Autumn Budget 2021 – key points

On 27 October, the Chancellor set out his plan for government tax and spending for the year ahead in his Autumn Budget 2021

The forecast for the UK economy is one of strong growth that takes the country back to pre-covid levels by 2022 but that inflation is set to rise to 4% next year.  Below is a summary of the key points from the Statement:

Public Finance and State of the Economy 

  • According to Office for Budget Responsibility (OBR), Inflation is due to rise to an average of 4% next year 
  • UK economy forecast to return to pre-Covid levels by 2022 
  • Annual growth set to rebound by 6.5% this year, followed by 6% in 2022 
  • Unemployment expected to peak at 5.2% next year, lower than 11.9% previously predicted 
  • Wages have grown in real terms by 3.4% since February 2020 
  • Borrowing as a percentage of GDP is forecast to fall from 7.9% this year to 3.3% next year 
  • Borrowing as a percentage of GDP will then fall in the following four years to 1.5% 
  • UK Government projects Foreign aid spending to return to 0.7% of GDP by 2024-25 

Government Spending 

  • Funding will rise by an average of £4.6bn for Scottish Government, £2.5bn for Welsh Government, and £1.6bn for Northern Ireland Executive 
  • Levelling Up Fund will mean £1.7bn invested in local areas across the UK 
  • Government backing projects in Aberdeen, Bury, Burnley, Lewes, Clwyd South, Stoke-on-Trent, Ashton under Lyne, Doncaster, South Leicester, Sunderland and West Leeds 
  • Extra £2.2bn for courts, prisons and probation services, including funding to clear the courts backlog 
  • Tax relief for museums and galleries will be extended for two years, to March 2024 which means tax credits doubling for the Creative Industry 
  • Core science funding to rise to £5.9bn a year by 2024-25 
  • £6bn of funding to help tackle NHS backlogs 

Taxation and Wages 

  • Universal Credit taper rate will be cut by 8% no later than 1 December, bringing it down from 63% to 55% – allowing claimants to keep more of the payment 
  • Confirmation business rates to be retained and reformed 
  • A 50% business rates discount for the retail, hospitality, and leisure sectors in England in 2022-23, up to a maximum of £110,000 
  • Planned rise in fuel duty to be cancelled amid the highest pump prices in eight years 
  • Consultation on an online sales tax 
  • National Living Wage to increase next year by 6.6%, to £9.50 an hour 

Children and Education 

  • Schools to get an extra £4.7bn by 2024-25 
  • There will be nearly £2bn of new funding to help schools and colleges to recover from the pandemic 
  • Schools funding to return to 2010 levels in real terms – an equivalent per pupil cash increase of more than £1,500 
  • £300m will be spent on a “Start for Life” parenting programmes, with an additional £170m by 2024-25 promised for childcare 
  • A UK-wide numeracy programme will be set-up to help improve basic maths skills among adults 

  Air Travel 

  • Flights between airports in the UK nations will be subject to a new lower rate of Air Passenger Duty from April 2023 
  • Financial support for English airports to be extended for a further six months 
  • From April 2023, new ultra long haul band in Air Passenger Duty for flights of over 5,500 miles introduced 

Alcohol 

  • Planned rise in the duty on spirits, wine, cider and beer cancelled 
  • Simplification of alcohol duties will see the number of rates drop from 15 to six 
  • Stronger red wines, fortified wines, and high-strength ciders will see a small increase in their rates 
  • Rates on many lower alcohol drinks including rose wine, fruit ciders, liqueurs, lower strength beers and wines to fall 
  • All sparkling wines to pay same duty as still wines of equivalent strength 
  • Lower duty on draught beer and cider from containers over 40 litres will cut the rate by 5% 

Housing 

  • £24bn earmarked for housing: £11.5bn for up to 180,000 affordable homes, with brownfield sites targeted for development 
  • 4% levy will be placed on property developers with profits over £25m rate to help create a £5bn fund to remove unsafe cladding 
  • £640m a year to address rough sleeping and homelessness 

 

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