As it happened – the Budget 2021: Details and reaction
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.”