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Budget 2021: key points

  • Rishi Sunak said he was creating ‘a stronger economy for the British people’
  • He warned of continuing challenges from Covid 
  • Office for Budget Responsibility says inflation expected to average 4 per cent over the next year, was 3.1 per cent in September.
  • Sunak: ‘The pressures caused by supply chains and energy prices will take months to ease.’ 
  • Vehicle excise duty for heavy goods vehicles is frozen for a year  
  • Suspension of HGV levy extended for another year 
  • OBR says economy will return to pre-Covid levels at the turn of the year, earlier than expected
  • Forecast 6.5 per cent growth this year, up from 4 per cent, then 6 per cent in 2022. 
  • But lower rates of 2.1 per cent in 2023, 1.3 per cent in 2024 and 1.6 per cent in 2025 
  • Unemployment forecast to peak at 5.2 per cent, lower than expected 
  • Foreign aid budget will go back up to 0.7 per cent on GDP by 2024/2025, having been cut to 0.5 per cent
  • Every Whitehall department will get a ‘real terms rise in overall spending’ as part of the Spending Review, amounting to £150 billion
  • Borrowing as a percentage of GDP is forecast to fall, from 7.9% this year to 3.3 per cent next year, then 2.4 per cent, 1.7 per cent, 1.7 per cent and 1.5 per cent in the following years. 
  • A levy will be placed on property developers with profits over £25 million at a rate of 4 per cent to help create a £5 billion fund to remove unsafe cladding 
  • The national minimum wage will increase from £8.91 to £9.50 from April next year. 
  • An extra £6billion will be given to the NHS to pay for new equipment and new facilities to clear the Covid backlog. 
  • Brownfield sites covering the equivalent of 2,000 football pitches could be turned into plots for housing as part of a £1.8billion injection. 
  • A £2.6billion pot of funding will be set up to help children with special educational needs and disabilities. 
  • Levelling up transport outside of London will benefit to the tune of nearly £7billion, paying for a range of projects, including tram improvements. 
  • The Department of Health and Social Care will receive £5billion over the next three years to fund research and development in areas such as genome sequencing and tackling health inequalities. 
  • A cash injection of £3billion will be given to both post-16 education but also to adults later in life. 
  • £850million will be spent over three years to ‘breathe life’ back into cultural hotspots like London’s V&A museum, Tate Liverpool and the Imperial War Museum in Duxford. 
  • Ageing Border Force vessels will be replaced by new cutters as part of a £700million investment to improve the safety of Britain’s borders. 
  • An 8 per cent cut to the Universal Credit taper rate meaning recipients keep more benefit money as they work 
  • He outlined the ‘most radical simplification of alcohol duties for over 140 years’ that cuts number of rates paid from 15 to six
  • The stronger the drink the higher the rate, as some high-percentage beverages are ‘under-taxed’
  • New ‘small producer relief’ to include small cidermakers and other producers making alcoholic drinks of less than 8.5% alcohol by volume (ABV).
  • ‘Draught relief’ – a new, lower rate of duty on draught beer and cider.  
  • Fuel duty rise cancelled for the 12th year in a row 
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Rishi Sunak today claimed the Tories are the ‘real party of public services’ after Covid – as he used higher growth forecasts to splurge on ‘Levelling Up’ and slashing business taxes.

Unveiling his crucial Budget, the Chancellor said he was choosing to ‘invest’ rather than ‘retrench’ after the pandemic hammered the country.

Departmental spending will go up by £150billion over this parliament – an average of 3.8 per cent a year in real terms, the fastest rate this century.

Per-pupil spending in schools will be back at 2010 levels by 2024-25, according to the Chancellor.

Research and development spending will be be £20billion a year by the end of the parliament, a 50 per cent increase and a greater proportion of GDP than in Germany, France and the US.

Meanwhile, in a boon for pubs and high street retailers Mr Sunak said their business rates are being slashed by 50 per cent this year – worth £1.7billion. There are also reforms that in total will benefit them to the tune of £7billion. 

Fuel duty is being frozen to avoid heaping pressure on drivers amid soaring prices, and alcohol taxes are being radically simplified. A special lower duty rate will apply to draught drinks. 

And in one of the most eye-catching moves, Mr Sunak said universal credit is being made far more generous to give families another £2billion. The taper rate – how much claimants lose for every hour they work over the allowance – is being slashed from 63p in the pound to just 55p. 

The minimum wage is also being hiked to £9.50 next year, and the public sector pay freeze is being axed. 

The splurges are being partly offset by pre-announced tax rises, including the huge national insurance increase for social care and the NHS and using a ‘double lock’ rather than the ‘triple lock’ for state pensions this year.

It means that overall the Budget only leaves the government £7.7billion a year worse off, according to Budget documents.  

Mr Sunak pointed out the UK is recovering more quickly than most competitor nations. 

‘Let there be no doubt our plan is working,’ he said.

But he admitted that the OBR expects inflation to average 4 per cent over the next year – twice the Bank of England’s target. 

The supply chain chaos will last ‘months’ even though much of the price pressure should disappear eventually, he said. 

The OBR has upgraded growth for this year from the 4 per cent it suggested in March to 6.5 per cent – less than some had hoped but still enough to return to pre-Covid levels of activity. 

Next year GDP is expected to be 6 per cent, lower than the 7.3 per cent at the last set of figures. 

Critically the ‘scarring’ – long-term damage to the economy – is now only thought to be 2 per cent rather than 3 per cent.   

The watchdog also now forecasts that unemployment will peak at 5.2 per cent, a fraction of what had been anticipated at the height of the crisis. 

‘Today’s Budget does not draw a line under Covid. We have challenging months ahead,’ Mr Sunak said.

‘But today’s Budget does begin the work of preparing a new economy post-Covid.’ 

Mr Sunak has a bit more money to deploy due to the strong bounceback from the pandemic. 

In a move that will not please many Tories, Mr Sunak said the commitment to spend 0.7 per cent of national income on foreign aid will be restored from 2024-25.   

The ferocity of the global resurgence has sparked materials and labour shortages, causing inflation to surge and posing other serious headaches for the government.      

But as a result borrowing so far this year is well over £30billion below previous estimates, and the long-term damage to the British economy could be less than originally feared. 

However, the Chancellor also stressed the need to balance the books after the £400billion cost of the pandemic, with Tories raising alarm about the massive £2.2trillion debt and the looming threat of inflation driving up interest rates.

In his speech, Mr Sunak said the Budget would usher in a ‘new economy’ after the pandemic as he confirmed billions of pounds for the NHS and wage rises for millions of workers.

‘Today’s Budget increases total departmental spending over this Parliament by £150billion,’ he said.

‘That’s the largest increase this century, with spending growing by 3.8% a year in real terms. 

‘As a result of this Spending Review, and contrary to speculation there will be a real terms rise in overall spending for every single department.

‘And public sector net investment as a share of GDP will be at the highest sustained level for nearly half a century. If anyone still doubts it, today’s Budget confirms the Conservatives are the real party of public services.’ 

Labour’s response was in danger of descending into shambles after it emerged at the last moment that Keir Starmer has tested positive for coronavirus. Shadow chancellor Rachel Reeves answered the statement for the Opposition instead, while shadow business secretary Ed Miliband filled in at PMQs. 

Rishi Sunak today vowed a Budget to foster a 'stronger economy' after Covid - having been handed firepower with much higher growth forecasts

Rishi Sunak today vowed a Budget to foster a 'stronger economy' after Covid - having been handed firepower with much higher growth forecasts

Rishi Sunak today vowed a Budget to foster a ‘stronger economy’ after Covid – having been handed firepower with much higher growth forecasts

Unveiling his crucial financial package, Mr Sunak insisted the government's Levelling Up agenda is a 'golden thread' in his approach. Senior Tories including Boris Johnson had donned masks for the statement - although Jacob Rees-Mogg was still bare-faced

Unveiling his crucial financial package, Mr Sunak insisted the government's Levelling Up agenda is a 'golden thread' in his approach. Senior Tories including Boris Johnson had donned masks for the statement - although Jacob Rees-Mogg was still bare-faced

Unveiling his crucial financial package, Mr Sunak insisted the government’s Levelling Up agenda is a ‘golden thread’ in his approach. Senior Tories including Boris Johnson had donned masks for the statement – although Jacob Rees-Mogg was still bare-faced 

Rishi Sunak and his team carried out the traditional photocall in Downing Street before he headed to the House of Commons to deliver his speech. From left to right, ministerial aides Rob Butler and Claire Coutinho; City minister John Glenn; financial secretary Lucy Frazer;  Mr Sunak; efficiency minister Lord Agnew; ministerial aides Alan Mak and Craig Williams

Rishi Sunak and his team carried out the traditional photocall in Downing Street before he headed to the House of Commons to deliver his speech. From left to right, ministerial aides Rob Butler and Claire Coutinho; City minister John Glenn; financial secretary Lucy Frazer;  Mr Sunak; efficiency minister Lord Agnew; ministerial aides Alan Mak and Craig Williams

Rishi Sunak and his team carried out the traditional photocall in Downing Street before he headed to the House of Commons to deliver his speech. From left to right, ministerial aides Rob Butler and Claire Coutinho; City minister John Glenn; financial secretary Lucy Frazer;  Mr Sunak; efficiency minister Lord Agnew; ministerial aides Alan Mak and Craig Williams  

In the Budget today, Rishi Sunak will declare Britain is ready to enter a 'new age of optimism' and a 'post-Covid' economy. Pictured with chief secretary Simon Clarke in the Treasury.  Mr Clarke, 6ft 6, who was promoted to the role in the reshuffle last month, explained that he would not be facing the cameras outside No11. 'I won't be outside for the photos in Downing Street as I live with agoraphobia - which prevents me being comfortable in some open spaces'

In the Budget today, Rishi Sunak will declare Britain is ready to enter a 'new age of optimism' and a 'post-Covid' economy. Pictured with chief secretary Simon Clarke in the Treasury.  Mr Clarke, 6ft 6, who was promoted to the role in the reshuffle last month, explained that he would not be facing the cameras outside No11. 'I won't be outside for the photos in Downing Street as I live with agoraphobia - which prevents me being comfortable in some open spaces'

In the Budget today, Rishi Sunak will declare Britain is ready to enter a ‘new age of optimism’ and a ‘post-Covid’ economy. Pictured with chief secretary Simon Clarke in the Treasury.  Mr Clarke, 6ft 6, who was promoted to the role in the reshuffle last month, explained that he would not be facing the cameras outside No11. ‘I won’t be outside for the photos in Downing Street as I live with agoraphobia – which prevents me being comfortable in some open spaces’

n a stark assessment alongside the Budget, the Office for Budget Responsibility (OBR) said its central forecast is for headline CPI to peak at 4.4 per cent in the second quarter of year

n a stark assessment alongside the Budget, the Office for Budget Responsibility (OBR) said its central forecast is for headline CPI to peak at 4.4 per cent in the second quarter of year

n a stark assessment alongside the Budget, the Office for Budget Responsibility (OBR) said its central forecast is for headline CPI to peak at 4.4 per cent in the second quarter of year

In both scenarios, CPI inflation could go up to 5.4 per cent, with the OBR saying that the Bank of England base rate would need to soar to 3.5 per cent from the low of 0.1 per cent now

In both scenarios, CPI inflation could go up to 5.4 per cent, with the OBR saying that the Bank of England base rate would need to soar to 3.5 per cent from the low of 0.1 per cent now

In both scenarios, CPI inflation could go up to 5.4 per cent, with the OBR saying that the Bank of England base rate would need to soar to 3.5 per cent from the low of 0.1 per cent now

The headline CPI rate of inflation was 3.1 per cent in September, down slightly from the 3.2 per cent recorded in August. However, the Bank of England expects it to top 4 per cent in the coming months

The headline CPI rate of inflation was 3.1 per cent in September, down slightly from the 3.2 per cent recorded in August. However, the Bank of England expects it to top 4 per cent in the coming months

The headline CPI rate of inflation was 3.1 per cent in September, down slightly from the 3.2 per cent recorded in August. However, the Bank of England expects it to top 4 per cent in the coming months 

Rishi’s deputy shuns Downing St photocall due to agoraphobia 

Rishi Sunak’s deputy today revealed he will not be joining the traditional pre-Budget photocall because he suffers from agoraphobia.

Chief Secretary to the Treasury Simon Clarke said he was ‘looking forward to explaining’ the fiscal package and spending review later. 

But Mr Clarke, who was promoted to the role in the reshuffle last month, explained that he would not be facing the cameras outside No11.  

‘I won’t be outside for the photos in Downing Street as I live with agoraphobia – which prevents me being comfortable in some open spaces – but will be busy in Parliament and out in the country,’ he said. 

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The easing of lockdown restrictions and the vaccine rollout mean the economy is in better shape than was expected at the time of the last financial statement in March.

The change in the OBR watchdog’s prediction for growth and the ‘scarring’ from the pandemic has given Mr Sunak more leeway to pump money into public services as he sets out spending plans for Whitehall departments for three years.

However, the biggest-ticket item – the £12billion a year NHS and social care boost funded by an eye-watering national insurance hike – has already been revealed last month. 

In a further positive bit of news for Mr Sunak, there are claims today that the chances of ‘Plan B’ Covid restrictions have fallen dramatically after the surge in cases levelled off. 

The Treasury has pledged green investment and policies to take advantage of post-Brexit freedoms and has touted nearly £7billion of new funding for local transport.

Mr Sunak also set out new fiscal rules, which include a commitment to stop borrowing to fund day-to-day spending within three years.

He is also requiring government debt, running at about 100 per cent of gross domestic product, to start falling by 2025.

Office for National Statistics figures showed last week government borrowing was far lower than forecast in the first half of the fiscal year. 

The budget deficit was £108.1billion between April and September, almost 30 per cent below predictions. However, Mr Sunak will strike a note of caution about how servicing the debt could become much dearer if prices rise.

In March, he pointed out that a 1 per cent rise in interest rates and inflation would cost us over £25billion, adding: ‘Over the medium term, we cannot allow debt to keep rising, and, given how high our debt now is, we need to pay close attention to affordability.’ 

Ministers have been under huge pressure to reverse the decision to end the temporary £20-a-week uplift to Universal Credit, which was introduced during the pandemic.

The government ruled out bowing to those demands and instead made the benefit more generous. 

Public sector net borrowing will be lower than had been expected in March, thanks to the improved overall economic picture

Public sector net borrowing will be lower than had been expected in March, thanks to the improved overall economic picture

Public sector net borrowing will be lower than had been expected in March, thanks to the improved overall economic picture

Public sector debt does not rise as high under the latest OBR projections

Public sector debt does not rise as high under the latest OBR projections

Public sector debt does not rise as high under the latest OBR projections 

The tax burden is going to its highest level since the Second World War, despite Rishi Sunak's promise that he wants to cut it

The tax burden is going to its highest level since the Second World War, despite Rishi Sunak's promise that he wants to cut it

The tax burden is going to its highest level since the Second World War, despite Rishi Sunak’s promise that he wants to cut it 

Mr Sunak defended his previous decisions to increase taxes for public spending, saying: ‘I don’t like it but I can’t apologise for it.’ 

In a passage seemingly designed to appease restive MPs about his Conservative instincts, Mr Sunak said: ‘We have a choice. Do we want to live in a country where the response to every question is, ‘What is the government going to do about it? Where every time prices rise, every time a company gets in trouble, every time some new challenge emerges, the answer is always the taxpayer must pay.

‘Or do we choose to recognise that government has limits, government should have limits.

‘If this seems if this seems a controversial statement to make, then I’m all the more glad for saying it because that means it needed saying.’ 

Starmer misses Budget after testing positive for Covid… as Tories finally put on masks in chamber  

Keir Starmer was forced to pull out of the Budget with Covid today – as Boris Johnson led senior ministers in wearing a mask in the House of Commons.

The Labour leader’s plight was revealed at the start of PMQs – with Ed Miliband standing in and shadow chancellor Rachel Reeves responding to Rishi Sunak.  

Mr Johnson was joined by Mr Sunak, Justice Secretary Dominic Raab and Health Secretary Sajid Javid in covering his face in the weekly Commons session.

But other Tory frontbenchers including Commons Leader Jacob Rees-Mogg and Scottish Secretary Alister Jack were among those still declining to take action to prevent the spread of Covid.

It is thought to be the fifth time that Sir Keir has needed to isolate.  

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Mr Sunak went on: ‘My goal is to reduce taxes. By the end of this Parliament, I want taxes to be going down not up. I want this to be a society that rewards energy, ingenuity and inventiveness. A society that rewards work.’ 

The director of the respected Institute for Fiscal Studies (IFS), Paul Johnson, tweeted: ‘(The) Chancellor seems to be claiming tax and spending rising to record levels because of the pandemic. Not true. These are largely tax and spending decisions unrelated to pandemic.’

Mr Johnson also contested the Chancellor’s claim the minimum wage increase is worth £1,000 to a full-time worker, stating this is worth £700 after tax and national insurance and ‘less than £300 to anyone on Universal Credit (UC)’.

Mr Johnson said it was the 12th year in a row fuel duty has been frozen, adding this was a ‘big tax loss’ for the Treasury and ‘hardly consistent with climate change objectives’.

He added: ‘Big cut to Universal Credit taper. And increase in work allowance. Targeted at working claimants. Out of work UC claimants get nothing.

‘Trade-offs as ever. Improves work incentives for current recipients but will drag more into the system.’

Tory MP Sir John Redwood said: ‘When do we get the plans to run down the one off pandemic spending? Where is the plan to run railway services for the new pattern of working, to drive down the huge losses? Government needs to spend wisely.’ 

In March, the OBR warned that by 2025-6 the economy will still be 3 per cent smaller than it would have been if the pandemic never happened.

Unemployment was expected to peak at 6.5 per cent, but that was down from the bloodcurdling 11.9 per cent predicted in July last year. 

National debt was set to hit an eye-watering £2.747trillion in 2023-4, equivalent to a peak of 109.7 per cent of GDP. 

By 2026-7 the central forecast was that it would be over £2.8trillion and still bigger than the economy’s annual output. 

The OBR estimated that by the end of its forecast period the government’s deficit will be almost eradicated, at £900million, finally stopping debt rising. 

OBR warns interest rates could hit 3.5 PER CENT if ‘wage spiral’ drives inflation to 5.4 PER CENT 

The government’s watchdog today warned that a ‘wage spiral’ or energy shock could drive inflation to a three-decade high of  5.4 per cent next year and force the Bank of England to take drastic action.

In a stark assessment alongside the Budget, the Office for Budget Responsibility (OBR) said its central forecast is for headline CPI to peak at 4.4 per cent in the second quarter of year.

That is far above the current 3.1 per cent, and more than double the Bank’s 2 per cent target. 

But it warned that data since the document was prepared suggests that a figure of 5 per cent could be more realistic.

The watchdog put forward two scenarios where the situation could get dramatically worse – with either a ‘mild wage spiral’ developing or continuing pressure on energy and product prices. 

In both, CPI inflation could go up to 5.4 per cent, with the OBR saying that the Bank of England base rate would need to soar to 3.5 per cent from the low of 0.1 per cent now. 

Andrew Bailey

Andrew Bailey

Rishi Sunak

Rishi Sunak

The OBR said that in its scenarios where a ‘wage spiral’ developed or product prices keep rising, Bank of England governor Andrew Bailey (left) would need to raise the base rate to 3.5 per cent from the low of 0.1 per cent now

Such a shift would cause huge pain for homeowners who would face massive mortgage costs.

But there would also be ‘fiscal consequences’ for the government as the bill for servicing the £2.2trillion debt mountiain would rise. 

The OBR said: ‘In both scenarios, a further sharp and persistent increase in costs means inflation peaks at 5.4 per cent (1 percentage point above our central forecast and the highest rate in three decades) and then falls back more slowly than in our central forecast. 

‘Based on a simple monetary policy rule, Bank Rate in our scenario reaches 3.5 per cent (its highest since November 2008), thereby suppressing demand and moderating inflationary pressures, but even so it still takes a year longer for inflation to return to the target than in our central forecast. 

‘At its peak, the impact of this vigorous monetary tightening prevents a further 2 to 3 percentage point rise in inflation, and without it the price level would be some 6 to 8 per cent higher at the scenario horizon.’ 

The OBR’s central forecast upgraded growth for this year from the 4 per cent it suggested in March to 6.5 per cent – less than some had hoped but still enough to return to pre-Covid levels of activity. 

Next year GDP is expected to be 6 per cent, lower than the 7.3 per cent at the last set of figures. 

Critically the ‘scarring’ – long-term damage to the economy – is now only thought to be 2 per cent rather than 3 per cent.   

The watchdog also now forecasts that unemployment will peak at 5.2 per cent, a fraction of what had been anticipated at the height of the crisis. 

Mr Sunak wielded the famous red briefcase outside No11 as the pomp and ceremony of the Budget got under way

Mr Sunak wielded the famous red briefcase outside No11 as the pomp and ceremony of the Budget got under way

Boris Johnson leaves Downing Street for the House of Commons this morning, where he took PMQs before the Budget

Boris Johnson leaves Downing Street for the House of Commons this morning, where he took PMQs before the Budget

Mr Sunak wielded the famous red briefcase outside No11 as the pomp and ceremony of the Budget got under way. Right, Mr Johnson leaves for the Commons 

Liz Truss

Liz Truss

Priti Patel

Priti Patel

Foreign Secretary Liz Truss (left) and Home Secretary Priti Patel were at Cabinet today ahead of the Budget

Mr Sunak will confirm a rise of minimum wage to £9.50 from April however, it was warned that a new inflation forecast could reduce household incomes by £1,000 next year. Pictured: A can of Sprite and a Twix next to Rishi's red box, he said was his ‘pre-game routine’ for the Budget

Mr Sunak will confirm a rise of minimum wage to £9.50 from April however, it was warned that a new inflation forecast could reduce household incomes by £1,000 next year. Pictured: A can of Sprite and a Twix next to Rishi's red box, he said was his ‘pre-game routine’ for the Budget

Mr Sunak will confirm a rise of minimum wage to £9.50 from April however, it was warned that a new inflation forecast could reduce household incomes by £1,000 next year. Pictured: A can of Sprite and a Twix next to Rishi’s red box, he said was his ‘pre-game routine’ for the Budget

Sir Lindsay Hoyle, Commons Speaker, (pictured) complained Mr Sunak was treating MPs in a ‘discourteous manner’ by pre-briefing some of his Budget announcements and said announcements should be to MPs first rather than the media

Sir Lindsay Hoyle, Commons Speaker, (pictured) complained Mr Sunak was treating MPs in a ‘discourteous manner’ by pre-briefing some of his Budget announcements and said announcements should be to MPs first rather than the media

Sir Lindsay Hoyle, Commons Speaker, (pictured) complained Mr Sunak was treating MPs in a ‘discourteous manner’ by pre-briefing some of his Budget announcements and said announcements should be to MPs first rather than the media 

Teetotal Chancellor uses post-Brexit freedoms to slash cost of Rose, fruit cider and prosecco but warns wine drinkers will pay more for their 12% volume red 

Rishi Sunak today unveiled a major overhaul of the UK’s alcohol taxes as he cut the price of a pint of draught beer by three pence – but increased the levy on red wine. 

The Chancellor used his Budget to set out a new Draught Relief policy which will see beer and cider duty reduced by five per cent. 

He said that amounted to the biggest cut on the tax on beer in 50 years and the ‘biggest cut to cider duty since 1923’. 

He also announced a planned increase to the duty on spirits, wine, cider and beer will be cancelled while the ‘irrational’ 28 per cent duty on premium sparkling wines like prosecco and fruit ciders will be cut.     

However, the Chancellor’s plans to simplify the alcohol duty system – which he said was made possible by Brexit – will see some drinks become more expensive, with red wine drinkers among those hit.

Mr Sunak said that under his new system which be rolled out in February 2023, the stronger the drink, the higher the rate of tax will be.  

That will also mean less-strong drinks like Rose wine and liqueurs which are currently ‘over taxed’ will become cheaper.

The Chancellor said the Draught Relief amounts to the biggest cut on the tax on beer in 50 years and the 'biggest cut to cider duty since 1923'

The Chancellor said the Draught Relief amounts to the biggest cut on the tax on beer in 50 years and the 'biggest cut to cider duty since 1923'

The Chancellor said the Draught Relief amounts to the biggest cut on the tax on beer in 50 years and the ‘biggest cut to cider duty since 1923’

Treasury estimates suggest the changes to beer duty will shave three pence in tax off the cost of a pint of Stella Artois and Guinness

Treasury estimates suggest the changes to beer duty will shave three pence in tax off the cost of a pint of Stella Artois and Guinness

Treasury estimates suggest the changes to beer duty will shave three pence in tax off the cost of a pint of Stella Artois and Guinness

What are the main changes to the alcohol tax system and how will prices change?

Main policy changes: 

– Duty rates for draught beer and cider will be cut by five per cent – taking three pence off a pint. 

– Duty rate on draught fruit cider will be equalised with beer, cutting the rate on fruit cider by 20 per cent, taking 13 pence off a pint.

– All products will be taxed according to their Alcohol By Volume (ABV), cutting duty on lighter wines and cider. Tax on a 10.5% bottle of Rose will decrease by 23 pence per bottle. But the levy on white ciders and stronger still wines will go up.  

– Sparkling wine will be taxed at the same rate as still wine, ending the 28 per cent premium currently applied to the product. 

Examples of impact on prices: 

– Stella Artois: 3p less tax on a pint in the pub, no change in shops.

– Guinness: 3p less tax on a pint in the pub, no change in shops. 

– Strongbow: 2p less tax on a pint in the pub, 0.5p less tax in shops. 

– Strongbow Dark Fruits: 13p less tax on a pint in the pub, 1p less tax in shops.

– Hardy’s VR Merlot red wine: 35p more tax on a bottle in shops.

– Echo Falls Zinfandel Rose wine: 23p less tax on a bottle in shops. 

– Canti Prosecco: 87p less tax on a bottle in shops.  

– Harvey’s Sherry: 51p more tax on a bottle in shops. 

– Taylor’s Port: £1.09 more tax on a bottle in shops. 

– Smirnoff Vodka: No change on a bottle in shops. 

– Bailey’s Irish Cream: 41p less tax on a bottle in shops.  

Source: HM Treasury 

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The Chancellor told the Commons that the existing alcohol duty system is ‘outdated, complex and full of historical anomalies’.  

He said his overhaul will deliver the ‘most radical simplification of alcohol duties for over 140 years’, resulting in a ‘simpler, fairer and healthier’ system. 

Mr Sunak said Brexit made the shake-up possible, telling the Commons the Government is ‘taking advantage of leaving the EU’ by rolling out a raft of changes.

The changes will see the overall number of alcohol duties reduced from the current 15 to just six.

Mr Sunak said the new system will be guided by a ‘common sense principal’ of ‘the stronger the drink, the higher the rate’. 

He said: ‘This means that some drinks, like stronger red wines, fortified wines or high strength white ciders will see a small increase in their rates because they are currently undertaxed given their strength.

‘That is the right thing to do and will help end an era of cheap high strength drinks which can harm public health and enable problem drinking.’

The Chancellor said the ‘converse is also true’ for alcoholic drinks which are not as strong. 

He said: ‘Many lower alcohol drinks are currently over taxed and have been for many decades.

‘Rose. Fruit ciders. Liqueurs. Lower strength beers and wines. Today’s changes mean that they will pay less.’ 

Mr Sunak said that drinking habits in the UK had changed, with more people now drinking sparkling wines as he moved to make them cheaper. 

He told MPs: ‘Over the last decade, consumption of sparkling wines like Prosecco has doubled. English sparkling wine has increased tenfold. It is clear they are no longer the preserve of wealthy elites.

‘And they are no stronger than still wines so I am going to end the irrational duty premium of 28 per cent that they currently pay.

‘Sparkling wines wherever they are produced will now pay the same duty as still wines of equivalent strength.’

Mr Sunak had been under pressure from Tory MPs to bring forward help for struggling pubs. 

Many Conservative MPs had been calling for a reduction in beer duty and Mr Sunak obliged as he announced his new ‘Draught Relief’ policy. 

He told the Commons: ‘A fairer, healthier system supports pubs so I can announce today Draught Relief.

‘Draught Relief will apply a new, lower rate of duty on draught beer and cider.

‘It will apply to drinks served from draught containers over 40 litres. It will particularly benefit community pubs who do 75 per cent of their trade on draught.

‘And let me tell the House the new rate: Draught Relief will cut duty by five per cent.

‘That is the biggest cut to cider duty since 1923, the biggest cut to fruit ciders in a generation, the biggest cut to beer duty for 50 years.

‘This is not temporary, it is a long term investment in the British pubs of £100million a year and a permanent cut in the cost of a pint of 3p.’ 

He added: ‘These much needed reforms will come into effect in February 2023.’

John O’Connell, chief executive of the TaxPayers’ Alliance campaign group, welcomed the changes and said: ‘After being battered by the pandemic, punters, publicans and producers will be raising a glass to these reforms and rate cuts.

‘Shaking up alcohol duties has been a long time coming and big moves to simplify the system are a welcome signal of support for the Great British pub and the hospitality industry more broadly.’

Jez Lamb, founder of the Wirral-based craft beer marketplace Beers@No.42, questioned whether the shake-up will benefit smaller breweries. 

He said: ‘The devil’s always in the detail. It’s brilliant to see alcohol duty cut on draught beer but that’s only for ‘containers’ more than 40L.

‘This is great for the big breweries but so many smaller craft brewers only supply in 30L containers.

‘This just further supports the big players in the market, not supporting the smaller, independent breweries who need support most.’ 

Chancellor confirms lifting of public sector pay freeze

Rishi Sunak today confirmed that a 12-month public sector pay freeze will end, paving the way for more than five million workers to receive a pay rise next year. 

The Chancellor froze public sector pay back in November last year amid public spending pressures caused by the pandemic. 

The freeze covered the period from April 2021 to March 2022.

But the Treasury said on Monday evening that the ‘pause’ will end from April next year. 

Mr Sunak said the move was possible because the economy is ‘firmly back on track’ after the lifting of coronavirus restrictions. 

However, there is no guarantee the increase will be higher than the rising cost of living, meaning workers could still feel worse off.

Union bosses have demanded a pay rise of at least 3.1 per cent – the current rate of inflation. 

Mr Sunak has not set out how much wages will be boosted by, with the rises set to be announced next year following recommendations from independent pay review bodies. 

Downing Street has also refused to be drawn, insisting the ‘process is for independent pay review bodies to look at’. 

In cash terms, public sector pay has risen more steadily than private sector pay, which has seen significant dips during the pandemic and the Credit Crunch. The different types of jobs in each sector means that the overall pay level is not directly comparable in this chart

In cash terms, public sector pay has risen more steadily than private sector pay, which has seen significant dips during the pandemic and the Credit Crunch. The different types of jobs in each sector means that the overall pay level is not directly comparable in this chart

In cash terms, public sector pay has risen more steadily than private sector pay, which has seen significant dips during the pandemic and the Credit Crunch. The different types of jobs in each sector means that the overall pay level is not directly comparable in this chart

National minimum wage to rise from £8.91 to £9.50

The national minimum wage will increase by 6.6 per cent next year, boosting the pay of an estimated two million workers. 

The wage baseline will go from the current rate of £8.91 an hour to £9.50, applying to all over-23s. 

The 59p an hour rise will take effect on April 1 and will mean a full-time worker on the minimum wage will see their pay packet grow by more than £1,000 a year.  

Rishi Sunak said the wage hike ‘keeps us on track to meet our target to end low pay by the end of this Parliament’.  

The minimum wage for younger workers will also increase, with people aged 21 to 22 seeing their pay go from £8.36 to £9.18. Pay for apprentices will increase from £4.30 to £4.81.     

Mr Sunak said: ‘This is a Government that is on the side of working people. This wage boost ensures we’re making work pay and keeps us on track to meet our target to end low pay by the end of this Parliament.’

The Government has set a target of the minimum wage being two-thirds of average earnings by 2024. 

Labour described the increase as ‘underwhelming’ and said ‘much of’ the extra cash will be ‘swallowed up’ by Government tax rises. 

Chancellor allocates almost £7billion to pay for ‘levelling up’ regional transport links

Rishi Sunak will pump billions of pounds into regional transport links in a bid to deliver on the Government’s ‘levelling up’ agenda.

Nearly £7billion will be given to areas such as Greater Manchester, the West Midlands and South Yorkshire for projects ranging from tram improvements to introducing London-style improvements in infrastructure, fares and services.

Greater Manchester will be one of the areas to benefit from a £7billion funding package to improve regional transport links. Mayor of Greater Manchester Andy Burnham is pictured with Boris Johnson on October 3

Greater Manchester will be one of the areas to benefit from a £7billion funding package to improve regional transport links. Mayor of Greater Manchester Andy Burnham is pictured with Boris Johnson on October 3

Greater Manchester will be one of the areas to benefit from a £7billion funding package to improve regional transport links. Mayor of Greater Manchester Andy Burnham is pictured with Boris Johnson on October 3

The investment will be seen as a win for Greater Manchester mayor Andy Burnham, who has been heavily lobbying the Government to hand over the cash for his region to launch a London-style transport system.

Labour’s Mr Burnham had called for £1billion and put pressure on ministers during the Tory Party conference in Manchester earlier this month.

The Treasury has confirmed Greater Manchester will be given just over £1billion. 

The announcement is also being touted as a vote of confidence in the devolution agenda as all those awarded cash are areas with metro mayors. 

Elsewhere, there will be £830million given to West Yorkshire, £570million in South Yorkshire, £1billion in the West Midlands, £310million in Tees Valley, £540million in the West of England and £710million for the Liverpool City Region. 

Some £5.7billion will be transport settlements for the regions, while £1.2billion of new funding will go towards transforming bus services to deliver London-style journey times, fares and number of services. 

NHS handed an extra £6billion to buy new equipment and clear Covid backlog

Rishi Sunak today confirmed the NHS will receive £6billion in new funding to buy equipment, improve its IT systems and tackle the Covid backlog. 

The £5.9billion is in addition to the £12billion funding boost delivered through a hike in National Insurance.

The Government said the extra cash will help to provide millions more checks, scans and procedures for non-emergency patients.  

The capital funding will aim to deliver approximately 30 per cent more elective activity by 2024-25 compared to pre-pandemic levels. 

In an effort to address the Covid backlog of people waiting for checks, tests and scans, and help get waiting lists down, £2.3billion of the funding package will be used to transform diagnostic services.

The Treasury said there will be at least 100 ‘one-stop-shop’ community diagnostic centres across England, including 44 which have already been announced.

These centres are expected to help clear most existing test backlogs caused by the pandemic, including for CT, MRI and ultrasound scans, by the end of the parliament. 

The settlement to tackle backlogs also includes £1.5billion for increased bed capacity, equipment and new surgical hubs to tackle waiting times for elective surgeries.

Each hub will be equipped with four or five surgical theatres designated for critical elective surgeries.

A total of £2.1billion of the £5.9billion total will be invested in technology and data in a bid to improve efficiency and security within the NHS.  

Health research receives £5billion funding boost  

The Department of Health and Social Care will receive £5billion over the next three years to fund research and development in areas like genome sequencing and tackling health inequalities.

Part of the package will include money for genome technology to allow doctors to detect more than 200 conditions in babies, compared with existing tests which can only identify nine.

Some £95million of the funding will go towards the Office for Life Sciences to help with cutting-edge innovations to help treat cancer, obesity and mental ill health. 

The money will also fund a project to tackle healthcare inequalities by increasing representation of minority groups in genomics research programmes. 

The ‘Diverse Data’ project will aim to recruit at least 15 per cent of people from ethnic minority backgrounds to take part in research programmes.

Rishi Sunak said: ‘The past 18 months has shown us how important innovative R&D is in delivering new, life-saving treatments and improving the efficiency of our healthcare system.

‘The UK is already home to some of the best minds in healthcare and life sciences, and I’m committed to seeing this sector flourish as we level up opportunity across the country and recover from the pandemic.’ 

Cash injection of £3billion to launch ‘skills revolution’ 

Rishi Sunak has pledged £3billion to improve post-16 education and to help more adults gain new skills later in life.       

The cash will be used to quadruple the number of ‘skills boot camps’ in areas like artificial intelligence, cybersecurity and nuclear. 

Some £1.6billion will provide up to 100,000 16 to 19-year-olds studying for T-levels – technical-based qualifications – with additional classroom hours, while 24,000 traineeships will also be created. 

Mr Sunak said: ‘Our future economic success depends not just on the education we give to our children but the lifelong learning we offer to adults.

Rishi Sunak has pledged £3billion to improve post-16 education and to help more adults gain new skills later in life

Rishi Sunak has pledged £3billion to improve post-16 education and to help more adults gain new skills later in life

Rishi Sunak has pledged £3billion to improve post-16 education and to help more adults gain new skills later in life

‘This £3billion skills revolution builds on our Plan for Jobs and will spread opportunity across the UK by transforming post-16 education – giving people the skills they need to earn more and get on in life.’

A total of £830million will be allocated to help revitalise existing colleges in England. 

Meanwhile, the National Skills Fund will be boosted with a total investment of £550million to make sure all adults can access education. 

Government targets brownfield housing boom with £1.8billion funding boost

Brownfield sites covering the equivalent of 2,000 football pitches could be turned into plots for new homes through a £1.8billion Budget funding boost. 

The Government hopes the cash will see hundreds of thousands of homes built on regenerated land across the country. 

England’s planning system will also undergo an overhaul including a raft of digitisation.  

Some £300million of grant funding will be handed to metro mayors and councils to unlock smaller brownfield sites for housing.

Meanwhile, a new £9million levelling up parks fund will give cash to local authorities to spruce up 100 neglected urban spaces into pocket parks. 

Rishi Sunak said: ‘We are investing in better quality, safer, greener and more affordable homes to create thriving places where people want to live.

‘One of my favourite pastimes is to go for walks in the park with my family, and I want to make sure everyone has green space on their doorstep to enjoy too.

‘Transforming our unloved and neglected urban spaces will help protect our cherished countryside and green spaces, while improving the physical and mental health of our communities.’ 

Cultural hotspots to be handed £850million for upgrades and restoration

Museums and galleries in England will receive a Budget boost of £850million to ‘breathe life’ back into cultural hotspots.

The money will be used to restore and upgrade some of the country’s most popular institutions such as London’s V&A museum, Tate Liverpool and the Imperial War Museum in Duxford. 

London's Victoria and Albert Museum will be one of a number of institutions to benefit from a £850million funding boost

London's Victoria and Albert Museum will be one of a number of institutions to benefit from a £850million funding boost

London’s Victoria and Albert Museum will be one of a number of institutions to benefit from a £850million funding boost

Other establishments set to benefit from the three-year funding include York’s National Railway Museum and the British Library site at Boston Spa in Yorkshire.

A total of £125million will be invested towards helping build a new state of the art scientific research centre in Oxfordshire, part of the Natural History Museum.

The centre, which is set to open in 2026, will house 27 million specimens, over a third of the museum’s total collection, and will make them digitally accessible to researchers around the world.

The Government hopes it will help strengthen the UK’s position in tackling global challenges including climate change, biodiversity loss and emerging diseases.

In addition, over £75million will be spent to help 110 regional museums and libraries improve their buildings and level-up their digital facilities, the Treasury said.

Funding will also be given to the flagship High Streets Heritage Action Zone programme to help continue its mission to revive town centres across England. 

Border Force boats to be replaced with new cutters

Ageing Border Force vessels will be replaced by new cutters as part of a £700million investment to improve the safety of Britain’s borders.

The current fleet, which is 20 years old, will be retired and 11 new vessels will come into service to help tackle organised crime and illegal migration at a cost of £74million.

The announcement also includes £628million ‘to modernise and digitalise the border’, with proposals including a US-style Electronic Travel Authorisation for tourists wishing to come to the UK.

Electronic authorisations will launch in 2023 and be fully in place two years later and, like the American system, will allow authorities to decide if people should be allowed to travel to the UK prior to their arrival.

Rishi Sunak said: ‘Protecting our borders and making it easier for us all to travel to and from our great nation is at the heart of our ambitions as a government.’   

Ageing Border Force vessels will be replaced by new cutters as part of a £700million investment to improve the safety of Britain's borders

Ageing Border Force vessels will be replaced by new cutters as part of a £700million investment to improve the safety of Britain's borders

Ageing Border Force vessels will be replaced by new cutters as part of a £700million investment to improve the safety of Britain’s borders

Rishi Sunak pledges £2.6billion to help children with special educational needs

The Chancellor has allocated £2.6billion to help back more than 30,000 new places for pupils to support their learning in both mainstream and special educational needs schools.

It will also be used to improve the suitability and accessibility of existing buildings and go towards new special and alternative provision free schools to help drive up standards in special education.

Mr Sunak said: ‘I want every child to have the best possible start in life and to fulfil their potential.

‘That’s why we’re taking action to fund tens of thousands of new places for students with special needs and disabilities, improving the lives of so many of the nation’s most vulnerable children.’

The move comes as there is rising demand for specialist support because the school age population is expected to be around 10 per cent higher in 2025 than it was in 2010.

The Treasury says the measure will almost triple the amount of this year’s capital funding for the most disadvantaged young people through specialised educational support.

No time for flip-flopping, Chancellor! 

Rishi Sunak teamed a pair of socks with £95 ‘sliders’ as he put the final touches on his Budget.

In glossy photos released by the Treasury, the Chancellor could be seen sporting the American-style shoes, made by fashion label Palm Angels.

‘Sliders’ are similar to flip flops but without a central toe post, and popular with sports stars.

Another photo showed a can of Sprite and a Twix bar next to his red box – after the Chancellor said he would eat the sugary snacks as his ‘pre-game routine’ pre-Budget.

But the Chancellor, who is teetotal, will not enjoy a sharpener like some of his predecessors as he delivers his speech in the Commons today.

Rishi Sunak teamed a pair of socks with £95 'sliders' as he put the final touches on his Budget

Rishi Sunak teamed a pair of socks with £95 'sliders' as he put the final touches on his Budget

Rishi Sunak teamed a pair of socks with £95 ‘sliders’ as he put the final touches on his Budget

Last year Mr Sunak raised eyebrows after pre-Budget photos showed a £180 travel mug on his desk.

The ‘Ember’ smart mug, a Christmas present from his wife, keeps hot drinks such as tea or coffee at the exact same temperature for up to three hours and comes with its own charging coaster.

Labour’s child poverty spokesman Wes Streeting said last night: ‘I don’t care if the Chancellor chooses to spend £95 of his money on a pair of flip-flops, but I do care that he’s so out of touch that he doesn’t understand the impact of taking £20 a week off low-paid workers and what it means for 200,000 kids pushed into poverty by his policy.’

Source: Daily Mail UK

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