by Aiken PR
Newly appointed Chancellor Rishi Sunak went to the Commons today to deliver his first budget, within what is a very challenging environment, with the Covid–19 virus creating a wave of economic uncertainty for the UK and the rest of the world.
The 2020 budget will see a considerable increase in public spending of around £100bn, with the economy set to grow at a rate of 1.1%, its slowest since 2009.
Key facets of the budget include, a substantial coronavirus response, an increased national insurance tax threshold, duties on spirits, beer and wine to be frozen, plastic packaging taxation, and a £600bn infrastructure injection by 2025.
At a Northern Ireland level, an extra £210million is set to be allocated, with the Department of Finance to provide further detail on what this amounts to in real terms.
See below key points from the Chancellor’s address:
State of the Economy
· Debt forecast is expected to decrease, reducing from 79.5% of GDP this year to 75.2% in 2024–25
· Office for Budget Responsibility had said the government’s “large planned increase in public investment should boost potential output”
· Growth is predicted to rebound to 1.8% in 2021–22, 1.5% in 2022–23 and 1.3% in 2023–24
· NHS will receive ‘whatever its takes’ to deal with the matter
· The crisis is likely to have a significant but temporary impact on the economy
· £30bn worth of fiscal stimulus package to be introduced, aimed at the real economy and health services
· There will be a £500m boost to the welfare system to support sick pay along with a £2bn support package for SMEs to encourage self–isolation.
· The government will refund the cost of statutory sick pay for up to 14 days to small– and medium–sized businesses
· Business rates will be abolished for firms with a rateable value below £51,000 including hospitality and retail sector
· Pubs will receive a business rates discount of £5000
Labour and Wages
· Government to increase national living wage to two thirds of median earnings by 2024, which the Chancellor has stated will be £10.50 an hour
· The chancellor has announced that the National Insurance contribution threshold will be raised from £8,632 to £9,500
· There will be National Insurance relief for employers that hire veterans.
· Alcohol Duty is to be frozen as the planned rises in beer, cider and wine duties have been cancelled
· Fuel duty remains frozen for another year
· VAT is to be removed on digital publications
· Entrepreneur tax relief scheme will be maintained
· Stamp duty surcharge for foreign buyers of UK properties to be levied at 2% from April 2021
Trade and Exports
· UK will continue to lobby the US to reduce tariffs
Research and Development
· R&D Expenditure will be increased to £22bn per year, as a percentage of GDP – this will be higher than the US, China, France and Japan
· Government to freeze levy on electricity and raise it on gas.
· Chancellor said: ‘Electricity is now a cleaner energy form than gas, but our climate change levy – paid by companies – taxes electricity at a higher rate
· £500m to support the rollout of new rapid charging hubs for electric cars
· The chancellor is going to double R&D into energy research, representing a £1bn investment
· There will be a reduction in taxation on electricity from renewable sources and increased taxation on polluting gas
Climate Change / Environment
· The chancellor will support the most energy–intensive industries to transition to net zero, by extending the climate change agreements scheme for a further two years.
· Government to spend £800m to establish two or more Carbon Capture Scheme clusters by 2030
· 30,000 hectares of trees will be planted over the next five years, and 35,000 hectares of peatland would be restored
· The chancellor has pledged to support the preservation of peatland and bogs with an investment of £640m for a new Nature for Climate Fund
· The Government will introduce a new plastic packaging tax with manufacturers and importers to be charged £200 per tonne on packaging made of less than 30% recycled plastic
· The Government will remove the tax break on red diesel for industrial vehicles with exceptions on agriculture and rail
· Work will begin on building 40 new hospitals across UK
· Immigration health surcharge will rise to £620 with a discounted rate for children
· The budget provides an extra £640m for Scotland, £360m for Wales, and £210m for Northern Ireland
· £5bn will be spent to bring gigabit broadband to hardest to reach places in UK
· The Chancellor has announced a significant investment in strategic roads and motorways with a £27bn package
· More than £600bn is set to be spent on roads, rail, broadband and housing by the middle of 2025
· £500m per year investment to for repairs of potholes which is estimated to repair 50 million potholes
· Affordable housing is a priority with Government announcing an extension to the affordable homes programme with a new, multi–year settlement of £12bn
· Interest rates on lending for the development of social housing will be cut by 1% which will make £1bn of discounted loans available for local infrastructure
· £1bn fund will be released to remove all unsafe combustible cladding from all public and private housing higher than 18 metres