On Wednesday, October 27th Chancellor Rishi Sunak delivered his Autumn Budget to the House of Commons. He announced new plans for the government tax and spending plans, where he focused on what a post-Covid Britain would look like. One of his main points was that we would see an economy of higher wages, higher skills and rising productivity.
Here is a summary of the key details (click here for a full breakdown):
Taxation and wages:
- Universal Credit taper rate will be cut by 8% no later than the 1st December, bringing it down from 63% to 55% – allowing claimants to keep more of the payment
- Confirmation business rates to be retained and reformed
- A 50% business rates discount for the retail, hospitality, and leisure sectors in England in 2022-23, up to a maximum of £110,000
- Planned rise in fuel duty to be cancelled amid the highest pump prices in eight years
- National Living Wage to increase next year by 6.6%, to £9.50 an hour
State of the economy:
- Inflation in September was 3.1% and is likely to rise to average 4% over next year, OBR says
- UK economy forecast to return to pre-Covid levels by 2022
- Annual growth set to rebound by 6.5% this year, followed by 6% in 2022
- Unemployment expected to peak at 5.2% next year, lower than 11.9% previously predicted
- Wages have grown in real terms by 3.4% since February 2020
- Borrowing as a percentage of GDP is forecast to fall from 7.9% this year to 3.3% next year
- Borrowing as a percentage of GDP will then fall in the following four years to 1.5%
- Foreign aid spending projected to return to 0.7% of GDP by 2024-25
Government spending:
- Whitehall departments to receive rise in overall spending, totalling £150bn over the course of this Parliament
- Funding will rise by an average of £4.6bn for Scottish Government, £2.5bn for Welsh Government, and £1.6bn for Northern Ireland Executive
- Levelling Up Fund will mean £1.7bn invested in local areas across the UK
- Government backing projects in Aberdeen, Bury, Burnley, Lewes, Clwyd South, Stoke-on-Trent, Ashton under Lyne, Doncaster, South Leicester, Sunderland and West Leeds
- Extra £2.2bn for courts, prisons and probation services, including funding to clear the courts backlog
- £6bn of funding to help tackle NHS backlogs
- £7bn for transport projects in areas including Greater Manchester, the West Midlands and South Yorkshire
Children and education:
- Schools to get an extra £4.7bn by 2024-25
- There will be nearly £2bn of new funding to help schools and colleges to recover from the pandemic
- Schools funding to return to 2010 levels in real terms – an equivalent per pupil cash increase of more than £1,500
- £300m will be spent on a “Start for Life” parenting programmes, with an additional £170m by 2024-25 promised for childcare
- A UK-wide numeracy programme will be set-up to help improve basic maths skills among adults
Air travel:
- Flights between airports in the UK nations will be subject to a new lower rate of Air Passenger Duty from April 2023
Alcohol:
- Planned rise in the duty on spirits, wine, cider and beer cancelled
- Stronger red wines, fortified wines, and high-strength ciders will see a small increase in their rates
- Rates on many lower alcohol drinks including rose wine, fruit ciders, liqueurs, lower strength beers and wines to fall
- Lower duty on draught beer and cider from containers over 40 litres will cut the rate by 5%
Housing:
- £24bn earmarked for housing, including £11.5bn for up to 180,000 affordable homes, with brownfield sites targeted for development
- £640m a year to address rough sleeping and homelessness