Today will see the government set out its tax and spending plans for the year ahead, and it’s plan for the economic recovery after the pandemic and the year of lockdowns that have hit big parts of the economy hard.
Rishi Sunak‘s announcements will cover everything from booze, fuel and cigarettes to wages, housing and Britain’s Covid response.
The Chancellor will vow to do “whatever it takes” to support the British people and business through this “moment of crisis” when he addresses Parliament in his annual statement at 12.30pm.
He will then try to spin the results in a 5pm press conference – while journalists and experts are still poring over the detail – saying: “We’re using the full measure of our fiscal firepower to protect the jobs and livelihoods of the British people”, the Mirror reports.
The Tory Chancellor will extend furlough to September, and is tipped to extend the Stamp Duty cut and other Covid support by three months, and the £20-a-week Universal Credit uplift by six months.
He will unveil grim financial projections on Britain’s economy and begin to sketch a vision for how it’ll be made better post-vaccine – with grants of up to £18,000 for lockdown-battered firms to reopen.
He will announce a string of other measures to help the economy recover – though some of these, like schemes to push people back into shops and restaurants, may not come until later.
And aides promise he’ll be “honest” about the need to claw back £280bn of Covid spending – as corporation tax could be hiked and income tax allowances frozen.
But he may well put off most painful tax rises until later too – with fuel and beer duty tipped to be frozen and any ‘Amazon tax’ put off until the Autumn.
The politics of this year’s Budget are very unusual. Keir Starmer has vowed not to back any immediate tax rises. This could bizarrely see a Tory government reversing its own tax breaks for big business, only to be opposed by the Labour Party.
Meanwhile Tory MPs could revolt as they are warned they’d be stripped of the whip if they vote against the Budget.
It’s a strange time, with a Conservative government overseeing massive state spending due to coronavirus.
Ex-Chancellor Philip Hammond has warned the Boris Johnson must tell “difficult home truths” – but ex-PM David Cameron has warned tax rises now “wouldn’t make any sense at all”. And ex-Cabinet minister David Davis warned tax rises will “lose all the northern constituencies” the Tories won last year.
So how on earth can you… well… make sense of it? And what will it mean for your wallet?
Here’s all the Budget speculation, along with a few hard facts, to sketch out what we know so far.
When is the Budget?
This year’s Budget takes place on Wednesday, March 3.
Mr Sunak will deliver the statement in the House of Commons, which will likely come after Prime Minister’s Questions at about 12.30pm. Labour will respond to the proposals, which will then be debated by MPs over several days.
What we know is in the Budget
The furlough scheme will be extended until the end of September, Rishi Sunak will announce in today’s budget.
The Chancellor will confirm that the lifeline jobs support scheme will continue into the autumn when he sets out his Budget in the Commons.
Around 4.7 million people were furloughed at the end of January, where the Government pays 80% of an employee’s wages.
But employers will be asked to start contributing 10% to the scheme in July, and 20% in August and September as the economy reopens after lockdown.
It means furlough will have been running for an astonishing 18 months – and suggests the Chancellor fears all will not be back to normal from June 21, the earliest date all legal lockdown rules would lift.
Likewise Rishi Sunak must decide whether to extend the £20-a-week boost to Universal Credit beyond April 12.
If he doesn’t, it will be cut suddenly by £85 a month for 6million claimants.
It’s thought the Chancellor is set to extend the £20 uplift for six months, after previous ideas to give claimants a one-off £500 payment met with ridicule.
But even a six month extension would push claimants off a cliff-edge in October and charities want the current rate to be permanent. They say a return to previous UC levels would take Britain’s unemployment support to its lowest since 1992.
Up to £18,000 for venues to reopen
Pubs, restaurants, shops and other businesses will get a £5 billion grant scheme to help reopen as the lockdown is eased.
Chancellor Rishi Sunak will announce “restart grants” – worth up to £6,000 per premises to help non-essential shops reopen and trade safely.
Hospitality, hotels, gyms, as well as personal care and leisure firms, will be eligible for up to £18,000 per premises – as they are due to open later under the plans for easing lockdown.
The Treasury estimates 230,000 firms will be eligible for the higher band, which will be awarded based on their rateable value, and 450,000 shops will also be able to apply.
The £5 billion is targeted at England, but the devolved nations in Scotland, Wales and Northern Ireland will receive an extra £794 million in funding through the Barnett formula.
Hospitality, accommodation, leisure, personal care and gym business premises will get £18,000 for a rateable value over £51k; £12,000 for a rateable value of £15-51k and £8,000 for a rateable value under £15k.
Non-essential shops will get £6,000 for a rateable value over £51k; £4,000 for a rateable value of £15-51k and £2,667 for a rateable value under £15k.
Business and self-employed Covid support
The Chancellor is also tipped to extend the self-employment support scheme and some business measures including VAT cuts.
A fourth grant from the Self-Employment Income Support Scheme (SEISS) will be available to claim from April, worth 80% of three months’ average trading profits up to £7,500.
And while details are still to be confirmed, the Treasury say “many” people who became newly self-employed in 2019-20 will be eligible for support for the first time.
The Treasury said that hundreds of thousands more people will be eligible for the grants this time, as tax return data for 2019/20 is now available. The Chancellor is set to make cash grants available to more than 600,000 extra people, it’s suggested.
Meanwhile Rishi Sunak is set to launch a £520 million fund to support small businesses in the UK with training and software. He said the Help to Grow scheme could help 130,000 SMEs (small and medium enterprises) become more productive by providing access to some of the UK’s top business schools.
£126m for apprenticeships
Chancellor Rishi Sunak is set to announce a £126 million boost for apprenticeships when he announces his Budget.
In the first confirmed policy of the Budget, Mr Sunak will tell MPs that the funding will enable the creation of 40,000 additional traineeships in England.
At the same time, he will promise to increase the cash incentives for employers who take on an apprentice to £3,000 – regardless of age. Currently firms can claim £2,000 for each apprentice they hire aged 16 to 24, or £1,500 for those aged 25 and over.
Mr Sunak will also set out plans for new “flexi-job” apprenticeships, enabling trainees to develop their skills with a range of employers within a particular sector.
Instead of having a single employer, they will be linked to an agency that will place them with various relevant organisations.
One way or another the Chancellor will have to make an announcement about Stamp Duty.
Either he ends the huge cut to the house sale tax as planned on March 31, or – as is rumoured – he extends it to the end of June.
Stamp duty was suspended on all house sales up to £500,000 during the pandemic, saving buyers up to £15,000 and stopping house prices from collapsing. But most of the saving went to people already on the property ladder because first-time buyers get a discount anyway.
Critics complained the £3.8billion tax break mainly helped wealthier buyers while renters got less help.
Return of 95% mortgages
Home-buyers will be given a boost with the return of 95% mortgages.
The government-backed guarantee will help banks lend with deposits of just 5% once more after lenders spurned them for being too risky during Covid.
The Tories are trying to stimulate the housing market and get more younger people onto the housing ladder.
But there will be questions about how progressive the policy is. The scheme will be available for both first-time buyers and existing homeowners – and for homes worth up to £600,000.
That suggests the maximum mortgage of £570,000 is only going to help very high earners who could have saved anyway, because buyers can generally only borrow four to five times their annual income.
Mr Sunak reportedly warned MPs he would have to hike fuel duty by 5p per litre to pay for the Universal Credit uplift. But the Chancellor is said to have cancelled the hike yet again – the tenth year running – in a red meat pitch to his back benchers.
The levy has been frozen at around 58p for an entire decade – saving the average car driver a cumulative £1,200 each but depriving the state of an absolute fortune while other duties continue to rise, and while we face a climate crisis.
Last year’s freeze alone deprived the Treasury of more than half a billion pounds in each future year.
The Budget is likely to confirm the minimum wage rates for 2021, but because they begin in April we already know what they’ll be.
It will rise by 19p an hour to £8.91 for over-23s, with 23 and 24-year-olds included in the higher rate for the first time.
It will also 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.
Due to low inflation the minimum wage is rising by less than might have been hoped.
Alcohol and cigarettes
It is traditional for ‘sin taxes’ to rise in the Budget – usually at 6pm the same day to avoid a run on corner shops.
However, it seems likely the Chancellor could freeze beer duty for example, to throw a bone to pubs desperate for some trade.
Beer gardens will be allowed to open from April 12 at the earliest in England, followed by indoor areas of pubs from May 17.
£1.6bn for vaccines
Mr Sunak will set out plans to inject another £1.6bn into the vaccination programme. As part of this he will give £22m to fund a “world first” trial to test if different vaccines can be used together, or if a third dose is effective.
He will also divert £33m to improve the ability to respond to variants and improve vaccine testing, including £5m to create a “library” of Covid-19 jabs.
But questions remain over whether vaccine hesitancy could hamper the UK’s path out of lockdown.
Crackdown on Covid fraud
A dedicated unit to crack down on Covid-19 fraudsters exploiting Government financial rescue schemes like furlough is due to be announced in the Budget next week.
The Taxpayer Protection Taskforce, underpinned by £100 million and 1,250 staff, will investigate and hunt down people swindling cash through coronavirus income support programmes, said the Treasury.
£150m to help save your local pub
Brits will be able to buy their local pub through a £150-million fund set to be announced in Rishi Sunak’s budget this week. The ‘community ownership fund’ will also allow locals to take over endangered sports clubs, theatres, music venues and post office buildings.
The pot of cash will become available this summer, with groups being encouraged to bid for up to £250,000 matched-funding. In ‘exceptional’ circumstances applicants will be able to ask for up to £1million to save beloved local treasures, such as sports clubs or grounds.
Money for culture and cricket
Rishi Sunak is preparing to hand out £408million to help museums, theatres and galleries in England to reopen once coronavirus restrictions start to ease in the coming months. Many theatres have not been able to open their doors since March 2020.
The money is split into £300m for the existing Culture Recovery Fund which offers grants and loans (details on how to apply for the new cash haven’t been released yet). £90m will go to national museums and cultural bodies, and £18.8m will go to specific projects:
- £1.8m for a new cultural space in Hartlepool’s Bourough Hall
- £2m for the Tullie House Museum and Art Gallery in Carlisle
- £5m to transform a shopping unit on Wakefield high street into a community library, museum and gallery space called The Hub
- £10m to transform Yeovil’s Octagon Theatre
The Budget will also give a “significant chunk” of a £300million sports recovery package to cricket as fans prepare to return to stadiums this summer. The “summer sports recovery package” comes on top of a £300m winter survival package previously announced.
Lifetime aid for thalidomide victims
Victims of Thalidomide are set to receive financial support for the rest of their lives as the Thalidomide Health Grant, which has been providing support since April 2013, is extended.
The grant currently provides help to more than 400 people in the United Kingdom through direct cash grants to help access personalised specialist care, rehabilitation and treatment.
Despite only currently running until April 2023, Rishi Sunak is expected to make a lifetime commitment to fund the scheme – with a £39m down payment that will cover the next four years.
Future funding figures for the grant will then be confirmed every four years.
Green savings bond and UK infrastructure bank
The UK will launch a sovereign green savings bond for retail investors to help cut greenhouse emissions to net zero by 2050.
Savers will be able to buy the bond through NS&I, the Treasury-backed organisation which offers things like Premium Bonds. It’ll be on sale later in 2021 with a to-be-confirmed interest rate. The funds will be spent on renewable energy and clean transport.
£12bn of capital and £10bn of government guarantees will be announced for the UK Infrastructure Bank launching in Spring.
It will offer equity, loans and guarantees for private sector infrastructure projects in sectors such as renewable energy, carbon capture and storage and transportation. Councils and mayors can also get infrastructure loans at low rates.
What is tipped to be in the Budget
Several reports say the Chancellor will reverse some of the Tory cuts to corporation tax, raising it to as high as 25%.
But this may not be immediate and may only happen over the length of the Parliament, which ends in 2024.
Bizarrely Labour, who have vowed to oppose “immediate” tax rises in the Budget, could end up siding with Tory rebels to oppose a hike on big business.
The main rate of corporation tax was slashed from 28% to 19% under a decade of Tory rule. In the 2019 election Labour pledged to reverse most of these cuts and bring the rate back to 26%, except for small businesses. But now the party says it’s not the right time for tax rises.
Mr Sunak is said to be considering axing rises to the Income Tax personal allowance to help pay for the Covid crisis, according to the Daily Telegraph.
The tax-free personal allowance – currently £12,500 – was due to rise in April for the first time since 2019.
While the allowance would have only risen to £12,562 this year, saving a family just £12.50 in tax, that would have paved the way for bigger rises in future years that could have built on it. Reports suggest the Chancellor is plotting three years in a row of freezes – saving the Treasury £6bn.
The threshold for paying 40% tax had also been due to rise from £50,000 to £50,250 in April, saving wealthier families £62.50 in the first year and more in future years.
There has also been speculation that Capital Gains Tax might be raised to 45%, bringing it in line with Income Tax, from its current rate of 20%.
Other tax changes
The Treasury was said to be mulling scrapping council tax and stamp duty – and replacing them with a property tax.
A proportional property tax could be levied on the existing values of homes, rather than 1990s valuations, which council tax is based on, the Sunday Times said. But this could be more of a long-term move.
Another possible long-term move is a raid on self-employed people’s National Insurance contributions. According to the Sunday Telegraph this could be done in a separate announcement this Autumn.
A ‘stealth tax’ on wealthy pensioners
The Times reported the Chancellor could freeze the lifetime allowance – the amount people can save before tax charges kick in – at just over £1million.
As more people would be pulled into the tax net, about 10,000 people with larger pensions could pay more than £22,000 extra in tax by 2024, it was reported.
The lifetime allowance had been expected to increase by £5,800 in 2021/22, in line with inflation.
Brexit immigration system changing already
Rishi Sunak will announce he’s already changing the post-Brexit immigration system just months after its launch.
Reforms will create a new “elite” route under the points-based system for researchers, engineers, scientists and those in the tech sector to work in the UK without other workers’ requirements.
The Treasury said: “Highly skilled migrants with a job offer from a recognised high-growth firm will qualify for a visa without the need for sponsorship or third-party endorsement.”
Moving bits of the Treasury north
The Chancellor could nod to the government’s pledge to “level up” by announcing a site for a northern HQ of the Treasury. According to the Financial Times it could be Darlington – which just happens to be a stone’s throw from his constituency.
What won’t be in the Budget – but could come later
Reports have suggested the Chancellor could impose some kind of windfall tax on firms that have done well out of the pandemic – especially online sales giants like supermarkets or Amazon.
Top of the in-tray is a proposed online sales tax. But it’s understood this particular issue is part of a review of business rates which will only report back in the Autumn.
While consultation responses are due to be announced on March 23, it’s thought there will be no announcement of a new policy on any online sales tax until the Autumn.
The Treasury has not completely ruled out a windfall tax in this week’s Budget but this is uncertain.
High street £150 vouchers
Every adult would be given a £150 voucher to spend in shops under a think tank’s idea to boost the high street when lockdown ends.
Every child would also be given £75 under the £9bn scheme being proposed by the Resolution Foundation.
However, it’s understood there is zero chance of Chancellor Rishi Sunak announcing the voucher scheme any time soon – including in next week’s Budget. Officials believe it would make no sense to announce such a scheme months in advance because it would change people’s spending behaviour.
And it would be difficult to set up sensibly because while some shops are on their knees due to Covid-19, others have done well from the pandemic.
Eat Out to Help Out II
Last year’s Eat Out to Help Out scheme was blamed – in a Warwick University study and elsewhere – for driving case rates.
But it did also drive people into struggling pubs and restaurants by giving them up to £10 a head off meals.
Treasury sources have not ruled out the scheme making a return in some form later this year. But they have absolutely ruled it out for the coming week’s Budget.
NHS pay rise
The NHS risks an “exodus” of nurses after the pandemic abates if Rishi Sunak fails to offer a decent pay rise to staff, union bosses have warned.
Nursing leaders said staff are “exhausted and morale is on the floor” after nearly a year of gruelling shifts battling coronavirus.
The Royal College of Nursing (RCN) urged the Chancellor to use next week’s Budget to boost central NHS funding for the explicit purpose of increasing staff pay levels – or risk staff shortages which could hit patient care.
But they will have to wait beyond the Budget for actual news on a pay rise until pay review bodies report back later in the Spring. Treasury sources insisted the timing was laid out last year.
Jonathan Ashworth MP, Labour ’s Shadow Health Secretary, said: “Our NHS staff deserve a fair pay rise. If Rishi Sunak next week refuses it will be kick in the teeth to our brave hardworking NHS heroes.”