UK Autumn Budget 2024: Key Takeaways for Employers
The latest Autumn Budget, delivered by Rachel Reeves following Labour's election in the summer, presented several anticipated changes.
The budget brings some significant adjustments that will impact business costs, hiring, and wages. Here’s a closer look at what the Autumn Budget 2024 holds for employers.
National Living Wage and Minimum Wage Increases
In line with the recommendations of the Low Pay Commission, the government has announced an increase in the National Living Wage. From April 2025, this rate will rise by 6.7%, moving from £11.44 an hour to £12.21. Rachel Reeves underscored this increase as a critical step toward establishing a genuine living wage for working people.
In addition, the minimum wage for younger workers is set to see a notable rise. For 18- to 20-year-olds, the rate will jump from £8.16 to £10 per hour – a 16.3% increase. This change supports a simplification process in the government’s approach to minimum wages, reducing the number of age-based categories in wage structures. Following last year’s removal of the 20–23 age bracket, this development signals an ongoing trend toward a single wage rate for all adult workers.
National Insurance Contributions: The Impact of a 1.2% Increase
Without a doubt, the most contentious change for employers in this budget is the rise in National Insurance Contributions (NICs) for employers, which will increase by 1.2% in April 2025, from 13.8% to 15%. Compounding this change, the income threshold for NICs has been lowered from £9,100 to £5,000.
Although Reeves acknowledged that this decision was not taken lightly, the government views it as a necessary means of generating additional revenue. Many businesses may struggle to absorb these costs without offsetting pay increases or bonuses for their workforce.
Get Britain Working
A noteworthy development in this year’s budget is the government’s initiative aimed at supporting economically inactive individuals back into work. Reeves has committed £240 million toward projects designed to assist these individuals in re-entering the workforce. While specifics around the scheme are still forthcoming, this funding allocation reflects the government’s broader ambition to tackle unemployment and foster an inclusive labour market.
Employers may find new opportunities and incentives for recruiting from these groups, but as with many similar programmes in the past, success will depend heavily on the government’s ability to deliver effective support structures and training.
As always, the proof will lie in the details and how well these policies are implemented. Businesses should stay attuned to further guidance on these measures, as well as any additional regulations stemming from the Employment Rights Bill, to navigate this evolving landscape effectively.
Employment Rights Bill: A Complementary Legislative Move
In conjunction with the Autumn Budget, the government recently introduced the Employment Rights Bill. This Bill is set to enhance employment protections and improve conditions for workers. Given the scope of the budget changes, particularly around wages and NICs, it’s likely the government will consider how they roll out the Employment Rights Bill, understanding how businesses respond to the current economic environment before committing to final provisions.
