Autumn Budget 2021

On Wednesday 28 October, Chancellor Rishi Sunak announced his Autumn Budget to the House of Commons.

Sunak said he was focusing on the “post-Covid” era with huge spending that would bolster the economy and clear clogged up services whilst warning that there are “challenging months ahead”. Sunak emphasised that the Budget delivered a “stronger economy, stronger public finances and stronger employment”.

Summary

Economy and Public Finances 

• Inflation will rise to 4% over the next year. Sunak mentioned the “challenging backdrop of rising inflation”, which Peter Lawlor wrote about in our October issue
• Economy forecast to return to pre-Covid levels by 2022
• Unemployment expected to peak at 5.2% next year
• Borrowing as a percentage of GDP will fall in the following four years to 1.5%
• Foreign aid spending will return to 0.7% of GDP from 2024

Tax and Wages 

• Universal Credit taper rate will be cut by 8% no later than 1 December, lowering it from 63% to 55%
• 50% business rates discount for retail, leisure and hospitality sectors in England in 2022-2023, up to a maximum of £110,000
• National Living Wage to increase to £9.50 an hour next year
• Planned rise in fuel duty scrapped

Children and Education 

• Schools to get an extra £4.7bn by 2024-25
• £300m spent on a “Start For Life” parenting programmes, with an extra £170m by 2024-25 promised for childcare
• A UK-wide numeracy programme will be set up to improve basic maths skills among adults
• Almost £2bn in extra funding to help schools and colleges recover from the pandemic

Government Spending

• Levelling Up programme will invest £1.7bn invested in local areas
• Extra £2.2bn in funding for courts, prisons and probation services to clear the courts backlog
• £6bn funding to tackle NHS backlog
• Increase in funding of £4.6bn for Scottish Government, £2.5bn for Welsh Government, and £1.6bn for Northern Ireland Executive

Housing

• £640m a year to tackle homelessness
•  £24bn for housing, including £11.5bn for 180,000 new homes

Summary

The Covid pandemic has forced the government to borrow more than it has done at any point since World War II. With inflation rising, there is pressure on household finances. With that in mind, Sunak’s Autumn Budget reins in government borrowing to counter it and continue the long road to recovery.