Chancellor Rishi Sunak unveiled the contents of his budget in the House of Commons.
It is defining the government’s fiscal and spending plans for the coming year.
Here is a summary of the main points.
- LIVE: Sunak unveils spending plans in Budget
- A simple guide to the 2021 Budget
- The economy is expected to reach pre-Covid level at the end of the year
State of the economy and public finances
Image source, Getty Images- Inflation in September was 3.1% and is likely to increase further, reaching an average of 4% over the next year, according to estimates.
- The UK economy is expected to return to pre-Covid levels by 2022
- Annual growth is set to rebound 6.5% this year, followed by 6% in 2022
- Unemployment is expected to peak at 5.2% next year, lower than the 11.9% previously forecast
- Wages have grown in real terms by 3.4% since February 2020
- Debt as a percentage of GDP is expected to decline from 7.9% this year to 3.3% next year
- Debt as a percentage of GDP will therefore drop to 1.5% in the following four years
- The government is expected to restore its commitment to spend 0.7% of GDP on foreign aid by 2024-25
Taxation and spending
Image source, EPA- Universal credit tapering will be reduced by 8% by 1 December, taking it from 63% to 55%
- Corporate rates will be maintained and reformed
- The expected fuel tax hike will be canceled out among the highest pump prices in the past eight years
- £ 24 billion has been allocated to housing: £ 11.5 billion for up to 180,000 affordable homes, with brownfield sites set aside for development
- Each department of Whitehall will receive a real increase in total spending, totaling £ 150 billion over the course of this Parliament
- A 4% tax will be applied to real estate developers with profits over £ 25 million to help create a £ 5 billion fund to remove unsafe coatings
- Funding will increase on average by £ 4.6bn for the Scottish Government, £ 2.5bn for the Welsh Government and £ 1.6bn for the Northern Ireland Executive
- There will be £ 2.2 billion more for courts, prisons and probation services
- Tax breaks for museums and galleries will be extended for two years, until March 2024
- Funds for basic science will rise to £ 5.9 billion annually by 2024-25
Children and education
Image source, PA Medium- Schools will receive £ 4.7 billion more by 2024-25
- There will be nearly £ 2 billion in new funding to help schools and universities recover from the pandemic
- Funding for schools to return to 2010 levels in real terms: an equivalent cash increase per pupil of over £ 1,500
- £ 300 million will be spent on a ‘Start for Life’ parenting program, with an additional £ 170 million pledged for childcare by 2024-25
- A UK-wide math program will be established to help improve basic math skills among adults
Airplane transport
Image source, PA Medium- Flights between UK airports will be subject to a new reduced Air Passenger Duty fare from April 2023
- Financial support for British airports to be extended for a further six months
- Starting April 2023, a new ultra long haul belt will be introduced in Air Passenger Duty for flights of over 5,500 miles
Alcohol
Image source, Getty Images- A planned increase in the duty on spirits, wine, cider and beer will be canceled
- Simplifying alcohol taxes over 140 years will see the number of tax rates drop from 15 to six
- Stronger red wines, fortified wines and high proof ciders will see a small increase in their rates
- Fares on many low-alcohol beverages including rose wine, fruit ciders, spirits, beers, and low-alcohol wines will decrease
- All sparkling wines will now pay the same duty as still wines of equivalent strength
- A new lower duty rate on draft beer and cider will reduce the rates by 5%
Related topics
- HM Treasury
- Rishi Sunak
- UK economy
- Budget 2021
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