Today (27 October) Chancellor Rishi Sunak officially announced his plans for the Autumn Budget, opening his speech with: “Employment is up, investment is growing, public services are improving, public finances are stabilising and wages are rising.”
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.
The budget is outlined by a new set of fiscal rules; “Underlying public debt as a percentage of gross domestic product – or everything the UK produces – must fall” and that day-to-day spending will be funded from taxation and not borrowing.
Inflation
- Hit 3.1% and is likely to rise further (due to lifted restrictions and demand for goods increasing)
- HGV levy had already been suspended until August however this will now be extended to 2023, freezing Vehicle Excise Duty for HGV’s.
Unemployment
- Office for Budget Responsibility (OBR) expects it to peak at 5.2%, however this leaves 2 million people fewer than expected unemployed
UK economic growth
- OBR revised forecasts from March, predicting GDP to expand by 6.5% compared to 4%. However, the Bank of England expects this to grow by 7.4%.
- If recovery is strong, government plan to return to spending 0.7% of GDP on overseas aid by 2024.
- Spending is growing by 3.8% a year with a real terms increase in spending for every government department announced.
Innovation
- The target to increase research and development (R&D) investment to £22bn will be maintained.
- The ‘Scale-Up Visa system’ will make it quicker and easier for fast-growing businesses to bring in highly-skilled individuals.
Retail, Hospitality and Leisure
- A new 50% rates discount has been confirmed for businesses in the retail, hospitality and leisure sectors, up to a maximum of £110,000.
- A “draught relief” has been announced, applying a 5% duty cut to draught beer and cider served from containers over 40 litres.
- There will be a long-term investment in British pubs of £100m a year and a permanent cut in the cost of a pint by 3p.
- There will be just six duty rates on alcohol, meaning that some stronger spirits and wines will become more expensive, but weaker alcohols like beer and rosé will become cheaper.
- There will also be a new “small producer relief” which will include small cider makers for the first time, in a similar way to small brewers’ relief.
- The duty premium of sparkling wines costing more than still wines of equivalent strength, will be ended.
- Duty is also being cut on fruit ciders to bring it in line with apple ciders.
Minimum wage increase
- The minimum wage is to rise by 6.6% to £9.50 an hour (from £8.91) for workers aged over 23
- The National Minimum Wage for people aged 21 to 22 will rise from £8.36 to £9.18 an hour and the Apprentice Rate will increase from £4.30 to £4.81 an hour.
Universal credit taper rate cut
- The universal credit taper rate will be cut from 63% to 55% by no later than 1 December.
Fuel
- The planned rise in fuel duty will be cancelled as Sunak is “not prepared to add to the squeeze on families and small businesses”, amounting to a saving of nearly £8bn over the next five years.
Public services
- £44bn increase to resource spending on healthcare by the end of the Parliament
- The health capital budget will be the largest since 2010.
- The chancellor lists a mix of old and new proposals, from the contested promise of 40 new hospitals through to 50,000 more nurses and 50 million more primary care appointments.
- £4.8bn new grant funding for local councils over the next three years.
- Money will be invested in youth services to build youth clubs and 8,000 state-of-the-art community football pitches across the UK.
Infrastructure
- The National Infrastructure Strategy is investing £21bn on roads, £46bn on railways and £5.7bn for London-style transport systems across city regions.
- £5bn on cycling infrastructure and local minor roads.
Bank Taxes
- A 5% cut (from 8% to 3%) to the bank surcharge that was introduced in 2015 by George Osborne, meaning they will pay 28% tax.
Devolved administrations
- Scottish government funding will go up by £4.6bn
- Welsh government funding will go up by £2.5bn
- Northern Ireland Executive funding will go up by £1.6bn
Housing
- £24bn for “multi-year housing settlement”, with 11.5bn of this used to build 180,000 affordable homes, the largest cash investment in a decade.
- Brown-field land targeted for new homes.
- £5bn made available (partly funded by the Residential Property Developers Tax) available to remove unsafe cladding from highest risk buildings.
Policing
- An extra £2.2bn for courts and rehabilitation services.
- 20,000 new police officers.
- £3.8bn for the “biggest prison-building programme in a generation”.
Education
- Additional £2bn for education recovery in England, taking the total to around £5bn, with an extra £4.7bn by 2024-25, restoring per pupil funding to 2010 levels.
- £300m will go towards “A Start for Life offer” for families, offering parenting programmes and help with perinatal mental health.
- Funding to create a network of Family Hubs around the country with an extra £170m pot.
- £150m to support and train those who work in early years, along with more funding for holiday and activity programmes.
Air Travel
- Flights between airports in England, Scotland, Wales and Northern Ireland will be subject to a new lower rate of Air Passenger Duty from April 2023, covering flights of over 5,500 miles, with an economy rate of £91.
Source: BBC News