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As it happened – the Budget 2021: Details and reaction

York live

Wednesday, 3 March, 2021

Chancellor Rishi Sunak delivers the Budget ahead of the UK emerging from lockdown. Got info? Let us know on Twitter, or at [email protected]

• Key updates

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‘There were many disappointing omissions from this budget’ – York pubs campaigner

Pub campaigner Paul Crossman. Photograph: Gavin Aitchison

The Campaign for Pubs was co-founded by Paul Crossman, licensee of The Swan, The Slip Inn and Volunteer Arms in York.

After today’s budget, the Campaign called the support measures disappointing, which were not enough to save many pubs.

Paul said: “There were many disappointing omissions from this budget.

“While we welcome measures such as income support for the newly self-employed who were unfairly excluded from previous schemes, we note that directors of limited companies, which will include a great many small pub businesses, and the nation’s small breweries, have still been left out.

“Further grants are welcome, but the restart grants that have been announced will simply be insufficient to enable most pubs to even cover ongoing fixed costs while closed, let alone enable them to restock and reopen.

“Even the furlough scheme, while great for our staff, will continue to carry a cost for struggling publicans, as we will continue to have to find NI and pension payments and to cover holiday entitlement in order to protect jobs.

“The offer of more loans will not appeal to businesses who are already extremely worried about escalating debt.

“This is especially the case for those still facing unreasonable rent demands, which is something the Chancellor failed to address at all, a worry which is compounded by the fact that we were not given the extra full year of business rates relief that we were hoping for.”

You can read the Campaign’s full analysis of the Budget here.

Budget reaction: ‘This will relieve some pressure on small businesses’ – Indie York

Rebecca Hill

The new chair of Indie York, Rebecca Hill, said the measures in the budget will help the city’s independent business – but it will still be a challenging few months.

“The extension of the business rates holiday, and then the two-thirds discount after that, is a very welcome result from today’s budget announcement, as this will relieve some pressure as businesses work hard to re-open over the next few months,” she said.

“There was widespread hope that the 100% business rates holiday night be extended to the end of the year, rather than only until the end of June.

“But York’s independent businesses are nothing if not resilient, and will continue to serve the local community as they have done throughout the pandemic.  

“The extension of the furlough scheme is a relief, and the VAT cut for hospitality is also a huge help for our hotel and restaurant members.

“There is no doubt that this will continue to be a challenging time for many, especially independent business owners who have adapted and diversified throughout this pandemic.  

“Sixty-five per cent of businesses in York are independently owned, and we believe that this is a huge part of what makes York special and unique, so our goal as Indie York is to promote these businesses as much as possible.  

“Of course the government support is a huge help, but we will continue to ask York’s residents to shop local as much as possible, and also to support our members in other ways as much as they can.

“Follow them on social media, like their posts, recommend them to friends, or write a review – it really does mean the world to our members, and helps to keep up morale during these still very challenging times.”

Video: This will ‘kickstart York’s tourism and hospitality business’

Phil Pinder is not only chair of the York Retail Forum (see earlier) he is the co-owner of The Potions Cauldron shop on Shambles, and about to launch a new leisure business – Coppergate’s mini golf attraction The Hole In Wand.

So he has a lot invested in the success of the retail and hospitality sector in York.

“On the whole it’s very good news,” he said of today’s budget. The extension of the business rates holiday till June, plus a further nine months at two-thirds the rate is “really welcome”.

The VAT threshold staying at £84,000 was less good news, but the 5% reduced VAT rate “which will kickstart our tourism and hospitality business”.

He described the reopening grants as “quite generous”.

“All we need now is to get back to normal and get back up and running.”

Budget reaction: ‘A positive outcome for retail and hospitality’ – the York BID

Executive director of York BID Andrew Lowson

Andrew Lowson, executive director of the York BID (Business Improvement District) said there were a lot of positives in today’s Budget.

“In general, businesses will be pleased with the announcement.

“It looks like hospitality in particular has been thought about, with the support they are looking to put in place.

“It is a positive outcome particularly for businesses in the retail and hospitality sectors, of which we have so many in York city centre.”

The Chancellor announced the business rates holiday for the retail, hospitality and leisure sectors will continue until the end of June, and will be discounted by two thirds for the remaining nine months of the year.

Andrew thought many businesses would have liked that holiday to extend through the year. “When you speak to businesses, rent and rates are still the two big expenses they talk about.”

And the decision to increase the rate of corporation tax, paid on company profits, to 25% in April 2023 “shows when we will have to start paying all this back”.

Budget reaction: ‘Disappointed on VAT but generally the support is very welcome’ – Shaun Collinge, York publican

Shaun outside the Maltings. Photographs: Richard McDougall

Shaun Collinge has been at the helm of the multi-award-winning pub The Maltings since it opened in 1992.

He is working towards reopening the Tanner’s Moat venue on 17 May.

Shaun was generally very positive about the Chancellor’s support package.

“I’m disappointed that the VAT cut didn’t extend a little further than the food and soft drinks sector within hospitality – thus denying wet-led pubs a much needed helping hand,” he told YorkMix.

“But on the whole, I think today’s Budget is very welcome and supportive for hospitality across the UK with a continued freeze on rates – albeit only until June – and the extension of the furlough scheme.

“First and foremost our priority has got to be getting our venues open and trading once and for all, with no unnecessary government restrictions.

“We need to get hospitality up and running to help boost the overall economy.”

Budget reaction: ‘Businesses facing a cliff edge’ – York Lib Dems

Cllr Andrew Waller

Andrew Waller, who is deputy leader of City of York Council as well as Liberal Democrat executive member for economy and strategic planning, wants a more long-term view.

“Whilst the Chancellor has answered many of the calls made by businesses, from furlough extension and VAT cut to a new grants scheme, these measures must not be a knee-jerk reaction but rather underpin a wider long term plan to support local economies and jobs,” he said.

“Limited extensions, whilst welcome in the short term, still put businesses and residents in a position here they are facing a cliff edge for when this vital support will be unilaterally withdrawn.

“Furlough, the VAT cut and business rate holiday must be continued until the end of the year with a gradual phasing out rather than a cut-off date at the time when most hospitality and retail business will only be beginning to recover.

“As always, we await further details on today’s announcements. Undoubtedly, local councils will be left in the dark speculating about the precise guidance surrounding the new plans for the coming days and weeks, as has been the case previously.

“Crucially for our city, the new grants are welcome news and we sincerely hope that these will be universal and government guidance will not tie the hands of local councils once again in eligibility criteria and other demands.

“The amount of discretionary grant funding provided to support firms in the supply chain only amounts to five per cent of the total.

“This will make it difficult for the council to provide the necessary level of support to those businesses struggling. The amount of Additional Restrictions Grant funding needs to increase to match to address the real extent of local need.

“We need clear and urgent guidance so we can ensure that council officers can continue to distribute support as soon as they reach the council.

“We will be awaiting further information on how today’s plans are expected to be implemented, and until then we will continue to work with the city’s businesses and partners to ensure that all is done to protect livelihoods and jobs people across York.”

Reaction: ‘A real boost for many businesses’ – Make It York

Sean Bullick, head of Make It York

Make It York broadly welcomed the Chancellor’s measures today.

Sean Bullick, managing director of Make It York said, “We welcome the Chancellor’s budget announcement today that outlined the further support for businesses that have been highly impacted by the pandemic. 

“Measures such as a business rates holiday and the extension of the furlough scheme will be a real boost for many businesses during this challenging time. 

“The introduction of the new restart grant scheme aimed at helping owners of pubs, restaurants, shops and other businesses which have been impacted by the pandemic restrictions to reopen will also be crucial to many York companies within the hospitality and retail sectors.

“The additional support for the culture sector is also hugely positive for many organisations within the city, and our team will continue to ensure York businesses are aware of how they can access support available to them and provide targeted guidance and support.”

Budget 2021: The key points

Here are the key points from his 51-minute House of Commons address:

The economy

  • The Chancellor said coronavirus has caused one of the “largest, most comprehensive and sustained economic shocks this country has ever faced”
  • The Office for Budget Responsibility (OBR) is now forecasting “a swifter and more sustained recovery” than they expected in November, predicting the economy will be 3% smaller than it would have been in five years’ time because of the coronavirus crisis.
  • But the economy, according to the OBR, is forecast to grow this year by 4%, by 7.3% in 2022, then 1.7%, 1.6% and 1.7% in the last three years of the forecast.
  • Borrowing is forecast to be £234 billion next year – 10.3% of gross domestic product (GDP), a measure of the size of the economy – but will fall to 4.5% of GDP in 2022-23, 3.5% in 2023-24, then 2.9% and 2.8% in the following two years.
  • The measures to support the economy amounted to £65 billion over this year and next, taking the total Government support to £407 billion over that period, Mr Sunak said.

Coronavirus support

  • The furlough scheme will be extended to the end of September, as will support for the self-employed.
  • The Universal Credit uplift of £20 a week will continue for a further six months, well beyond the end of this national lockdown.
  • A new restart grant will start in April to help businesses reopen, with £5 billion of funding.
  • The Chancellor confirmed an additional £1.6 billion for the coronavirus vaccine rollout and to “improve future preparedness”.
  • The business rates holiday for the retail, hospitality and leisure sectors will continue until the end of June, and will be discounted by two thirds for the remaining nine months of the year.
  • The 5% reduced rate of VAT for the tourism and hospitality sector will be extended for six months to the end of September, with an interim rate of 12.5% for another six months after that.
  • The stamp duty cut will continue until the end of June, with the nil rate band set at £250,000 – double its standard level – until the end of September.

Taxation

  • The rate of corporation tax, paid on company profits, will increase to 25% in April 2023 – but small businesses with profits of £50,000 or less will continue to be taxed at 19%.
  • There will be a “super deduction” for companies when they invest, reducing their tax bill by 130% of the cost for the next two years.
  • Rates of income tax, national insurance and VAT kept at the same level but personal tax thresholds will be frozen from April 2026.
  • The inheritance tax threshold and the pensions lifetime allowance will be maintained at their current levels, along with the annual exempt amount in capital gains tax, until April 2026 and, for two years from April 2022, the VAT registration threshold.

Other announcements

  • The minimum wage will increase to £8.91 an hour from April.
  • On apprenticeships, the Government is to double the incentive payments given to businesses to £3,000 for all new hires, of any age.
  • All alcohol duties are frozen for the second year in a row and the planned increase in fuel duty is also cancelled.
  • A “mortgage guarantee” was announced, with lenders who provide mortgages to homebuyers who can only afford a 5% deposit benefitting from a Government guarantee on those mortgages.
  • The UK Infrastructure Bank will be located in Leeds, while the Treasury is to establish a new economic campus in Darlington, the Chancellor revealed.
  • Freeports – “special economic zones with different rules to make it easier and cheaper to do business” – will be located at East Midlands Airport, Felixstowe and Harwich, the Humber region, the Liverpool City Region, Plymouth, Solent, Thames and Teesside.
  • There was more funding for the devolved administrations, with £1.2 billion for the Scottish Government, £740 million for the Welsh Government, and £410 million for the Northern Ireland Executive.
  • An extra £19 million will be handed to domestic violence programmes.
  • Survivors of the Thalidomide scandal will be given a “lifetime commitment” with an extra down payment of £40 million.

Reaction: ‘On balance, a welcome budget’ – York-based hotel CEO

The chief executive of Best Western, which has its HQ in York, has given the budget a thumbs-up.

This is his response on Twitter:

Rob Paterson

Reaction: ‘Furlough extension should have gone on longer, the rates cut is key’ – Hospitality Association York

Martin Bradnam of Hospitality Association York

Martin Bradnam, chair of the Hospitality Association York, welcomed many of the Chancellor’s measures – with caveats.

“With hotels only able to open and trade potentially from May 2021 there are many risks,” he told YorkMix.

“International travel and the travel trade is unlikely to return in 2021, with many postponing trips until 2022.  

“Business travel has been limited with many large companies placing travel bans on any travel.  Conferences and events have been limited and may start some form of recovery, likely from September onwards.”

So he welcomed the furlough extension – but felt it could have been extended further.

“It is great that this is continuing. But September is mid recovery and it is shame this has not gone further to support businesses for longer, to January or February.

“There are some risks around employer contributions. Time will tell – dependent on the speed of the recovery and return to the mix of travel.”

The £18k grants “are appreciated – as long as access to these is supported and quick.  Last time this was through the local council and was quickly accessed.”

On the hospitality business rates being cut till the end June, he said this “positive approach and will be key during initial reopening.  I would have preferred to see an interim reduction until the return to full rates.  

“In York, it is expected the market will not recover until July/August 2021.”

The 5% reduced rate of VAT will be extended for six months to September 30, which is “exceptionally positive and will really support the challenge of lower room rates, and support businesses to support employees. This is really welcomed and appropriate.”

Martin described the apprentice hire scheme as “positive for the industry.   I am optimistic there may be more demand for this scheme moving forward.  In the past hospitality has struggled to fulfil apprenticeship quotas.”

Reaction: ‘Good news on business rates, not on VAT’ – York retail chair

Phil Pinder, vice chair of the York High Street Forum. Photograph: Richard McDougall

Here’s the reaction from Phil Pinder, chair of the York Retail Forum.

“It’s great to see the business rates discount continue until June, with a further discount for a further 9 months.

“It’s less good news on the VAT threshold staying the same for five years – this will bring thousands of more small businesses into the scheme with an extra burden and red tape that VAT brings.

“The 5% reduced rate of VAT for tourism and hospitality will be extended for six months to the end of September.

“Great news on the return of a small business rates for corporation tax, with one larger business paying the new 25% rate from 2023.”

‘An important moment is upon us’ – the Chancellor finishes

Shadow chancellor Anneliese Dodds looks on as Chancellor of the Exchequer Rishi Sunak delivers his Budget to the House of Commons. Photograph: Screengrab

Concluding, Rishi Sunak told MPs: “Today we set out a plan to protect the jobs and livelihoods of the British people but the promises that underpin that plan remain unchanged from those we pledged ourselves to 12 long months ago.

“To unite and lead, to level up, to create a world-class education system, to keep our streets safe, to keep our NHS strong, to support the most vulnerable, to reform and improve public services, to grow the economy, to spread prosperity, to extend the awesome power of opportunity to all corners of the United Kingdom, and, yes, to be honest and fair in all that we do.

“An important moment is upon us. A moment of challenge and of change. Of difficulties, yes, but of possibilities too. This is a Budget that meets that moment.”

£150m community fund for pubs, clubs and more

The Chancellor said: “We’re creating a £150 million fund to help communities across the UK take ownership of pubs, theatres, shops, or local sports clubs at risk of loss – putting more power in the hands of local people.”

New UK Infrastructure Bank to be located in Leeds

A UK Infrastructure Bank will be located in Leeds, with £12bn capital.

The Chancellor told MPs: “The Bank will invest across the UK in public and private projects to finance the green industrial revolution.”

Mr Sunak said the Government is also funding new port infrastructure to build the next generation of offshore wind projects in Teesside and Humberside.

Alcohol duties frozen – fuel duty increase cancelled

On duties, Rishi Sunak told MPs: “I can confirm that the planned increases in duties for spirits – like Scotch Whisky – wine, cider and beer will all be cancelled.

“All alcohol duties frozen for the second year in a row – only the third time in two decades.

“And right now, to keep the cost of living low, I’m not prepared to increase the cost of a tank of fuel. So the planned increase in fuel duty is also cancelled.”

Corporation tax to increase to 25%

The rate of corporation tax paid on company profits will increase to 25% in 2023.

He told MPs: “Even after this change the UK will still have the lowest corporation tax rate in the G7 – lower than the United States, Canada, Italy, Japan, Germany and France.”

A taper above £50,000 will also be introduced to ensure only businesses with profits of £250,000 or greater will be taxed at the full 25% rate.

Small businesses with profits of £50,000 or less will have a small profits rate, maintained at the current rate of 19%. “This means around 70% of companies – 1.4 million businesses – will be completely unaffected.”

Personal tax allowance to be frozen for five years

Rishi Sunak said the Government will not raise the rates of income tax, national insurance, or VAT.

But he added: “Instead, our first step is to freeze personal tax thresholds.”

The Chancellor went on: “We will of course deliver our promise to increase it again next year to £12,570, but we will then keep it at this more generous level until April 2026.

“The higher rate threshold will similarly be increased next year, to £50,270, and will then also remain at that level for the same period.”

Government’s record borrowing ‘like the two world wars’

The total Covid-19 support package amounted to £352 billion.

And that means that this year the Government has borrowed a “record” £355 billion, the equivalent of 17% of the UK’s national income.

He told MPs: “Next year, as we continue our unprecedented response to this crisis, borrowing is forecast to be £234 billion, 10.3% of GDP – an amount so large it has only one rival in recent history – this year.”

Borrowing will fall to 4.5% of GDP in 2022/23, 3.5% in 2023/24 then 2.9% and 2.8% in the following two years due to action he is taking.

He told MPs: “While underlying debt rises from 88.8% of GDP this year to 93.8% next year, it then peaks at 97.1% in 2023/24, before stabilising and falling slightly to 97% and 96.8% in the final two years of the forecast.”

The Chancellor went on: “The amount we’ve borrowed is only comparable with the amount we borrowed during the two world wars. It is going to be the work of many governments, over many decades, to pay it back.

“Just as it would be irresponsible to withdraw support too soon, it would also be irresponsible to allow our future borrowing and debt to rise unchecked. When crises come, we need to be able to act. And we need the fiscal freedom to act. A freedom that you only have if you start with public finances in a good place.”

A summary from the Treasury

Government to offer mortgage guarantee

Rishi Sunak also announced a “mortgage guarantee”, telling MPs: “Lenders who provide mortgages to homebuyers who can only afford a 5% deposit will benefit from a Government guarantee on those mortgages.

“I’m pleased to say that several of the country’s largest lenders including Lloyds, NatWest, Santander, Barclays and HSBC will be offering these 95% mortgages from next month, and I know more, including Virgin Money will follow shortly after.

“A policy that gives people who can’t afford a big deposit the chance to buy their own home. As the Prime Minister has said, we want to turn generation rent into generation buy.”

Stamp duty holiday to stay

“I can announce today the £500,000 nil rate band will not end on March 31, it will end on June 30.

“Then, to smooth the transition back to normal, the nil rate band will be £250,000, double its standard level, until the end of September – and we will only return to the usual level of £125,000 from October 1.”

VAT reduction to stay till September

The 5% reduced rate of VAT will be extended for six months to September 30: “Even then, we won’t go straight back to the 20% rate.

“We’ll have an interim rate of 12.5% for another six months; not returning to the standard rate until April next year. In total, we’re cutting VAT next year by almost £5 billion.”

100% business rates holiday to stay till June

Rishi Sunak said the 100% business rates holiday in England will continue from April until June, telling MPs: “For the remaining nine months of the year, business rates will still be discounted by two-thirds, up to a value of £2 million for closed businesses, with a lower cap for those who have been able to stay open.

“A £6 billion tax cut for business.”

Restart business grant: £6K for shops, £18K for hospitality

The Chancellor told MPs: “Non-essential retail businesses will open first, so they’ll receive grants of up to £6,000 per premises.

“Hospitality and leisure businesses, including personal care and gyms, will open later, or be more impacted by restrictions when they do, so we’ll give them grants of up to £18,000.”

That’s another £5 billion in grants.

£20 Universal Credit increase extended for six months

Rishi Sunak said the £20 weekly increase for Universal Credit will continue for a further six months.

He also said the minimum wage will increase to £8.91 an hour from April.

On apprenticeships, Mr Sunak said: “I’m doubling the incentive payments we give businesses to £3,000 – that’s for all new hires, of any age.”

Confirmed – Furlough scheme extended till September

The furlough scheme will be extended until the end of September, and employees will continue to receive 80% of their salary for hours not worked.

He told MPs: “As businesses reopen, we’ll ask them to contribute alongside the taxpayer to the cost of paying their employees. Nothing will change until July, when we will ask for a small contribution of just 10% and 20% in August and September.”

Mr Sunak said the support for self-employed workers will also continue until September, with the fourth grant providing three months of support at 80% of average trading profits. He noted for the fifth grant, people will continue to receive grants worth three months of average profits – with the system open for claims from late July.

Employment could peak at 11.9%

Sunak said a July 2020 forecast suggested unemployment could peak at 11.9%, telling the Commons: “Today, because of our interventions, they forecast a much lower peak: 6.5%.

“That means 1.8 million fewer people are expected to be out of work than previously thought. But every job lost is a tragedy, which is why protecting, creating and supporting jobs remains my highest priority.”

Swifter recovery expected

Rishi Sunak said the forecasts show the response to Covid-19 is “working”, adding: “The Office for Budget Responsibility is now forecasting, in their words ‘a swifter and more sustained recovery’ than they expected in November.

“The OBR now expects the economy to return to its pre-Covid level by the middle of next year – six months earlier than they previously thought. That means growth is faster, unemployment lower, wages higher, investment higher, household incomes higher.”

Damage to the economy ‘acute’ – Chancellor

Chancellor Rishi Sunak told MPs that the damage coronavirus has done to the UK economy has been “acute” as he began his Budget statement.

Covid-19 has “fundamentally altered” our way of life, telling the Commons: “Much has changed, but one thing has stayed the same: I said I would do whatever it takes – I have done and I will do.”