The First Labour Budget In 14 Years Gets Lukewarm Response in Northern Ireland
UK Chancellor of the Exchequer Rachel Reeves MP has delivered her first budget.
She announced that the City Deals for the South West and Derry are to go ahead, and that there will be by 2024-25 and sum of over £19billion for the NI Executive.
Added to this there will be £45m allocated for counter-terrorism support and there will also be and extra £1.5b added from the Barnett Consequentials for The NI Executive.
Announcing the record investment in Northern Ireland and amidst a wide range of reactions, she said: “We’re fixing the foundations to deliver change.
“Today’s Budget will cut NHS waiting lists and enable us to invest in Britain’s future by rebuilding our hospitals, schools and broken roads:
- Over £25.6 billion of new funding which will deliver an extra two million NHS operations, scans and appointments a year, so waiting times are reduced for you and your family.
- £1.4 billion to rebuild 500 schools to deliver classrooms that children can learn and thrive in.
- £500 million to fix local roads and fill in an additional one million potholes a year.
“These are just some of the steps this Labour Government is taking to deliver change.
“We’re doing all of this by making fairer choices, ensuring that working people don’t face higher taxes in their payslips.
“We are choosing to protect working people with a pay rise for over 3 million earning the National Living Wage and have frozen fuel duty, while making fair choices to increase funding for public services.
“We’re helping those most in need with essentials, announcing £1 billion to help those facing financial hardship with the Household Support Fund, and ensuring pensioners are protected in their retirement by confirming an increase of up to £475 in the state pension next year.
“It hasn’t been easy. The £22 billion black hole that the Tories left in the public finances means that there are tough decisions on spending, welfare and tax.
“Unlike the Tories, this Labour Government isn’t dodging those decisions. We’re cracking down on fraud, tax avoidance and waste, and making sure that every penny of taxpayer money is spent wisely.
“We had a choice: five more years of Conservative decline with more austerity and working people picking up the bill, or change with Labour investing in Britain’s future.
“We chose change. This Labour Government is fixing the NHS, rebuilding Britain and protecting the payslips of working people.
“We’re fixing the foundations and setting the country on the path of change.”
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Funding announced won’t undo the damage caused by austerity says NI Finance Minister Archibald
Responding to the Chancellor’s Budget statement, Finance Minister Caoimhe Archibald said whilst a Budget that prioritises the economy and public services is welcome, it will not undo the damage caused by years of underfunding.
Commenting Minister Archibald said: “While there appears to be a genuine attempt to protect public services and invest in infrastructure, the harm done by austerity was never going to be reversed by one Budget.
“I welcome the commitments to capital spending and to the need for the broadest shoulders to carry the heaviest load.
“But there is no doubt the taxation increases on business will prove challenging for many small businesses.
“While the National Insurance employer contribution increase is lower than some had speculated, this will be cold comfort to those businesses impacted.”
The Executive will receive Barnett consequentials in 2024/25 of £609 million in Resource DEL and £30 million in Capital.
Dr Archibald added: “While this is welcome for our public services, it still won’t address all the pressures departments have identified this year. That means challenging decisions will still have to be made.
“Now that we have certainty about our finances for this year, I intend to move quickly to seek agreement with Ministerial colleagues for how the additional funding will be allocated in the next Monitoring Round. Once agreed, each department will have to take action to live within their allocated funding envelopes.”
The £609 million in Resource DEL from 2024/25 will be rolled forward into 2025/26. In addition, the Executive will receive in 2025/26 £601 million in Resource DEL and £266 million in Capital.
The Minister said: “The amount of money involved here reflects the state of public services as I have been pointing out since I took up post. The £431 million of the extra funding we are receiving over these two years for our public services is a result of the Interim Fiscal Framework I negotiated in May.
“This equates to a real terms uplift of 1.3% in Resource DEL compared to 2024/25 but given the continued pay and inflationary pressures and growing demands on our services, this still represents challenges for the Executive and highlights the need for transformation of our public services.”
Welcoming the reinstatement of funding for the two paused Growth Deals, the Minister said: “The announcement that funding for both the Causeway Coast and Glens and Mid South West Growth Deals has been lifted is welcome but this is something that should not have happened in the first place.
“I am glad common sense has prevailed and the right decision has been made to allow these game-changing Growth Deals to proceed in both regions.
“These Deals are a key driver to boost economic development and deliver regional balance.”
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The IoD Says This Is A Painful Budget For Business
Responding to the Budget Statement by the Chancellor of the Exchequer, Dr. Roger Barker, Director of Policy at the Institute of Directors, said: “At first blush, there is precious little in the government’s first Budget which offers anything other than short-term pain for the business community.
“The government has chosen to impose a significant new tax burden on business as a means of achieving an immediate boost to its public sector spending priorities.
“The risk is that this will exert a negative impact on business confidence, with worrying implications for the economy’s future growth trajectory.
“On the positive side, the government has made changes to its fiscal rules, in order to accommodate borrowing for the purposes of investment, and published a corporate tax roadmap, both of which we called for in our Budget submission.
“The protection of public spending on R&D and the announcement of various transport infrastructure projects are also welcome. The role of the National Wealth Fund in directing investment towards the industries of the future will hopefully make a positive contribution to the economy’s long-term growth prospects.
“However, after a difficult few years, business leaders will undoubtedly find it hard to look beyond the imminent tax increases set out by the Chancellor, particularly the increases in employers’ National Insurance and capital gains tax. Whilst these broad changes had been largely pre-briefed ahead of the statement, the magnitude of the National Insurance tax rise is greater than expected and further adds to the burden on business.
“Business leaders can only hope that this is a big bang now, to wipe the slate clean, and that there will be no further shocks of this magnitude in the lifetime of this Parliament, enabling business to plan with more confidence.”
On changes to employers’ national insurance, Dr. Barker added: “The changes to employers’ National Insurance represent a straightforward increase in business costs and take no account of whether a business is profitable or not.
“At a time when business confidence is low, hiring plans have already been hit by the government’s employment rights reforms, and the minimum wage is set to rise by more than inflation, this will hit employment prospects and earnings.
“The government is seeking to make a distinction between taxes on working people and taxes on business, with the former being exempt from tax increases following manifesto commitments. However, this is a false dichotomy.
“The effects of higher National Insurance costs will hit profits in the near-term before being passed on in lower wages and lower employment.
“Although the increase in the employment allowance will alleviate the hit for the smallest enterprises, there is no doubt that this increase in employers’ National Insurance is a major blow for most businesses.”
The IoD’s submission to HM Treasury, ahead of the Budget, can be viewed here.
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Retail NI Says Budget ‘Deeply Disappointing’
Responding to the Budget Statement by the Chancellor, Retail NI Chief Executive Glyn Roberts said: “This Budget is deeply disappointing, increasing the Cost of Doing Business Crisis for local high street businesses”
“Retail NI members are working people who are struggling to pay the highest business rates in the UK. The decision of the Chancellor to add to this burden by increasing Employers National Insurance will have a negative impact on local jobs, the viability of small businesses and restrict the growth of our economy”
This hike along with a 6.7% increase in the Living Wage is a huge cost for local independent retailers to absorb”
“The Chancellor announced a welcome 40% rates relief scheme for independent retailers and other high street businesses in England. It is absolutely vital that the Barnet consequence of this is used locally by the Finance Minister to provide the same 40% rates relief for our members in Northern Ireland”
“This will offset the National Insurance increase and allow high street businesses to reinvest more of their money to create new jobs and boost our economy”
“While we welcome decision to resume the Causeway Coast and Mid-West City Deals, both should never have been put on hold in the first place”
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Budget undermines farm families and food security says UFU
Responding to the autumn budget delivered by Chancellor Rachel Reeves, Ulster Farmers’ Union (UFU) president William Irvine expressed deep concern.
He warned that the budget jeopardised farm family livelihoods, food security, and the future of Northern Ireland’s biggest industry. “This budget is a blow to our agriculture sector.
“The Chancellor has failed to grasp the essential role our farming community plays in the UK’s food security, rural economy, and environmental stewardship,” said Mr Irvine.
“Last week, the presidents of the four UK farming unions wrote to the Chancellor, urging the government to maintain Inheritance Tax Reliefs for farm businesses.
“Disregarding this advice, the budget introduces new thresholds for Inheritance Tax and Agricultural Property Relief (APR). This imposes a substantial tax burden on everyday family farms with assets above £1 million.”
Mr Irvine added: “It is extremely disappointing the government chose to ignore the message from all of the UK’s farming unions. These changes to APR compromise the liquidity needed for succession planning on farms of all sizes, eroding the very foundation of our agricultural sector.”
The UFU is concerned these changes will create a barrier for new generations to enter farming and force many farmers to delay or even abandon reinvestment in their businesses.
“These adjustments may provide some marginal financial benefits to the Treasury, but they come at a huge cost to farming families and the rural economy. Opportunities for new entrants and growth will be diminished,” added Mr Irvine.
The UFU is also disappointed by the lack of clarity surrounding the agricultural budget, despite the sector’s ongoing needs and repeated calls for stable funding.
In a recent letter to the Prime Minister, the UFU emphasised the importance of securing an increased, multi-annual agriculture budget to support Northern Ireland’s agricultural sector. Currently, the UK’s agricultural funding pot remains stagnant, failing to account for inflation or meet the strategic goals of ensuring food security, promoting farm efficiency, and supporting environmental objectives.
“This budget threatens the resilience of our family farms, which are the cornerstone of agriculture and food processing here. Promises on APR have been broken, shattering trust and signalling an alarming disconnect between policymakers and the realities facing farmers.
“Family farms are vital assets, but that does not make those who work them wealthy.
“Without government action to address these changes, we risk undermining our nation’s food security and compromising the government’s vision for rural growth and prosperity,” said the UFU president.
The UFU has urged the Chancellor to revisit these measures and engage in meaningful dialogue with farming unions to protect the future of agriculture and rural communities.
UFU president William Irvine further added further that: “The UFU is bitterly disappointed the government has ignored all calls from the farming lobby around agricultural property relief.
“This has been the key for years to allowing farming families to pass on farms without the business being burdened with debt to meet the tax liability. The low threshold means this will affect every family farm business.
“The government’s stance has shattered trust and signals an alarming disconnect between policymakers and the realities facing family farms. Family farms are vital assets, but that does not make those who work them wealthy.
“This is a bad decision for the economy and for family farms and without action, these changes will compromise our nation’s food security.”
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UUP Says Budget Will Have Big Impact On NI Farmers
Ulster Unionist Peer Lord Elliott has said that today’s Labour Budget will have a devastating impact on Northern Ireland farmers.
Lord Elliott said: “The significant changes to Agricultural Property Relief in the budget is likely to force many family farms out of business that have been within the family structure for generations.
“This decision coupled with the resolution that the NI farm support budget will no longer be ring-fenced, but instead be part of the Block Grant that DAERA will have to bid for is likely to cause farmers to go out of business and lead to significant increases in the cost of food in shops and supermarkets.
“The result will not only be bad for the farming community but also for food consumers and the public in general.
“The current government are certainly demonstrating an offensive against the agricultural sector that has the potential to have devastating consequences.”
