Budget 2024: Wins on Pay, But Overlooked Needs Remain

Yesterday (30 Oct), Chancellor Rachel Reeves unveiled the Autumn Budget 2024, showcasing a change in the UK’s economic strategy. While workers have plenty to feel optimistic about, such as increases in the National Living Wage (NLW), critical gaps remain that could impact the overall effectiveness of these changes.

As the government claims Chancellor Reeves has acted to “rebuild Britain”, read on as we explore the key points from the budget speech. From enhanced carer support to a UK tax increase, we analyse the implications for employees and what may have been overlooked.

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What is in the New Budget 2024?

This year’s budget reflects a commitment to support workers and vulnerable groups through targeted financial measures. With significant changes to enhance living standards and promote skill development, the Chancellor’s proposals set the stage for a transformative approach to the UK’s financial landscape.

National Living Wage Boost

One of the standout announcements in the financial budget is the NLW rise by 6.7% to £12.21 per hour, set to take effect in April 2025. This increase is poised to benefit over 3 million low-paid workers across the UK. This adjustment could provide up to an additional £1,400 annually, improve workers’ financial security and help stimulate local economies through increased consumer spending power.

Carer’s Allowance Earnings Limit Raised

Another significant change within the Budget 2024 is the Carer’s Allowance earnings limit increase by £45 per week. This government budget reform will positively impact over 60,000 carers and acknowledge their valuable societal role. Furthermore, with approximately 70% of Carer’s Allowance recipients being women, this adjustment could bring us closer to a more gender-equitable society.

UK Taxes Increase & Potential Wage Pressure

Unfortunately, not all changes in the budget speech will be beneficial for employees. A planned increase in employer National Insurance Contributions (NICs) from 13.8% to 15% has raised several concerns. 

Since employers will have to contribute more, wages may stagnate to offset the increased costs. However, employers could go one step further and issue job cuts to address higher expenses. Consequently, if the UK tax rises continue, employers may be forced to make tough decisions, undoing the progress made in the above initiatives.

Flexible Work as a New Standard

Elsewhere in the financial budget, the government reinforced its commitment to flexible working. This comes after they recently unveiled the Employment Rights Bill, which will make flexible working the ‘default option’. Modernising UK workplaces, this change follows employee demands for a better work-life balance. Parents and caregivers will especially benefit from this initiative, allowing them to manage their personal and professional responsibilities more effectively.

New Focus on Skills Development

The Budget 2024 also establishes plans for a Growth and Skills Levy to replace the Apprenticeship Levy. With it, there will be a £40 million investment aimed at enhancing skills development. 

This initiative promises to create more opportunities for upskilling and career progression as job roles evolve due to changing market demands, often influenced by modern technological advancements. By focusing on skills development, the government hopes to ensure employees have the necessary training for career growth.

Potential Gaps in the Autumn Budget 2024

Despite these positive changes, gaps in the Budget 2024 require further attention. One notable area of concern is the lack of dedicated provisions for worker well-being and mental health support.

While the budget speech focuses on economic growth and employment, it fails to address workplace stress and burnout prevention. Although 96% of executives feel they offer enough support for well-being, only 69% of employees agree. If this area is given more attention, it could improve employee engagement, reduce absenteeism and foster long-term productivity.

Moreover, the government budget lacks a robust strategy to address the impacts of automation and AI on the workforce. Automation is already displacing various roles in sectors like customer service, finance, and certain administrative functions. While one analysis concluded that around 40% of roles in such areas could be automated by 2035, other reports have revealed that automation will disproportionately impact lower-skilled jobs.

With this in mind, there is a risk of unemployment without a strategic response. As such, support programs must be considered to ensure those affected can transition into emerging roles and industries.

Elevating Employee Pay and Benefits

The government budget has introduced several measures that will benefit employees. Key points from the Budget 2024 include the rise in the NLW and expanded support for caregivers. While more needs to be done to address workplace mental well-being and the impacts of automation, the government’s focus on flexible working and skills development reflects a commitment to modernising the UK workforce. And although there are concerns about the potential negative implications of the UK tax rises, the government can monitor this carefully to ensure their positive measures aren’t undone.

Overall, while there may be gaps the government must address, the financial budget represents a pivotal moment in UK economic policy. There are several wins for workers concerning pay and benefits, and this move marks a significant step toward a more fair and equitable workplace. 

We hope you enjoyed this latest employment insight concerning the Budget 2024. Please reach out if you have any questions. Redmans Solicitors are specialists in the employment law sector, and after a quick consultation, we can provide expert advice.

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