How can SMEs balance their own budgets following the Autumn Statement?

Chancellor Rachel Reeves has now delivered the first Labour Budget for 14 years. But which aspects will have a bigger impact on SMEs and UK PLC. Likewise, where can business growth come from now?

Stuart Winstone - CEO SilverDoor

31 October 2024

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At SilverDoor, we work with SMEs worldwide every single day and understand the pressure they have been under to reduce and manage cost over the last few years. Here I consider some of the key takeaways for business owners from the Autumn Statement and what items will need to have prime position on the balance sheet.Business costsThe two major announcements around wages and national insurance many predict will impede the capacity for SMEs to recruit and retain staff. The increase to National Living Wages, effective from April next year, will increase to £12.21 p/h for over-21s £10 p/h for 18-20 year olds and £10 p/h for apprentices putting even more cost pressure on SME business owners. Likewise, national insurance contributions made by employers will rise from 13.8% to 15% and the threshold at which businesses start paying national insurance on a workers' earnings will be lowered from £9,100 to £5,000. However, the employment allowance which allows companies to reduce their national insurance liability will increase from £5,000 to £10,000. This means 865,000 employers won’t pay any national insurance next year, which will no doubt be welcomed by the many small businesses who are facing increased costs from elsewhere. For other SMEs, increased national insurance contributions and National Living Wages will add significant cost and they may be left with no choice but to offset these against any planned pay rises.Many analysts and business owners expect both these changes, coupled with broader reforms to worker’s rights, will have a significant impact on smaller businesses making it more difficult and costly to create jobs and avoid redundancies as staff costs rise. It is reasonable to suggest we may see less confidence from SMEs to recruit and invest in people and instead turn their attention to greater automation and adoption of AI as a solution to support operations such as customer service chatbots and more data-focused tasks.One cost line that has held fast is corporation tax which remains frozen at 25% until the next election which also might provide some level of certainty for business owners when making future projections for growth and investment.

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A roadmap for growth?

The Chancellor also recently announced a new investment debt rule aimed at “changing the measure of debt” to enable the Government to fund investment in infrastructure and public sector services, including roads, railways and hospitals. This is reassuring news for those many businesses that rely on transport networks for both staff travel and the delivery of goods and supplies. Coupled with the addition of a freeze on fuel duty and many businesses can hope for extended transport networks and an acceleration in both staff mobility and goods and supplies delivery to support their operations and their growth.Unquestionably much to consider. Forewarned is forearmed and whilst there was some degree of forewarning ahead of the Budget, business owners now at least have a clearer idea of what costs and opportunities are likely to impact their balance sheets in the months ahead and where to sharpen their focus.

SilverDoor is the world’s leading corporate serviced accommodation booking agent with more than one million units worldwide. SilverDoor doesn’t own or manage any of the properties it markets, so works with a network of more than 2,600 global property operators to source accommodation for business travel and mobility professionals.Global teams of experts source accommodation exclusively for corporate clients and utilise their wealth of experience to find the most suitable options and secure the best rates; industry-leading technology perfectly supports its multi-award-winning service model. Our technology and service enables us to work with businesses to save them time, reduce their accommodation spend by negotiating the best rates on the market and improve the experience of their employees when travelling for business either at home or abroad.

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