It comes as no surprise that government policy plays a pivotal role in shaping ESG frameworks for businesses across industries and sectors. Reviewing the Spring Budget from an ESG perspective, it is evident that the Government stayed quiet on how achieving the UK’s 2050 net zero target will be financed and regulated, with a focus on expanding the nuclear industry to help with national decarbonisation goals.
However, the societal impact of the Spring Budget will be equally important to analyse, with changes set to benefit many but with a need for further clarity around how these adjustments will be implemented successfully.
Following the announcement that the UK had entered a recession at the end of 2023, it will undoubtedly come as a welcome relief to many to see the National Insurance cuts being expanded by a further 2p, following the initial cut announced in the 2023 Autumn Statement. More money in employees’ pockets can only be a positive move for the local economy and our local communities. In addition, the childcare reforms, including the increase in the earning threshold to £60k, will certainly relieve some pressure on families and encourage more parents to return to the labour market. This move is anticipated to have a positive knock-on effect, consequently bridging the gender pay, pension and progression gaps – all individually pertinent issues with far-reaching socio-economic implications.
The scrapping of the £90 debt relief order fee and six more months of cost-of-living support for people most in need will make some difference but does not change the fundamental issues that are preventing people from breaking the cycle of relative poverty. It is yet to be decided if the Chancellor’s announcements go far enough, to truly support people who are struggling in the ongoing cost-of-living crisis. This will require much more drastic tax reform, and from a political perspective as we approach the 2024 General Election, this Spring Budget was not the time to make any radical changes. It must be recognised that at the grassroots, people are struggling to manage their finances and debt, and as the cost-of-living crisis continues, this is being normalised for the younger generation as they progress through education and into the workplace. Despite attempts to amalgamate financial education into the National Curriculum in 2014, a lack of resources has resulted in it being neither implemented correctly nor prioritised effectively. External financial well-being providers and specialists have also seen a reduction in funding opportunities since the introduction, and the gap has subsequently widened further, with money expert Martin Lewis going as far as to call it a ‘pyrrhic victory’ for financial education.
As we wait for government to take the lead on better supporting our communities with cost-of-living and financial education, businesses must take social responsibility for the roles they play in the local economy, identifying their societal purpose as part of their ESG strategy. This can be achieved in a variety of ways, from setting up a centralised fundraising structure that supports a charity or a cause which is important to their employees and local community, to volunteering time and expertise at grassroot organisations to help them deliver support to the people most in need.
2024 is proving an important year for our government, and the Chancellor’s announcements will only be the start of the many pledges we will hear this year to enable the UK to achieve social sustainability.
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Mark Lumsdon-Taylor
Partner MHA
