Business leaders across the North have had mixed reactions to the Labour budget which was announced yesterday.
Chancellor Rachel Reeves set out her party’s plans on a range of areas, including funding for potholes, an increase in employer national insurance contributions and investments in AI and 5G, as well as extra cash for day-to-day NHS health budgets and money to fix crumbling schools.
Delivering the first Labour budget in 14 years, Reeves announced that there would be tax rises amounting to £40 billion – and was quick to slam the Tories for failing when they were in power for leaving a £22 billion deficit.
Reeves claimed the scale of the public spending problems she inherited were worse than previously thought.
And there was plenty of news for businesses in the North. Some of them spoke to Business Manchester in response to the announcement.
“Mere drop in the ocean”
Mark Tongue, joint CEO and founder of UK vehicle lease firm Select Car Leasing, which has Manchester offices, cautiously welcomed the additional £500 million funding to repair potholes. But he fears the sum represents a “mere drop in the ocean compared with the enormous scale of the problem.”
He said: “Decades of underfunding in our road network has led to a point where we’ve reached a true crisis point when it comes to potholes.
“The government has already committed billions to road resurfacing – with £8.3 billion of HS2 funding redirected to cash-strapped councils last year. Local authorities have been allocated the money – but can any of us really say the roads in their area have improved? If anything, they’re still getting worse because the rot has well and truly set in.
“Some estimates, including those made by the Asphalt Industry Alliance (AIA), suggest that the true amount needed to fix our pothole backlog is actually around £16.3 billion.”
“Mixed bag”
Connectivity
Reeves also reaffirmed the government’s dedication to research and development, allocating over £20 billion for research funding in areas such as engineering, biotechnology, and medical science.
Moreover, the chancellor has pledged £500 million to enhance mobile broadband connectivity, particularly in rural regions, through the Department for Science, Innovation and Technology (DSIT).
Phil Wedgwood, CEO at Engage (pictured main) said: “The government’s £500 million investment in 5G, AI, and full-fibre broadband goes beyond infrastructure—it’s about social mobility, too.
“Reliable 5G and broadband mean that our cities are better connected, opening up access to talent and proper employee engagement for businesses across the region. Empowering all regions with advanced digital connectivity will help level the playing field and support economic growth nationwide.”
Carbon capture
The budget also confirmed key investments such as Carbon Capture and Storage to create jobs in the “industrial heartlands”.
Dave Richardson (pictured above), interim chair of the North West Hydrogen Alliance said: “Great news coming out of today’s Autumn budget with confirmed funding for 11 HAR1 schemes in her budget statement, including Barrow-in-Furness located right here in the North West.
“As an Alliance, we’re pleased to see such a strong commitment to the hydrogen and carbon capture sector, which will be essential in decarbonising key industries across the country—such as low-carbon refining, glass, and chemical manufacturing. This support not only helps to protect thousands of existing jobs but also attracts new businesses, moving Britain closer to becoming a clean energy superpower.”
Energy savings
Thomas Farquhar, co-founder of Liverpool-based low-carbon start-up Heatio, welcomed the extension of funding for heat pumps and support for domestic manufacturing of the technology.
He added: “There are also welcome, clear ambitions in the Warmer Homes scheme, which promotes solar and heat pump installations. The government’s £3.4 billion additional funding for 350,000 homes, including 250,000 low-income homes, is especially good news and a step forward in making energy savings accessible for all, especially those most affected by fuel poverty.”
Impact of increases
Over at Primas Law, John Hartley, its business crime and regulation legal partner, talked about the new ‘painful’ tax hikes will place on UK business and the potential fallout from this, including potential opportunities for bad practice, including tax evasion and evasion to avoid increased costs.
He said: “I wonder if due care and attention has been given to the potential impact of some of these increases, particularly in terms of how businesses may attempt to avoid or evade payment.
“In relation to income tax, whilst these have not been increased the thresholds will remain frozen for a further 4 years. As the cost of living increases we may therefore see more and more individuals falsifying their income and undercooking this to avoid higher tax penalties.
“And while much of today’s public outcry centres on increases to Inheritance Tax, the government is naive to think there won’t be attempts made to lessen the burden of this by minimising or falsifying the value of the deceased’s estate by hiding highly valuable assets.
“Clamping down on tax avoidance and misuse has been clearly signposted as a means to raise funds, with a focus on closing tax ‘loopholes’, an appointment of a Covid corruption commissioner to investigate the businesses who used a national emergency to line their pockets and a re-energised HMRC debt recovery taskforce as well as clamp down on tax avoidance schemes.”
