Creating Your Efficiency Budget: What Should You Do Now?

 

We've had the UK Spring Budget 2024.
We've had the media commentary on Jeremy Hunt's Budget.

You may be scratching your head, wondering what you're supposed to do with all the information about the information you have.

What's the best move? Where should your business be? How screwed are you?

Here at The Productive Pessimist, we're all about keeping it simple, whilst respecting that you're not stupid. So:

Are You Screwed?

If you earn under £32,500 a year, probably. But, then, you probably already knew that.

However, the freeze on tax bands means the best advice is not "get a better paid job".  

As the government has opened up the definition of 'high net worth individual', enabling more people to qualify as 'sophisticated' investors, and thus be approved to take a chance on unproven entrepreneurs, the best thing you can do if you're not making £32,500 a year is to get together a business plan, and a series of pitch decks (we can help with this - just drop us an email: theproductivepessimist@yahoo.com), and look forward to being able to approach a greater number of people who might have the means to help you get off the ground.

If you've been artificially inflating local house prices by running holiday lets or Airbnbs (sorry, we don't really do 'impartial' when it comes to preventing people who were born and grew up in nice areas being able to afford to stay in those areas), you're less screwed if you release those properties back to the market, selling them as actual housing stock people can live in, than if you keep them on as short-term rentals; why not buy a caravan, or take your new-found capital and go in with an entrepreneur who has an idea for new style of hotel?

What Business Should I Be In?

Probably not property. The Tories are looking to win votes and influence people, and Labour are wondering about how to keep hold of their poll lead - all in the face of people becoming increasingly angry about the idea that they should hand over half their income or more just to avoid the civil offence of being unhoused.  The likelihood is, eventually, it will be made deeply unpleasant for people who think that they should be making their living off other peoples' need for basic shelter.

And definitely not in anything related to smoking or vaping, either - tax has gone up on both of those, and people under pressure are going to be thinking very carefully about how much they spend, and on what.

On the sales you do get, there'll be practically no margins left.

If you have a ready-for-market healthcare pill, potion, app, or initiative to help people stop smoking, which isn't vapes, however, and you're approved to approach the NHS, or connected with an organisation which is,, then you're in a very good place, especially considering more people are going to be able to qualify as angel investors.  Even if you're not ready-for-market yet, it would be worth getting your decks in a row, and starting your journey to investment.

I'd also try and avoid working in the NHS itself - there's going to be a lot of fall-out from the demand that they be more efficient. Best to let the dust settle before you go in to a new job in an unsettled organisation.  Working for private healthcare providers, and in healthcare research, however, could be a very good bet, especially as they tend to pay a lot better than the NHS, and, tax brackets aside, the cost of living isn't going to go away. Whether you earn £22,000 a year or £37,000 a year, you'll still pay 20% tax; 80% of £37,000 is considerably better than 80% of £22,000. (It's £29,600 vs £17,600, in case you're wondering.) 

If you're in a position (financial) to get into the 'sophisticated investor' category, especially if you're not another white man, then you could do very well for yourself; entrepreneurs have the passion, grit, and sheer bloody-mindedness to drag Britain back to a position of genuine greatness, without the toxicity that historical interpretations bring with them - and without that scrappy determination and skinned-knees focus, Britain isn't going to experience any kind of economic growth any time soon; without the entrepreneurs, it's a country crippled by the weight of businesses who've sat back and settled for 'getting by', and public sector organisations who spend more time talking about what they might do than actually doing anything new and truly innovative. We need the entrepreneurs, and the entrepreneurs need funding. Perhaps the opening up of qualification as an angel investor is the reason to divest that property portfolio you've been holding on to.

But They Have Done Some Good Things, Right?

If you're thinking joyfully about that cut to National Insurance, that's not a good thing. National Insurance - and tax, for that matter - is how we pay for our public services; schools, the NHS, the vague future promise of NHS dentists, public transport, care for the elderly and disabled who are unable to live independently... Every time taxes and National Insurance get cut to win votes from idiots, a few hundred thousand more people get told the services and support they rely on aren't going to be there any more.  

The chaos over SEND places, or lack of them, in schools? Public sector spending cuts.
The reason your GP surgery had to be bullied into offering you a face to face appointment again after lockdown? Spending cuts.
The reason you'll be in A&E until the middle of the night, at best, if 111 sends you over there at 8.30pm? Spending cuts.
The reason schools can't manage to employ teachers who can actually keep control of their classes? Spending cuts.
The reason there's an increasing number of homeless people in town and city centres? Spending cuts.

Are you starting to see why you "having more money in your pay packet" is actually a really, really bad thing, long term?

£120million investment in the green energy sector sounds like a lot, but it amounts to every working age person giving just £3.24. Just how much green energy do you think you're going to get for less than a Starbucks coffee?

The "extra 2.4billion" for healthcare amounts to £37 per person; how much healthcare do you imagine that buying you? It's certainly not going to buy anything for my personal household, which includes:
1 person (myself) with actively-deteriorating sight loss conditions, and mental health conditions
1 person (my wife) with stable, but high-risk sight impairment, cerebral palsy, with a current unmet need for qualified physiotherapy, compromised lung function which creates a higher risk for serious illness (the lung function was compromised by emergency neonatal intubation following my wife's extremely premature birth at 25 weeks, so no, nothing to do with "lifestyle choices" - neither were either of our sight loss conditions), autism, and ADHD. If I had to pay to manage even the most impactful of those conditions myself? I wouldn't be able to afford to.  £37 would probably buy an hour of an experienced consultant's time, at best - and that's if most of it doesn't get drawn into the inevitable 'admin and overheads' black hole first.

So...Single Sentence 'What Now?'

Your best chance of having a halfway decent life is to sell up your property portfolio, if you have one, and get into the angel investing gig - if you don't have a property portfolio, and earn less than £32,500, become a genuine entrepreneur; not 'side hustles', not 'gig economy' - start planning something that will last, and create the kind of presentation that will get funding for it.

That's not technically a 'single sentence' answer - but economics is complex, the national budget is complicated, and life doesn't always fit neatly on a social media visual.  Start getting used to it.