Post Budget: Will Labour Provide Essential Support for the UK’s Manufacturing Sector?
11-11-2024
The newly appointed chancellor of the Exchequer, Rachel Reeves, announced Labour’s first budget in 14-years yesterday, 30th October 2024. This included an increase on the rate of income tax and National Insurance (NI) paid by employees, and a rise in the legal minimum wage, from £11.44 to £12.21 per hour from April for over-21’s, along with increases for the 18 to 20-year old age group.
Reeves, the first-ever woman in history to deliver the budget, also highlighted an increased spend on education, the NHS and housing. She stated that the Labour government had a massive task to close a £22bn hole in public finances and that difficult decisions had to be made to rebuild the economy.
Here, leading business figures voice their opinions:
Fashion-Enter Ltd / FashionCapital CEO Jenny Holloway…
“We pride ourselves on finding a balance in garment manufacturing to offset the large per hour rates of pay compared to countries like Morocco, with a minimum wage of approximately £1 an hour and Bangladesh which is just 35p an hour!
“Having software like Style3D and a totally nimble workforce that can be employed on samples, production or repairs means we can be agile to our clients requests.
“Having Employer NIC’s upped to 15% then a minimum wage cost of £12.21 from April means that we have to look at our supply chain yet again! There needs to be support for manufacturing and skills by the Labour government, and actually isn’t this the very foundation of Labour’s policies?
“We couldn’t be doing more for our learners and ethical manufacturing in the UK. It’s about time the government recognised and supported these two sectors before it’s just too late.”
Saxon Moseley, partner and head of leisure and hospitality at RSM UK:
“The Chancellor’s announcements today amount to a significant additional tax on jobs for the UK high street. The retail and hospitality sectors rely on a large number of people, and an increase of at least £615 a year to the cost of employing a full-time staff member will have a disproportionate impact on the industry. On top of rises in National Minimum Wage and the increased administrative burden from the Employment Rights Act, this will leave many businesses on a financial cliff edge.
“Promises of business rates reform in 2026 will be welcomed, but need to be set against a real terms 140% increase in next year’s rates bill for small businesses resulting from the existing relief being reduced.
“Combined, these measures overshadow more positive news regarding investment in filling the skills shortages which have plagued the hospitality industry, plus promises to tackle shoplifting which have eroded retail margins.
“High street businesses will be hoping that the lack of tax increases for working people, together with a modest 1p reduction in the price of a pint of draught ale, will see an uplift in consumer confidence ahead of the all-important festive trading period.”
Andy Jones, Partner, Retail Indirect Tax Leader at EY UK:
“For retailers, the bottom line is that the Budget will likely result in increased cost pressures amid what is already a challenging backdrop. A particularly significant headline, as expected, is the proposed increase in the national minimum wage and National Insurance Contributions (NICs) for employers. Whilst good news for workers, this will impact retailers during a time of already-intense cost pressures.
“Moreover, whilst the announcement to ease the removal of the business rate discount will be welcome news for some businesses, it will still be an increase on the amounts paid today. That said, many may be hopeful that it is a first indication of the new Government’s approach to taxation and an indication that further reliefs that may come in the future. Therefore, overall, whilst the freeze on fuel duty and the reduction in Alcohol Duty rates for draught products will be welcomed, the Budget will likely lead to increased inflationary pressures for retailers and likely price rises for consumers.”