Chancellor Rishi Sunak unveiled his Autumn Budget on 27th October to the House of Commons. He has set out his plans for the forthcoming year and stressed that we are now in the ‘post-Covid’ era, and his Budget would pave the way for an “economy of higher wages, higher skills, and rising productivity”.
Economy and wages
In positive news, Sunak advised that the economy is forecast to return to pre-Covid levels by 2022. Annual growth is set to rebound by 6.5% this year, and then 6% in 2022. Unemployment is set to peak at 5.2%, significantly lower than the 11% initially predicted. In further good news, wages have grown by 3.4% since February 2020. However, in slightly bleaker news, inflation in September was 3.1% and is likely to rise to an average 4% over the next year.
Regarding wages and taxes, the National Living Wage to increase next year by 6.6%, to £9.50 an hour and there will be a 50% business rates discount for the retail, hospitality, and leisure sectors in England in 2022-23, up to a maximum of £110,000. Furthermore, the planned rise in fuel duty will be cancelled, a welcome announcement given the high price of fuel. Confirmation business rates will be retained and reformed and the Universal Credit taper rate will be cut by 8% no later than 1st December which will allow claimants to retain more of the payment.
There will be an overall rise in government spending for England, Scotland, Wales, and Northern Ireland. The Levelling Up Fund will mean £1.7bn invested in local areas across the UK, including for our neighbours in Bury, Burnley and Ashton-Under-Lyne. Similarly, £7bn for transport projects in our own Greater Manchester has been set aside, including for the West Midlands and South Yorkshire. Tax relief for museums and galleries will be extended for two years, to March 2024, and the funding of core sciences will rise to £5.9bn a year by 2024-25. Happily, £6bn of funding has been allocated to help tackle NHS backlogs.
There is good news for the education sector with schools set to get an extra £4.7bn in funding by 2024-25 and nearly £2bn of new funding to help schools and colleges recover from the pandemic. Ultimately, schools funding will return to 2010 levels, this being equivalent to a per-pupil cash increase of more than £1,500.
Housing, air travel and alcohol duty
Regarding housing, £24bn has been set aside, including £11.5bn for up to 180,000 affordable homes. A 4% levy will be placed on property developers with profits over £25m to help create a £5bn fund which will remove unsafe cladding. There have also been changes announced to air travel, in good news for frequent domestic flyers, flights between airports in the UK nations will be subject to a new lower rate of Air Passenger Duty from April 2023. Also from April 2023, the new ultra-long-haul band in Air Passenger Duty for flights of over 5,500 miles will be introduced. Furthermore, the financial support for English airports due to the pandemic will be extended for six months.
A big talking point has been the changes to alcohol duty. The planned rise on spirits, wine, cider, and beer has been cancelled. However, stronger red wines, fortified wines, and high-strength ciders will see a small increase. Rates on many lower alcohol drinks including rose wine, fruit ciders, liqueurs, lower strength beers and wines will be reduced, and all sparkling wines will pay the same duty as still wines of equal strength.
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