In his first Budget, Rishi Sunak was in a generous mood, pledging £30bn to counter the coronavirus epidemic plus money for business, infrastructure, and education.
The biggest threat to the economy right now is the coronavirus, with up to 20% of the workforce expected to be out of action and global supply chains disrupted. Building on the Bank of England’s interest-rate cut this morning, Sunak met the challenge head on. Statutory sick pay (SSP)will be paid from day one, not day four. It will be available to employees who self-isolate, even if they have no symptoms. And it will be possible to get a sick note by calling 111, rather than visiting your GP.
To help small businesses cope with the extra expense, the cost of providing SSP for the first 14 days will be borne by the government for all businesses with fewer than 250 employees. He introduced temporary “coronavirus business interruption loans” of up to £1.2m, provided by commercial banks, but 80% guaranteed by the government. The removal of business rates for retail businesses valued below £50,000 will be extended to the leisure and hospitality sectors. And any business eligible for small business relief will get a cash grant of £3,000.
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For low-paid workers, the national living wage will rise to £10.50 an hour by 2024, and the national insurance threshold will rise from £8,632 to £9,500.
VAT will be removed from women’s sanitary products, and from digital publications (ebooks, newspapers, etc) Duty increases on all alcohol products have been cancelled. And fuel duty remains frozen for another year.
And, while he admitted he had come under pressure to remove entrepreneurs tax relief, he said he had decided not to fully abolish it, Instead, he will reduce the lifetime limit from £10m to £1m, saving £6bn over fiveyears.
To bolster the country’s green credentials, he raised the levy on gas, while freezing it on electricity. He introduced a new plastics and packaging tax of £200 per tonne, if less than 30% of it is recycled. And he abolished the “red diesel” tax break for all but farmers railways domestic heating and the fishing industry. He promised £1bn for green transport, including £500m to support the rollout of a fast-charging network for electric vehicles, and promised to establish “two or more” carbon capture and storage facilities by 2030.
Infrastructure and regions
He was in a generous mood when it came to infrastructure and the regions, too, promising that “if the country needs it, we will build it”.He pledged £5bn to roll out cable broadband nationwide and £510m to upgrade the rural mobile phone network to provide 4G coverage. Plus, £27bn for road-building, including a £2.5bn “pothole fund”, and funding for rail.
Regional parliaments get extra cash, with £640m to Scotland, £360m to Wales and £210 to Northern Ireland. Around 22,000 civil servants will be pushed out of London and a new economic campus will be built in the north with 750 staff moved from Whitehall.
Housing and health
In housing, Sunak extended the affordable homes programme to £12bn; cut interest rates on lending for social housing by one percentage point;and pledged £650m to help rough sleepers into permanent accommodation.
He introduced a stamp duty surcharge of 2% from April 2021 for non-residents buying property. And a £1bn building safety fund to help remove unsafe cladding from high-rise buildings.
As for health, he promised that £6bn of “new” funding would be available, which would provide for 50,000 nurses, more GP appointments and 40 new hospitals. And to address the pensions anomaly where doctors and consultants are effectively punished for working more hours by heavy tax penalties on their pension contributions, he reduced the “taper threshold” by £90,000.
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Ben studied modern languages at London University's Queen Mary College. After dabbling unhappily in local government finance for a while, he went to work for The Scotsman newspaper in Edinburgh. The launch of the paper's website, scotsman.com, in the early years of the dotcom craze, saw Ben move online to manage the Business and Motors channels before becoming deputy editor with responsibility for all aspects of online production for The Scotsman, Scotland on Sunday and the Edinburgh Evening News websites, along with the papers' Edinburgh Festivals website.
Ben joined MoneyWeek as website editor in 2008, just as the Great Financial Crisis was brewing. He has written extensively for the website and magazine, with a particular emphasis on alternative finance and fintech, including blockchain and bitcoin. As an early adopter of bitcoin, Ben bought when the price was under $200, but went on to spend it all on foolish fripperies.
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