Budget 2021

Rishi Sunak announced a further raft of tax and spending measures in the Budget on Wednesday. What are the key points that will affect the economy, businesses and households’ personal finances? Jobs and the economyThe Office for Budget Responsibility expects the economy to reach its pre-Covid level by the middle of next year –  six months earlier than thought.However, it also forecasts that the economy will be 3 per cent smaller in five years than it would have been if the pandemic hadn’t happened.More than 700,000 people have lost their jobs since March 2020 and the economy went through its worst contraction in more than 300 years. The arrival of vaccines has allowed the OBR to slash its forecast for future unemployment. It now expects the jobless rate to a peak of 6.5 per cent this year, down from the 11.9 per cent it had previously projected. Personal financesStamp duty holiday and mortgages – The stamp duty holiday for home buyers is being extended for a further three months until the end of June, Rishi Sunak announced. Purchases up to £500,000 will continue to be free from the tax – and homes bought up to a value of £250,000 until the end of September.Inside Politics newsletterThe latest news on Brexit, politics and beyond direct to your inbox every weekdayInside Politics newsletterThe latest news on Brexit, politics and beyond direct to your inbox every weekdayThe chancellor also confirmed a new scheme to provide mortgages to homebuyers who put forward only a 5 per cent deposit, with a government guarantee.Income tax thresholds – Thresholds at which people start to pay income tax or move into a new bracket will be frozen. The personal allowance will remain at £12,750 until 2026. The higher-rate threshold will increase to £50,270 next year, then be frozen at that level. The change means many more people will slip into higher tax brackets as wages rise.Thresholds for capital gains tax, inheritance tax and the tax-free allowance for pensions contributions will also be frozen. There was no mention of an increase in capital gains tax rates which had been rumoured to be under consideration. An increase would have levelled up the amount people pay on earnings from buying and selling assets with the amount they pay on wages.Alcohol and fuel duty rises scrapped – Duties on fuel and alcohol have been frozen. The decision means duty on petrol and diesel has remained at 57.95p a litre since 2011, with planned increases cancelled every year for the past decade.Business taxesCorporation tax – In April 2023, the rate companies pay on their profits will rise from 19 per cent to 25 per cent. The higher rate still leaves the UK with the lowest corporation tax rate in the G7.Smaller businesses will continue paying the lower rate. Only those making £250,000 or more in profit will pay a higher rate that will be tapered from 19 per cent to 23 per cent.VAT and business rates cut – A VAT cut for the hospitality and tourism industries will be extended for six months until 30 September. The chancellor said 150,000 businesses employing 2.4 million people “need our support” to protect jobs as the coronavirus restrictions are eased.The government first announced the cut from the standard rate of 20 per cent to 5 per cent last summer, applying to the hospitality industry, hotel and holiday accommodation and admission to certain attractions, as the national lockdown was lifted. Hospitality and leisure businesses will pay no business rates for three months and then one third of their normal rate for the final nine months of the year. Business support‘Restart Grants’ – £5bn of “restart grants” will be available from April to help businesses reopen. Non-essential retail businesses will open first, so they’ll receive grants of up to £6,000 per premises. Hospitality and leisure businesses, including personal care and gyms, will open later can get grants of up to £18,000.Business loans – A new raft of government backed loans will be launched to replace two programmes that are ending this year: the bounce back loan (BBL) and coronavirus business interruption loan scheme (CBILS).Businesses can apply for loans of between £10,000 and £25m through participating lenders. Loans will be backed up to 80 per cent by the government as CBILS are currently.Furlough – The Coronavirus Job Retention Scheme will continue until 30 September with furloughed workers receiving 80 per cent of their pay for hours that they do not work. From July, employers must pay 10 per cent of wages for those hours and in August they must contribute 20 per cent. More

Watch live as chancellor Rishi Sunak announces new budget for Covid ‘next stage’Rishi Sunak has announced the extension of both VAT cuts for the hospitality and tourism industries, as well as prolonging the end of the stamp duty holiday, in this year’s “fiscal firepower” Budget. Purchases up to £500,000 will continue to be free from the tax – and homes bought up to a value of £250,000 until the end of September, the chancellor confirmed.Speaking in the Commons, he told MPs more than 700,000 people have lost their jobs since March 2020 and the economy has shrunk by 10 per cent – the largest fall in more than 300 years. But he said the UK’s GDP is set to return to its pre-Covid peak in mid-2022, according to the Office for Budget Responsibility (OBR), which is six months earlier than previously anticipated. Mr Sunak also revealed that the headline rate of corporation tax will rise from 19 per cent to 25 per cent from 2023, effectively reversing the policy of his predecessor George Osborne – though it still leaves Britain with the lowest rate of such a tax in the G7, below countries like US, Germany, and Canada.Elsewhere, the chancellor pledged an additional £1.6bn for the coronavirus vaccine rollout and to “improve future preparedness”, as well as separate visa reforms for “highly skilled migrants”, in what he said is a combined move by the UK to become a “scientific superpower”.Inside Politics newsletterThe latest news on Brexit, politics and beyond direct to your inbox every weekdayInside Politics newsletterThe latest news on Brexit, politics and beyond direct to your inbox every weekdayShow latest update
1614783038Sunak urged to reconsider ‘insurance scheme for live events’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.” More

Rishi Sunak has unveiled a £19 million package in the budget to tackle domestic abuse amid soaring incidents in lockdown.The chancellor warned the experience of domestic abuse victims was one of the “hidden tragedies” of lockdown measures rolled out to curb the spread of coronavirus.Domestic abuse services, which often help those at risk of murder if they remain in their own homes, have been decimated by austerity measures in recent years.While several refuges have closed altogether, others are grappling with a chronic shortage of bed spaces, as local authority spending on refuges has been cut from £31.2m in 2010 to £23.9m in 2017.Over the weekend, the government announced Mr Sunak was expected to spend £15 million of the package to double the amount currently spent on schemes which attempt to stop perpetrators of domestic abuse harming their victims.While an extra £4m will help homeless women who have suffered domestic abuse get specialist help in “Respite Rooms’” – with the government hoping this will deliver up to 132 new bed places for roughly 1,100 homeless and extremely vulnerable women a year.Women’s Aid, a leading domestic abuse charity, told The Independent the budget announcement did not do enough to tackle the “funding crisis” the sector is in which has endangered services “very survival”.Inside Politics newsletterThe latest news on Brexit, politics and beyond direct to your inbox every weekdayInside Politics newsletterThe latest news on Brexit, politics and beyond direct to your inbox every weekdayLucy Hadley, a spokesperson for the organisation, added: “Specialist women’s domestic abuse services continue to face a funding crisis, with funding cuts and poor commissioning decisions failing to keep them secure. “Women’s Aid estimates that £393m is required for lifesaving refuges and community-based services in England, alongside ring-fenced funding for specialist services led ‘by and for’ black and minoritised women, disabled women and LGBT+ survivors. However next year only £165 million will be delivered”.Ms Hadley called for the government to give extra details about the funding – adding that it is not clear what “respite rooms” are.“Whilst funding for working with perpetrators is important, it must never come at the expense of funding lifesaving support for survivors,” she added. “Women-only services deliver tried and tested support that survivors and their children continue to desperately need. They are likely to face even further pressure and demand once lockdown finally lifts, and more women and children are able to reach out for help.” Domestic abuse has risen substantially during the pandemic as victims have been cooped up indoors with abusive partners. The national domestic abuse hotline saw a 65 per cent increase in calls during the first lockdown last year and research by Women’s Aid found one in seven victims currently enduring abuse at the hands of their partners said it had got worse in the wake of the public health crisis.A report released by MPs at the end of April last year revealed domestic abuse killings in the first 21 days of the first lockdown were double the total of an average period in the past decade. Tracy Blackwell, of Refuge, the UK’s largest provider of shelters for domestic abuse victims, warned services need to be able to get beyond the “funding cliff edge many find themselves on year after year”.She added: “Refuge would have liked to have seen this budget include an increase in funds for community-based services for survivors of domestic abuse, such as Independent Domestic Violence Advocates (IDVAs). “Right now, across the country Refuge is supporting more than 7,000 women and children – 6,000 of whom are accessing our community services and around 1,700 of whom are living with their perpetrators. Not all women who come to Refuge for support are able, or ready, to leave their perpetrators, and we support them through community led services which provide life-changing and life-saving support to women who need it.”Charlotte Kneer, chief executive of Reigate and Banstead Women’s Aid refuge in Surrey, warned the funding is a “drop in the ocean” as she explained they are forced to turn away eight women and their children for each space they have.She added: “The bulk of this announced funding will go to perpetrator programmes with the aim of stopping offending. We are concerned about this for a number of reasons. Improperly managed perpetrator programmes can create more danger for victims. The outcomes from these programmes have not been proven effective.”Pharmacies joined forces with the government earlier in the year to launch a codeword scheme which allows victims who may be trapped at home with abusers to discreetly gesture they are in need of help.If a victim asks for ANI (which stands for action needed immediately), a trained pharmacy worker will offer them to go into a private space where they can support them to either contact domestic abuse services or the police. The Independent recently reported cash-strapped services have been forced to turn away victims fleeing abusive partners – with leading services warning bed shortages push survivors into homelessness or into returning to their abuser where they face further torment.Providers say they have long been battling severe economic uncertainty due to austerity measures, but surging demand for help during the pandemic has compounded an already fragile financial situation.Anyone who requires help or support can contact the National Domestic Abuse Helpline which is open 24/7 365 days per year on 0808 2000 247 or via their website https://www.nationaldahelpline.org.uk/ More

Sir Keir Starmer has claimed the Budget “papers over the cracks” of the problems facing Britain in the wake of the Covid pandemic, as he suggested insecurity is being “deferred” for millions with a temporary extension of the universal credit uplift.Speaking moments after Rishi Sunak unveiled the government’s economic plans, the Labour leader accused the government of ignoring the crisis facing social care, telling MPs: “Although the chancellor spoke for almost an hour, we heard nothing about the long-term plan to fix social care.”“We needed a Budget to fix the foundations of our economy, to reward our key workers, to protect the NHS and to build a more secure and prosperous economy for the future,” Sir Keir added.“Instead what we got was a Budget that papered over the cracks rather than rebuilding the foundations — a Budget that shows the government doesn’t understand what went wrong in the last decade or what’s needed in the next.”Echoing his comments on social care, the former Conservative health secretary Jeremy Hunt also questioned the lack of help, suggesting. there was “little hope” for the sector which had been “bruised and demoralised after [the] most devastating year in its history”.”Understand money is difficult to commit at this stage, but they desperately need to know a plan is coming,” he said.Inside Politics newsletterThe latest news on Brexit, politics and beyond direct to your inbox every weekdayInside Politics newsletterThe latest news on Brexit, politics and beyond direct to your inbox every weekdayWhile the decision has been welcomed, many campaigners have highlighted concerns that when the support expires in September — coinciding with the end of the furlough scheme — the extra £20 per week will remain vital lifeline.Hinting at the political battle looming over the future of the welfare payments, the Labour leader accused Mr Sunak of “once again deferring the problem”.And he said: “As a result, insecurity and the threat of losing a £1,000 a year still hang over six million families. We would keep the uplift until a new, fairer system could be put in place.”The Labour leader also welcomed the “long-overdue” commitments to extend the coronavirus furlough scheme, the business rates relief for business and the extended VAT cut for the hospitality and tourism sectors as national restrictions are eased. However, he said: “There is no excuse for holding the announcement of this support back until today – and, of course, we will look at the detail.” More

The Office for Budget Responsibility (OBR) sees a “swifter and more sustained recovery” than it expected in November, Chancellor Rishi Sunak said in his 2021 Budget speech.Mr Sunak said the OBR, the Treasury’s independent forecaster, is now projecting UK GDP to be back to its pre-crisis peak by the middle of 2022 , six months earlier than it previously expected.He added that the OBR now thinks that unemployment will peak at 6.5 per cent, down from the 11.9 per cent it projected in its central scenario last summer.However, Mr Sunak also said that the OBR continues to project a 3 per cent of shortfall in UK GDP relative to its pre-crisis forecasts in five years’ time.Inside Politics newsletterThe latest news on Brexit, politics and beyond direct to your inbox every weekdayInside Politics newsletterThe latest news on Brexit, politics and beyond direct to your inbox every weekday More

Eight English ports will be granted controversial tax breaks to “unlock billions of pounds of private sector investment”, the Chancellor announced.The scheme is hugely controversial because it allows goods to be imported temporarily without tariffs, excise duties and other taxes being paid – before the goods are shipped on again.The EU is cracking down on that whiff of corruption – amid further criticism that business is simply shifted into the freeport, without the overall economy benefitting.But Mr Sunak said they were a route to “unlocking billions of pounds of private sector investment – generating trade and jobs up and down the country”. He also claimed they were a boost from Brexit, because the UK was constrained as an EU member –even though seven freeports existed in the UK between the mid-1980s and 2012. Freeports would “encourage free trade and reinforce our position as an outward looking trading nation, open to the world”, he told MPS.Inside Politics newsletterThe latest news on Brexit, politics and beyond direct to your inbox every weekdayInside Politics newsletterThe latest news on Brexit, politics and beyond direct to your inbox every weekday“A policy we can now only pursue now that we are out of the European Union,” the Chancellor claimed.“Freeports are special economic zones with different rules to make it easier and cheaper to do business. They’re well established internationally, but we’re taking a unique approach.“Our freeports will have simpler planning to allow businesses to build, infrastructure funding to improve transport links, cheaper customs with favourable tariffs, VAT or duties, and lower taxes, with tax breaks to encourage construction, private investment and job creation.”Mr Sunak promised “an unprecedented economic boost across the United Kingdom”, working with the Scottish Welsh and Northern Irish administrations to create more. The main beneficiaries would be businesses and the super-rich who took advantage of the tax breaks – while the public was left to pick up the bill for the infrastructure required.Up to 40 ports and airports were believed to have applied for the status, which were promised in the Conservative election manifesto. Mr Sunak also* Confirmed the extension of the furlough scheme until the end of September, although employers will be expected to make a contribution from July.* Extended the 5 per cent reduced rate of VAT for the tourism and hospitality sector to the end of September, with an interim rate of 12.5 per cent for another six months after that.* Continued the business rates holiday for the retail, hospitality and leisure sectors until the end of June, with a two-thirds discount for the remaining nine months of the year.The Chancellor also unveiled forecasts suggesting the economy will return to its pre-Covid level by the middle of next year – six months earlier than they previously thought.But he told MPs that, despite the £280bn of support already committed to protecting the economy, the damage done by the virus has been “acute””.“Our economy has shrunk by 10 per cent – the largest fall in over 300 years. Our borrowing is the highest it has been outside of wartime.” More

Rishi Sunak said in his Budget speech that the benefit uplift introduced last April to mitigate the impact of coronavirus on household finances, which was due to end on 31 March, will remain in place until September.He said working tax credit claimants would receive equivalent support over the next six months through a one-off payment of £500, due to the way that system works operationally.Around 446 people were still making new claims every hour in the first week of 2021, and a total of 4.5 million people have made a claim for the benefit since the start of the public health crisis.The decision to extend the extra benefit support is welcomed by many, but there are concerns that six months is not long enough, particularly as at that point the furlough scheme will have ended and unemployment is expected to be near its highest.Inside Politics newsletterThe latest news on Brexit, politics and beyond direct to your inbox every weekdayInside Politics newsletterThe latest news on Brexit, politics and beyond direct to your inbox every weekdayEmma, from Kent, who is on universal credit, told The Independent that while she was relieved the extra £20 per week would continue beyond March, six months was not long enough to provide her family financial stability.Her husband, a wine and beer wholesaler, was put on furlough last March and – other than two months between September and December – has been out of work and on 80 per cent of pay since.Emma said he was hoping to return to work in June, but she explained that even if he is able to, this would only give the family two months to “try to get back on top of things fully”.“The way prices have ramped up, plus the winter we’ve had, we’re going to be playing catch-up for a while before we can say ‘right, we can deal with this now’,” she added.“My kids are going back to school this month so I’ve had to buy them new school uniforms – that’s another extra cost that has already put us back this month.“I am worried. It’s still going to be a strain, and half of the trouble is the not knowing it’s the uncertainty of everything.”Experts also highlighted that the 2.2 million people on legacy benefits – most of whom are sick or have a disability– did not receive an uplift at all, despite the fact that many are struggling to afford basic essentials during the pandemic.Kevin Watkins, chief executive at Save the Children, said he was disappointed that the uplift would continue for “only another six months”. “While the extension will provide some help for families in the short term, children and their struggling parents across the UK will continue to face the prospect of having their incomes slashed in a few months’ time – just as furlough is ending, when people are most at risk of losing their jobs,” he said.“It also provides no support to the 2 million people receiving so called ‘legacy’ benefits, who missed out on the first benefits uplift and have been left to struggle throughout this crisis with no additional help.“This pandemic is far from over, and we know that families need long-term support that allows them to plan and budget effectively.”Professor Lisa Scullion, professor of social policy at the University of Salford, said the extension was welcome, but that it was “clear that for many people, this is just not going to be enough”.She added: “And what about benefit claimants who didn’t receive the increase, such as those on legacy benefits. In our research they were most likely to have experienced some of the more severe financial strains.
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The phased-out extension until the end of September will guarantee workers 80 per cent of their salaries, with employers set to contribute 10 per cent toward the total in July and 20 per cent in August and September.Mr Sunak has pledged to “continue doing whatever it takes to support the British people and businesses through this moment of crisis”.But why is the scheme going to run beyond the end of the government’s lockdown-easing roadmap for England, which envisages the lifting of all social restrictions by 21 June?The “relatively generous” September extension is an admission that businesses hit particularly badly by Covid-19 may require extra time to recover once restrictions are fully lifted, according to Paul Johnson of the Institute for Fiscal Studies.He told BBC Radio 4’s Today programme: “I think the thinking behind that is that there will be some businesses that are still struggling with demand, struggling to get back on their feet so giving them two or three months of grace will help to ensure that jobs are maintained.Inside Politics newsletterThe latest news on Brexit, politics and beyond direct to your inbox every weekdayInside Politics newsletterThe latest news on Brexit, politics and beyond direct to your inbox every weekday“Remember the chancellor tried to do this last summer – he was intending to phase out furlough over the summer and early autumn and of course that couldn’t happen because of the return of the virus.“The key thing now is that this really does end in September because we really do move back to normal.”Rain Newton-Smith, chief economist at the Confederation of British Industry, agreed that the extension would “give businesses the chance to catch their breath as we carefully exit lockdown”.She added: “It’s common-sense to keep the scheme going while business resilience remains so fragile for some months yet.”
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