The Chancellor’s Budget 2021
On Wednesday 27th October 2021 Chancellor Rishi Sunak presented his second Budget of the year along with a response to the latest economic forecasts and a Comprehensive Spending Review.
Here are the main points from Chancellor Rishi Sunak’s Budget:
– The Budget is focused on the “post-Covid” era, according to the Chancellor, and will pave the way for the “Prime Minister’s economy of higher wages, higher skills, and rising productivity”.
– Independent forecaster the Office for Budget Responsibility (OBR) has scaled down its assumption of the scarring effect of Covid-19 on the economy from 3 per cent to 2 per cent, Mr Sunak told the Commons.
– The OBR has downgraded its unemployment forecast due to the coronavirus pandemic from 12 per cent down to 5.2 per cent, the Chancellor told MPs.
– The minimum wage will increase to to £9.50 an hour next year, up from the current £8.91.
– The Universal Credit taper rate will be cut by 8 per cent from no later than December 1, bringing it down from 63 per cent to 55 per cent.
– Alcohol duty is being “radically” simplified by introducing a system designed around the principle of “the stronger the drink, the higher the rate”.
– A “draught relief” will apply a lower rate of duty on draught beer and cider, cutting the tax by 5 per cent on drinks served from draught containers over 40 litres and bringing the price of a pint down by 3p.
– A planned rise in fuel duty will be cancelled because of pump prices being at their highest level in eight years.
– Flights between airports in England, Scotland, Wales and Northern Ireland will be subject to a new lower rate of Air Passenger Duty from April 2023.
– Every Whitehall department will receive a “real terms rise in overall spending” as part of the Spending Review, the Chancellor said, amounting to £150 billion over this Parliament.
– Mr Sunak confirmed a levy will be placed on property developers with profits over £25 million at a rate of 4 per cent to help create a £5 billion fund to remove unsafe cladding.
– Devolved administrations will be given the “largest block grants” since 1998, with an increase to Scottish Government funding in each year by an average of £4.6 billion, £2.5 billion for the Welsh Government, and £1.6 billion for the Northern Ireland Executive.
– An extra £2.2 billion has been announced for courts, prisons and probation services, including £500,000 to reduce the courts backlogs.
– £300 million will go towards “A Start for Life” parenting programmes, with an extra £170 million by 2024/25 going into paying for childcare.
– The Chancellor said core science funding will rise to £5.9 billion a year by 2024-25, a cash increase of 37 per cent.
– A new 50 per cent business rates discount will apply in the retail, hospitality, and leisure sectors, with eligible businesses able to claim a discount on their bills of up to a maximum of £110,000.
– Ahead of the Budget statement, £7 billion transport funding was announced for areas including Greater Manchester, the West Midlands and South Yorkshire for projects ranging from tram improvements to introducing London-style improvements in infrastructure, but only £1.5 billion of this was believed to be “new” funding.
– A £6 billion package of funding will help tackle NHS backlogs and invest in technology was also trailed ahead of the statement.