Budget 2021

A few notes from listening to the live speech by Rishi Sunak;

The devil will be in the detail, but pretty much nothing unexpected. And for me and the employment sector I feel like higher cost without increased productivity is a potential worry (nmw, increases in NIC and Corp tax will certainly hit our sector) thank goodness no increase in CGT or touching of Business Asset Disposal Relief (prev called Entrepreneurs relief) ………

Intro:

Employment is up, investment is growing, wages are rising, public sector investment is up?

We are looking to recover growth, stronger public finances, improved unemployment and debt down our plan is working

Help for working families and the cost of living and levelling up??

Covid still presents a challenge but we are preparing for a new economy post covid, an economy fit for optimism – this budget is the foundation

Inflation in sept 3.1% and is likely to rise to more than 4% - it is due to 2 global forces

• Due to shut down, supply chains are under pressure
• Global demand for energy has increased and in some case more than doubled

These pressures will not be solved overnight, this is not unique to the UK – gov are reacting quickly eg HGV driver changes

Cost of living – 0.5bn household support

Bank of England – to achieve stable inflation

OBR do expect recovery to be earlier than previously thought

Growth is revised from 4 to 6.5%

OBR expect unemployment to peak at 5.2% far better than expected

Wages are rising – grown in real terms by 3% since 2020

The plan for jobs is working

New Charter for Budget responsibility – these are the rules:

The importance of strong public finances is essential – we need to strengthen our public finances to cope for the future – discipline and responsibility

??????????????Net debt must fall

Borrowing as a percentage of GDP must fall

??????????????Every day spending must be funded by taxation

??????????????Only long term investment should be funded by debt?3% GD on capital investment

Public sector net investment will be at the highest level!

￡44billion extra to NHS, 50, 000 more nurses?

Investment in housing and affordable homes ￡24 billion

￡10bn in new housing – a million new homes in brown field sites

• Funded by property developers Levy

Investment in police

￡5bn for unsafe cladding

Support for children - ￡300m for Start for Life program, family hubs.

Childcare providers - ￡150m

￡200m for holidays program

Tripling investment for new school places

Youth services, clubs and football pitches

￡1.7bn levelling up fund for local areas

Investment in culture and museums – extending tax relief to 2024 worth ￡0.25 billion

Success will be measured by the outcomes – now we must deliver, this is tax payers money

Only way to pay for this is through higher growth – we choose to invest in a plan for growth

• Infrastructure Revolution – roads rail broad band mobile
• Integrated rail plan
• Local transport
• Buses cycling and walking
• Invest in innovation and tech
• Universities
• Research & Development ￡22bn spend 50% up and will rise to 1.1% of GDP from 0.7%, ahead of other European countries?
• R& D tax relief to be revamped – expanding the scope to include cloud computing and needs to be focussed on domestic activity
• Eco and Green bonds
• 107m for offshore wind in Teeside
• Hosting Cop26
• Attractive to the best and brightest minds – New Scale Visa -?competitive to attract the best global people
• World class education – apprenticeships and kickstart proven already – increasing skill spending by 42%, T Levels, investment in adults with poor numeracy – “Multiply program”?worth ￡560m

Simpler fairer tax system?

• Shipping Tonnage tax regime – reward companies for adopting the UK red shipping flag
• Air Passenger duty – domestic flights will from April 2023 subject to a new lower rate of air passenger duty to unify the country and boost regional airports and improve the cost of living
• Carbon emission – long haul levy will be higher
• Corporation tax is increasing to 25% in2023
• Annual investment allowance of ￡1m will be extended to March 2023
• Banks will retain the banks 3% surcharge increasing it to 28%
• Review of business rates with key reform to ease the burden – a cut of ￡7bn
• fairer and timelier with revaluation more often every 3 years
• Investment relief for tec like solar
• Property improvements for 12 months wont pay extra in business rates
• Investment incentives of ￡750m
• Next years planned increase in multiplier will be cancelled
• For one year a 50% business rates
• discount for retail and hospitality
• Alcohol duties are outdated and complex – radical simplification and worth ￡3bn
• Reducing the number of rates from 15 to 6.?The stronger the drink the stronger the tax is the?rationality.?Lower strength to pay less
• Craft producers – small producer relief and cider makers
• Modernise the system to reflect todays habits -?sparking wine etc end irrational duty premium of 28% - so UK wines will be cheaper
• Pubs – Draft relief – new lower rate of duty in pubs for drinks on draft – cut duty by 5%
• Planned duty on spirits will be cancelled

Support for working families

• The planned rise in fuel duty will be cancelled – ave car driver will save ￡1900 pa

Public sector pay freeze to stop

Increase in National Living Wage - ￡9.50 an hour up 6.6%

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Taxes are rising to the highest levels due to Covid – we don’t like it – but there is personal responsibility it cannot just be government led.?His goal is to reduce taxis by the end of this parliament, a society that rewards work

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Universal credit taper is a tax on work?- to make sure work pays – this rate will be cut by 8% !!!!! From 63 too 55%??- impact on working families on ave an extra ￡1000 a year to be introduced by December 1st ?