Can the Autumn Budget restore vitality in towns, cities and their communities? Yes and No

The Autumn Budget, announced on 30th October, was both expected and unexpected. While it’s no surprise that tax hikes have been introduced, the scale of these increases on businesses is startling, given the Government’s stated commitment to making economic growth its top priority. In total, £40 billion in new taxes has been set out to balance the books.

For places and their communities, it’s a mixed picture. As we continue to recover from recent social and economic challenges, and with ongoing structural changes on high streets and in town centres, the Budget offers long-term hope. Some initiatives aim to address collective challenges across the UK. The Chancellor has received praise from the IMF, which acknowledges that these measures could deliver economic benefits—though likely not for years, even decades. If funds are spent well, it marks an encouraging prioritisation of long-term growth.

Public investment in core services—£22 billion for healthcare, £6 billion for education, and increased funding for transport, housing, and local Government finance—is welcome and will be beneficial for communities and society as a whole. However, these investments bring little immediate relief and come at a cost, framed as a necessity to restore economic and fiscal stability.

High street businesses and beyond are bearing the brunt of the cost:

High street businesses are facing a clear increase in expenses. Employer National Insurance Contributions (NICs) will rise from 13.8% to 15%, with a reduced secondary NIC threshold from £9,100 to £5,000. Coupled with a 6.7% increase in the National Living Wage, these changes are likely to weigh heavily on many employers, especially in the retail, hospitality, and leisure sectors. The boost in the Employment Allowance, from £5,000 to £10,500, feels minor against these rising costs.

For many high street workers, particularly young people and lower-earners, the outlook is more positive, helped by stronger employee rights. However, this comes alongside lower wage growth and a potentially less dynamic job market with fewer opportunities. The Office for Budget Responsibility (OBR) estimates that 80% of rising employment costs will be passed on through slower wage growth, with the remaining 20% reflected in higher consumer prices.

The burden of Business rates has been partly shifted from SMEs to larger businesses. However, those in globally renowned districts in London and other international cities in the UK will face even more challenges and constraints, undermining the established competitiveness UK cities have. Even for small businesses, they need to go through a two year period of discount reduced from 75%-40% along with all the new burdens before operating in a potentially better economic environment.

Good news is if there is no significant disruption in the following years, inflation is predicted to average 2.5% in 2024, rising to 2.6% in 2025, before gradually dropping to 2% in 2029, according to OBR forecasts, which should alleviate some pressure on both businesses and individuals.

30/10/2024. London, United Kingdom. Chancellor Rachel Reeves delivers the Autumn Budget 2024. Picture by Lauren Hurley / DESNZ

But it still comes back to that question: what about Growth, the Government’s no.1 mission?

The Government has decided to prioritise high-value sectors and projects, like life science, AI and the creative industry, in their Industrial Strategy Green Paper, with the final strategic paper due early next year (the Government is holding a consultation closing on November 24th). Measures like planning reform will hopefully address some barriers.

But there aren’t clear incentives in the Budget. Quite the opposite, many businesses feel negatively about it. Kevin Fitzgerald, UK MD at Employment Hero, said to City AM “The Chancellor says she wants the Government to invest, invest, invest, but all businesses are seeing are barriers, barriers, barriers to growth.”

The OBR said the Budget is short-term sugar rush and a hefty rise in business taxes would limit the economy’s expansion to 1.5% in the final year of the parliament, down from 2% next year, even though they think it will eventually boost output in a sustainable way, but only from 2032.

All the tax and benefit changes targeted at “those with wider shoulders”outlined in the budget would “fall on everyone’s shoulders” once the combined impact of welfare cuts, an increase in employer national insurance rises and tax rises on consumer goods are felt evenly across the income distribution.

It still seems to be uncertain about how we can get to the point where long term investment starts to pay off. And we still need balanced measures that alleviate high tax burdens on businesses that will at some point hinder the growth.

While the Chancellor deserves credit for her long-term approach in challenging circumstances, the effectiveness of this Budget also relies on effective policy implementation and incentives to offset the heavy burdens on businesses and, ultimately, on workers.

Government action has its limits; true economic growth relies on public-private partnership. For growth to truly take root, the Government must demonstrate genuine support for business communities and entrepreneurs—honouring the commitments made before the election.

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At Attis, we believe in a mission-led approach to restoring the vibrancy, vitality, and sustainability of our towns and city centres, just as the Government does to growth.

Attis’s mission-led approach centres on creating ambitious and deliverable missions with flexible strategies to address collective and complex challenges faced by places and their communities

This budget raises an essential question: does it truly support the Government’s mission for growth, or might it hinder it by imposing immediate financial burdens on businesses and communities? Attis is committed to ensuring that every initiative we champion aligns with our core mission to foster vibrant, viable, and sustainable urban centres—places that truly serve their communities and economies.