Charlotte Street Partners



Don't wait for the budget

Written by Javier Maquieira, senior associate 
Edited by Scott Reid, associate partner
26 October 2021

Good morning,

In the autumn of 1947, the then Labour chancellor of the exchequer, Hugh Dalton, resigned after revealing key budget details in an impromptu remark to a political journalist of the now defunct evening paper Star.
The leak was printed even before Dalton had finished delivering his budget speech and while the London stock market was still open. In those days, when pre-budget purdah meant that the chancellor would disappear from public view weeks in advance to allow the Treasury to consider its policy options in a confidential atmosphere, breaking a budget secret was considered a scandal worthy of resignation.
In 2021 Britain, however, the tradition of pre-budget secrecy has long gone, much to the speaker of the House of Common’s chagrin. In fact, formal government announcements in the run-up to a budget have become so commonplace, that it makes one wonder if there’s anything left to announce on the day itself.
The funding announcement blitz we are currently experiencing ahead of Rishi Sunak’s budget and spending review statement tomorrow is a clear example of that evolution. But it also serves a wider purpose – securing good headlines with shiny investments and reports of largesse.
Chief among them is the rise of the national living wage from £8.91 to £9.50 from April 2022, which would translate into full-time workers aged over 23 getting £1,074 extra a year before tax. The move, which follows the recommendation of the low pay commission, is more than twice the current 3.1% rise in the cost of living.
Other spending pledges set to be made at lunchtime tomorrow include the end of a “temporary pause” in salary progression for at least 1.3m public sector workers; £6.9bn for England’s city regions to spend on train, tram, bus, and cycle projects; £5.9bn for NHS England to tackle the backlog of people waiting for tests and scans; £5bn over the next three years for health research and development; and £1.8bn for building around 160,000 new homes on derelict or unused land in England.
But as the old saying goes, ‘all that glitters is not gold.’ The chancellor has already been criticised for a lack of detail, as well as not taking rising inflation into consideration. What’s more, although these public expenditure announcements sound reasonably generous, they are likely to prove tight in relation to current demands on public services.
From their perspective, British businesses have voiced their concern over the forthcoming rise in national insurance contributions. Amid surging energy prices, labour shortages, and widespread supply chain disruption, companies are urging the government to relieve pressure on them, while 39% of respondents in an EY survey of more than 1,000 businesses think taxes should go up to tackle greenhouse gases.
Crucially, this year’s autumn budget will be delivered only four days before COP26 kicks off in Glasgow and as the prime minister, Boris Johnson, prepares to play host to the climate summit. Against this background, expect any spending announcements left to be scrutinised through the carbon lens.


The UK prime minister admitted on Monday that he was “very worried” COP26 would fail to achieve a breakthrough of tackling the climate crisis. Boris Johnson was speaking to children in Downing Street as it was revealed that rich countries would not deliver their long-promised target of $100bn a year to help developing nations until 2023 – three years later than originally planned.
The Australian prime minister has released his government’s plan to reach net-zero emissions by 2050, updating the country’s 2030 projection to between 30% and 35% as he prepares to attend COP26. However, Scott Morrison’s long-awaited pledge, which comes after bargaining with resistant MPs within his government, has been criticised for not including plans to end Australia’s massive fossil fuel sectors.
Former Facebook employee Frances Haugen told members of the UK parliament yesterday that the company’s chief executive, Mark Zuckerberg, “has unilateral control over three billion people” due to his position, and urgent external regulation is needed to make social media platforms take some responsibility for content on their sites. Haugen added that Facebook’s internal culture prioritised profitability over its impact on the wider world as she urged the company to make it harder to share material to slow the sharing of hate and disinformation.

Business and economy

Tesla briefly broke the $1tn (£700bn) market valuation barrier on Monday, making it the fifth such firm to reach the milestone. Shares in the US electric car pioneer climbed after it struck a deal to sell 100,000 vehicles to the car rental firm Hertz. Elon Musk’s company has been the world’s most valuable carmaker for some time, despite brands such as Ford and GM making more cars.
The recent reputational impact of leaked internal documents notwithstanding, Facebook has posted better-than-expected earnings for the third quarter, making $9bn (£6.5bn) of profit in the three months to September. The social media giant also said it expected to adapt to the “headwinds” caused by Apple’s updated privacy rules, which make it harder for brands to target ads at specific users, in time.
UK petrol prices hit their highest level on record yesterday, as average daily price for a litre reached 142.94p on Sunday in what was described as a “truly dark day for drivers”. The new high, which comes as another blow to hard-hit households and small businesses, surpasses the all-tine record 142.48p reached on 16 April 2012 and could rise further in the coming weeks as the global energy crisis drives oil markets up.

Columns of note

Despite the doom and gloom currently surrounding COP26, David Callaway explains in The Independent how coordinated financial regulation efforts can prevent the climate crisis from causing another global financial crisis. By shedding light on the preparedness of companies for the expected ravages of the climate crisis based on released carbon, Callaway argues that climate investors will help build new businesses that can transition worldwide economies away from oil and gas.
In light of differing Covid-19 infection rates and regulations put in place north and south of the border, Neil Mackay ponders in The Herald whether Scotland might find itself put at risk by England’s more lax approach to the coronavirus. The author concludes that the UK government’s libertarianism is ultimately showing “utter disregard” for fellow citizens by firmly prioritising the economy over public health. (£)

Cartoon source: The Times


What happened yesterday?

London stocks managed a positive finish on Monday as investors braced for a raft of earnings releases and the UK government’s autumn budget. The FTSE 100 ended the session up 0.25% at 7,222.82, while sterling was stronger against the dollar by 0.06% at $1.38 and versus the euro by 0.36% at €1.18.
In the US, stocks advanced to highs after a slight pullback at the end of last week. The blue-chip S&P 500 index rose 0.5%, closing at a record high for the second time in the past three sessions, while the tech-heavy Nasdaq Composite climbed 0.9%.
In company news:
HSBC advanced 1.9% after the banking and financial services company reported bumper third-quarter profits that smashed expectations and unveiled plans for a share buyback of up to $2bn.
Plus500 ended a turbulent session 2.66% firmer, after the online trading platform posted a dip in third-quarter earnings but said full-year revenues and underlying earnings were set to be ahead of analysts’ expectations.

What’s happening today?


Trading announcements
Rws Hldngs

Int. economic announcements
(14:00) House Price Index (US)
(15:00) Consumer Confidence (US)
(15:00) New Homes Sales (US)

Source: Financial Times

did you know

Before reluctantly deciding on the word ‘viewer’, the 1935 BBC sub-committee on words considered many terms for their “users of television apparatus”, including auralooker, glancer, looker-in, seer, sighter, teleobservist, viewer-in, visionnaire, vizzior, and witnesses. (Source: @qikipedia)

Parliamentary highlights

House of Commons

Oral questions
Foreign, Commonwealth and Development Office (including Topical Questions)
Ten Minute Rule Motion
Electricity Grid (Review)
Northern Ireland (Ministers, Elections and Petitions of Concern) Bill: Remaining stages
Judicial Review and Courts Bill: Second reading
Child sexual exploitation in the Bradford district

House of Lords 

Oral questions
Timetable for the appointment of the Chair of Ofcom
Evaluating the success of measures in place to address the shortage of HGV drivers
The comparative costs and effectiveness of the provision of public services in England by local authorities and their contractors
Costs to public services, and the wider economy, of the recent campaign by Insulate Britain of obstructing motorways and major roads
Telecommunications (Security) Bill – third reading
Environment Bill – consideration of Commons amendments
Social Security (Uprating of Benefits) Bill – committee stage

Scottish parliament 

Topical Questions (if selected)
First Minister’s Statemen
COVID-19 Update
Scottish Government Debate
A Person Centred Approach to Mental Health and Substance Abuse
Committee Announcements
Members’ Business
UK Malnutrition Awareness Week 2021, Malnutrition in Older People

Share this post