The upcoming budget is an opportunity to rethink the current fiscal rule framework
Changing the fiscal rules to allow for an increase in public investment would be a welcome move from the Chancellor.
Press Release
Read our immediate response to today's first Labour Budget
“The UK’s first ever female Chancellor has today delivered a budget that offers some promising green shoots for women, particularly when it comes to the additional investment in the NHS and schools and some additional spending for local government and social care. Women and those they care for rely more on these services and are more likely to work in them.
“The Chancellor in her speech recognised the scale of the problems faced by our public services, which are crying out for investment at levels that can only be met through higher taxes and borrowing. However, we need greater ambition both on changes to taxes and on the levels and areas of investment, which could have been achieved through further changes to the fiscal rules while also maintaining sustainability in the public finances.
“It’s good that the Government recognised that investment in physical infrastructure, like roads, bridges, and hospital and school buildings, has wider economic benefits which justify government borrowing. But spending on social infrastructure – education, health, care – the activities happening inside the buildings – is also an investment with wider economic benefits, which further reforms to self-imposed fiscal rules could recognise. We would urge the Chancellor to reconsider the rules to enable a more generous spending review settlement.
“The increase in the Living Wage is very welcome, particularly for low-paid women who make up 58% of those receiving the National Living Wage. However, for the women hardest hit by austerity and subsequent economic shocks since 2010, who are unable to work and are reliant on social security, there will be another real-terms cut which they simply can’t afford.
“Our analysis shows that the 1.7% uplift in benefits is the equivalent of just £2.50 per week per person for a lone mother household. The Chancellor confirmed that inflation is expected to increase to 2.6% in 2025. So, for the families relying on the social security safety net and for Disabled people reliant on benefits to cover additional costs, there was no end to the cost-of-living crisis in this budget.
“Changes to the Treasury’s self-imposed fiscal rules are welcome as a mechanism to give the Chancellor more ability to invest in the foundations of the economy. But health, care, education and other public services are as fundamental to the strength of the economy as roads and rail. As with roads and rail, these services generate long-term benefits not only for direct users but for society and the wider economy. They are a form of social infrastructure.
“Just take Sure Start Centres – a recent report by the IFS found that access to a centre for young children resulted in better GCSE results ten or more years later. For children from the poorest backgrounds, the positive effects were six times higher 1 . This means those children are now likely to be earning more as a result of the funding put into those centres by the last Labour Government as well as being more likely to measure higher on all kinds of other indicators like health and wellbeing.
“These long-term economic and other benefits mean that some forms of day-to-day spending should be categorised as social infrastructure, and therefore an investment, which would also consequently justify government borrowing.”
“Tax is the necessary contribution to a healthy and well functioning society and economy. We welcome changes announced today to raise taxes from wealth which also tackles wealth inequality. We would like to have seen the Government take bolder action to overhaul the current tax system, including inheritance, wealth, capital gains, property, earnings, and profits, to counter widening gender disparities and ensure fairness and effectiveness in funding public services.”
“Because wealth is disproportionately concentrated in the hands of men, taxing wealth and income from wealth to invest in our social infrastructure is a wallet to purse transfer from men to women. Changes to Capital Gains Tax go some way to doing that but could have gone much further with the potential to have raised up to £15.2bn a year instead of the estimated £2.49bn by 2029/30. The Government could go much further – a 2% annual wealth tax on people with £10 million in assets could raise £22 billion a year.”
“Taxing inheritances should help improve intergenerational mobility by reducing inequality in inheritances, a major source of wealth inequality. Reforming business and agriculture relief in inheritance tax could bring in up to £1.4bn, but all loopholes need to be closed.”
“We have been calling for an abolition of the “non-dom” status, which could bring in £3.2bn a year, and so welcome the Chancellor’s announcement of the end of the current rules for non-UK domiciled individuals, two thirds of whom are men”.
“Increasing the rate on carried interest is welcome, and we look forward to seeing the Government meet its manifesto commitment to treat profits from private equity (known as ‘carry’ or ‘carried interest’) the same way as income from other work for tax purposes. Under-taxation of carry disproportionately benefits men who make up 85% of carry recipients and receive 96% of all carry 2 .”
“Labour cut off some of the more progressive and effective options for much needed revenue by committing not to raise key taxes during the election. For example, they could have pledged to reverse the two cuts to National Insurance Contributions made by the previous Government, which benefited high income earners over low earners, and men over women.
“In that context, the increase to employer contributions to national insurance is one of the few options available. However, we are concerned that there have been no measures to protect providers of vital services, such as childcare and social care, from the effects of the rise in National Insurance and the cut in the Secondary Threshold from £9,100 to £5,000.
“There are other reforms to National Insurance, for example extending it to investment income and abolishing the upper earnings limit, that would raise substantial further revenue.
“On average, because of their unpaid care and domestic responsibilities, women are more likely to have less time for paid work and therefore more likely to rely on social security for more of their individual and household income than men. It is disappointing that there were not more substantial changes to social security in the Labour Government’s first budget to undo some of the most punitive measures introduced since 2010, including the 2-child limit, the benefit cap and the sanctions regime. Not only because it is the right thing to do morally, but because it makes more economic sense in the long run.
“For example, if we were to lift 250,000 children from poverty as the removal of the two-child limit is estimated to do, we could expect a saving of around £2.3 billion – nearly twice as much as the removal of the limit would cost. Roughly half of this (£1.15bn) would be savings in public expenditure right now, with the other half being savings in long-term costs to the economy and Treasury from lost earnings.
“We recognise that improving wider living standards and economic conditions through greater investment should over time reduce the need for social security. But social security is also an investment in people and in their ability to contribute to the economy long term – the two are not in conflict.”
“The change to cap deductions from Universal Credit claimants’ payments to cover up front loans to 15% will reduce some of the financial pressures on those claimants. It is a step in the right direction and will provide some relief to many families who are struggling to make ends meet and who will be able to put that money into food, heating, and clothes. But it would be far better to do away with making claimants wait for five weeks before their first payment and therefore avoid the debt in the first place.”
“Reintroducing the freeze on local housing allowance is deeply disappointing for the hundreds of thousands of families struggling in temporary housing or facing eviction. The cost of private renting has been increasing, eating up more and more of women’s incomes – with the gender housing affordability gap widening in the last year. The average rent for a one bedroom property in England is now taking up 47% of a woman’s median earnings. This is up from 36% last year, compared to 34% and 26% for men respectively 3 . ”
“We are disappointed that the Chancellor confirmed this Government would continue with reforms to the Work Capability Assessment announced by the previous Government, which assesses eligibility for additional Universal Credit and contributory Employment Support Allowance. These plans are likely to reduce the levels of support available to Disabled people.
“Our analysis shows that Disabled women are among those who have seen their living standards decline the most due to changes to tax and benefits and cuts to public services, losing 11% or the equivalent of over £4,000 a year. Women make up 55% of Disabled people and 55% of PIP claimants. They also make up the majority of unpaid carers for Disabled people.
“Increasing the National Living Wage is an important move from the Chancellor to restore living standards and will particularly benefit women who make up 58% of those receiving the minimum wage 4 .
“Budget settlements for departments for health, local government and education need to include additional funding to meet the cost of paying workers in low paid but vital roles, like early education and childcare and children and adult social care. Otherwise, these sectors risk being put under unsustainable financial pressures while demand is going up”
“Additional funding for the NHS in both capital and revenue budgets is needed to address the shortfalls in the last Government’s Budget. And with waiting lists at 7.77 million in September 5 it is right to prioritise the health service and increase taxes to do so.
“But with local councils on the verge of bankruptcy up and down the country, we are concerned that the same priority hasn’t been given to social care and the other vital local services provided by councils. The additional £600 million of funding to local authorities to support social care will likely not be enough to compensate for years of underfunding or for the increase in the minimum wage and national insurance contributions.
“Without significant investment in social care, pressures on the NHS will continue to build along with unmet need in the community. This often results in women picking up the care unpaid, impacting their own health and access to the labour market.
“We look forward to what will hopefully be a more generous settlement following the spending review.
“The Government’s aim to halve violence against women and girls can only be delivered with targeted funding for specialist services to support survivors to leave abusers and bring them to justice if that’s what they choose.
“Many specialist services are approaching a funding cliff edge from April when central government grants come to an end. So it will be crucial that the Home Office and Ministry of Justice provide clear and sustainable funding as soon as possible.”
“We welcome the £1.8bn commitment to fund the much-needed expansion in early education and childcare. It will be important that the allocation takes account of the uplift in the National Living Wage given the makeup of the workforce. We remain concerned that there is still a gap in funding for the hours promised to parents as ‘free’ and the cost to providers of delivering them, particularly for three and four year olds.”
“The commitment to build more affordable housing marks a significant change in direction and is very welcome given the rising level of need. And the change to reduce the discount on Right To Buy on new social housing is a positive step for addressing annual net loss of social rent homes.
“Although men are the vast majority of those sleeping rough (84%), women are the majority of people statutorily homeless (60%) and are more likely to experience hidden homelessness. Lone mothers make up two-thirds of homeless families with children (they are just one quarter of all families with children).
“To really grasp the nettle of meeting the need for social and affordable housing, the Government should pause Right To Buy and give councils the tools they need to build the social housing we need, as set out by Shelter 6 .”
“While it is good news that the cap on bus fares will be extended, the 50% increase will have a disproportionate impact on women who make up 56% of bus users. We would like to see dispensation for carers in particular, who often make journeys as part of their caring responsibilities and should be provided with carer’s bus passes.”
“The continued freezing of fuel duty makes no sense while also increasing bus fares when we need to drastically reduce car use to stay within planetary boundaries. Furthermore, more men than women will benefit from the fuel duty freeze: 66% of men are the main drivers in their households compared to 54% of women 9. We also know that men tend to take longer car journeys than women, who are more likely to use public transport.”
WBG spokespeople available for comment, please contact press@wbg.org.uk
Notes to editors:
Estimations for the increase in social security payments are based on an increase of 1.7% in working-age benefits for 2025 for, household equivalised income AHC, using UKMOD version B2024.14. UKMOD is maintained, developed and managed by the Centre for Microsimulation and Policy Analysis (CeMPA) at the University of Essex. The process of extending and updating UKMOD was financially supported by the Nuffield Foundation (2018-2021) and the abrdn Financial Fairness Trust (2023-2024). The results and their interpretation are the author’s(’) sole responsibility.
CenTax (2024) Policy Brief: Ten Facts About Carried Interest
Low Pay Commission (2024) National Minimum Wage. Low Pay Commission Report 2023.
[5] Private healthcare boom fuelled by NHS waiting lists
Shelter (2024) The Way Home: A manifesto to rebuild our broken housing system
Changing the fiscal rules to allow for an increase in public investment would be a welcome move from the Chancellor.
We have responded to the Autumn Budget 2024 / Spending Review - Stakeholder Representations
The gendered impact of Autumn Statement