Budget 2021: Summary of Rishi Sunak's Autumn Budget and key changes to tax and Universal Credit, explained
UK Chancellor Rishi Sunak outlined the UK Government’s spending agenda for 2022 in Westminster today, here are the key points of the Budget 2021 – and what they mean for Scotland
The UK Government will scrap planned increases in fuel duty to help ease the pressure of spiking petrol costs for UK travellers and controversial proposals around domestic air passenger duty.
But the key policies in the Budget 2021 were an overhaul of alcohol duty, increases in Minimum Wage and Living Wage pay and more money for Scotland and other devolved nations.
Here’s a Budget 2021 summary – and how the UK Government’s spending plans will impact Scotland, businesses and families across the country.
What did Rishi Sunak say in the Autumn Budget announcement?
Speaking to MPs in the House of Commons on Wednesday afternoon, Chancellor Rishi Sunak promised to help families meet the rising cost of living as he painted a positive picture about the health of the economy as it recovers from the pandemic.
The Chancellor opened his Budget statement promising the "stronger economy of the future".
He said the Office for Budget Responsibility (OBR) had forecast a faster bounce back, with growth expected to be 6.5% this year rather than the 4% previously expected.
Mr Sunak added that the OBR has scaled down its assumption of the scarring effect of Covid-19 on the economy from 3% to 2%, with unemployment forecasts reduced from 12.5% to 5.2%.
The Budget is focused on the "post-Covid" era, according to the Chancellor, and will pave the way for the "Prime Minister's economy of higher wages, higher skills, and rising productivity".
How will the Budget 2021 impact UK households?
Among the Budget 2021 proposals announced today were Mr Sunak announced that the UK Government will reduce the Universal Credit taper rate by eight percent from no later than 1 December, cutting it from 63% to 55%.
This means that those claiming Universal Credit will see payments taken as they start earning more reduced – leaving them with more money to save until they earn above the earning threshold for Universal Credit.
The move comes after the Government came under fire for cutting the £20-a-week uplift to Universal Credit provided to help ease the financial burden of sudden unemployment and a shortage of jobs during the pandemic.
Planned increases to fuel duty, the tax included in the price you pay per unit of petrol, diesel and fuels collected by HMRC, have also been axed in line with increased costs of fuel at the petrol pump across the UK – with average petrol prices spiking at 142.94p on average last weekend (23-24 October).
The Government also outlined £300 million funding for "A Start for Life" parenting programmes, with an extra £170 million by 2024/25 going into paying for childcare.
Meanwhile, Minimum Wage will increase for UK workers under the age of 23, while the Living Wage for those aged 23 and over will rise to £9.50 an hour.
What drinks will be cheaper under the Budget’s Alcohol Duty changes?
The Chancellor said he was "radically" simplifying alcohol duty by introducing a system designed around the principle of "the stronger the drink, the higher the rate".
Mr Sunak said he is ending the "irrational" 28% duty premium on sparkling wines and duty on fruit ciders will be cut.
A "draught relief" will apply a lower rate of duty on draught beer and cider, cutting the tax by 5% on drinks served from draught containers over 40 litres and bringing the price of a pint down by 3p.
The UK Government has also announced plans for a new small producer relief scheme, extending its small brewers tax relief scheme to producers of cider and alcoholic drinks of less than 8.5%.
What will the Budget 2021 mean for businesses?
Businesses look to benefit the most from the UK Budget 2021 announced on Wednesday afternoon.
Rishi Sunak said he was allocating the first round of bids from the "Levelling Up Fund", noting it would be £1.7 billion to "invest in the infrastructure of everyday life in over 100 local areas".
He added: "With £170 million in Scotland, £120 million in Wales, and £50 million in Northern Ireland - more than their Barnett shares. This will benefit the whole United Kingdom."
Mr Sunak said the Government is backing projects in Aberdeen, Bury, Burnley, Lewes, Clwyd South and Stoke-on-Trent - along with Labour areas of Ashton under Lyne, Doncaster, South Leicester, Sunderland and West Leeds.
Alongside this, it will be cutting Air Passenger Duty for domestic flights between England, Scotland, Wales and Northern Ireland from April 2023 – in a decision that has proved controversial for environmental concerns as COP26 looms.
The Chancellor said core science funding will rise to £5.9 billion a year by 2024-25, a cash increase of 37%.
A new 50% business rates discount will apply in the retail, hospitality, and leisure sectors, with eligible businesses able to claim a discount on their bills of up to a maximum of £110,000.
And a £6 billion package of funding will help tackle NHS backlogs and invest in technology was also trailed ahead of the statement.
How much money will Scotland get from the Autumn Budget?
Rishi Sunak said, through the Barnett formula, that the UK Government’s latest Budget will see “the largest block grants” yet delivered for devolved administrations in the UK since 1998’s devolution settlements.
The increased block grants will see an increase to Scottish Government funding in each year by an average of £4.6 billion, with £2.5 billion for the Welsh Government, and £1.6 billion for the Northern Ireland Executive.
Additional reporting by the Press Association (PA)