Autumn Budget and Spending Review 2021: Baachu Summary 27.10.21

Baskar Sundaram
Baskar Sundaram

Key Points

As part of today’s Budget and Spending Review the Government has made the following announcements.  Further details will be sent to the relevant BSA Committees.

Responding to the announcements, BSA Chief Executive Mark Fox said:

“We welcome the Chancellor’s focus on investment in infrastructure, R&D, skills and training. We note the Chancellor expects inflation to rise to 4 per cent next year but the hard work to bring it down as quickly as possible must be relentless.”

The full documents can be found here

Economy

  • OBR forecasts economic growth for 2021 of 6.5 per cent, with economy forecast to return to pre-Covid levels by 2022
  • COVID-19 ‘scarring’ assumption revised down to 2 per cent
  • OBR expects unemployment to peak at 5.2 per cent
  • Business investment forecast revised up over next five years
  • Borrowing as percentage of GDP forecast to fall from 7.9 per cent this year to 3.3 per cent next year
  • New Charter for Budget Responsibility with new fiscal rules
  • Inflation in September 3.1 per cent and is likely to rise to average 4 per cent over next year

Business, Employment and Skills

  • Business rates reform announced. New 50 per cent discount for companies in the retail, hospitality, and leisure sectors, lasting for one year
  • Rise in National Living Wage from £8.91 to £9.50 per hour, from 1st April
  • £3.8 billion will be invested in skills, an increase of 48 per cent over the course of this parliament
  • £1.6 billion over three years to roll out T-levels, and £550 million for adult skills in England £830 million for modernizing colleges in England
  • £150 million for the British Business Bank to encourage development of Dragons’ Den-style regional investors outside London and SE
  • Scale-Up Visa system will make it quicker and easier for fast-growing businesses to bring in highly-skilled individuals
  • Suspended HGV levy until 2023, and frozen VED for heavy goods vehicles

Tax, Pensions and Savings

  • Alcohol duty reform, in particular to relate tax to alcohol strength
  • New lower rate air passenger duties for flights within the UK from April 2023, but higher fees for longer haul flights
  • Planned rise in fuel duty cancelled
  • Cut to the bank surcharge
  • Will loosen 0.75 per cent pension charge cap
  • Goal is to reduce taxes by the end of this Parliament

Welfare and UK Shared Prosperity Fund

  •  Universal Credit taper rate cut from 63 to 55 per cent
  • UK Shared Prosperity Fund will continue to be ramped up to “to match EU receipts, averaging around £1.5 billion a year”
  • First successful bids for Levelling Up Fund also announced

Public Services and Public Spending

  • Spending is growing by 3.8 per cent a year in real terms. Real terms increase in spending for every government department
  • Public sector workers will “see fair, and affordable” pay rises across the next few years, which will return to being made independently
  •  £5.9 billion for NHS England to tackle the backlog of people waiting for tests and scans.  £5 billion over the next three years for research and development
  • Schools to get an extra £4.7 billion by 2024-25.  Nearly £2 billion of new funding to help schools and colleges recover from the pandemic.  Schools funding to return to 2010 levels in real terms
  • £300 million for “Start for Life” parenting programmes
  • UK-wide numeracy programme to help improve basic maths skills among adults
  •   £700 million to protect UK borders including £74 million for a new fleet of patrol boats
  •   Extra £2.2 billion for courts and rehabilitation services. £3.8 billion for the “biggest prison-building programme in a generation”
  •  £435 million to prevent crime, protect communities and help victims in England and Wales
  • Government able to return to spending 0.7 per cent of GDP on overseas aid by 2024

Infrastructure, Housing and Environment

  • £5.7 billion for London-style transport systems across city regions
  •  National Infrastructure Strategy spends over £100 billion a year on UK infrastructure
  •  Grants worth £1.4 billion will be given to “internationally mobile” companies to invest in UK infrastructure
  • £24 billion earmarked for “a multi-year housing settlement”.  £11.5 billion of this to build up to 180,000 new affordable homes
  •   Integrated Rail Plan will come “soon”

Devolution

  •  Through the Barnett formula Scottish Government funding will go up by £4.6 billion, Welsh Government funding by £2.5 billion, and £1.6 billion for the Northern Ireland Executive

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