Budget 2024: Reactions from the North East business community

Chancellor Rachel Reeves has announced the first Budget by a Labour Government in 14 years, pledging more public investment but also committing to tax rises worth £40 billion.

Business leaders from across the North East have been delivering their verdict, with the response being mixed.

Some have welcomed measures such as the pledge of £25 million for the Crown Works Studios in Sunderland and suggested that the Government had listened to calls for a “stronger, fairer region”. There was also an acceptance from many that tough measures were necessary to address, as Ms Reeves put it, the “black hole” in public finances that the Government had inherited.

However, others have warned that the hike in National Insurance contributions will “place significant additional strain on operational costs” and that "a tsunami of employment costs" will lead to many companies cutting back on recruitment and will “do more to hamper growth than incentivise it”.

Meanwhile, mayor Kim McGuiness and Cllr Karen Kilgour, leader of Newcastle City Council, have welcomed the Budget, describing it as a “good start” and helping “unravel Tory decay” by unlocking opportunities and transferring more “powers and resources from Westminster to the North”.

Here, we provide a compilation of how regional business and public leaders have reacted.

Rachel Anderson, assistant director of policy at the North East Chamber of Commerce

“The employers’ National Insurance rise will be difficult for businesses, especially against the backdrop of increases in national minimum wage. We do, however, welcome the Chancellor’s increase in employment allowance, which will help many of our smaller businesses.

“There is positive news for investment in the electric vehicle and the automotive sector in our region, and for Crown Works Studios in Sunderland, which is expected to create over 8000 jobs.

"We were pleased to see the Chancellor’s commitment to multiyear local authority funding and the announcement that the North East Combined Authority will be eligible for integrated funding settlements from 2026/27.

“The commitment of £300 million for the further education sector is positive but does not go far enough. These are both measures we called for in our pre-Budget submission and our 'Stronger, Fairer North East' document.

“It’s good that government is maintaining business rates relief for retail, hospitality and leisure to support our high streets, and we welcome the Chancellor's freeze on fuel duty.

“We recognise the government has tough decisions to take for the long term and having pressed reset with this Budget, the government needs to use future fiscal events and policy initiatives to support business in the delivery of growth.”

Jonathan Carter, director of 186 Property Solutions

“Rachel Reeves’s Budget announcements bring a mixed outlook for our industry. On the positive side, I welcome the increased capital spending for schools, with £1.4 billion allocated for rebuilding and £2.1 billion for maintenance, as well as the £3.1 billion capital boost for the NHS, including £1 billion dedicated to repairs and upgrades.

“For a company like ours, dedicated to refurbishing, retrofitting, and maintaining public and commercial buildings, these investments are essential to strengthening core sectors and provide opportunities to deliver sustainable, high-quality solutions.

“However, the increase in employers’ National Insurance contributions from 13.8 per cent to 15 per cent, along with the reduction in the secondary threshold from £9,100 to £5,000, places significant additional strain on operational costs.

“For businesses like ours, where skilled labour is critical, these increased employment expenses risk slowing growth and complicate an already challenging landscape for the construction sector, where rising employment costs are compounded by material inflation and supply chain pressures.”

David Baggaley, tax partner at Clive Owen LLP 

“This year’s Budget was always going to be a keen topic of interest following months of uncertainty.

“The decision to subject inherited pension pots to inheritance tax from 2027 in addition to the restriction of Business Relief and Agricultural Property Relief could be a cause for concern for many individuals. This will be particularly relevant for those in the rural and agriculture sectors and family businesses, which could have significant implications for future financial and succession plans.

“Despite a rise in Capital Gains Tax, it was pleasing that the hike wasn’t as extreme as had been speculated. This increase, however, will be a blow to investors who will see a reduced return on their investments.

“Next year’s increases in the National Minimum Wage and National Living Wage will be welcome news to workers but rises to employer National Insurance contributions will substantially raise payroll costs, necessitating careful financial planning for businesses.

“This increase in NIC could result in firms withholding investment in recruitment as a result, with the reduction of the secondary threshold to £5,000 potentially impacting employment costs further.

“That being said, the doubling of the Employee Allowance offers some relief, particularly for SMEs and those hiring their first employee. While it provides some certainty to businesses that the corporate tax rate remains at 25 per cent, we will have to wait to see where the ‘Corporation Tax Roadmap’ takes us before we start planning too far into the future.”

Stephen Patterson, chief executive of NEI

“The Chancellor did a brilliant job presenting this budget and news of investment is to be welcomed, especially the £25 million for the Crown Works Studios in Sunderland. This will have major significance for the whole region, and we look forward to the additional economic uplift this will provide.

“But for businesses operating on the high street in the leisure, retail and hospitality sectors, this was not a good budget, and the increased costs will place a significant additional burden on business.

“News of the increased employer National Insurance contributions came as no surprise but will have an immediate and major impact, especially combined with the lowering of the threshold when businesses start paying and the increase in the minimum wage. These measures all add to the financial pressures many businesses are already facing and significantly increase staffing costs.

“For many, there will be relief that the cliff edge removal of Business Rates Relief has been avoided, but they will still need to find additional money to make up the shortfall from the current 75 per cent relief to the new 40 per cent rate announced in today’s budget.

“For small to medium-sized businesses operating on the high street this budget has driven up the cost of employing staff and doing business and has, during an already challenging trading environment, placed significant additional burdens on business.

“With economic growth forecasts downgraded, there is little light at the end of the tunnel and more now needs to be done to stimulate economic growth.”

Kate Nicholls, chief executive of UK Hospitality

“This Budget is the latest blow for hospitality businesses. Rising taxes, increasing costs and fragile consumer confidence risk bringing growth to a grinding halt.

“In the short-term, the tsunami of employment costs coming in April will ultimately do more to hamper growth than incentivise it. Increases to employer NICs (National Insurance Contributions) and wages will make it harder for businesses to support employment and invest in their businesses. Avoiding the business rates cliff-edge next April was critical and it was important that some relief has been extended. 

“However, the reduced level of 40 per cent is another cost that businesses have to deal with. For those small and medium-sized operators, their rates bills will still go up in April. All of this means that 2025 will be painful for hospitality, with an increased annual tax bill of £3 billion for the sector.

“There are reasons for longer-term positivity. I am pleased that the chancellor is implementing UK Hospitality’s recommendation for a permanently lower level of business rates for hospitality. Levelling the playing field in this way recognises the importance of the high street and the role it plays in our communities and economy.”

Charlotte Windebank, managing director and co-founder of First 

“As someone dedicated to empowering entrepreneurship in the North East, these budget announcements present both opportunities and challenges for our region’s economic future, and I will be watching with interest as more details emerge.

“The £240 million pledge for work and health support services is particularly relevant for our region, where we see 44 per cent of our working-age population currently economically inactive.

“At First, we know that self-employment and business ownership can offer the flexibility and autonomy that many people need, and I hope that this funding will include support for those seeking self-employment as a way back into the workforce.

“The increase in employers’ national insurance contributions has the potential to slow hiring, especially for early stage or smaller businesses where margins are particularly tight.

“These are precisely the businesses we should be encouraging to grow and create their first job opportunities, not burdening with additional employment costs.”

Cllr Karen Kilgour, leader of Newcastle City Council

“After 14 years of underinvestment in public services and a £22 billion black hole in the public finances this was never going to be an easy budget.

“The Chancellor has made it clear she wants to tackle the underlying problems in our economy which means shoring up the foundations and building for a brighter future.

“Today’s Budget is a good start. I welcome the significant extra investment for the NHS, for schools, children with special educational needs, social care, roads, and social and affordable housing which Newcastle and the rest of the country is crying out for.

"I also applaud the rise in the National Living Wage for the lowest paid because everyone deserves fair pay for their work - far too many workers are still struggling just to get by.

“I won’t pretend that this budget will please everyone. There will be winners and some losers – mainly those with the broadest shoulders who can afford to pay a bit more, but I think most people will see that as only fair if we are to create wealth and opportunity for all and rebuild Britain.”

North East mayor Kim McGuinness 

"Today’s Budget confirmed the biggest transfer of powers and resources from Westminster to the North East in a generation.

“The Chancellor has listened to my calls to back our region with a new integrated settlement, which means we as local leaders can invest in the priorities that matter to people in the North East.

“The Government is backing our plans to create manufacturing jobs in the North East, with investment in our car industry and potential in electric vehicles. 

“I’m pleased the Treasury has listened to my calls to save the £25m investment in the Crown Works Studios, so we can unlock 8000 jobs and build a creative powerhouse on the banks of the River Wear. That means jobs for people in a range of industries, from hairdressers, electricians, make up artists, to set designers and script writers. 

“Taken with new powers to help people back into work, the Budget means new jobs, new training, new homes and new opportunities for people in the North East. 

“The first Labour Budget in 14 years will unravel Tory decay, give us the tools to tackle child poverty and put us on course to make the North East the home of real opportunity."

Looking to promote your product/service to SME businesses in your region? Find out how Bdaily can help →