All eyes were on the Chancellor Rishi Sunak this week as he delivered his budget – which promised a stronger post-Covid economy for the British people.
Firstly, it was a huge relief to hear that the economy is recovering faster than predicted, with the Office of Budget Responsibility forecasting the economy to return to pre-covid levels at the turn of the year. The OBR has also revised down their scarring assumption - meaning we have been successful at preventing a lot of the long-term economic damage.
However, we know things will still be difficult for the time being – especially while post-Covid demands on supply chains and energy supplies impact the cost of living. So, it was paramount that the budget delivered for hard working people and families.
The key announcement was an 8% cut to the Universal Credit Taper, which will leave millions of families better off. I believe that work should always pay, and the UC taper is effectively a tax on work. The Taper Rate withdraws support gradually as people work more hours. Currently, for every extra £1 someone earns, their Universal Credit is reduced by 63p. So, to help some of the lowest income families keep more of their hard-earned money, the taper is being cut from 63p to 55p. Those eligible, will also benefit from an increase to the Work Allowance – the amount they can earn before the taper rate kicks in and their Universal Credit begins to reduce. This is hugely important and welcome news, meaning nearly 2 million families will keep, on average, an extra £1,000 a year.
The lowest paid workers are also set to benefit from the budget, with the National Living Wage being increased to £9.50 an hour – this is a pay rise of over £1000 for a full-time worker. Statistics published just yesterday show that the proportion of people in low-paid work hasn’t been lower since 1997 – yet again, we are making sure that work pays.
I also know that the future of town centres is an important issue for many people, and I was delighted to see the Chancellor announce key reforms to ease burdens and create stronger high streets. Firstly, we are making the business rates system fairer and timelier with more frequent revaluations every three years, this will begin in 2023. Secondly, we are introducing a new ‘business rates improvement relief’ which will allow every single business to make property improvements with no extra business rates for 12 months. Thirdly, for one year, we will see a new 50% business rates discount for businesses in the retail, hospitality, and leisure sectors - a business tax cut worth almost £1.7bn. When added to the Small Business Rates Relief, a whopping 90% of retail, hospitality and leisure businesses will see a discount of at least 50%.
Other important announcements in the budget include: £500m in extended support for children and families, including £300m to establish local Family Hubs; the biggest schools funding boost in a decade, totalling an extra £4.7bn by 2024-2025; another freeze on fuel duty; and the most radical simplification of alcohol duties for over 140 years.
The budget announced yesterday is one that strengthens public finances, supports families and vulnerable people meet the cost of living, supports businesses and drives growth – which is what is needed at this point of economic uncertainty.
