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Autumn Budget 2021 – Reactions and  commentary

Autumn Budget 2021
Autumn Budget 2021
Chancellor Rishi Sunak’s Budget Speech – Key announcements unveiled.The Chancellor’s department has been criticised for ‘leaks’ with Budget detail over recent days.

The detail of the Budget is now unveiled – described as a ‘Something for Everyone Budget’ but a ‘Trick and Treat’ Budget by the opposition.

Key points from Chancellor Rishi Sunak’s Budget speech.  (The Key Points are lengthy!!)

The Budget has been likened to a Labour budget – lots of spending – although the Conservatives state it’s a budget for our time!

Autumn Budget 2021

ECONOMY

The Chancellor says there are ‘challenging’ months ahead, adding that inflation in September was 3.1% and likely to rise further.  The OBR expects inflation to average 4% over the next year.

  • Pressure caused by supply chains and energy crisis will “take months to ease”.  
  • Economy to return to its pre-Covid level at the turn of the year – an improvement on OBR forecasts revealed in March. 
  • Economy expected to grow by 6% in 2022 and 2.1%, 1.3% and 1.6% over the next 3 years.  
  • In July last year, at the height of the pandemic, unemployment was expected to peak at 12% but the OBR now expects it to peak at 5.2%. 
  • Compared to 2020 wages have grown by 3.4%.

Autumn Budget 2021

DEBT AND BORROWING

  • Underlying debt is forecast to be 85.2% of GDP this year.  It will reach 85.4% in 2022/23 before peaking at 85.7% in 2023/24.  Falls are then predicted in the final three years of the forecast from 85.1% to 83.3%.
  • Total departmental spending over this parliament will increase by £150bn, growing by 3.8% a year in real terms.

NHS

  • Spending on healthcare to increase by £44bn to over £177bn by the end of this Parliament.
  • Extra revenue from Health and Social Care levy will go towards NHS and Social Care as promised.
  • Health budget will be the largest since 2010 with record investment in research and development, better screening, 40 new hospitals and 70 hospital upgrades.

CRIME

  • The Chancellor says the budget funds an ambition to recruit 20,000 new police officers. 
  • Extra 2.2bn for Courts, Prisons and Probation Services, including £500m to reduce the backlog in Courts.
  • Programmes to tackle neighbourhood crime, reoffending, county lines crimes, violence against women and girls, victims’ services and improved response to rape allegations.
  • £3.8bn for the “largest prison building programme in a generation”.

HOUSING

  • £11.5bn to build up to 180,000 affordable homes – 20% more than the previous programme.
  • £1.8bn to bring 1,500 hectares of brownfield land into use.
  • £640m a year to help those who are rough sleepers and homeless.

CLADDING

  • £5bn to remove unsafe cladding from the highest risk building, partly funded by a residential property developers’ tax, levied on developers with profits over £25m at the rate of 4%.

CHILD SERVICES

  • £300m for parenting programmes for families, tailored services to help with perinatal mental health.
  • £150m to support training and development for early years workforce
  • £200m for Supporting Families programme which helps families with varied needs 
  • Over £200m to continue the holiday activity and food programme  
  • £560m for youth services – enough to fund up to 300 youth clubs in England 
  • More than £200m to build or transform up to 8,000 community football pitches in the UK 
TRANSPORT

  • £21bn for roads as part of a larger investment in transport.
  • £2.6bn for upgrades of over 50 local roads.
  • More than £5bn for roads maintenance – enough to fill one million more potholes a year.
  • More than £5bn for buses, cycling and walking improvements.
  • HGV levy (previously suspended until August) will now be suspended until 2023.
  • Vehicle Excise duty for heavy goods vehicles to be frozen.
  • Funding to improve lorry park facilities.
RAIL
  • £46bn investment in railways, with an integrated rail plan to be published.
  • £5.7bn for London style transport settlements in Greater Manchester, Liverpool City Region, Tees Valley, South Yorkshire, West Yorkshire, West Midlands, West of England.
EDUCATION

  • £2bn new funding to help schools and colleges with “education recovery”, bringing total support (some already announced) to almost £5bn 
  • Restoring per pupil funding to 2010 levels in real terms, equivalent to a cash increase for every pupil of more than £1,500 
  • 30,000 new school places for children with special needs and disabilities 
BUSINESS SUPPORT

  • Business rates will remain at the same rate, with Mr Sunak saying that it would be wrong to find £25bn in extra borrowing through cuts to public services or tax rises elsewhere 
But there will be some changes:
  • New 50% business rates discount for businesses in the retail, hospitality and leisure sectors, including pubs, music venues, cinemas, restaurants, hotels, theatres, and gyms
  • This will mean any eligible business can claim a discount up to a maximum of £110,000 – a tax cut worth almost £1.7bn
  • Mr Sunak says that, together with small business rates relief, this means more than 90% of all businesses in these sectors will see a discount of at least 50%
  • Those who pay business rates will benefit from more frequent re-evaluations every three years from 2023
  • New investment relief to encourage businesses to adopt green technology such as solar panels
  • Business rates improvement relief – from 2023 every business will be able to make property improvements and, for 12 months, pay no extra business rates. This and the investment relief above total £750m
  • To help businesses pay their tax bills, next year’s planned increase in the multiplier will be cancelled – a cut of £4.6bn over the next five years
ALCOHOL DUTY

  • An overhaul of alcohol duty, cutting the number of main duty rates from 15 to six – the stronger the drink, the higher the rate
  • Small producer relief will extend the principle of small brewers’ relief to small cidermakers and others making alcoholic drinks of less than 8.5% ABV
  • Sparkling wines will pay the same duty as still wines of equivalent strength, rather than the 28% they currently pay. Duty will also be cut for fruit cider
The Chancellor seems to have pulled the proverbial “rabbit out of the hat” in relation to Universal Credit taper.  The rate currently being 63% – reducing to 55% which will please working parents who benefit from Universal Credit.

Thankfully, the Chancellor has resisted altering CGT, IHT and Pension Tax Relief at this point.

This summary hopefully enables you to follow the budget speech.  A financial specific overview will be produced and sent to you in due course.

As always, if you require advice, simply get in touch where we will do all we can to support you.

Best Wishes.

Richard and the Best Price FS Team

Advice: Simply click here to get in touch if you wish to receive regulated advice in relation to the ‘suitability’ of the plans to meet your investment needs.