HOW LABOUR ARE FRAMING THE AUTUMN BUDGET THROUGH STRATEGIC COMMS

Written by Chantelle McKeever, B2B Senior Account Executive

“Painful” was the word used by both Prime Minister Keir Starmer and Chancellor Rachel Reeves to describe the Labour government’s first budget taking place this week. But with manifesto promises not to increase Income Tax or National Insurance for working people still fresh, predictions suggest that businesses will be taking the brunt of the budget. But, are they right? Let’s delve a bit deeper into the key messages and comms we’ve been hearing from the Labour party so far.

National Insurance

While working people may be able to breathe a cautious sigh of relief that their payslips won’t include an increase in contributions towards Income Tax or National Insurance next year, no such exemption was extended to employer contributions. Labour pledged not to increase National Insurance in its manifesto, however the Chancellor has recently suggested that there’s a distinction between employee and employer contributions – strategically leaving the door open for tax rises without breaking their pledge.

In a previously unpredicted turn of events, businesses could see a 1% increase to 14.8% in their NICs, earning the Treasury between £8bn and £9bn to help “balance the books.” But could this affect people's pay slips?  Rachel Reeves suggested as much in 2022 when she was Shadow Chancellor, opposing then Prime Minister Rishi Sunak’s plans to increase employers NICs as it could lead to a reduction in pay rises for workers and increased costs for consumers.

The party has been tight lipped about tax increases but has potentially been attempting to soften the blow that’s predicted to come, with public statements about not pretending that there aren’t difficult decisions to be made around taxation. Whatever we see on Wednesday, the Prime Minister is promising a “different path” that’s in the interests of working people.

National Minimum Wage

When it comes to the National Minimum Wage (NMW) there is expected to be a further increase, ranging between £11.82 and £12.39 per hour.

While this doesn’t come as a surprise during a budget, the government’s plans to make the NMW the same rate for all adults regardless of age could be a cause of concern, especially for small and medium sized businesses that are already struggling in the current economic climate and will have to facilitate a considerable pay increase for all staff.

This could result in issues similar to those raised by the planned NIC increase, increasing costs for consumers and stagnant wages for employees.

However, Labour has famously been the party for people and their budget comms have been reflecting this, they’ve doubled down on not making life more difficult for “working people” and stated that the "broadest shoulders should bear the heavier burden", seemingly meaning higher earners or large businesses, something which has spooked organisations such as the Federation of Small Businesses and certain Chief Executives.

Apprenticeship Levy reform

The Apprenticeship Levy is one area where businesses may see some real benefit in the budget.

Often described as restrictive and not inclusive of small businesses, the levy could be reformed into a more flexible Growth and Skills Levy that would include a broader range of roles and give employers more control over the allocation of funds to ensure training is relevant to their business needs.

With a number of crucial sectors reliant on apprenticeships, including construction and engineering, a reformed levy could help close the skills gap these sectors are facing and meet new building targets announced by the government earlier this year.

Road to infrastructure

In a bid to tackle the hole in Britain’s public finances, the government is making a technical change to the self-imposed debt rules, freeing up to £50bn that can be invested in infrastructure.

But it doesn’t end there, in order to “bring growth and jobs to Britain” the new approach will involve independent checks on spending for major building work through a new National Infrastructure and Service Transformation Authority, allowing the government to borrow more efficiently and invest in a broader range of sectors, including tech, life sciences and clean energy.

The comms around the new debt rules has focused on how the government is aiming to reverse the “path of decline” they claimed the country was on during the previous government. Although businesses will inevitably experience changes that impact their finances, investment in business and infrastructure is coming in a broader sense, not only to stabilise the economy but to grow it.

Means to an end

Historically, Labour hasn’t been considered the party for business and with a £22bn “black hole” allegedly left behind by the previous Conservative government, businesses can expect significant initiatives announced this week as the government strives to meet pledges, some of which will come at a cost.

The government has been brutally honest in its recent comms, stating that the budget will show the public “how they intend to do business”. The language being used in public statements and social posts: “painful”, “difficult” and “facing up to reality” is strategic in demonstrating that Labour can make tough decisions for the good of the people. But with a long career as an economist under her belt, there’s hope that Reeves can deliver much needed economic stability and business growth to the UK.