Chancellor Rishi Sunak has set out his Autumn Budget and the results of his Spending Review as he prepares the country for a post-COVID economy.
In the run up to the announcement, The Treasury had already released several funding announcements including new money for the NHS, a rise in the National Living Wage, and public sector pay rises.
Promising a stronger economy for the British People, Sunak says he will give people the support they need with the cost of living and levelling up.
Universal Credit
The taper rate is the amount of Universal Credit payments that a person loses as they work and earn more above a certain threshold. Currently, for every £1 earned, 63p is automatically deducted from the benefit payment. The Chancellor has announced that this will be reduced to 55p allowing people to keep more of what they earn.
Whether the claimant is better off depends on their circumstances. Around two million will be better off but another four million will see no change as they either do not work or do not earn enough.
This change has come after criticism of cancelling the £20 a week universal credit uplift given during the pandemic.
Rising Cost of Living
The cost of living is expected to rise by 4% over the next year.
The Chancellor announced that the freeze on fuel duty will continue for at least another year as drivers are impacted by high fuel prices. About 60% of the price drivers pay for fuel is tax.
There have not been any measures put in place to assist householders with rising domestic gas and electricity bills.
National Living Wage
Those aged 23 and above will see the National Living Wage increase from £8.91 to £9.50. There will also be increases in the minimum wage for younger workers as follows:
- National Living Wage for those aged 23 and over: From £8.91 to £9.50 an hour
- National Minimum Wage for those aged 21-22: From £8.36 to £9.18
- National Minimum Wage for 18 to 20-year-olds: From £6.56 to £6.83
- National Minimum Wage for under-18s: From £4.62 to £4.81
- The Apprentice Rate: From £4.30 to £4.81
The freeze on public sector staff wages will also be lifted in April.
Alcohol Duty
The Chancellor has announced a ‘radical’ simplification of alcohol duty. Higher strength alcoholic drinks will attract a higher duty including fortified wines and high-strength ciders will low strength drinks such as rosé and liqueurs will see a lower tax rate. This is presented alongside a new ‘draught relief’ for pubs and bars which will cut duty on beer and cider.
Tax
Looking at the Spring and Autumn budgets together, the chancellor has raised taxes by more this year than in any single year since 1993.
In Spring, the Chancellor said the thresholds at which income tax is paid would be frozen at April 2021 levels for five years.
In September, the government also announced employees, employers and those self-employed will pay 1.25% more for National Insurance from April 2022 to fund social care.
Air Travel Costs
The cost of a plane ticket could be reduced as the chancellor makes changes to Air Passenger Duty.
The levy paid by airlines is ultimately funded by customers through the cost of their plane tickets. With this change, the cost of a domestic flight ticket could be cut, but very long-haul flights may increase.
Cladding Removal
Many homeowners of high-rise flats have been hit with high costs following the ‘cladding crisis’ following the Grenfell Tower tragedy.
A levy on the biggest property developers of high-rise buildings to pay for the removal of the dangerous cladding has been confirmed.
Highlights of the Autumn Budget 2021:
- The National Living Wage for people aged 23 and over will rise to £9.50 an hour
- The pay freeze on public sector wages will be lifted
- £1.8bn for building around 160,000 new homes on brownfield sites in England
- Office for Budget Responsibility forecasts that inflation will average 4% next year and the economy will grow by 6.5% this year
- GDP will grow by 6% next year, 2.1% in 2023, 1.3% in 2024, and 1.6% in 2025.
- Unemployment is forecast to peak at 5.2%
- There will be new ‘fiscal rules’ for management of the public finances
- Borrowing in the current financial year 2021-2022 will be 7.9% of GDP, and will fall to 3.3% next year
- Overseas aid will return to 0.7% of GDP by the end of parliament, after a cut to 0.5% announced last year
- Funding for pupils will be returned to 2010 levels – an increase worth £1,500 a pupil
- Investment triples to create 30,000 special school places
- £1.7bn of funding in the first grants from the Treasury’s Levelling Up Fund.
- There will be a radical simplification of alcohol duty and a new draught relief
- Changes to Air passenger Duty could see a reduction in domestic flight ticket prices
- A levy on property developers of high-rise buildings to pay for the removal of dangerous cladding has been confirmed
- The taper rate in universal credit will be cut from 63p to 55p
This update is still developing and figures changing.
