Over a month on from the Labour government’s first budget in over 14 years, Chancellor Rachel Reeves’ announced tax increases and policy changes are still being digested by those most affected, not just set to have but already having profound implications for Norfolk's residents, businesses, and rural communities.
Impact on Norfolk's Rural Communities
A central concern is the proposed changes to inheritance tax reliefs for agricultural properties. The National Farmers' Union (NFU) warns that these adjustments could affect up to 75% of commercial farms, potentially forcing many family-owned farms to sell land to cover tax liabilities, thereby threatening food security and the rural economy when backing British farming should be a priority.
Additionally, the Department for Environment, Food and Rural Affairs (DEFRA) faces a 1.9% budget cut over the next two years, leading to uncertainty that could hinder support for our rural communities and environmental initiatives.
Effects on Local Employment and Businesses
The budget includes a 1.2 percentage point increase in employers' National Insurance Contributions (NICs), raising the rate from 13.8% to 15%. This change, coupled with a reduction in the Secondary Threshold from £9,100 to £5,000, means that more businesses will incur NICs at lower salary levels. While the employment allowance has been increased from £5,000 to £10,500 per employee, the overall impact on small and medium-sized enterprises (SMEs) in Norfolk remains a huge concern.
Chartered Institute of Legal Executives
The Confederation of British Industry (CBI) has since expressed apprehension that these tax hikes could lead to reduced hiring and stifled investment. This affects the overall economic growth that Labour not just promised but campaigned upon in the General Election, whilst potentially affecting job creation in Norfolk's local economy.
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Consequences for Graduates and Young Professionals
For recent local graduates from institutions like the University of East Anglia (UEA), the budget's tax changes place a greater burden on those employing graduates. Increased NICs could have a devastating impact on employers’ hiring decisions, limiting job opportunities for our best and brightest across Norfolk who want to stay in our region and provide enormous value.
Broader Economic Implications
The Office for Budget Responsibility (OBR) forecasts that public sector borrowing will be £28.4 billion higher on average over the next five years compared to previous expectations, partly due to increased government spending on goods and services.
While the government has committed to investing in infrastructure and public services, the increased tax burden and gloomy messaging has already shown to dampen consumer confidence and spending. Worse, consumer confidence appears likely to remain muted in the run up to Christmas. The Rural Services Network (RSN) has highlighted that, despite some positive measures, the budget's impact on rural areas like Norfolk remains uncertain.
A Budget Norfolk Can’t Afford
The Labour government's 2024 budget introduces several measures that place Norfolk's economy and communities in unnecessary precariousness. While investments in public services and infrastructure are welcomed, the increased tax burden and policy changes present unneeded challenges for rural communities, businesses, and individuals. Norfolk Conservatives are committed to engaging with policymakers to address these concerns and ensure that Norfolk's unique local needs are considered in future fiscal decisions.
