What Cambridge made of the Autumn Budget 2024
Rachel Reeves announced £40 billion a year in extra taxes as she increased Government borrowing and spending to “rebuild Britain”.
The Chancellor’s plans will see the tax burden reach an historic high, while borrowing increases by an average £32.3 billion a year as spending increases by around £70 billion annually over the next five years.
She confirmed plans to hike employers’ national insurance contributions and increase capital gains tax, while also making changes to inheritance tax and stamp duty.
And changing the way government debt is measured allowed her greater flexibility to borrow, resulting in what the Office for Budget Responsibility (OBR) called “one of the largest fiscal loosenings of any fiscal event in recent decades”.
It was also confirmed that a consultation on the “next stages” of East West Rail will be launched in November and there is £10m for the Cambridge Growth Company.
Labour’s Daniel Zeichner, MP for Cambridge, says the budget ‘delivers the change our country voted for’
He said: “Rachel Reeves showed clearly how this Budget is focused on “investment, investment, investment” to get the economy moving with a boost to public investment of over £100 billion in the next five years.
“Importantly, that includes the green light locally for £10 million of new investment in Cambridge and our local infrastructure. This funding will enable the Cambridge Growth Company to develop an ambitious plan for the housing, transport, water, and wider infrastructure Cambridge needs to realise its full potential.
"This funding, together with East West Rail, will support life sciences companies and unlock private investment, to connect the laboratories, industrial parks, and housing needed, cementing Cambridge’s status as a globally renowned centre of excellence and its important role within the Labour government’s new Industrial Strategy.
"This Budget delivers the change our country voted for. It is the start of a new chapter towards making Britain better off: more pounds in people’s pockets. An NHS that is there for you when you need it. And businesses creating wealth and opportunity for all. It is a Budget that invests in Britain’s future so, alongside business, we can build the homes, the infrastructure, the roads and the railways our country needs.”
‘A significant milestone for Cambridge’ says Cambridge Ahead
Dan Thorp, CEO of Cambridge Ahead, welcomed today’s announcement.
He said: “The announcements made today in this Government’s first Budget are a significant milestone for Cambridge. Government’s investment into realising Cambridge’s full potential, and action taken to deliver East West Rail in full, underscore growing national recognition that a successful Cambridge economy is good for the whole of the UK.
“Cambridge Ahead will continue working closely with Government and Local Authorities to make sure that transformational infrastructure is delivered, and the benefits of growth are spread to more communities, as quickly as possible.”
MP says extra NHS funding must deliver improved services
South Cambridgeshire MP Pippa Heylings said the extra funding for the NHS announced in the Budget must deliver improved health services for local people, and provide certainty for the future of the Cambridge Cancer Hospital.
She said she will “hold the government’s feet to the fire” on delivering on her promises on the NHS, adding that fixing social care will be crucial to take pressure off local health services and give older people the care they need.
Ms Reeves announced that tax hikes and increased borrowing will allow for the government to provide a £22.6billion increase in the day-to-day health budget as well as a £3.1 billion increase in the capital budget, which she called the “largest real-terms growth in day-to-day NHS spending outside of Covid since 2010”.
The Lib Dem MP said: “I have consistently campaigned for more investment in our local health services so I’m glad the Chancellor has finally listened, but I will hold the government's feet to the fire on this as I know it is a top priority for residents in South Cambridgeshire.
“Sadly the government has repeated the Conservatives' mistake of neglecting social care. We urgently need cross-party talks to tackle this crisis so that older people stranded in hospital beds can finally get the care and dignity they deserve.
“I am also very concerned about the impact of the government’s increase to Employer’s National Insurance, which is a tax on jobs that will hit our small businesses and high streets. The government should instead be raising the money we need by reversing tax cuts for the big banks and asking the social media giants to pay a bit more.”
“While we welcome the extra NHS funding set out today, it’s disappointing not to see a new and clear plan for the Cambridge Cancer Hospital. The government cannot drag its heels on such a vital issue, local patients have been left waiting far too long.
“I also have serious concerns about plans that will see bus fares hiked to £3.00. This is an unfair bus tax on people in rural parts of South Cambridgeshire who depend on their local bus services to get around.
“I know many people in communities like ours rely on buses to travel to work and go about their everyday lives. This is simply the wrong choice. If the government was serious about investing in the economy and tackling the cost of living crisis they would think again.
“People are fed up with years of broken promises from the Conservatives. What we need now is a government that stands up for our NHS, delivers our new and much needed Cancer Hospital, and looks out for people who depend on our public transport during a time of rising cost of living. The Chancellor can do better than this.”
The budget represents a “high-stakes commitment to ‘build forward’ with a clear focus on growth-enhancing investments” says Cambridge Judge economist
Michael Kitson, associate professor in International Macroeconomics at Cambridge Judge Business School, University of Cambridge, said: “Chancellor Rachel Reeves has unveiled a UK budget aimed squarely at addressing the nation’s long-standing challenge of sluggish economic growth. In a decisive move, she has rewritten the fiscal rulebook to unlock billions in new investments, prioritising growth while still pledging fiscal responsibility. As the first female Chancellor in the office’s 800-year history, Reeves is making history not just through her position, but through her approach to economic renewal.
“Central to this strategy is a significant shift in how government debt is measured. Rather than sticking to ‘public sector net debt’, Reeves has adopted ‘public sector net financial liabilities’ as the benchmark. By including a broader range of assets in this measure, she has effectively reduced the apparent debt-to-GDP ratio, allowing more flexibility for borrowing to fund essential infrastructure, health, education, and green energy projects—all without breaching fiscal sustainability goals. This is borrowing to invest, not to consume, a distinction Reeves has made clear, underscoring her commitment to creating long-term assets for the economy rather than short-term spending splurges.
“The investment focus - Reeves’s own ‘invest, invest, invest’ - has echoes of Tony Blair’s famous ‘education, education, education” mantra but rings closer, in economic terms, to Gordon Brown's references to “post-neoclassical endogenous growth theory’. This ugly term (common in modern economics) simply suggests that government policies and institutions can play a key role in fostering growth through stimulating innovation, and human and capital investment. Unlike past initiatives that prioritised consumption, Reeves’s budget envisions public investment as the engine of sustainable growth, setting the stage for long-term productivity gains. And it is productivity growth that will ultimately lead to higher wages, corporate profits and tax revenues.
“However, Reeves has paired these ambitions with immediate revenue-raising measures with taxes increasing by £40 billion annually. The budget introduces an increase in employers' national insurance contributions and raises capital gains tax. These changes come with potential implications for business operating costs and investment decisions, which Reeves must balance against anticipated gains in productivity.
“But there are risks. By concentrating on public investment, Reeves’s budget inevitably limits the room to address real-time pressures on household incomes. Striking a balance, she faces the immediate challenge of rising taxes impacting real incomes and consumption as she prioritises the longer-term vision. The Chancellor must also keep an eye on the response from financial markets, which will be watching closely to see how the ambitious borrowing levels align with her pledges of fiscal responsibility.
“In a time when the UK’s growth has remained persistently sluggish, Reeves’s budget represents a high-stakes commitment to “build forward” with a clear focus on growth-enhancing investments. While the path may not be without bumps, today’s budget marks a new chapter in addressing the UK’s economic malaise, with hopes pinned on transformative public investment as the key to sustainable economic revival.”
‘Government has recognised immense economic potential of Arc’ says Bidwells
Max Bryan, head of science and technology at Bidwells, said: "Support for the delivery of the East West Rail is excellent news for the British economy. The network will combine the region’s strengths so we can reach the critical mass needed for Britain to become a truly global science and technology supercluster.
“The government has recognised the immense economic potential of the Oxford Cambridge Arc to drive growth for the country at large, and this is welcome.”
This Land welcome investment in Cambridge
It was announced that there will be £10m for the Cambridge Growth Company to develop an “ambitious” plan for the housing, transport, water, and wider infrastructure the city needs to “realise its full potential”.
Reacting, David Meek, CEO, This Land, said: “This budget was critical for restoring both the confidence of the general public as well as the real estate industry in the government. The new government has faced a lot of negativity since the initial few weeks of optimism following the election and continuing with the same ‘doom and gloom’ rhetoric will only harm public and market sentiment further. After everything people have been through—COVID, the cost-of-living crisis—blaming the past isn’t going to cut it anymore. This isn’t about sugar-coating reality, but rather about providing a vision that people can believe in.
“It is positive to see £10 million allocated for the Cambridgeshire Growth Company to develop an ambitious plan for housing, transport, water and wider infrastructure in this Budget – measures that will help Cambridge realise its full potential by addressing the challenges posed by the ongoing housing shortage, infrastructure limitations and water scarcity.”