Budget 2021 Highlights: Key Changes

Budget 2021 Highlights: Key Changes

UK Chancellor Rishi Sunak outlined the UK Government’s spending agenda for 2022 in Westminster this Wednesday.

Here are the key points in Rishi Sunak’s autumn Budget and Spending Review:

  • Chancellor Rishi Sunak said the Budget is focused on the “post-Covid” era, paving the way for the “Prime Minister’s economy of higher wages, higher skills, and rising productivity”;
  • The OBR – The Office for Budget Responsibility – has scaled down its assumption of the scarring effect of Covid-19 on the economy from 3 per cent to 2 per cent;
  • The OBR has downgraded its unemployment forecast due to the coronavirus pandemic from 12 per cent down to 5.2 per cent;
  • The National Living Wage will increase 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 1 December, bringing it down from 63 per cent to 55 per cent;
  • Alcohol duty is being 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 is being cancelled because of pump prices being at their highest level in eight years;
  • Flights between airports in the UK will be subject to a new lower rate of Air Passenger Duty from April 2023;
  • Every Whitehall department is getting a “real terms rise in overall spending” as part of the Spending Review, amounting to £150 billion over this Parliament;
  • 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 Northern Ireland Executive;
  • An extra £2.2 billion has been announced for courts, prisons, and probation services, including £500 million to reduce the court’s 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;
  • A new 50 per cent business rates discount will apply in the retail, hospitality, and leisure sectors;
  • Eligible businesses will be able to claim a discount on their bills of up to a maximum of £110,000.

 

What will the Budget 2021 mean for businesses?

Mr. Sunak said he was allocating the first round of bids from the “Levelling Up Fund”, noting it would be £1.7 billion to “invest in the infrastructure of everyday life in over 100 local areas”.

The Chancellor added: “With £170 million in Scotland, £120 million in Wales, and £50 million in Northern Ireland – more than their Barnett shares. This will benefit the whole United Kingdom.”

Chancellor Rishi Sunak said the Government is backing projects in Aberdeen, Bury, Burnley, Lewes, Clwyd South and Stoke-on-Trent – along with Labour areas of Ashton under Lyne, Doncaster, South Leicester, Sunderland and West Leeds.

The Chancellor said core science funding will rise to £5.9 billion a year by 2024-25, a cash increase of 37%.

A new 50% 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

A £6 billion funding package to tackle NHS backlogs and invest in technology was also trailed ahead of the statement.

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