On a day where the Leader of the Opposition was absent, having tested positive for Covid, The Chancellor ran through a series of announcements, almost all of which had already been trailed to the press.
The Chancellor started his Statement by describing a Budget for a post-Covid economy and "an age of optimism", and ended by summarising his statement as a pay-rise for 2 million people and a £2bn tax cut for the lowest paid. In between he announced more spending plans than tax measures to pay for them, but it was unclear how many of the commitments were for new money and which initiatives would be funded through normal departmental budgets.
Predictably, announcements about lower rates of duty on draught beer and cider, and on sparkling wine, led to immediate increases in the share prices of UK pub chains from JD Wetherspoons to Mitchells and Butlers.
Other spending announcements included:
- £21bn on roads, £46bn on railways and £5.7bn for London style transport systems for cities across the UK
- Lower Air Passenger Duty on domestic flights
- £5bn for cycling infrastructure
- £24bn for housing, including £11.5bn to build 180,000 affordable homes and £5bn for removal of cladding
- 20,00 new police officers
- £3.8bn for prison-building
- Rise in fuel duty to be cancelled
All of this will be paid for by tax increases already announced but coming into effect to coincide with this budget. Offsetting that is a 50% discount for companies in the retail, hospitality and leisure sectors, to last for a year.
The final rabbit out of the hat came at the end as he announced more generous than expected reforms to Universal Credit, with taper relief decreased by 8% from 63% to 55% and work allowances increased to £500.
If all this sounds like the sort of tax and spend budget that you wouldn't expect from the Tories, the Chancellor was at pains to restate his credentials, if only for his own party MPs listening from behind. Claiming to be a Thatcherite at heart, he described his firm intention to decrease government spending as a proportion of GDP by the end of the government.
Whether that is possible will depend significantly on whether the newly optimistic projections of the OBR turn out to be true.
Alan Nelson is an author for accountingcpd. To see his courses, click here.
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