Citizens Advice Salford

The Budget March 2021:

Here are the main points in the March budget. Followed by our response. The full details of the budget are available at www.gov.uk.

Main Points:

Coronavirus support

  • Furlough to be extended until the end of September.
  • Government to continue paying 80% of employees’ wages for hours they cannot work.
  • Employers to be asked to contribute 10% in July and 20% in August and September.
  • Support for the self-employed also to be extended until September.
  • 600,000 more self-employed people will be eligible for help as access to grants is widened.
  • £20 uplift in Universal Credit worth £1,000 a year to be extended for another six months.
  • Working Tax Credit claimants will get £500 one-off payment.
  • Minimum wage to increase to £8.91 an hour from April.

Taxation

  • No changes to rates of income tax, national insurance, or VAT.
  • Personal income tax allowance to be frozen at £12,570 from April 2022 to 2026. (The modest planned increase for this year being allowed, but there after being frozen – probably because it’s too late to change this at this stage.)
  • Higher rate income tax threshold to be frozen at £50,270 from 2022 to 2026.
  • Corporation tax on company profits to rise from 19% to 25% in April 2023.
  • Rate to be kept at 19% for about 1.5 million smaller companies with profits of less than £50,000.
  • Stamp duty holiday on house purchases in England and Northern Ireland extended to June, with no tax liability on sales of less than £500,000.
  • No changes to inheritance tax or lifetime pension allowance or capital gains tax allowances.

Health and education

  • £1.65bn to support the UK’s vaccination rollout.
  • £19m for domestic violence programmes, funding network of respite rooms for homeless women.
  • £40m of new funding for victims of 1960s Thalidomide scandal and lifetime support guarantee.
  • £10m to support armed forces veterans with mental health needs.

The arts and sport

  • £400m to help arts venues in England, including museums and galleries, re-open.
  • £300m recovery package for professional sport and £25m for grassroots football.

Business, digital and science

  • Tax breaks for firms to “unlock” £20bn worth of business investment.
  • Firms will be able “deduct” investment costs from tax bills, reducing taxable profits by 130%.
  • Incentive grants for apprenticeships to rise to £3,000 and £126m for traineeships.
  • VAT rate for hospitality firms to be maintained at reduced 5% rate until September.
  • Interim 12.5% rate to apply for the following six months.
  • Business rates holiday for firms in England to continue until June with 75% discount after that.
  • £5bn in Restart grants for shops and other businesses forced to close.
  • £6,000 per premises for non-essential outlets due to re-open in April and £18,000 for gyms, personal care providers and other hospitality and leisure businesses.
  • New visa scheme to help start-ups and rapidly growing tech firms source talent from overseas.
  • Contactless payment limit will rise to £100 later this year.
  • Business rates holiday extended to June.
  • Contactless payment limit will rise to £100.

Alcohol, tobacco, and fuel

  • All alcohol duties to be frozen for second year running.
  • No extra duties on spirits, wine, cider, or beer.
  • Fuel duty to be frozen for eleventh consecutive year.

Environment, transport, infrastructure, and housing

  • New UK Infrastructure Bank to be set up in Leeds.
  • It will have £12bn in capital, with aim of funding £40bn worth of public and private projects.
  • £15bn in green bonds, including for retail investors, to help finance the transition to net zero by 2050.
  • A new mortgage guarantee scheme will enable homebuyers secure a mortgage up to £600,000 with a 5% deposit.

Nations and regions

  • £1.2bn in funding for the Scottish government, £740m for the Welsh government and £410m for the Northern Ireland executive.
  • 750 UK civil servants to be relocated to new Treasury campus in Darlington.
  • £1bn Towns Fund fund to promote regeneration in 45 English towns.
  • £150m for community groups to take over pubs at risk of closure.
  • First eight sites for freeports in England announced.

Our thoughts:

Whilst we welcome the extension of the Universal Credit £20 uplift for a further six months, we would ask the Government again to make this permanent. We believe that this would be one of the best ways to reduce child and in-work poverty in Salford and beyond.

We also think that this budget would have been a good opportunity to introduce a fund to assist people in rent arrears. This is likely to become a major policy issue in the near future, with many thousands of tenants facing eviction as well as causing financial difficulties to large numbers of small landlords. It will also cause a marked increase in the numbers of people becoming homeless and needing emergency rehousing from already hard-pressed local councils.

In terms of fixing what we think is a major flaw in the current Coronavirus emergency measures, the Government could have done more to support those people having to self-isolate; with the current self-isolation payment scheme being too restrictive. In the longer term a review and improvement of the inadequate arrangements for paying sick pay is needed, which we think is the real problem here.

We welcome the extension of the furlough scheme. 

We call for the national minimum wage to be aligned with the Real Living Wage, this would be a relatively modest increase of 59 pence an hour – a further 6%; but would have a transformative impact on in-work poverty.

 

Tom Togher

March 2021.