Rishi Sunak set out the government’s tax and spending plans for the year ahead in his second budget as the country still reels from the effects of the covid pandemic.
The chancellor announced new measures to help business and jobs and to support the UK’s long-term economic recovery but he signalled he will cut Universal Credit back by £20 in September and the government’s furlough job retention scheme will also come to an end then.
Boris Johnson tweeted his support for the Chancellor. He said: “Throughout the pandemic we stepped in to protect jobs and livelihoods. This Budget continues that support and sets out our plan for growth.
“We’re investing in innovation, skills and infrastructure to build back better, level up and unleash the potential of the United Kingdom.”
But Labour’s Keir Starmer accused the Conservatives of having “no plan for the future”.
He told the Commons: “Behind the spin, the videos and the photo-ops, we all know the Chancellor doesn’t believe in an active and enterprising government.
“We know he’s itching to get back to his free-market principles and to pull away support as quickly as he can. One day these restrictions will end, one day we’ll all be able to take our masks off and so will the Chancellor, and then you’ll see who he really is.“And this Budget sets it up perfectly because this is a Budget that didn’t even attempt to rebuild the foundations of our economy or to secure the country’s long-term prosperity.”
The SNP’s Ian Blackford proposed that Scotland escape from Tory austerity and said that there is “no Boris veto on Scottish independence”.
He told MPs: “These attacks on devolution show what is fundamentally at stake because, as I said at the beginning of this speech, post-Brexit and post-pandemic, Scotland has a choice of two futures.
Here is a summary of the main points and the budget in numbers.
Covid recovery
Furlough at 80 per cent and support grant for the self-employed also to be extended until September
£20 uplift in Universal Credit to be extended for another six months
Covid spending to hit £352 billion over two years , a total of £407 billion once other fiscal support is included.
£1.6 billion for the vaccination programme.
£100 million for a ‘Taxpayer Protection Taskforce’ staffed by 1,250 people to hunt Covid fraudsters, including furlough fraud.
Wages
Minimum wage to rise by 19p an hour to £8.91 for over-23s from April. It will hit £8.36 for those aged 21-22; £6.56 for those aged 18-20; £4.62 for 16 and 17-year-olds and £4.30 for apprentices.
23 and 24-year-olds included in highest minimum wage rate for the first time.
Taxes are set separately in Scotland but Sunak froze tax levels for the rest of the UK so similar measure can be expected at Holyrood.
The economy and jobs
UK economy shrank by 10 per cent in 2020 but forecast growth of 7.3 per cent next year.
Some 700,000 people have lost their jobs since pandemic began, unemployment to peak at 6.5 per cent next year.
UK to borrow a peacetime record of £355 billion this year.
Taxing and spending
Tax-free personal allowance to be frozen at £12,570 from April 2021 levels to 2026. Although tax rates are set separately in Scotland the personal allowance remains reserved and is set by the UK Government.
Corporation tax on company profits to rise from 19 per cent to 25 cent in April 2023 but to be kept lower about 1.5 million smaller companies
VAT rate for hospitality kept at five per cent rate until September with an interim 12.5 per cent rate to apply for the following six months
Contactless card payment limit to rise from £45 to £100 later this year. People can still make five transactions in a row but only up to £300 total.
No extra duties on spirits, wine, cider or beer and fuel duty to be frozen for eleventh consecutive year.
