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Protecting Immediate and Long-term Financial Health? – The Spring Budget, March 2024
On 6th March 2023 the Chancellor of the Exchequer, Jeremy Hunt, announced his Spring Budget in the House of Commons.The Chancellor outlined the UK Government's tax and spending plans, which included further cuts to National Insurance, an increase in the VAT registration threshold, and protections for charities claiming Gift Aid.
The Budget was also announced in line with forecasts from the Office of Budget Responsibility (OBR) who confirmed inflation is set to fall to target earlier than previously expected.
MVA offers some of the key points below:
Growth and Tax
The Chancellor announced that the economy is expected to grow by 0.8% this year and 1.9% in the next, which was slightly stronger than the rate expected by the OBR in November.
The Chancellor also pointed out that Inflation currently stands at 4% - a target achieved earlier than predicted – and is set to go down further in the next couple of months.
And so The Chancellor confirmed that from 6th April 2024, the employee National Insurance (NI) contribution rate would be cut from 10% to 8%, and this comes on top of a 2p cut as announced previously in the 2023 Autumn Statement:
This means that someone on a £35,000 full-time salary should receive an estimated £450 a year in their personal income.
It was also announced by The Chancellor that the Household Support Fund (HSF) to help families struggling with the cost of living, has been extended by a further six months to September 2024.
And it was confirmed that the current £90 charge to obtain a debt relief order (DRO) was to be scrapped (which is relevant for debt-relief charities.)
Childcare
It was announced that tens of thousands of families will be able to claim more child benefit at the start of this financial year.
Currently as it stands, child benefit begins to be taken away if one parent earns over £50,000 a year.
So, it was announced that there are plans to move the High-Income Child Benefit Charge to a household-based system, and this is to be introduced by April 2026.
Until this comes into place, The Chancellor also said from April 2024 the level of income at which a parent starts to lose child benefit entitlements is to go up from £50,000 to £60,000.
That means no one earning under £60,000 will pay the charge, taking 170,000 families out of paying it altogether.
There was also an announcement about the rates paid to nurseries to fund free childcare hours for parents of children aged more than nine months is to continue for the next two years.
Health and Public Services
The Chancellor stated spending for public services is to go up over the next parliament as planned: But added the UK Government “will spend it better.”
It was announced a new Public Sector Productivity Plan is to be introduced to reform the Treasury’s traditional approach to public spending.
Part of The Plan for the NHS – worth £3.4 Billion – will focus on digital transformation to help fund productivity growth across the next 5-6 years. This includes:
- Expanding the use of Artificial Intelligence (AI) for quicker cancer diagnosis
- An improved NHS app to allow patients to confirm and modify appointments
- A new app for NHS staff to allow for easier e-rostering, and
- Plans for all hospitals to use the electronic patient record.
In addition, the Police will receive over £200 Million Investment in tech, aimed at helping police officers reduce the time they must spend on admin tasks and allow them to do more frontline work.
Alcohol and Fuel
The alcohol duty was due to rise in August, however – in the interest of backing the great British pub - The Chancellor announced it is to stay as it is until February 2025.
It was also announced that fuel duty will stay at its current level for another year; and the 5p cut to fuel duty, which was introduced in 2022 and was due to run out this month, has now been extended.
Other highlights included an amendment to Gift Aid legislation to benefit charities, and £45 Million of additional funding to strengthen medical charities' life-saving research programmes.
Reaction from the Charity Sector
Various Civil Society organisations responded to Jeremy Hunt's latest Spring Budget, with several groups reflecting on a lack of measures to help the Charity Sector.
The National Council for Voluntary Organisations (NCVO) said the budget presented a missed opportunity to empower the Voluntary Sector as a partner for Government in the delivery of public services.
The Charity Tax Group (CTG) expressed a similar opinion, and whilst they welcomed the funding for medical research charities and amendments to Gift Aid, reminded the Government to tackle the long-standing problem of Charity support.
National membership network Locality observed that the Budget overlooked the immediate pressures faced by Local Councils to deliver public services, and that the Government need to act now to keep vital local spaces and services alive.
The Charity Finance Group (CFG) agreed with this; and whilst they highlighted some of the relevant announcements in the Budget, reminded The Government of the on-going work of charities and community groups.
The Pro Bono Economics group also pointed out some of these measures, but stressed there was little to support those in the greatest need and would result in demand on the nation’s charities continuing to climb.
The Association of Chief Executives of Voluntary Organisations (ACEVO) also pointed out the unseen pressures on public services and local authorities which were not addressed by this Budget; and services for the disadvantaged continue to be a concern for the Sector.
Think tank and consultancy firm New Philanthropy Capital (NPC) stressed upon this, citing the measures in the Budget did little to really tackle both poverty and the growing crisis in Local Government finances.
Referring to it as the ‘General Election Budget’, national training charity Directory of Social Change (DSC) observed there was little to relieve the current social conditions and crises, so charities must keep engaging with the political system to influence what comes next.
To read the Chancellor’s Spring Budget speech in full, or for more information, visit the UK Government website.