Rishi Sunak delivers his second Budget on March 3, and there are crunch decisions to be taken on key aspects of the COVID support for workers and businesses announced over the past year.
As speculation mounts over the prospect of announcements on tax rises, COVID scheme extensions and welfare changes, we take a look at what to expect when the Chancellor steps up to the despatch box on Wednesday.
The furlough scheme is the defining pillar of the Chancellor’s coronavirus response, and its likely extension on Wednesday is almost universally accepted as necessary. Those excluded from support so far continue to make a vocal case for targeted support on a similar scale to the Job Retention Scheme.
- Job Retention Scheme extended until the end of September;
- Self-Employed Income Support Scheme (SEISS) extended to cover over 600,000 people who became self-employed in 2019-20;
- an extra £5bn in Restart Grants for small businesses in the retail, hospitality, accommodation, leisure and personal care sectors;
- new ‘flexi-job’ apprenticeship programme, allowing apprentices to work with multiple firms in one sector;
- increased cash incentives for businesses that hire an apprentice, with the scheme extended until September;
- £126m investment in traineeships targeted at unskilled 16-24 year-olds;
- £100m investment in a Taxpayer Protection Taskforce, targeting people who have fraudulently claimed through a COVID support scheme.
- extensions to business rates relief and reduced rates of VAT;
- permanent £20 uplift to Universal Credit;
- further wage support schemes for those who have been excluded from COVID support.
The COVID-19 support measures will form one part of the Chancellor’s giveaway for businesses, and more policies are expected to try to stimulate the growth the country needs for a rapid economic recovery.
- a new stock market listings regime, based on the findings of an as-yet unpublished review by Lord Hill, to entice Spacs from New York and persuade more companies to float in London;
- £520m ‘Help to Grow’ scheme to provide MBA-style management training, aimed at SMEs through separate digital and management streams;
- contactless transaction limit increased to £100.
- announcement of locations for UK freeports, the special enterprise zones championed by Sunak as a backbench MP as far back as 2016.
Boris Johnson has already sought to burnish the government’s net-zero credentials by putting climate at the forefront of the UK’s G7 presidency and UN Security Council chairmanship, so measures aimed at greening the economy are a given in the year that the UK hosts the COP26 summit. The Prime Minister appeared to confirm in an interview with The Sun that fuel duty would again be frozen this year, while also pledging not to introduce any new taxes on carbon.
- £12bn in funding for the Prime Minister’s Ten Point Plan for a green industrial revolution;
- launch of a sovereign green savings bond for retail investors, with funds earmarked for renewable energy and clean transportation projects;
- launch of programmes to receive funding from the £1bn Net Zero Innovation Portfolio, with allocations expected to offshore wind, energy storage and biomass feedstocks.
- investment in green jobs;
- detail on UK national carbon plan (NDC).
The Stamp Duty holiday has been one of the most popular COVID support measures, and one which kept the housing market ticking over in 2020. Supply and affordability are evergreen issues that have vexed successive governments, though Sunak appears to have followed his predecessors’ examples in opting for demand side solutions.
- a new mortgage guarantee scheme aimed at buyers with smaller deposits, with 95% mortgages available for houses worth up to £600,000.
- an extension to the Stamp Duty holiday until the end of June;
- support for those affected by cladding remediation costs.
The Conservative Party won an 80-seat majority on the back of its promise to ‘level-up’ the UK, and while the pandemic has taken up most of the government’s time and resources for since the beginning of last year, there may now be an expectation in Red Wall areas and elsewhere that it is time to see a return on the election investment.
- Levelling Up Fund extended to the four nations of the UK, running until to 2024/25;
- £4.8 billion for investment in local regeneration and transportation projects;
- new backing for the UK Investment Bank to support infrastructure investment, with £12bn in capital and £10bn in government guarantees;
- £375m to invest through the Future Fund: Breakthrough scheme to support innovative UK firms in areas such as life sciences, quantum computing, or clean tech;
- announcement that the Treasury’s new Northern HQ will be located in Darlington.
As the country moves toward the Prime Minister’s roadmap to recovery, the government’s focus is increasingly turning to the vaccination programme’s rollout and expansion. The programme’s early successes mean the July 31 target for all adults to receive a jab looks achievable, and the Chancellor will be doing all he can to ensure the prospect of opening up the economy completely in time for high summer.
- an extra £1.65bn in cash for the UK’s COVID-19 vaccine roll–out;
- an additional £33m for vaccine testing and development, with funding testing capability expansion and a vaccine ‘library’ at the Centre for Process Innovation in Darlington;
- £22m to fund a trial of different vaccines in combination and the efficacy of a third dose.
The introduction of a points-based system was being touted as one of the main benefits of Brexit long before Rishi Sunak entered government, though the Chancellor is now making the most of the new system to attract talent to the UK to help with the COVID recovery.
- a new ‘elite’ points-based route, which is intended to help start-ups and fast-growing businesses such as fintech firms to recruit top talent;
- a streamlined sponsorship process through which highly–skilled migrants with a job offer from a recognised ‘high-growth’ firm will qualify for a visa;
- reform of the Global Talent route so international award recipients automatically qualify for a visa;
- expansion of the Global Entrepreneur Programme, which encourages international entrepreneurs to develop their business in the UK.
ARTS, HERITAGE & SPORT
With the arts and sporting sectors hit hard by the pandemic, noted cricked fan Sunak has already announced a pack of measures to help bridge the gap as audiences look to return this summer.
- an extra £300m for the Culture Recovery Fund;
- a further £300m for a summer sports recovery package, with a ‘significant slice’ going to cricket;
- a new £150m fund to help community groups take over struggling pubs in their area.
- £10m in funding to support veterans with mental health needs, distributed through the Armed Forces Covenant Fund Trust;
- lifetime extension of the Thalidomide Health Grant, with £39m for the next four years of personalised support for Thalidomide survivors.
- further detail on the government’s plans to decentralise the civil service.
While Sunak hasn’t made any announcements on tax rises, he has hinted that they may be on the way. Most economists think it’s likely any tax rises announced in this Budget wouldn’t come into effect until later in the parliament, though the Chancellor will be mindful of how close those rises come to the 2024 general election.
- increase to Corporation Tax;
- self-employed NICs increase or personal allowance freeze.