Autumn Budget: Statement & reaction
Big spending Sunak sets tone for post-Covid tax cuts
Rishi Sunak: mission is to cut taxes
Chancellor Rishi Sunak announced a big spending Budget that will raise the tax take to levels not seen for half a century but will set the tone for cuts in taxes in future years.
Spending across departments will rise by £150 billion over this parliament – an average of 3.8% a year in real terms, the fastest rate this century, and funded by a mix of tax rises and better than expected economic growth.
The tax burden will rise to 36.2% of gross domestic product by 2026-27 – the highest level since the socialist government of the early 1950s.
To ease the pain felt by business he announced cuts in aviation taxes and business rates for the hospitality, retail and leisure sector, as well as changes to Universal Credit to help those on low incomes.
Funding for Scotland will increase by £4.6 billion, for Wales by £2.5bn and for Northern Ireland by £1.6bn. Mr Sunak said these are the largest block grants since devolution was agreed in 1998.
There will be an extension of investment allowances, more support for R&D, a radical overhaul of alcohol taxes, and a freeze on duty paid on wines, spirits, beer and fuel.
The price of a pint will fall by 3p
A new Draught Relief will mean a special lower duty rate will apply to draught drinks, a move that will help pubs over supermarkets. The moves will mean a 3p cut in the price of a pint of beer, but some drinks, including red wine, will become more expensive.
A £150m pot dedicated to supporting smaller businesses in Scotland will be made available to the British Business Bank to invest alongside business angels.
In a gesture of support for the Union, £170m will be given to projects that include a refurbishment of Inverness Castle, and restoration of Granton’s listed gasholder in Edinburgh.
Mr Sunak announced a 50% cut in business rates for the hospitality, retail and leisure industries for the next financial year. Rates are already cut to zero in Scotland but only until March.
There is to be a reduction in air passenger duty (APD) for internal flights – a move that has infuriated climate change campaigners ahead of COP26 this weekend.
APD is also due to become a devolved issue and the proposed cut will need to be clarified with the Scottish government.
The Chancellor confirmed the announcement made in January that the Treasury will provide £1.5bn a year to regions through the new UK Shared Prosperity Fund which replaces EU structural funds.
There will be a £20bn annual pot for additional investment in research and development, a 50% increase and a greater proportion of GDP than in Germany, France and the US.
Pubs and high street retailers in England will benefit from business rates being slashed by half this year – worth £1.7billion.
A surprise move was a decision to make universal credit more generous by slashing the taper rate – a measure of how much claimants lose for every hour they work over the allowance – from 63p in the pound to just 55p. This was to reward work over welfare.