Autumn Budget 2021: What You Need to Know
Did the Autumn Budget contain a bit too much information to digest in one go? We’ve rounded up all of the key points below.
"Employment is up, investment is growing, public services are improving, public finances are stabilising and wages are rising."
Rishi Sunak promises his Budget will deliver a "stronger economy for the British people" and leave them in "no doubt" the government's plan is working.
Four fiscal rules
Rishi Sunak outlined his four fiscal rules in this Budget:
The fiscal situation in the UK is between four to six times more "sensitive" than it was before the pandemic, so forecasts have been adjusted.
Continue to help working families.
Meet obligations to the world's poorest people. If recovery is strong, the government will be able to return to spending 0.7% of GDP on overseas aid by 2024.
Spending is growing by 3.8% a year in real terms.
The inflation rate recently hit 3.1% and is likely to rise further, increasing the general cost of living.
The HGV levy had already been suspended until August 2022 and this will now be extended for a further year until 2023, freezing Vehicle Excise Duty for heavy goods vehicles.
Fuel duty freeze
The planned rise in fuel duty will be cancelled. It amounts to a saving over the next five years of nearly £8bn.
The Office for Budget Responsibility expects unemployment to peak at 5.2%. This means "over two million fewer people out of work than previously feared".
Gross domestic product (GDP)
UK GDP grew 5.5% between April and June 2021 compared with the first three months of the year. Rishi Sunak says GDP is expected to expand by 6.5% this year compared to the 4% it forecast at the Budget in March 2021. However, the Bank of England expects it to be higher, at a 7.4% rate of growth.
£24bn will be earmarked for a multi-year housing settlement. £11.5bn of this will be set aside to build up to 180,000 new affordable homes.
£5bn will be made available to remove unsafe cladding from the highest risk buildings. This will be levied at a rate of 4% on developers with profits over £25m.
The Chancellor promises to commit an extra £4.7bn to schools by 2024-25.
In the shorter term, £300m will go towards the government’s A Start for Life offer for families, offering parenting programmes and help with perinatal mental health.
An additional £170m of funding will be allocated to the creation of a network of Family Hubs around the UK.
A further £150m will be invested into supporting and training people who work in early years education, along with more funding for holiday and activity programmes.
Police and courts
The government is sticking to its ambition to hire 20,000 new police officers.
An extra £2.2bn will also be set aside for courts and rehabilitation services.
Additionally, £3.8bn will be spent on "the biggest prison-building programme in a generation".
Through the Barnett formula – which allocates the proportion of spending in the nations – Scottish government funding will go up by £4.6bn, Welsh government funding by £2.5bn, and £1.6bn for the Northern Ireland Executive.
The Chancellor says the post-Brexit UK Shared Prosperity Fund will also continue to be ramped up to "to match EU receipts, averaging around £1.5bn a year".
Money will be invested into building youth clubs and 8,000 state-of-the-art community football pitches across the UK. Regional libraries, museums and theatres will also benefit.
The National Infrastructure Strategy will continue to spend over £100bn a year on UK infrastructure. This includes £21bn on roads, £46bn on railways, and £5.7bn in spending for London-style transport systems across city regions. However, there is no update on the HS2 development.
There will also be £5bn invested into improving the UK’s cycling infrastructure, and the same figure spent on improving local minor roads.
Research and development
The Chancellor says that innovation and R&D are key. The government will maintain its target to increase research and development investment to £22bn.
The Scale-Up Visa system will make it quicker and easier for fast-growing businesses to bring in highly-skilled individuals.
It will help "identify, attract and relocate the best global talent in key science and tech sectors" and is "all part of our plan to make our visa system for international talent the most competitive in the world".
Health and social care
There will be a £44bn increase to resource spending on healthcare, including 40 new hospitals, 50,000 more nurses and 50 million more primary care appointments.
UK (domestic) flights
Flights between airports in England, Scotland, Wales and Northern Ireland will be subject to a lower rate of Air Passenger Duty from April 2023.
A “radical simplification” of alcohol duties will take place. There will be just six duty rates on alcohol – the stronger the drink, the higher the rate.
This will mean that some stronger spirits and wines will become more expensive, but weaker alcohols like beer and rosé wine will become cheaper.
There will also be a small producer relief, which will include small cider makers for the first time, in a similar way to small brewers’ relief. Duty is also being cut on fruit ciders to bring it in line with that of apple ciders.
The "draught relief" applies a 5% cut to duty on draught beer and cider served from draught containers over 40 litres. This equates to a permanent cut in the cost of a pint by 3p.
Hospitality business discount
A new 50% business rates discount will apply to companies in the retail, hospitality and leisure sectors, lasting for one year.
"Pubs, music venues, cinemas, restaurants, hotels, theatres, gyms, any eligible business can claim a discount on their bills of 50%, up to a maximum of £110,000.”
Alongside the Small Business Rates Relief, the Chancellor claims his measures mean more than 90% of all retail, hospitality and leisure businesses will see a discount of at least 50%.
The Universal Credit taper rate will be cut from 63% to 55%. This will be introduced no later than 1 December.
There will be a cut to the bank surcharge that was introduced in 2015. Banks pay a surcharge of 8% on their profits, on top of the current 19% corporation tax. With corporation tax now set to rise to 25%, that would mean banks would be paying 33%. However, Sunak's announcement of a cut to the surcharge to 3% means they will pay 28% tax.
National living wage
The minimum wage for everyone aged 23 and over will rise by 6.6%. Someone working 35 hours a week on the new salary will see an increase of £1,070 a year in earnings before tax.
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Tagged as: Government Updates
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