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SPRING BUDGET ANALYSIS 2024: Investment in UK Plc, Manufacturing, Defence, Childcare & Child Benefit

Civitas, 7 March 2024


Politicians are all thinking about the next six months when the focus should be on the long-term economic prosperity of Britons. While pension fund and savings reforms towards improved investment in British business are desirable steps, the British Business Bank ultimately needs to be given a new mandate to lead a new national wealth fund.

Our focus should be on the launch of a ‘British People’s Wealth Fund’ – which would be independent from government and owned by citizens who would receive dividends. It could invest in British businesses by providing loans and taking an equity stake in them.

It could be originally funded by selling shares to British citizens, to encourage investment, levelling up and higher living standards. It would give everyone in the country a stake in their economy, as well as funding economic growth through investment in new productive assets.

The model of a sovereign national wealth fund works well in other countries. The question is, why aren’t we doing things for ourselves?

A British People’s Wealth Fund would increase investment and give every citizen a chance of holding a stake in our future prosperity. There is a pressing need to make post-Brexit Britain a fairer society and which refuses to leave a £2.6 trillion debt pile for future generations to pay.


The Secretary of State has still insisted that the government remains committed to spending 2.5% of GDP on defence as soon as fiscally possible, noting that the Ministry of Defence has in fact secured a real-terms uplift of £1.4 billion, and the largest defence budget in history of £55.6 billion.

In addition, the government have announced a further £11 billion for defence between 2023-24 and 2027-28. However, this has already largely been ringfenced to improve the readiness of the UK’s nuclear forces.

As public sector spending is set to reduce across the board, troublingly there is now also a reduction in the Resource Departmental Expenditure Limit for defence, from £35 billion in this financial year to £32.8 billion in the 2024-2025 financial year, in addition to a reduction in the Capital Departmental Expenditure Limit, from £19.2 billion in this financial year to £18.9 billion in the 2024-2025 financial year.

There has also been an announcement of a £26 million pledge to the Office for Veteran’s Affairs to help underwrite the bid for Birmingham to host the Invictus Games taking place in 2027. As a veteran who has injured friends and former colleagues involved in these events I welcome this funding to help improve the mental and physical rehabilitation of our wounded veterans.

However, it would be equally welcome to see the government act bolder with regards to improving service accommodation – one of the single largest reasons for service members leaving our Armed Forces, causing a huge strain on the subsequently failing recruitment pipelines trying to plug the gaps in retention through mismanaged and underfunded recruitment. This needs urgently addressing and requires more funding.


One part of the headline news for British manufacturing was the Chancellor’s earmarking of £360 million to boost manufacturing and R&D, while announcing a 12-month extension to the windfall tax on energy firm’s profits.

It is also hoped that certain new tax reliefs and investments will help establish the UK as a world leader in high-growth industries, including in advanced manufacturing and life sciences, with £270 million earmarked for research and development for advanced technologies in clean automotive and aerospace, in order to grow zero emission vehicle and clean aviation technology.

Elsewhere, 28,000 SMEs will now be taken out of VAT registration altogether – encouraging them to invest and grow, as the threshold for VAT registration will go up from £85,000 to £90,000 – although, still not as far as the £100,000 many smaller businesses were hoping for.

Fundamentally, the Chancellor recalled how the Autumn Statement announced permanent full expensing, effectively leading to a much welcomed £10 billion tax cut for businesses. Today he announced that the Treasury would take further steps to boost investment, by publishing draft legislation for full expensing to apply to leased assets too when fiscally prudent – which if enacted would support smaller manufactures further and boost investment and drive growth.

Finally, there was a welcome pledge to boost Britain’s AI sector, by increasing funding for the national hub for data science & AI to £100 million over 5 years.

All in all, some welcome pledges and continued stability and hopefully investment for businesses and manufacturing, although how much can be enacted before the next election in order for the UK economy to see the intended growth may be dampened by the fact that most of these pledges are medium-long term in nature – though prove welcome news nonetheless.


The Government’s Spring Budget 2024 has made good progress in ensuring that household budgets go further. However, for many across the country the Chancellor’s measures will not be felt against the inflationary pressures of the last few years.

Regarding childcare, at the Chancellor confirmed that:

‘…the hourly rate childcare providers are paid to deliver the free hours offers for children aged nine months to four years will increase in line with the metric used at Spring Budget 2023 for the next two years. This reflects that workforce costs are the most significant costs for childcare providers and represents an estimated additional £500 million of investment over two years.’[1]

In addition:

‘Local Authorities (LAs) will have an eight week window to communicate final hourly funding rates to providers and will soon have to pass through at least 97% of funding to providers, this gives providers more certainty on future funding so they invest in expanding their business.’[2]

The Government are correct to state that this ‘will give childcare providers the confidence to expand and support delivery of the government’s landmark expansion of free childcare.’ As such, these measures should be welcomed in part. Rate increases to address staffing costs for providers along with planned reforms to local funding rules will help tackle the very real high costs of providing childcare to some extent. It is helpful that the government have acknowledged the sector is struggling.

However, as expected, the Government has demonstrated it does not (a) have enough fiscal headroom and (b) political capital, to attempt fundamental reform which would directly address the very real cost of starting and caring for a family.

Major questions still remain regarding the value for money of providing childcare support through the current offer. Though a large sum, £500 million in extra investment over the next two years seems unsubstantial compared to the £5 billion which will be spent on the Spring Budget 2023’s new childcare entitlements alone from 2024 to 2026.[3]

For as long as the Government are committed to the current childcare arrangements and funding mechanisms, both parents and providers will remain under significant pressure.


Parents with children under the age of 16 in the UK are eligible for child benefit equal to £1,248 a year for your first child and then £826.80 a year each for subsequent children. This is, however, gradually removed for every household with someone earning over £50,000 a year – paying back £124.80 for every additional £1,000 – such that those earning over £60,000 receive no child benefit.[4]

In Wednesday’s Budget, these thresholds moved:

‘The government will increase the [Higher Income Child Benefit Charge] HICBC threshold to £60,000 from April 2024. The rate at which HICBC is charged will also be halved so that Child Benefit is not fully withdrawn until individuals earn £80,000 or higher.’[5]

Parents will now start losing the benefit at £60,000 and will lose it half as quickly – at just £62.40 for each additional £1,000.

Also, the Chancellor announced a long-term structural change in how child benefit is administered:

‘The government plans to administer the HICBC on a household rather than an individual basis by April 2026, and will consult in due course.’[6]

Why do this? The current situation

In the UK, although the welfare system is organised according to household income, the tax system is organised according to individual income.

We can take the example of three households all with a household income of £80,000 per year in 2023/24.

Dual income parents with two children: one on £60,000 per year, one on £20,000 per year

This couple pay a combined £17,620.20 of income tax and NICs and will receive no child benefit.[7]

Dual income parents with two children: both on £40,000 per year

This couple pay a combined £16,454.40 – over £1,000 less – of income tax and NICs whilst also receiving £2,074.80 of child benefit.[8] Overall, a tax-benefit deal that is £3,240 better per year with the same household income, both parents working and the same number of children.

This was originally defended due to the administrative awkwardness of ‘some form of household means test requiring a complicated form.’[9]

Sole income parents with two children: one on £80,000 per year

For the £80,000 sole earner, income tax and NICs come to £23,793[10] alongside no child benefit entitlement. This £80,000 household annual income for a two child family is £9,410 worse off per year just on income tax, NICs and childbenefit than the £40,000:£40,000 couple.

There is also a loss of 1,140 free hours per year of free childcare entitlement for those with children under four – which is worth in excess of £8,000 assuming an hourly rate of £7.02 or more[11] – leaving them at least £17,410 worse off also including free childcare benefits in-kind.

How will the Budget announcement improve the situation?

An individual-based tax system is most likely not going anywhere, but the inequalities that it generates need to be considered when making other tax policies. These should generally avoid exacerbating the difference in tax burden according to the number of earners in a household.

Wednesday’s announcement is a big step in the right direction, it should mean that the three couples outlined above receive the same child benefit entitlement, whatever that would be. The discrepancy between the dual earner couple on £60,000 and £20,000 and the couple both on £40,000 would shrink by two thirds.

It would be welcome to see a similar move from the government with respect to free childcare entitlement, which provides a large benefit in-kind exclusively to dual earner households – households which already have more favourable taxation than sole earner households at equal levels of household income. It will also be interesting to see how HMRC will cope with the new and significant task of assessing household income, should this policy come to fruition.

[1] Spring Budget 2024, p.24

[2] Spring Budget 2024, p.45

[3] Spring Budget 2024, p.24; Spring Budget 2023, p.7

[4] HM Government (2024), Child Benefit: Detailed information, Available at: Child Benefit: detailed information – GOV.UK ( (Accessed 6th March 2024)

[5] HM Government (2024), Spring Budget 2024, Available at: Spring Budget 2024 – GOV.UK ( (Accessed 6th March 2024)

[6] HM Government (2024), Spring Budget 2024, Available at: Spring Budget 2024 – GOV.UK ( (Accessed 6th March 2024)

[7] HM Government (2024), Estimate your income tax for the current year, 2023/24, Available at: Estimate your Income Tax for the current year – GOV.UK ( (Accessed 6th March 2024)

[8] HM Government (2024), Estimate your income tax for the current year, 2023/24, Available at: Estimate your Income Tax for the current year – GOV.UK ( (Accessed 6th March 2024)

[9] House of Commons Library (2023), The High Income Benefit Charge, Available at: CBP-8631.pdf ( (Accessed 6th March 2024)

[10] HM Government (2024), Estimate your income tax for the current year, 2023/24, Available at: Estimate your Income Tax for the current year – GOV.UK ( (Accessed 6th March 2024)

[11] HM Government (2024), Apply for free childcare if you’re working, Available at: Apply for free childcare if you’re working – GOV.UK ( (Accessed 6th March 2024)


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