Your commercial news round-up: autumn budget, NHS, Google, Shell

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Are you up to date on this week’s commercial news? The government has announced a new budget, which sees a number of changes to taxes, pay and pensions, and increased spending for the NHS. Meanwhile, Alphabet has put investor worries about its AI development to rest, reporting increased profit for its cloud business. Plus, Shell is facing backlash after reducing its spending on green energy. Read on to discover more!

• Chancellor Rachel Reeves has announced a new budget, which includes a range of changes to tax, pay and pensions. Firstly, the National Living Wage will increase, with minimum wages rising for different age groups. In addition, employers will have to make a larger contribution to National Insurance. Changes have also been made to inheritance tax, potentially bringing more estates into the inheritance tax net, as the government has removed exemptions that grant immunity to various types of property, such as farms and family business assets. The chancellor also announced a range of other changes, including:
  • raising capital gains tax from 10% to 18% for basic rate taxpayers and 20% to 24% for those who pay at the higher rate;
  • upping taxes on tobacco, vaping and non-draught alcoholic drink;
  • increasing benefits and state pensions in line with inflation; and
  • introducing VAT tax on private school fees from January.

In addition, income tax thresholds will remain frozen but tax evaders will face higher interest rates on repayments.

• The budget also detailed a significant spending increase for the NHS, which is due to  receive £22.6 billion over two years. This is the largest spending increase outside of covid-19 since 2010. Reeves stated that the NHS is the nation’s “most cherished public service” and explained that, with more funding, “we can now begin to bring waiting lists down more quickly and move towards our target for waiting times to be no longer than 18 weeks by delivering on our manifesto commitment for 40,000 extra hospital appointments a week”. However, health experts have cautioned that patients may not see a significant improvement due to the funds being absorbed by pay rises and higher care costs. The budget also includes a £3.1 billion increase in the capital budget for repairs and new equipment, but this is considered insufficient to address the £13.8 billion backlog of maintenance costs.
   
• Alphabet, the parent company of Google, reported a 34% increase in profit for the third quarter, driven by strong growth in its cloud business. Google Cloud saw a 35% increase in revenue to $11.4 billion, with operating profit rising from $266 million to $1.9 billion. The results helped to ease concerns about the financial returns on the significant investments being made into AI by Alphabet and other tech giants. Chief Financial Officer Anat Ashkenazi said the majority of investment went towards infrastructure, such as servers, chips, data centres and networking equipment. However, Google Cloud remains behind Microsoft's Azure and market leader Amazon Web Services in the cloud market.
   
• From AI to energy, Shell has reduced its investment in renewable energy, raising concerns among campaigners who argue that the focus on fossil fuels "jeopardises the future of the company". Currently, investment in renewable energy makes up just 8% of the company’s overall spending budget. Earlier this year, the company also confirmed plans to cut hundreds of jobs from its low-carbon solutions division. Instead, Shell plans to grow its gas production in the coming years, despite warnings from climate experts. For example, Shell reported better than expected profits of $6 billion in the third quarter, largely due to increased gas sales. Shell also announced plans to buy back $3.5 billion of shares from investors, continuing its trend of distributing significant amounts of cash to shareholders. Aakash Naik, a campaigner at Greenpeace UK, said: “Upcoming international climate talks are an opportunity to right this brazen injustice: it’s time for leaders to take bold action to force the industry to stop drilling and pay up for the immense harm it is doing to people and planet.”

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