WBG response to the Autumn Budget 2024

The first Budget from a Labour government in 14 years marked a shift in the UK’s economic direction, with more resources for public sector spending and investment and increased taxation. This change of direction is welcome news, especially for women, who have borne the brunt of austerity-driven public services cuts since 2010. However, the scale of underinvestment in public services over the past 14 years means that even this increase in public spending won’t be enough to restore services to the level needed.

The Budget moved away from austerity for public services, but the same didn’t happen for social security, offering little help for the poorest women. The above-inflation increase in the National Living Wage is very welcome and will particularly benefit women, who make up the majority of low-wage workers. Working-age benefits will increase by 1.7% next year, less than the 2.6% projected average inflation rate for 2025/26. The two-child limit and the benefit cap, key drivers of child poverty, remain in place. The overall benefit cap will be frozen from next year, as will the rate of Local Housing Allowance, which is worrying at a time when rents are rising faster than inflation. For Disabled women, there are particular concerns about the Chancellor’s announcement that this Government would continue with reforms to the Work Capability Assessment (WCA) announced by the previous Government.

The Women’s Budget Group will look forward to the Child Poverty Review and the Spending Review next Spring as an opportunity for the Chancellor to build on what she has started with this budget and truly create an economy that works for women.

Key policy decisions

Increased public spending

Public spending will increase by £22.6 billion this year and £64.8 billion on average per year thereafter, with one-third allocated to capital (investment) spending and two-thirds to current (day-to-day) spending. The spending is considerably front-loaded, with most set to happen in the first two years. Day-to-day spending for ‘unprotected’ departments is expected to decrease by 1.1% per year in real terms from 2025/26 onwards.

NHS England is among the public services with the highest levels of additional funding announced, with a 4% per year real terms increase between 2023/24 and 2025/26. However, we are concerned that the same priority has not been given to social care, nor to other vital local services provided by councils, which are particularly important for women as users, workers and carers. As the Office for Budget Responsibility (OBR) highlights, local authority spending as a percentage of GDP has fallen from 7.4% in 2010/11 to 5% in 2023/24.

Increase in employer National Insurance Contributions

A major announcement in the Autumn Budget 2024 was the rise in employer National Insurance Contributions (NICs) from 13.8% to 15% and a reduction in the threshold from which employers start paying NICs for each employee, from £9,100 to £5,000 per year. These measures aim to raise £25 billion per year by 2028/29, with additional support for small businesses and public services to offset the NICs increase.

Raising employer NICs is expected to increase costs of employing low earners, impacting essential sectors like social care and early education which have many low-paid, mostly female workers. While the Government has allocated some funds to help public services cover these costs, other providers may face increased financial strain.

National Living Wage and National Minimum Wage

Following the recommendations of the Low Pay Commission, the Chancellor announced an increase in the National Living Wage (NLW) by 6.7%, reaching £12.21 per hour from April 2025 for those aged 21 and older. The National Minimum Wage (NMW) for 18 to 20 year olds, will increase by 16.5% to £10 per hour.

While the increase is good news for those earning the NLW and the NMW, mainly women, there are concerns among care providers that this will increase their costs, particularly when combined with the changes to employers’ NICs. The Women’s Budget Group (WBG) would like to see additional funding made available to enable providers of essential services to meet the costs of the increase in the NLW.

Social security

Working age benefits will be uprated in April 2025 by the September 2024 Consumer Prices Index (CPI) figure of 1.7%. However, the increase will not be enough to cover the increase in prices expected for 2025. The OBR estimates that CPI inflation will reach 2.6% in 2025, meaning that households receiving social security benefits will see a real terms cut in their income.

The Government announced that the income threshold for the Carer’s Allowance (CA) will increase to the equivalent of 16 hours at the NLW per week from April 2025. We welcome this change, which will allow people to increase their income from employment while retaining CA. Nevertheless, other problems with the CA must also be addressed.

For Disabled women, there are particular concerns that this Government would continue with reforms to the WCA announced by the previous Government.

Housing

The Chancellor announced an additional £500m increase to the affordable homes programme, which is a welcome step towards increasing the supply of social housing. Right-to-Buy discounts will be reduced and councils will be able to keep the full receipts of Right-to-Buy sales. This could provide an incentive for councils to build new social housing.

We are concerned at this Budget’s failure to address Local Housing Allowance, which is set to be refrozen in 2025 at a time when rents are still rapidly rising. We urge the Chancellor to tackle the widening gender housing affordability gap by permanently re-linking Local Housing Allowance with actual rents. Housing is a gendered issue with women in a generally worse situation, in terms of affordability, ownership, safety and overcrowding.

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