Budget response from Dutton Moore...
27 October 2021

Responding to today’s budget from Chancellor Rishi Sunak, Managing Partner Tony Bullock, offers some commentary on the announcements:

Although the chancellor has warned that there are “challenging” months ahead – the forecasts are looking more positive for our economy as we emerge out of restrictions.

Inflation in September was 3.1% and likely to rise further, and the Office for Budget Responsibility expects it to average at 4% over the coming year. We are also all aware of pressures on supply chains and the energy crisis, and the Chancellor has stated it will “take months to ease”.

However, there is an improvement on the OBR forecasts revealed last March and the economy is expected to return to pre-COVID levels at the turn of the year – so this is positive.

The economy is expected to grow by 6% in 2022, and 2.1%, 1.3% and 1.6% over the following three 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% - again more positive signs for all.

For lower income households there is some good news: the national living wage will be increased by 6.6% to £9.50 per hour, so for a full-time worker that’s a pay rise worth over £1k per year. Plus, the cut to the Universal Credit taper (from 63p in the pound to 55p) is also welcomed and will be a real incentive for lower income families to work rather than not – and this will come into effect within weeks.

Some other key announcements at a glance:

  • £1m annual investment allowance will not end in December as planned. It will be extended to March 2023.
  • Bank surcharge within corporation tax will be retained at 3% and overall corporate tax rate on banks will increase from 27% to 28% in 2023.
  • New 50% business rates discount for businesses in the retail, hospitality, and leisure sectors, including pubs, music venues, cinemas, restaurants, hotels, theatres, and gyms.
  • The Chancellor 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.
  • To help businesses pay their tax bills, next year's planned increase in the multiplier will be cancelled.
  • An overhaul of alcohol duty, cutting the number of main duty rates from 15 to six - the stronger the drink, the higher the rate.
  • Planned rise in fuel duty is cancelled.
  • Spending on healthcare will increase by £44bn to over £177bn by the end of this parliament.
  • £4.8bn for local government over the next three years for social care.
  • £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 cases.
  • £3.8bn for the "largest prison-building programme in a generation".
  • £11.5bn to build up to 180,000 affordable homes - 20% more than the previous programme.
  • £640m a year to help those who are rough sleepers and homeless.
  • £5bn to remove unsafe cladding from the highest risk buildings.
  • £2.6bn for upgrades of over 50 roads.
  • £46bn investment in railways.
  • £300m for parenting programmes for families, tailored services to help with perinatal mental health.
  • Over £200m to continue the holiday activity and food programme.
  • £2bn new funding to help schools and colleges with "education recovery", bringing total support (some already announced) to almost £5bn.

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