New Chancellor Rishi Sunak unveiled a mammoth spending spree in his first budget, subscribing to a mantra of “levelling up” and “getting things done”.
Whilst Sunak was quick to state that the Budget was “delivered not just within the fiscal rules in our manifesto, but with room to spare”, he went on to announce a review of those rules suggesting that his future plans involve yet more munificence.
The Coronavirus pandemic alone has been allocated an £30 billion emergency package, with other big spends on infrastructure, capital budgets, research & development funding and green initiatives. There was also increased funding for the devolved nations.
Mr Sunak ditched a planned cut in corporation tax – that will now be reviewed – and scaled back on plans to ditch Entrepreneur’s Relief, whilst announcing a new 2% surcharge on Stamp Duty for foreign purchasers of properties in England and Northern Ireland from next April.
The Office for Budget Responsibility (OBR) reacted to Mr Sunak’s plans saying that such levels of largesse by a Chancellor haven’t been seen since Norman Lamont’s 1992 budget. The spending will take government borrowing to a six-year high of £66.7billion in 2021-22 and add more than £125billion to public debt by 2024-25.
However, Ambrose Evans-Pritchard concluded in the Telegraph that, given the current global coronavirus crisis, this Budget “reduces the risk of a credit crunch that can in turn set off a negative feed-back loop through the lending system”, adding that the benefits should “feed through later this year and ensure that the U-shaped recovery does not not stretch into an L-shaped slump.”
Business Budget at a glance
A £30billion package to tackle the Coronavirus pandemic:
– £5billion emergency fund to support the NHS and other public services in England
– Statutory sick pay for those who are advised to self-isolate – firms with under 250 employees will be refunded the cost by government for 2 weeks, and Employment Support Allowance for the self-employed from Day 1
– £500 million hardship fund for councils to help the most vulnerable
– Business Interruption loans of up to £1.2million for small firms
– Business rates in England abolished for firms with a rateable value under £51k in the retail, leisure and hospitality sectors
Public Investment will increase to £22billion over the next 4-5 years to meet government pledges on expanding the UK’s science, innovation and technology base and spending will increase to £2.4% of GDP by 2027:
– £1.4billion funding boost for the Science Institute in Weybridge, Surrey
– £900million for research into space, nuclear fusion and electric vehicles
– £5billion to improve the broadband network especially in remote areas
– £400million for R&D funding for Universities outside the south east
– Entrepreneurs’ Relief stays, but lifetime allowance drops from £10million to £1million
– £3k grant for firms eligible for small business rates relief
– High Street business rates to be reviewed
– Business rate discount for pubs raised to £5k this year
– £600billion for roads, rail, broadband and housing over next 5 years
– £27billion for motorways and other main roads including new Stonehenge tunnel.
– £2.5billion Pothole Fund to resurface roads and fix potholes in England over next five years
– £1.5billion for building upgrades for Further Education colleges
– £1billion fund to remove combustible and unsafe cladding from all public and private housing over 18m in height