Budget 2024: The key announcements in Chancellor Rachel Reeves’s speech
Chancellor Rachel Reeves has finally unveiled the budget for 2024. Here are the key points:
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• The budget raises taxes by £40bn.
• National Insurance contributions for employers (not employees) will increase by 1.2 percentage points to 15% from April 2025.
The point at which employers start paying NI will fall from £9,100 a year to £5,000 a year. This will raise £25bn per year.
• The lower rate of capital gains tax (CGT) on the sale of assets will increase from 10% to 18%. The higher rate will go from 18% to 24%. CGT on the sale of residential property will also increase from 18% to 24%.
• Tax thresholds will rise, meaning the point at which people pay higher taxes will be increased. These tax bands had been frozen. But this freeze will end in 2028 and the bands will increase at the rate of inflation.
• The freeze on inheritance tax will continue for a further two years until 2030. This means the first £325,000 can be inherited tax-free, rising to £500,000 if the estate is passed to direct descendants, and £1m if it’s passed to a surviving spouse or civil partner.
• From tomorrow the stamp duty surcharge for second homes, or ‘higher rate for additional dwellings’, will increase by two percentage points to 5%.
• Health and employment services for people who are disabled and long-term sick will get £240m in funding.
• The minimum wage for people 21 and over will rise by 6.7% to £12.21 an hour. This is the equivalent of £1,400 a year for a full-time worker. Workers aged 18 to 20 will see their minimum wage increase by 16.3% to £10 an hour.
• People will now be able to earn £10,000 or more while claiming Carers Allowance. This will mean an extra £81.90 for those newly eligible.
• The household support fund will receive £1bn to help those in financial hardship with the cost of essentials.
• A new fair repayment rate will mean Universal Credit claimants who have been accidentally overpaid will only have to pay back 15% of their allowance each month, falling from 25%. This means a gain of around £420 a year for roughly 1.2 million of the poorest households.
• Businesses will get an increase in employment allowance, which will mean 65,000 employers won’t pay any National Insurance at all next year with the allowance growing from £5,000 to £10,500. This will mean more than a million businesses will pay the same or less than they did previously.
• Business rates relief will fall from the current 75% down to 45% for retail, leisure and hospitality businesses.
• The day-to-day NHS budget will increase by £22.6bn. There will also be a further £3.1bn investment in its capital budget.
• This will facilitate 40,000 extra hospital appointments and procedures every week and will include £1.5bn for new hospital beds.
• Local government will receive funding worth “at least” £600m for social care.
• An investment of £5bn in housing, which will increase the affordable homes programme to a budget of £3.1bn.
• In addition, £1bn will be spent on the removal of dangerous cladding, implementing the findings of the Grenfell inquiry.
• Fuel duty will be frozen this year and next, with the existing 5p cut maintained.
• A cut to draft alcohol duty of 1.7%, which could make drinks cheaper by 1p.
• The tax on tobacco will rise at the rate of inflation plus an additional 2%. There will also be an extra 10% on rolling tobacco.
• There will be a new flat rate duty on all vaping liquid from next October.
• VAT will be introduced on private school fees from January 2025 and business rates relief for private schools will be removed from April 2025.
• Some 500 state schools that are old and not fit for purpose will be rebuilt at a total cost of £1.4bn. There will be an extra £300m for school maintenance each year, which will cover dealing with RAC concerns.
• The budget for free school breakfast clubs will be tripled to £30m, in 2025 and 2026. The core budget for schools will also rise by £2.3bn next year.
• An investment of £300m for further education and £1bn for children with special educational needs (SEN).
• The HS2 rail link between Old Oak Common in west London and Birmingham has been confirmed. Tunnelling work will also begin on extending the line to London Euston.
• Air passenger duty on private jets will rise by 50%, which is the equivalent of £450 per passenger.
• The energy profits levy on oil and gas companies will increase to 38% until March 2030.
• The annual defence budget will fall below 2.5% of GDP next year – with an increase of £2.9bn for the Ministry of Defence.
• A commitment of £3bn a year for Ukraine for “as long as it takes”.
• Public finances will be in surplus, rather than in deficit, by the 2027-2028 financial year. The government claims this means reaching stability two years earlier than planned.
• The Office for Budget Responsibility (OBR) predicts UK GDP growth to be 1.1% in 2024, 2.0% in 2025, 1.85% in 2026, 1.5% in 2027, 1.5% in 2028, 1.6% in 2029.
• The OBR expects public sector net borrowing to be £105.6bn in 2025-26, £88.5bn in 2026-27, £72.2bn in 2027-28, £71.9bn in 2028-29 and £70.6bn in 2029-30.
• Consumer price index (CPI) inflation will hit 2.5% this year, according to OBR forecasts. Next year it will rise to 2.6% before falling to 2.3% in 2026, 2.1% in 2027, 2.1% in 2028 and 2% in 2029. It’s the goal of the Treasury to bring inflation down to 2%. The Bank of England has raised interest rates to bring the rate of price rises to 2%.
• The price of soft drinks will rise, with an increase to the drinks levy in line with inflation every year. Nearly £1bn a year will be raised thanks to the measure.
• All government departments will have their budgets reduced by 2% next year. This will be achieved by “using technology more effectively and joining up services across government”.
Shares in The Magnum Ice Cream Company (TMICC) have fallen slightly on debut after the completion of its spin-off from Unilever amid a continuing civil war with one of its best-known brands.
Shares in the Netherlands-based company are trading for the first time following the demerger.
It creates the world’s biggest ice cream company, controlling around one fifth of the global market.
Primary Magnum shares, in Amsterdam, opened at €12.20 – down on the €12.80 reference price set by the EuroNext exchange, though they later settled just above that level, implying a market value of €7.9bn – just below £7bn.
The company is also listed in London and New York.
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Unilever stock was down 3.1% on the FTSE 100 in the wake of the spin off.
The demerger allows London-headquartered Unilever to concentrate on its wider stable of consumer brands, including Marmite, Dove soap and Domestos.
The decision to hive off the ice cream division, made in early 2024, gives a greater focus on a market that is tipped to grow by up to 4% each year until 2029.
Ben & Jerry’s accounts for a greater volume of group revenue now under TMICC. Pic: Reuters
But it has been dogged by a long-running spat with the co-founders of Ben & Jerry’s, which now falls under the TMICC umbrella and accounts for 14% of group revenue.
Unilever bought the US brand in 2000, but the relationship has been sour since, despite the creation of an independent board at that time aimed at protecting the brand’s social mission.
The most high-profile spat came in 2021 when Ben & Jerry’s took the decision not to sell ice cream in Israeli-occupied Palestinian territories on the grounds that sales would be “inconsistent” with its values.
Unilever responded by selling the business to its licensee in Israel.
A series of rows have followed akin to a tug of war, with Magnum refusing repeated demands by the co-founders of Ben & Jerry’s to sell the brand back.
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Sept: ‘Free Ben & Jerry’s’
Magnum and Unilever argue its mission has strayed beyond what was acceptable back in 2000, with the brand evolving into one-sided advocacy on polarising topics that risk reputational and business damage.
TMICC is currently trying to remove the chair of Ben & Jerry’s independent board.
It said last month that Anuradha Mittal “no longer meets the criteria” to serve after internal investigations.
An audit of the separate Ben & Jerry’s Foundation, where she is also a trustee, found deficiencies in financial controls and governance. Magnum said the charitable arm risked having funding removed unless the alleged problems were addressed.
The Reuters news agency has since reported that Ms Mittal has no plans to quit her roles, and accused Magnum of attempts to “discredit” her and undermine the authority of the independent board.
Magnum boss Peter ter Kulve said on Monday: “Today is a proud milestone for everyone associated with TMICC. We became the global leader in ice cream as part of the Unilever family. Now, as an independent listed company, we will be more agile, more focused, and more ambitious than ever.”
Commenting on the demerger, Hargreaves Lansdown equity analyst Aarin Chiekrie said: “TMICC is already free cash flow positive, and profitable in its own right. The balance sheet is in decent shape, but dividends are off the cards until 2027 as the group finds its footing as a standalone business.
“That could cause some downward pressure on the share price in the near term, as dividend-focussed investment funds that hold Unilever will be handed TMICC shares, the latter of which they may be forced to sell to abide by their investment mandate.”
Donald Trump has said he will be “involved” in the decision on whether Netflix should be allowed to buy Warner Bros, as the $72bn (£54bn) deal attracts a media industry backlash.
The US president acknowledged in remarks to reporters there “could be a problem”, acknowledging concerns over the streaming giant’s market dominance.
Crucially, he did not say where he stood on the issue.
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It was revealed on Friday that Netflix, already the world’s biggest streaming service by market share, had agreed to buy Warner Bros Discovery’s TV, film studios and HBO Max streaming division.
The deal aims to complete late next year after the Discovery element of the business, mainly legacy TV channels showing cartoons, news and sport, has been spun off.
But the deal has attracted cross-party criticism on competition grounds, and there is also opposition in Hollywood.
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Netflix agrees $72bn takeover of Warner Bros
The Writers Guild of America said: “The world’s largest streaming company swallowing one of its biggest competitors is what antitrust laws were designed to prevent.
“The outcome would eliminate jobs, push down wages, worsen conditions for all entertainment workers, raise prices for consumers, and reduce the volume and diversity of content for all viewers.”
File pic: Reuters
Republican Senator, Roger Marshall, said in a statement: “Netflix’s attempt to buy Warner Bros would be the largest media takeover in history – and it raises serious red flags for consumers, creators, movie theaters, and local businesses alike.
“One company should not have full vertical control of the content and the distribution pipeline that delivers it. And combining two of the largest streaming platforms is a textbook horizontal Antitrust problem.
“Prices, choice, and creative freedom are at stake. Regulators need to take a hard look at this deal, and realize how harmful it would be for consumers and Western society.”
Paramount Skydance and Comcast, the parent company of Sky News, were two other bidders in the auction process that preceded the announcement.
The Reuters news agency, citing information from sources, said their bids were rejected in favour of Netflix for different reasons.
Paramount’s was seen as having funding concerns, they said, while Comcast’s was deemed not to offer so many earlier benefits.
Paramount is run by David Ellison, the son of the Oracle tech billionaire Larry Ellison, who is a close ally of Mr Trump.
The president said of the Netflix deal’s path to regulatory clearance: “I’ll be involved in that decision”.
On the likely opposition to the deal. he added: “That’s going to be for some economists to tell. But it is a big market share. There’s no question it could be a problem.”
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