PA Consulting comments on the Autumn Budget
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Our experts reflect on the UK Autumn Budget and the impact it may have in a number of key areas.
Shaun Delaney, Global Head of Public Services, says:
Shaun Delaney says economic growth will only be achieved if public service leaders can help businesses start, scale and stay in the UK.
Shalini Raste, Regional growth expert, says:
Shalini Raste asked if regions will now really have the ability to unlock UK productivity?
Guy Neale, Defence and security expert, says:
The Autumn Budget has shown us that there is a real opportunity in using this public investment as a platform to drive external investment and export growth.
By prioritising private capital – through the National Wealth Fund and targeted industrial strategy – the budget has created an opening for the UK to leverage its position as a hub for defence innovation and manufacturing, attracting international partners and boosting exports to support European defence resilience.
The opportunity may be there, but if we want real, sustained growth, we cannot rely solely on government spending – we need to take a series of practical steps to turn the UK’s defence sector into a magnet for global investment and sales. That means:
- building partnerships across the supply chain so high-growth companies can secure funding, innovate and scale;
- creating buying and export conditions that generate steady revenue rather than infrequent large orders;
- accelerating the Rapid Commercial Exploitation marketplace through shared enablers like field testing, working capital and rapid feedback;
- embedding exportability into competition criteria to align MOD buying behaviours to the global export community;
- providing as much precision and confidence-rated analysis as possible in the forthcoming Defence Investment Plan so investors can plan with certainty.
Anthony Legg, Infrastructure expert, says:
Government doubles down on infrastructure delivery. Since its election last July, the government has made attracting private sector investment a cornerstone of its strategy to boost productivity and economic growth. Today’s Budget continues that push. Measures include leveraging the government balance sheet to crowd in private funding - seen in the previously announced £14BN commitment to Sizewell C and now a £900M investment in the Lower Thames Crossing.
Government hits fast-forward on infrastructure delivery. From Heathrow and Gatwick expansion decisions to greenlighting the first small modular reactor at Wylfa, the government is accelerating the pace of delivery. Continuing this agenda, today’s budget included the announcement of reforms to regulation being considered in the nuclear sector to enable these projects to be delivered faster. Electricity grid connection reforms continue, including a review of which data centre projects are most strategic and credible to be taken forward fastest.
The infrastructure push is likely to be welcomed by investors - but turning ambition into action will be key. Government steps are expected to be welcomed by infrastructure investors, but as ever there will be hopes for more. Those looking to invest in carbon capture, hydrogen or sustainable aviation fuel sectors will still be waiting for clarity on support for future projects. These kinds of commitments are constrained by the government finances and the cost of living (which is impacted by passing on the costs associated with contracts for difference and regulated asset base models used to support the infrastructure projects), so it will be interesting to see how the government continues to walk the tight-rope between bringing forward investment, the tight public finances and keeping costs down for consumers in future.
Jason Whyte, Pensions and investments expert, says:
Pensions
From April 2029, capping salary sacrifice pension contributions at £2,000 a year is forecast to raise £4.7bn – making it the second-biggest revenue source after the three-year tax threshold freeze. Taken with the freeze on income tax thresholds, these changes will impact more people than expected. At auto-enrolment contribution rates, a pre-tax employee contribution of 4% reaches £2,000 per year at a £50,000 salary. This is very close to the higher rate income tax band, and by 2029 one in seven UK taxpayers are expected to pay higher rate tax and so might be affected by the salary sacrifice changes. From April 2029, pension contributions above the £2000 limit will attract 2% NICs for employees and 15% for employers. The amounts could be significant: the expected £4.7bn raised averages to around £1,000 per higher rate taxpayer, mostly in employer’s NICs.
Faced with what is effectively another increase in national insurance, albeit only on higher earners, employers may reconsider whether to scale back the generosity of their pensions offer. Over the past 20 years, many employers that adopted salary sacrifice have passed on the benefit of reduced NICs by offering more generous pension contributions. It's unclear whether employers will absorb the additional cost or seek to recoup it with less generous employer contributions.
Meanwhile, the cost of state benefits to the retired generation continues to escalate. Today's workers are effectively funding their parents’ retirement – without any certainty that they will receive equally generous benefits. Successive Chancellors have shied away from reforming the state pension Triple Lock, which demands an increasing share of tax each year, while implementing changes (such as the salary sacrifice cap) that discourage today's workers from saving for their own future.
Retail Savings and Investments
Lifetime ISAs are expected to be scrapped in 2026 and replaced with a simpler ISA product, geared towards supporting first time buyers. Lifetime ISAs have been popular with savers, but there has always been a concern that people could miss out on tax benefits and employer contributions if they opted for a Lifetime ISA over a pension. If they are abolished, the industry is unlikely to feel their loss.
This is a Budget designed to encourage investment. Taxes on income from property, dividends and savings rise by 2 percentage points, narrowing the gap to earned income. The Cash ISA limit is reduced for the under 65s. The combined effect is to steer savers towards long term investment rather than property or cash. The market has responded positively: shares in wealth platforms jumped following the announcement.
Richard Sallnow, Transport expert at PA Consulting
Today’s Budget forces us to face a simple reality: fuel duty faces a cliff edge, and without a refresh of road taxation we’re heading towards a multibillion-pound black hole in transport funding. Moving to a pay-per-mile system for electric vehicles is an inevitable step, but its design and implementation needs careful consideration for a smooth journey ahead.
This shouldn’t be seen as a radical shift – internal combustion engines already pay a per mile charge of sorts through fuel duty. This latest announcement is an extension of that same principle for zero emission vehicles.
The quickest, fairest way to start is a simple mileage-based charge for zero-emission vehicles, verified through annual mileage readings. It gets the system running fast without intrusive surveillance or costly technology.
There will be questions from the public about how this policy will work, but that shouldn’t slow progress. Clear communication and transitional measures - such as free annual miles or phased charges - can help maintain confidence while keeping the shift to EVs on track.
Implementation will take years, but now is the time for decisive action. By working with clarity and conviction, the government can deliver a road-pricing system that people understand, trust, support and rely on.
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