Autumn Budget 2021

Autumn Budget

Autumn Budget 2021

The Chancellor of the Exchequer announced the contents of the 2021 autumn budget in the House of Commons on the 27th October 2021.

The budget set out the government’s plan for taxation and spending for the upcoming year. Rishi Sunak said the plans were focused on a “post-Covid era” and would pave the way for an “economy of higher wages, higher skills and rising productivity.

State of the economy and public finances

  • UK economy predicted to return to pre-Covid levels by 2022
  • Inflation in September reached 3.1% and is likely to rise to average 4% on the next year
  • Unemployment is set to peak at 5.2% in 2022, much lower than previously predicted (11.9%)
  • Annual growth set to rebound by 6.5% this year, followed by 6% in 2022
  • Wages have increased in real terms by 3.4% since February 2020
  • Foreign aid spending projected to return to 0.7% of GDP by 2024-25
  • Borrowing as a percentage of GDP predicted to decrease from 7.9% this year to 3.3% next year
    • Borrowing as a percentage of GDP will then fall in the following 4 years to 1.5%

Taxation and spending

  • Universal credit taper rate will be cut by 8% no later than the 1st December, bringing it down for 63% to 55%
    • Allowing claimants to keep more of the payment
  • The planned rise in fuel duty will be canceled amid the highest pump prices in 8 years
  • Confirmation that Business rated will be retained and reformed
  • National Living Wage to increase next year by 6.6%, from £8.91 to £9.50 an hour
  • Consultation on an online sales tax
  • A 50% business rate discount for retail, leisure and hospitality sectors in England in 2022-23, up to a maximum of £110,000

Government spending

  • Whitehall Departments will receive a rise in overall spending, totaling £150bn over the course of the current parliament
  • Core science funding to increase to 5.9bn a year by 2024-25
  • £6bn of funding to help tackle NHS backlog
  • Funding will rise by average of £4.6bn for Scottish Government, £2.5bn for Welsh Government and £1.6bn for Northern Ireland Executive
  • Leveling up fund will invest £1.7bn in local areas around the UK
  • Government to back projects in Aberdeen, Bury, Burnley, Lewes, Clwyd South, Stoke-on-Trent, Ashton under Lyne, Doncaster, South Leicester, Sunderland and West Leeds
  • An extra £2.2bn for prisons, courts and probation services, including funding to clear the court backlog
  • Tax relief for museums and galleries to be extended until march 2024
  • £7bn to be invested into transport projects in areas including Greater Manchester, the West Midlands and South Yorkshire

Education

  • Schools to receive £4.7bn extra funding by 2024-25
  • £300m invested into “start for life” parenting programs, with an additional £170m by 2024-25 promised for childcare
  • There will be nearly £2bn of new funding to help schools and colleges recover from the pandemic
  • Schools funding will return to 2010 levels in real terms
    • An equivalent of more than £1500 increase per pupil
  • UK wide numeracy programmers will be set up in an aim to help improve basic mathematic skills in adults.

Air Travel

  • Flights between airports in UK nations will be subject to a new, lower rate of air passenger duty from April 2023
  • A new ultra long-haul ban in air passenger duty for flights of over 5,500 miles will be introduced from April 2023
  • Financial support for English airports to be extended for a further 6 months

Alcohol

  • The planned rise in duty on spirits, wine, cider and beer will be cancelled
  • Simplification of alcohol duties will see the number of rates drop from 15 to 6
  • Rates on many lower alcohol drinks including rose wine, fruit ciders, liqueurs, lower strength beers and wines to fall
  • All sparkling wines to pay the same duty as still wines of equivalent strength
  • The new, lower rate of duty on draught beer and cider will cut rates by 5%

Housing

  • £650m a year to help address homelessness and sleeping rough
  • £24bn earmarked for housing, including £11.5bn or up to 180,000 affordable homes, with brownfield sites targeted for development
  • 4% levy will be placed on property developers with over £25m in profit to help create £5bn fund to remove unsafe cladding

If you have any concerns or would like to discuss the topics within the Autumn 2021 budget further, please get in contact with the HPC team today. 

T: 0844 800 5932

E: contact@highperformanceconsultancy.com

Twitter: @HPC_HRServices

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