This afternoon in the House of Commons, the Chancellor of the Exchequer delivered his Budget for the coming year.
Since the beginning of the COVID pandemic, the Government has sought to do whatever it takes to provide security and stability for the British people. We are delivering on that promise.
Over this year and next, we are providing £407 billion of support for families, jobs and businesses. Despite this unprecedented support, the damage the pandemic has done to our economy has been acute. Since March last year, 700,000 people have lost their jobs, the economy has shrunk by 10% – the largest fall on record – and our borrowing is at the highest it has ever been outside of wartime.
Today’s Budget protects the jobs and livelihoods of the British people with a three-part plan:
Supporting people and businesses through the national lockdown
Starting to fix the public finances with a fair and honest plan about how to do so
Building our future economy
Furlough extended until the end of September
The furlough scheme has supported 11.2 million jobs across the UK, worth £53 billion. To provide further certainty the scheme will be extended until the end of September.
Employees will continue to receive 80% of wages for hours not worked, but as businesses reopen, we will ask them to contribute 10% of wages in July, and 20% in August and September.
Furlough remains among the most generous schemes of its kind anywhere in the world.
Further assistance for the self-employed
A fourth grant for those who are self-employed covering the period February to April will be introduced, worth 80% of people’s average monthly revenues.
From May, a fifth grant will be available which is more targeted towards those most affected by the pandemic: people whose turnover has fallen by more than 30% will receive the 80% grant, while those whose turnover has fallen by less than 30% will receive a 30% grant.
And we will ensure that the more than 600,000 people, including many who became self-employed last year, and filed their 19/20 tax return by 2 March, will now be eligible for both grants.
Overall, we will have spent £33 billion on the self-employed, among the most generous anywhere in the world.
Restart grants to help our businesses get going again
As our economy reopens, it is essential that we give our businesses the support they need to start trading again.
Non-essential retail businesses will open first and therefore receive grants of up to £6,000, while hospitality and leisure businesses – including personal care, hairdressers and gyms – will likely open later or with more restrictions and so receive grants of up to £18,000.
These will be worth an extra £5 billion – taking our total cash grant support to £25 billion. We are also providing local councils with £425 million discretionary funding to support other local businesses.
Business rates holiday
Last year the Government provided an unprecedented 100% business rates holiday for all eligible businesses in the retail, hospitality and leisure sectors – a tax cut worth £10 billion.
This year, that 100% holiday will continue for the first three months until June, before rates are cut by two-thirds for the remaining nine months, up to a maximum £2 million per business.
Over 350,000 properties will pay nothing for three months, with the vast majority of businesses will receiving a 75% cut in their bill next year – a tax cut worth £6 billion.
VAT cut extension
To protect the 150,000 hospitality and tourism businesses which employ around 2.4 million jobs and have been hardest hit, the Government will extend the 5% reduced rate of VAT for a further six months until the end of September.
The rate will then increase to 12.5% from October until the end of March, before returning to the normal 20% rate from April 1.
Overall, that’s a tax cut of nearly £5 billion next year.
Support for the lowest paid and most vulnerable
The National Living Wage will rise to £8.91 from April, from £8.72. That is a 2.2% rise and will be for people aged 23 and over.
The temporary £20 uplift to Universal Credit will continue for a further six months, benefiting some of the poorest families in the UK.
A new mortgage guarantee scheme for homebuyers
Even with the stamp duty cut, there is still a significant barrier for people to get on the housing ladder: the cost of a deposit, given that 95% loan-to-value loans have gone from the market. That is why, from April, lenders who commit to providing loan-to-value ratios of between 91 to 95% can get a government guarantee on the full value of those mortgages.
Extension to the stamp duty cut
To avoid purchases not completing in time for the end of March, the Government announced the £500,000 nil rate band will end on 30 June, before tapering down to £250,000 until the end of September (60% of buyers will pay no stamp duty), before returning to its normal level of £125,000 from 1 October.
New Recovery Loans to replace our existing loan schemes
The array of Government schemes has provided £70 billion of support to 1.5 million companies. But as these come to an end, a new Recovery Loans will be introduced to take their place: loans from £25,000 up to £10 million, with an 80% government guarantee.
Better skills for people to get better jobs
The Government has already launched the Restart scheme to help hundreds of thousands of long term unemployed; doubled the number of Work Coaches; introduced the Lifetime Skills Guarantee to fund Level 3 Qualifications for all adults; and launched the Kickstart scheme to help 250,000 young people into work.
There is always more that we can do though, and today the Government announced the doubling of the incentive payment to small businesses to take on apprentices of any age to £3,000, alongside £126 million to triple the number of traineeships next year.
Support for culture and sport
£700 million will be provided to support local and national arts, culture and sports institutions as they reopen. We’re also piloting a new apprenticeship scheme for creative industries, and extending our successful £500 million Film and TV Production Insurance Restart Scheme.
Launching a new Help to Grow scheme to boost the productivity of our small businesses
Too often our brilliant small firms don’t have the time or resources to get the extra skills they need to be more productive.
So the new Help to Grow: Management scheme will help SMEs get world-class management training through government-funded programmes delivered through business schools, with businesses contributing only £750, just 10% of the overall cost of the course.
Help to Grow: Digital will level up the digital skills of our small businesses with a voucher entitling them to 50% off the purchase of new productivity-enhancing software, up to a total of £5,000 each.
Help to Grow will launch this Autumn and could benefit 130,000 SMEs.
Supporting business investment through an unprecedented 'Super Deduction'
Even with the lowest corporation tax rate in the G7, we must do even more to encourage business to invest now and unlock their cash reserves.
Historically, the UK has invested a lot less than our peers, but investment drives innovation, productivity and growth. That is why, for the next two years, when businesses invest, they can reduce their tax bill by 130% of the cost of that investment.
The OBR have said this will lift business investment by 9% and lift the UK from 30th in the OECD's world rankings for business investment to 1st. And for the two-year period this is in place, this will be the biggest tax cut in modern British history - worth £25 billion.
Making the UK the best place in the world for high growth, innovative companies
These businesses account for just 1% of companies, but generate 80% of our employment growth.
At today’s Budget a wide-ranging consultation was launched to make sure our Research and Development Tax Credits are internationally competitive:
reviewing our Enterprise Management Incentive scheme so it supports growing companies to retain talent;
attracting world-class talent to the UK through visa reforms aimed at highly skilled migrants, including a new unsponsored points-based visa and new visa processes for scale ups/entrepreneurs;
ensuring high growth firms have access to capital by giving the pensions industry more flexibility to unlock billions from pension funds into innovative new ventures;
launching a new Future Fund Breakthrough to support innovative tech businesses, and;
taking forward Lord Hill’s review of the UK’s listing regime.