Describing the Autumn Budget 2021 as “an economy fit for a new age of optimism”, the Chancellor, Rishi Sunak, reflected on the seven months since his previous Budget back in March.
With inflation in September at 3.1%, and likely to rise further due to pressures caused by supply chains and energy prices, the OBR expects CPI to average 4% over next year. However, promisingly, the OBR has downgraded its unemployment forecast due to the pandemic from 12% down to 5.2%, meaning over 2 million fewer people out of work than previously predicted. The OBR has also scaled down its assumption of the damaging effect of the pandemic on the economy from 3% to 2%.
According to the Chancellor, the OBR expects the UK’s recovery to be quicker than expected, with Sunak stating, “they forecast the economy to return to its pre-Covid level at the turn of the year.”
Business rates – The business rates system will also be modernised moving forwards:
Levelling up fund – At least 100 projects will benefit from a £1.7bn boost as part of the first round of the Government’s Levelling Up Fund. Almost £400m has been committed to support 21 projects across the Midlands, with £203m been pledged towards ten projects in the East Midlands, including the establishment of a new science centre at Twycross Zoo, the revitalisation of Leicester Railway Station and the construction of a four-screen cinema in Gainsborough Town Centre.
Plan for Growth – The Chancellor stated that the government will be putting its Plan for Growth into action, with significant investment in innovation, infrastructure, and skills. Sunak announced that £130billion will be invested in economic infrastructure, including roads, railways, broadband and mobile networks. £20billion has been allocated to R&D investments. A new ‘Multiply’ scheme was also announced to help equip adults with basic maths skills to help improve their job opportunities.
National Living Wage – As announced back in September ahead of the Budget, the Chancellor has increased the national living wage to £9.50 – a rise of 6.6% from the current living wage of £8.91 per hour for those aged 23 and over. The government says will give full-time workers an extra £1,000 a year. The Treasury has also announced it will be lifting a pay freeze imposed on millions of public sector workers last year as a result of the pandemic.
Universal Credit Taper Rate – The government has reduced the Universal Credit Taper Rate from 63p to 55p and increasing work allowances by £500 per year to help working families with the cost of living. This reduction may deflect some of the criticism the Government has been coming in for over reversing the £20 pandemic uplift.
Alcohol duties overhaul
A significant cut in alcohol taxes was revealed in the Autumn Budget. In a major shake-up to the alcohol duty system, consumers will now see lower taxes on sparkling wine, rose and draught beer and cider. The number of duties has been slashed from 15 to 6, in order to reflect a “common sense principle” that the stronger the drink, the higher the rate.
Fuel duty will be frozen for 2022-23, the twelfth consecutive freeze. This means the average tank of fuel will cost around £15 less per car, £30 less for vans and £130 less for HGVs compared to pre-2010 plans.
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