Chancellor Rishi Sunak will present his budget on Wednesday.
It will say how much of our money the government will take in taxes and what it will spend it on.
What is the Budget?
Each year, the Chancellor of the Exchequer – who is responsible for the government’s finances – makes a budget statement to the parliamentarians of the House of Commons.
It describes the government’s plans to raise or lower taxes. It also includes big decisions about what the government will spend money on, including health care, schools, police and other public services.
When is the budget?
The budget speech will be delivered on Wednesday 27 October.
It usually starts at around 12:30 UK time and lasts around an hour. Labor leader Sir Keir Starmer will give his answer shortly thereafter.
This year’s fall budget is unusual for two reasons:
- It’s the second of the year – there was a budget in March too
- It comes the same day that the results of a spending review, which details how the government will finance public services for the next three years
On the same day, the Independent Budgetary Responsibility Office (OBR) – which monitors public spending – will publish a report on the performance of the economy.
What could be in this Report?
The Budget is likely to contain aid to help businesses and individuals recover from the economic effects of Covid.
The clerk is expected to announce that the minimum wage will increase from £ 8.91 per hour to £ 9.50.
It will also outline some more details about the government’s long-term ambitions:
- Reduce the UK’s net greenhouse gas emissions to zero by 2050 to combat climate change
- Level up – bringing jobs and investment to the poorest regions of the UK
Budget 2021: what has already been announced?
Are we still paying for the pandemic?
Measures like the leave plan – which ended in late September – have been costly, and government revenues have fallen as it raised less tax money during the pandemic.
To bridge the gap between more spending and less money, the government had to borrow more.
In the year ending April 2021, the government borrowed £ 320bn, the highest figure recorded outside of wartime.
Economists expect it will borrow around £ 180bn more this year – another huge sum.
During his budget speech, the Chancellor will present the latest debt forecasts for the coming years.
- Where does the government borrow billions from?
Will taxes rise or fall in the fall budget?
The government must reduce the gap between what it spends and what it collects.
A major tax hike was announced in September – the £ 12 billion health and social tax. This broke a promise made by the Conservatives in the last election, not to raise the three largest taxes: income tax, national insurance and VAT.
It has been speculated that graduates may be required to start repaying student loans earlier.
At the same time, the cost of living increases. So the chancellor may want to cut some taxes, such as the amount of VAT paid on the energy bill.
It is also expected to announce major changes to the complicated alcohol taxation system, which could see sparkling wine become cheaper.
- Six things that could affect you in the Budget
- Why does the cost of living rise?
Will the expense be cut in the Budget?
Overall public spending will increase next year, with large increases already announced for health care and schools in England.
The government has already said that the NHS in England will receive an extra £ 5.9 billion to help clear the record backlog of people waiting for tests and scans.
But other government departments, such as courts, prisons, local government and transportation, are poised for cuts to their daily budgets next year.
They’ve already faced a decade of tight spending, and making further cuts will be painful.
Does the budget affect all parts of the UK?
Some parts of the budget, such as defense spending, affect the whole of the UK.
Others, like education, only concern England. This is because Scotland, Wales and Northern Ireland make their own decisions.
Scotland has income tax raising powers, which means its rates differ from the rest of the UK. The Scottish government will publish its budget on 9 December.
If the government announces extra spending in areas that only affect England, other nations get an equivalent amount of extra money to spend at their leisure, according to a rule called Barnett’s formula.
- HM Treasury
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