In his first Budget as Chancellor of the Exchequer, Rishi Sunak today announced a wave of coronavirus-battling measures
It was a Budget that was supposed to be about the Boris Bounce, but instead the Chancellor ended up trying to contain coronavirus.
Battling the effects of a coronavirus outbreak and the UK’s attempts to stop it spreading were the cornerstone of Rishi Sunak’s first Budget.
He pledged a massive wave of support for business, particularly small firms, and offered a helping hand on sick pay to those caught by the virus.
A hoped for stamp duty cut failed to arrive, but so too did a feared raid on pension tax relief and a mansion tax.
There was still time for plenty of Budget measures though, some stated in the speech and others somewhat hidden. Below we list the main Budget stories you need to know about and the key points in brief.
BUDGET 2020 IN BRIEF
This is Money picked out all the key points of Chancellor Rishi Sunak’s crucial financial presentation and is bringing them to you all in one place to get you up to speed at a glance.
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NOVEL CORONAVIRUS SPECIAL MEASURES
-The Chancellor began at 12.34 by addressing the novel coronavirus outbreak. ‘We will get through this together’ Sunak said. The Government is doing ‘everything it can’ to keep the UK ‘healthy and financially secure.’
-Sunak said there is likely to be a ‘temporary disruption’ to the economy, while up to a fifth of the working age population could be off at any one time.
-The total spent on fiscal stimulus measures to fight the impact of the virus will be £30billion. ‘One of the most comprehensive packages anywhere in the world’, Sunak says.
–Whatever extra resources the NHS needs to cope with the coronavirus ‘it will get’ he pledges, beginning with a £5billion emergency response fund.
-Sunak said statutory sick pay will be available for ‘all those who are advised to self-isolate’ even if they have not displayed symptoms. Businesses with less than 250 staff will get refunded for two weeks of pay if workers need to stay at home.
-The ‘Coronavirus business interruption loans scheme’ will support companies through the crisis with banks to offer loans of up to £1.2million to small and medium-sized businesses.
-For the coming year the ‘exceptional step’ of abolishing business rates for businesses with a rateable value below £51,000 will be taken.
-A £3,000 cash grant to be available to businesses eligible for small business rates relief.
ECONOMY, BUSINESS AND PUBLIC BORROWING
-The Office for Budget Responsibility has ‘slightly reduced’ its forecast for GDP growth compared to its March 2019 forecast.
-Without accounting for the impact of coronavirus, the OBR has forecast growth of 1.1% in 2020, 1.8% in 2021 and then 1.5%, 1.3%, and 1.4% in the following years.
-The Chancellor said the OBR forecasts inflation of 1.4% this year, increasing to 1.8% next year and then remaining on or around target for the rest of the forecast period.
-Sunak said the OBR forecasts a current budget surplus in every one of the next five years, with borrowing increasing from 2.1% of GDP in 2019/20 to 2.4% in 2020/21 and 2.8% in 2021/22.
-The OBR forecasts that headline debt will be lower at the end of this Parliament than it is currently, falling from 79.5% this year to 75.2% in 2024/25.
-Sunak said research and development investment will be increased to £22billion a year.
-The Science Institute in Weybridge, Surrey to get a £1.4bn funding boost
-There will be an extra £900m for research into nuclear fusion, space and electric vehicles.
-The Chancellor said he will establish Treasury offices in Scotland, Wales and Northern Ireland and open a new ‘economic campus’ in the north with over 750 staff.
-Sunak said the government is providing an additional £640million for the Scottish Government, £360million for the Welsh Government, £210million for the Northern Ireland executive and £240million for new city and growth deals.
TAXATION AND MINIMUM WAGE
-The National Insurance threshold will increase from £8,632 to £9,500, cutting taxes for 31 million workers by around £100.
-The Chancellor said ministers would publish a new remit for the independent Low Pay Commission to have a formal target of the National Living Wage reaching two-thirds of median earnings by 2024 ‘as long as economic conditions allow’ -a rate of more than £10.50 an hour.
-VAT charges on sanitary products widely known as the ‘tampon tax’ will be abolished.
-Sunak said he will introduce a ‘plastics packaging tax’ charging manufactures and importers £200 per tonne on packaging made of less than 30% of recycled plastic.
-The government will freeze the levy on electricity from April 2022 and raise the levy on gas to help tackle climate change.
-Corporation tax will remain at 19%.
-The Chancellor announced VAT on digital publications including books, newspapers, magazines and academic journals is being abolished from 1 December.
-The lifetime limit for entrepreneurs’ tax relief will be cut to £1million from £10million.
ALCOHOL, TOBACCO AND FUEL DUTIES
-Sunak said the planned increase in spirits duty will be cancelled and that duties for beer, cider and wine drinkers will be frozen as well.
-Fuel duty will be frozen for another year.
-‘Red diesel’ tax relief scheme to be abolished ‘for most sectors’.
-Tobacco duty is going up by inflation plus 2%.
ROADS AND OTHER INFRASTRUCTURE
-£27billion to be invested in Britain’s road’s with 50 million potholes repaired.
-Spending on flood defenses is to be doubled to £5.2billion. £120million available immediately to repair all defences damaged in the recent winter floods.
-A total of £600billion will be invested over the next five years. ‘If the country needs it we will build it,’ Sunak says.
-Sunak said the Budget provides £5billion to get gigabit-capable broadband into the hardest to reach places and £510million of new investment for the shared rural mobile phone network. He says that means 4G coverage will reach 95% of the country in the next five years.
-The Chancellor adds that ‘the OBR has said today’s Budget will be the largest sustained fiscal boost for 30 years.’
-Sunak said he is providing every region in the country with funding for special 16-19 maths schools, an average of £25,000 per year for secondary schools to invest in arts activities and £30million a year to improve PE teaching.
-The Chancellor said he is committing £1.5billion of new capital over five years to improve the further education college estate.
-Sunak announced £6billion of new funding to support the NHS over this Parliament.
-This will pay for 50,000 more nurses, 50 million more GP surgery appointments and work to start on 40 new hospitals, Sunak says.
-The Chancellor pledged a package of measures to benefit the NHS including clamping down on ‘aggressive tax avoidance, evasion and non-compliance’ with extra funding for the HMRC to secure £4.4billion of extra revenue.
-Sunak said the immigration health surcharge is being raised to £624, with a discounted rate for children.
-Sunak said the government will extend the affordable homes programme with a new multi-year settlement of £12billion.
-There will be £1.1bn from the Housing Infrastructure Fund to build nearly 70,000 new homes in high demand areas across the country, he says.
-He announced a £1billion ‘building safety fund’ to ensure all unsafe combustible cladding is removed from buildings above 18 metres tall.
ENVIRONMENT AND CLIMATE CHANGE
-Sunak said 30,000 hectares of trees will be planted over the next five years and 35,000 hectares of peatland will be restored.
–That’s equivalent to a forest larger than Birmingham, according to Sunak.
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