Budget 2021: Key issues for Newark and changes to expect
Every budget is important but the Chancellor’s spending plans and how he intends to help the UK economy recover from the coronavirus pandemic make this one particularly significant. And as well as the budget, the government will set out its three-year spending review, which will be significant for public services, from schools to our councils.
So, what are the key issues? Our political editor Paul Francis looks ahead...
Levelling up: The government’s flagship policy designed to boost investment in poorer towns and communities could cause concern if extra money is diverted to the so-called red wall seats in the north.
The NHS: The government’s pre-announcement of a cash injection of £5.9bn in the NHS to catch up on missed and postponed appointments has been heavily trailed; the question is whether it will be enough? And there’s been a bit of smoke and mirrors around this announcement — it forms part of the £36bn extra cash being raised by the 1.25% National Insurance hike over the next three years. And might we hear some reference to that statement of intent to build 40 new hospitals?
Social care: Another long-awaited announcement. After years of dithering, the government will confirm the introduction of a social care levy on National Insurance to meet the costs of looking after the elderly and vulnerable. There may be a sting in the tail for care homes: while the NHS will be exempt from paying the extra charge, no such commitment has been made for providers of adult care services.
Up and up again? Councils will be looking to the government to put their finances on a stable footing by recognising the extra costs of dealing with the coronavirus and by plugging the gap between what they need to keep council tax bills down and maintain services at their existing level.
Climate change: The budget comes just before the UK hosts COP 26, the climate change global summit, so expect some commitments and action needed to achieve its net-zero emissions target by 2050. Road pricing has emerged as a possible way to compensate for the potential loss of revenue from fuel taxes; and with the cost of filling the tank at a high, the government won’t want to antagonise motorists. The switch to electric cars means almost £30bn in fuel duty raised annually for the Treasury will need to be replaced.
Taking care of business: To help the business community survive over the period of the pandemic, the government offered a range of benefits, key among them being a discounted business rate, which tapers to roughly two thirds of bills up until next March.
But coming down the pipeline is an increase in corporation tax, rising to 25% in April 2023 and a 1.25% hike in the rate of dividend tax and National Insurance contributions.
Reform or abolition of business rates is unlikely, so there may be meagre offerings to small and medium-sized businesses, many of whom remain in a fragile condition.
Cost of living: If reports are true, the Chancellor is poised to announce an increase in the Living Wage to £9.50 and hour from £8.91 an hour — a 6.6% rise.