Budget 2024: Five key takeaways for advisers

Published: 31/10/2024

The chancellor’s budget on Wednesday brought with it a whole host of considerations for protection and health advisers, writes Vitality’s Adviser Editor, Rob Harvey.

After weeks of speculation, leaks and press coverage, Chancellor Rachel Reeves took to the dispatch box to deliver what was arguably one of the most anticipated budgets of recent years.

Although there were no ‘rabbit out of the box’ announcements, this was nonetheless a hugely significant budget that will set the tone for the UK’s tax and spend agenda over the coming years.

With measures impacting the housing market, businesses and personal finances, there is much that’s relevant to our industry, to say nothing of the massive focus on health spending that also sits at the heart of this budget. With that in mind, here are our five key takeaways for advisers:

1. Prioritising health spending and reform

Described by the chancellor as “our most cherished public service”, the NHS unsurprisingly featured prominently. With waiting lists still at record highs and healthcare infrastructure struggling as we go into the winter, an extra £25bn of funding was announced as part of the budget; £22.2bn earmarked for front-line services and a further £3.1bn for equipment and buildings.

The recent Darzi report though laid bare the challenges facing the NHS¹, with Health Secretary Wes Streeting promising there would be no new funding without reform. The government’s 10-year plan for the NHS is expected to be published in Spring 2025, which will set out that reform agenda.

We’ve also seen a marked shift in attitudes to healthcare, with rising numbers of people opting to go private and a big growth in demand for private medical insurance². This shows no signs of slowing down.

Even with the new funding announced, there is still a clear opportunity for our industry to offer people more choice, quicker access to treatment and a wider range of care services. All of which can complement the NHS, as well as help ease the overall burden.

2. Prevention is likely to be a priority

Prevention has been repeatedly mentioned by the health secretary as a key priority for ‘fixing the NHS’ and although was only mentioned once in the budget, is expected to feature prominently in the 10-year plan for the NHS published next year.

As part of the budget, the chancellor did however unveil a ‘package of measures to disincentives activities that cause ill health’. Aimed at smoking, vaping and high sugar foods, the announcements signal a clear awareness of the need to tackle lifestyle-related ill-health.

Findings published earlier in the year by Vitality highlight the scale of the challenge, with 96% of UK workers now living with at least one lifestyle or clinical risk³.

This is clearly another area where private medical insurance (PMI) providers can play a prominent role. Health plans have evolved in recent years to provide a much broader range of everyday care services with an emphasis on prevention. We see this resonating more with consumers and being used more frequently, demonstrating the important role PMI can play in supporting the government’s prevention agenda.

3. Helping more people return to work

With record numbers out of work and economically inactive⁴, getting more people back into the workplace is clearly another priority for the government.

Ahead of the budget the government published its ‘Get Britain Working’ whitepaper, with the £240m pledged to provide health support for disabled people and the long-term sick. Measures include providing £26m to open new mental health crisis centres, which may help to address one of the leading causes of sickness absence⁵.

Such measures highlight the importance of supporting people to not only remain in good health and avoid falling out of work in the first place but also helping them return to work after a period of ill-health.

It’s one of the reasons why we increasingly see income protection plans offer vital return to work support, such as the recovery pathways offered by Vitality. And with many UK households lacking the necessary financial resilience should they experience a loss of earnings due to illness, the government’s back to work agenda only serves to reinforce the need for clients to consider their financial protection needs.

4. Employer National Insurance increase

The chancellor’s decision to increase employer National Insurance contributions came as no surprise, having been leaked in the days leading up to the budget.

Whilst the increase will undoubtedly place an additional cost burden on businesses – which the chancellor partially offset by increasing the amount businesses can claim back to £10,000 – it’s important that companies don’t cutback on important employee benefits like group PMI.

Investing in employee health and wellbeing is a key driver of improving productivity. Findings published in Vitality’s Britain’s Healthiest Workplace survey highlighted how employees are losing a significant amount of productive time due to ill-health and that the cost to the UK economy is as much as £138bn.

In light of this, workplace wellbeing schemes and group PMI shouldn’t be regarded as a ‘nice to have’ when times are good, but essential. It’s also something prospective employers increasingly demand and will be key to attracting and retaining talent in an increasingly competitive job market.

5. Inheritance Tax, Income Tax and pensions all impacted

Inheritance tax was always likely to feature in the budget and although the changes were not as dramatic as expected, the decision to freeze the nil-rate band at £325,000 until 2030 will mean more households could end up paying IHT.

There were other changes as well impacting IHT, with pensions brought back into scope for IHT, overturning a move made by the previous government to remove them in 2015.

Alongside other changes to business property relief, these measures highlight the importance of estate planning and in particular, products like term insurance and whole of life insurance.

Elsewhere, the chancellor’s decision to ‘unfreeze’ income tax thresholds from 2028/29 will be welcomed by many and speaks to the need to improve household finances at a time when costs remain high.

Against this backdrop, there is a clear opportunity for advisers to be discussing protection insurance products – including Income Protection, Serious Illness Cover and Life Insurance – to help further strengthen people’s financial resilience.

Find out more

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