Chancellor Rachel Reeves must deliver a Budget that promotes growth, whilst staying focused on long-term economic and societal challenges. She must also aim to achieve this without penalising vulnerable people and those in greatest need. 

The Chancellor has been warning for some time that ‘difficult’ decisions will be needed to address the Budget deficit and mitigate the need for deep cuts in capital spending. Recent economic data has not been helpful, with the latest figures released by the Office for National Statistics for the three months to the end of September, showing a further slowdown in the economic growth rate – with the economy growing by just 0.1%, down from 0.3% in the previous quarter.

Refusing to rule out increases to headline rates of tax, such as Income Tax, VAT and National Insurance, there has been a great deal of speculation that she may be forced to break the Government’s pre-election pledge to avoid increasing taxes on ‘working people’.

Whilst it’s difficult to predict how the markets would react, the impact of tax hikes at a time when many households and businesses are struggling to make ends meet would be a major blow. Instead, the Chancellor must look beyond tax increases and focus on using her fiscal powers to promote growth and ensure the interests of vulnerable and disadvantaged people are protected. 

It is only by driving and incentivising growth that it will be possible to strengthen public spending in the areas that need it most. Many sector analysts believe that more funding is essential to address long-term societal challenges, especially when it comes to meeting increased demand for social care services.

Here’s Anthony Collins’ take on what the Chancellor should consider whilst preparing for the Autumn Budget 2025.

Social housing

The Chancellor made a number of significant announcements for stimulating growth in housing, including social housing, in the Spending Review earlier this year. This included the announcement of funding under the new Social and Affordable Homes Programme 2026 – 2036 (SOHP) and setting a timeline for the introduction of the National Housing Bank, which is due to go live in April next year. However, housing providers are waiting for further detail regarding the implementation of these initiatives. 

The Budget should hopefully give clarity on the outcome of the recent consultation on implementing social rent convergence and the level of convergence that can be used by providers when rents are below formula rent. There is a balance to be struck for affordability for residents and the need for providers to increase income (still within the limits of the Rent Standard) to facilitate the investment needed to meet various legislative and regulatory requirements.

Health and social care 

The social care sector urgently needs support and should not be ignored. Efforts have been made by policymakers to address the critical issue of fair pay for workers in the sector, but a long-term funding settlement is needed for care providers to stay viable. In November, another not-for-profit provider, the Queen Elizabeth’s Foundation for Disabled People, exited the market, and without long-term funding, there is a real risk that more could follow. 

Personal taxation

When it comes to personal taxation, the Chancellor should bear in mind that raising taxes doesn’t necessarily result in more tax receipts. Instead, fiscal incentives could help to direct private investors to sectors where their money could deliver the greatest benefit for society in the long term – for example, investment in much-needed public services.  It is also important that any tax changes for pensions that she might be considering don’t disincentivise saving for retirement, which could increase demand for public spending in the future.

Disadvantaged and vulnerable people

The Chancellor has signalled that meeting fiscal rules could require cuts to public spending, including welfare, which would hit disadvantaged and vulnerable groups hardest. At the same time, freezing tax allowances and thresholds will quietly increase the tax burden on millions, especially low-paid workers, disabled people, single parents, and pensioners – is this the kind of society we want to pass on to the next generation? 

Social business

Having seen the success of tax incentives in encouraging employee ownership, the Chancellor could consider incentivising a broader range of alternative economic models. Tax breaks for co-operatives and mutuals would assist in meeting the Government’s own manifesto commitment to double the size of the sector. A new form of Social Investment Tax Relief (SITR) would promote private investment into social purpose organisations. 

Local government

Local authorities are going through an immense amount of change at the moment, and budgets are stretched to the limit. We would like to hear more from Rachel Reeves on the Government’s plans for multi-year financial settlements. This move is important to enable local authorities to plan for the longer term.