Budget 2021 – live: Rishi Sunak extends VAT cut and stamp duty holiday as corporation tax to rise

Chair of the Digital, Culture, Media and Sport (DCMS) committee, said it was “disappointing” the government did not include cancellation insurance schemes for music festivals.

“It is welcome that the Treasury has listened to the case pressed by this committee for additional support for our outstanding arts, creative and sporting sectors that have been hit so hard by the impact of the pandemic,” Julian Knight said.

“However, it is greatly disappointing that the government appears not to have heard our call to give its backing to cancellation insurance schemes for festivals which would provide a safety net should organisers need to cancel plans and enable more to go ahead with confidence this summer.”

It comes after some festivals, including Glastonbury and Download, were forced to cancel their events for a second year running due to the pandemic.

Greg Parmley, CEO of Live, the UK’s official industry body for live music, echoed Mr Knight’s concerns and called for an insurance scheme to support festivals.

“We warmly welcome the additional financial support the chancellor announced in his Budget today, which is due recognition from government that the live music industry has been one of the hardest hit by the pandemic,” he said.

“The extension of the reduced 5 per cent rate of VAT, in particular, will provide significant support to businesses who have had their revenue decimated over the past year.”

He added: “But we also call on the chancellor to look again at a government-backed insurance scheme, which would ensure we can recover, and get people back to work, as quickly as possible once it is safe to lift restrictions.”

Some more tax updates from the chancellor’s Budget announcement…

Inheritance tax thresholds, the pensions lifetime allowance, and the annual exempt amount in capital gains tax will be maintained at current levels until April 2026, according to Rishi Sunak, as well as the VAT registration threshold until April 2022.

He also told MPs today: “We’ll also tackle fraud in our Covid schemes, with £100m to set up a new HMRC taskforce of around 1,000 investigators, as well as new measures, and new investment in HMRC, to clamp down on tax avoidance and evasion.”

Union leaders have labelled Rishi Sunak’s silence today on pay for public sector workers “deafening”, describing the Budget announcement as an “insult”.

Many public sector workers face a pay freeze this year despite calls for an increase because of their efforts during the coronavirus crisis.

Rehana Azam, national officer of the GMB, said: “The chancellor can dance around his living room with the ministerial red box all he wants, but all this Budget shows to public sector workers is that his clapping is a worthless gesture.

“When it comes down to it, the big ‘love-in’ and ‘immense praise’ has amounted to nothing for the workers that carried us through the pandemic.

“Nor has he changed the super-spreader policy of poverty sick pay that prevents people from self-isolating. This Budget is an insult to the millions of NHS, schools, care, local government workers who have seen us through this crisis.”

Mark Serwotka, general secretary of the Public and Commercial Services union (PCS), said: “Rishi Sunak has failed to vaccinate the economy from the effects of the Covid-19 pandemic.

“His refusal to lift the pay cap on civil servants and other public sector workers, who have kept the country going during the pandemic, is a disgrace and economically illiterate.

“It is clear the government will not listen to public sector workers on pay, and therefore a united trade union movement must be prepared to take action together in order for our members to see pay justice.”

Meanwhile, TUC general secretary Frances O’Grady said: “After a year of key workers going above and beyond, it’s an insult that the Chancellor announced no new support for our hard-pressed NHS or public services and no guarantee of a decent pay rise for all our public sector key workers.”

The Budget contains nearly £60bn of “giveaways” for the coming financial year, compared with nearly £30bn of tax rises by 2026, the Institute for Fiscal Studies has said.

Paul Johnson, IFS director, pointed out that this was in addition to future spending cuts that related to previous plans laid out in Rishi Sunak’s Autumn Spending Review.

“How realistic I wonder?” he wrote on Twitter.

Tax hikes announced in the Budget will increase the UK tax burden to the highest level since Roy Jenkins was chancellor in the late 1960s, according to the fiscal watchdog.

In its latest set of economic forecasts, the Office for Budget Responsibility (OBR) said the tax burden will rise from 34 per cent to 35 per cent of UK gross domestic product (GDP) in 2025-26.

The OBR said more than half of this rise was as a result of the increase in corporation tax to 25 per cent.

It also said the corporation tax rise will raise 3.2 per cent of GDP in revenue by 2025-26 – its highest since 1989-90.

Its economic and fiscal outlook report also revealed that Mr Sunak’s move to freeze the income tax personal allowance and higher rate threshold for four years will bring 1.3 million people into the tax system and create one million higher rate taxpayers by 2025-26.

Labour leader Sir Keir Starmer told the Commons this Budget is one which “papers over the cracks” with no plan to rebuild the UK’s “shattered” economy.

Rishi Sunak has unveiled what he has described as the biggest business tax cut in British history, offering companies the chance to reduce their bill by 130 per cent of any amount invested.

The chancellor said the unprecedented move would deliver a significant boost to the UK’s economic recovery in the wake of the coronavirus pandemic.

But he admitted the idea, dubbed the ‘super deduction’, which would effectively pay companies to invest, had never been tried before in the UK.

Whitehall editor Kate Devlin has more:

Asda has said it will continue to pay its business rates bill in full during 2021-22 and will not accept the offer of rates relief announced today by the chancellor in his spring Budget.

Roger Burnley, Asda chief executive and president, said: “We have always sought to support colleagues, customers and communities during the pandemic and will continue to do so as long as Covid remains a threat.

“There are clearly many industries and businesses that have been hard hit by the pandemic and we hope that by continuing to pay business rates in full this year we can continue to support the nation’s economic recovery from the pandemic.”

Business correspondent Ben Chapman recaps all the key points from today’s Budget announcement:

Rishi Sunak announced he and home secretary Priti Patel will oversee visa reforms aimed at “highly-skilled” migrants, telling MPs: “A new unsponsored points-based visa to attract the best and most promising international talent in science, research and tech, new, improved visa processes for scale-ups and entrepreneurs, and radically simplified bureaucracy for high-skilled visa applications.”

To help firms access capital, Mr Sunak said steps will be taken to give the pensions industry “more flexibility to unlock billions of pounds from pension funds into innovative new ventures” via the “Future Fund Breakthrough”.

The chancellor said it was vital the UK becomes a “scientific superpower”, carrying on the vital work of scientists and researchers throughout the pandemic.