The Chancellor of the Exchequer has delivered his Budget Statement to the House of Commons. Below is a summary of the announcements in his speech. The main Budget documents can be downloaded here.
OBR figures and forecast
The OBR has published its latest figures on the economic and fiscal outlook:
Treasury and Tax changes
New Charter for Budget Responsibility – setting two fiscal rules which must be met by the third year of every forecast period, supplemented by targets to spend up to 3% of GDP on capital investment and keep welfare spending on a sustainable path:
Underlying public sector net debt, excluding the impact of Bank of England, must be falling as a percentage of GDP;
The state should only borrow to invest in future growth and prosperity so that every day spending must be paid through taxation.
Overseas aid – Government will return to spending 0.7% of GNI on overseas aid in 2024-25 as it hits its fiscal targets.
Departmental spending – The Budget increases departmental spending over this Parliament by £150bn – a 3.8% real-terms increase each year.
Tonnage Tax regime – Reformed to reward companies for adopting the UK Merchant Shipping flag, the Red Ensign.
Air Passenger Duty – Flights between airports in England, Scotland, Wales and Northern Ireland will be subject to a lower rate of Air Passenger Duty from April 2023; support will be extended to English airports for a further six months; and a new ultra long haul band in Air Passenger Duty will be introduced from April 2023 covering flights of over 5,500 miles with an economy rate of £91.
Annual Investment Allowance – £1m AIA will be extended to March 2023.
Corporation Tax Bank Surcharge – 3% rate retained; the overall rate of Corporation Tax for Banks will increase to 2023 from 27% to 28%; and the annual allowance will also be raised to £100m to help small challenger banks.
Business Rates – More frequent revaluations will take place every three years, to be delivered from 2023; the Government will introduce new investment relief to encourage businesses to adopt green technologies like solar panels; a new Business Rates Improvement Relief will be introduced from 2023 where business will pay no additional rates on property improvements for 12 months; the planned increase in the Business Rates multiplier next year will be cancelled – an effective tax cut of £4.6bn over the next five years; and a new, one-year 50% business rates discount for businesses in the retail, hospitality and leisure centres (up to a maximum of £110,000) will be introduced.
Alcohol duties – the number of main duties rates will be reduced from 15 to 6 designed around the principle that “the stronger the drink, the higher the rate”; a new Small Producer Relief will extend the principle of the Small Brewers Relief to include small cider producers and others making alcoholic drinks less than 8.5%; the “irrational” duty paid on premium sparkling wines will be ended, so it equals the same duty still wines pay; the duty on fruit cider will be cut to match apple or pear cider; a Draft Relief will be introduced, cutting duty on draft beer and cider by 5%, and cider, particularly benefitting community pubs; (NB – all these reforms so far will come into effect from February 2023); and the planned increase in duty on spirits, wine, cider and beer will be cancelled from midnight tonight.
Fuel duty – The planned rise in fuel duty will be cancelled.
HGV Levy – Extended for a further year until 2023, freezing vehicle excise duty for heavy goods vehicles
National Living Wage – Recommendation to increase the National Living Wage by 6.6% to £9.5 per hour accepted.
Inflation – Announced he has written to the Bank of England Governor to reaffirm their remit to achieve low and stable inflation
Reduced taxes by end of the Parliament – Stressed his goal to reduce taxes by the end of this Parliament.
Health and Social Care
Healthcare budget - Spending review confirms resource spending on healthcare will increase by £44bn to over £177bn compared to the beginning of this Parliament.
Health Capital Budget – To be the largest since 2010, funding 40 new hospitals, 70 hospital upgrades, 100 community diagnostic centres, 50,000 more nurses and 50 million more primary care appointments.
Local Government, Levelling Up and Housing
Local Government funding – £4.8bn of new grant funding over next three years, the largest increase in core funding for over a decade.
Housing – A multiyear housing settlement totalling nearly £24bn; £11.5bn to build up to 180,000 new affordable homes; £1.8bn to bring 1,500 hectares of brownfield land into use and unlock one million new homes; £5bn to remove unsafe cladding from the highest risk buildings, partly funded by residential property developer tax, to be levied on developers with profits over £25m at a rate of 4%; and £640m per year to tackle rough sleeping and homelessness – an 85% increase in funding compared to 2019.
Levelling Up communities – £560m for Youth Services to fund up to 300 youth clubs across the country; over £200m to build or transform 8,000 state-of-the-art community football pitches; funding to turn over 100 areas of derelict land into new pocket parks; and £1.7bn allocated to the first round of bids from the Levelling Up Fund.
Police and crime
Reconfirmed police funding – Funding provided to enable recruitment of 20,000 new police officers, to tackle reoffending, neighbourhood crime and violence against women and girls
Reconfirmed justice funding – Extra £2.2bn for courts, prisons and probation services (including £0.5bn to reduce the courts backlog), victims services and improved responses to rape cases.
Prison building - £3.8bn over three years for the largest prison building programme in a generation.
Education
Early years – £300m for a Start for Life offer for families providing high quality parenting programmes, tailored programmes for perinatal mental health and funding to create a network of family hubs around the country.
Childcare and families – £170m to pay childcare providers more by 2024-25; £150m to support training and development for the early years workforce; £300m for the Supporting Families programme; and £200m a year to continue the holiday activity and food programme.
Schools – An extra £4.7bn of funding by 2024-25, restoring per pupil funding to 2010 levels in real terms, equivalent to a cash increase for every pupil by more than £1,500; tripling of the amount invested in Special Educational Needs to create 30,000 new school places; and just under £2bn of new funding to help schools and colleges.
Adult skills – a £3.8bn (42%) increase in skills funding over the length of the Parliament including significantly increasing funding for apprenticeships.
Numeracy – £560m for a new numeracy program called Multiply to improve basic maths skills across the UK.
Culture
Local culture – £800m to protect museums, galleries and libraries; over 100 regional museums and libraries to be renovated; and up to £2m to start work on a new Beatles attraction in Liverpool.
Museums and galleries tax relief – Extended by two years to March 2024; tax reliefs for theatres, orchestras, museums and galleries to recover from Covid will be doubled from today until April 2023, returning only to the normal rate in April 2024.
The Union
Funding for devolved administrations – An increase in Scottish Government funding each year by an average of £4.6bn; an increase in Welsh Government funding each year by an average of £2.5bn, and an increase in Northern Ireland Executive funding each year by an average of £1.6bn – the largest block grants in real terms for devolved administrations since the 1998 devolution settlements.
UK Shared Prosperity Fund – Ramped up so “overtime” it will match EU receipts averaging around £1.5bn a year.
Transport
Local transport –£5.7bn for London-style transport settlements in Greater Manchester, Liverpool, Tees Valley, South Yorkshire, West Midlands and the West of England.
Rail – Integrated Railway Plan to be published soon.
Roads – £2.6bn for a long-term pipeline of over 50 local roads upgrades; over £5bn for local roads maintenance, enough to fill one million potholes a year; and funding for buses, cycling and walking totalling more than £5bn.
Welfare
Universal Credit – a reduction in the Universal Credit taper for those on low incomes from 63% to 55%, meaning almost two million families will keep an extra £1,000 per year, to be introduced no later than 1st December 2021.
Science and Innovation
Research and Development investment – The Government will maintain its target to increase R&D investment to £22bn, reaching the target in 2026-27, spending £20bn a year on R&D by the end of the Parliament – a cash increase of 50%; and total public investment in R&D will increase from 0.7% of GDP in 2018 to 1.1% of GDP by end of the Parliament, higher than France, Germany and the US on current figures (NB - increase in funding is in addition to cost of R&D tax reliefs).
Core science funding – Increased to £5.9bn per year by 2024-25 (a cash increase of 37%); the Government will meet the full cost of associating with Horizon Europe; £800m for the new Advanced Research and Invention Agency by 2025-26; and an increase in Innovate UK’s core budget to £1bn, double what it was at the start of the Parliament.
R&D Tax Credits – Scope of R&D tax reliefs to be expanded to include cloud computing and data costs; and R&D tax reliefs focused to incentivise domestic R&D in the UK from April 2023.
Investment in the UK
Investment incentives – The Government will consult on further changes to the regulatory charge cap for pension schemes, unlocking institutional investment.
Global Britain Investment Fund – The Government will introduce a new £1.4bn Global Britain Investment Fund.
Regional investment – An increase in the British Business Bank’s regional financing programmes to £1.6bn.
Visas and Global Talent
Scale Up Visa – Eligibility criteria confirmed in the Budget.
Global Talent Network – The new programme will identify, attract and relocate the best global talent in key science and technology sectors
Read the Chancellor’s speech here