A better budget than businesses expected
THE Chancellor pulled a rabbit out of his budget hat with help on business rates for the hard-hit retail and hospitality sectors.
We expected little from him on the much criticised business rates system, but Rishi Sunak had some welcome news for the high street with a 50 per cent reduction in rates over the next year up to £110,000.
The Chancellor said that the total take from business rates – £25 billion – could not be replaced at the risk of lots of public services being hit but government was now working on a reform package for what business has always regarded as an iniquitous tax.
There will now be a revaluation of business premises every three years which will be very welcome by business who have complained that their properties have not been re-rated for many years.
Business will also be pleased by the decision to cancel any rise in fuel duty.
And for pubs so badly hit by the
Covid pandemic, there was good news in the reduction of draught beer and cider duty.
Business will also benefit by the increase in government support for research and development with the budget of Innovate UK being increased by 50 per cent to £1 billion and total investment increased to £20 billion.
This was a better budget than business expected, particularly with the welcome news on business rates reform.
■ The minimum wage will increase to £9.50 an hour next year, up from the current £8.91. ■ The Universal Credit taper rate will be cut by 8% from no later than December 1, bringing it down from 63% to 55%.
■ Alcohol duty is being “radically” simplified by introducing a system designed around the principle of “the stronger the drink, the higher the rate”.
■ 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.
■ A planned rise in fuel duty will be cancelled because of pump prices being at their highest level in eight years.
■ Flights between airports in England, Scotland, Wales and Northern Ireland will be subject to a new lower rate of Air Passenger Duty from April 2023. ■ Every Whitehall department will receive a “real terms rise in overall spending” as part of the Spending Review, the
Chancellor said, amounting to £150 billion over this Parliament. ■ A levy will be placed on property developers with profits over £25 million at a rate of 4% to help create a £5 billion fund to remove unsafe cladding.
■ Devolved administrations will be given the “largest block grants” since 1998, with an increase to Scottish Government funding in each year by an average of £4.6 billion,
£2.5 billion for the Welsh Government, and £1.6 billion for the Northern Ireland Executive. ■ An extra £2.2 billion has been announced for courts, prisons and probation services, including £500 million to reduce the courts backlogs.
■ £300 million will go towards “A Start for Life” parenting programmes, with an extra
£170 million by 2024/25 going into paying for childcare.
■ 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.
■ Ahead of the Budget statement, £7 billion transport funding was announced for areas including Greater Manchester, the West Midlands and South Yorkshire for projects ranging from tram improvements to introducing London-style improvements in infrastructure, but only
£1.5 billion of this was believed to be “new” funding.
■ A £6 billion package of funding will help tackle NHS backlogs and invest in technology which was also trailed ahead of the statement.
■ The Office for Budget Responsibility downgraded its unemployment forecast due to the pandemic from 12% to 5.2%.