Alcohol, fuel and tax: Key announcements from the budget
Here are the key points from Chancellor Rishi Sunak’s budget speech:
• The chancellor says there are “challenging” months ahead, adding that inflation in September was 3.1% and is likely to rise further – the OBR expect it to average 4% over the next year
• Pressures caused by supply chains and energy crisis will “take months to ease”.
• Economy to return to its pre-COVID level at the turn of the year – an improvement on OBR forecasts revealed in March
• Economy expected to grow by 6% in 2022, and 2.1%, 1.3% and 1.6% over the next three years
• In July last year, at the height of the pandemic, unemployment was expected to peak at 12% but the OBR now expect it to peak at 5.2%
• Compared to 2020, wages have grown by 3.4%
• Underlying debt is forecast to be 85.2% of GDP this year
• It will reach 85.4% in 2022-23, before peaking at 85.7% in 2023-24
• It then falls in the final three years of the forecast from 85.1% to 83.3%
• Total departmental spending over this parliament will increase by £150bn, growing by 3.8% a year in real terms
• Spending on healthcare to increase by £44bn to over £177bn by the end of this parliament
• Extra revenue from health and social care levy will go towards NHS and social care as promised
• Health budget will be the largest since 2010, with record investment in research and development, better screening, 40 new hospitals and 70 hospital upgrades
• Mr Sunak says the budget funds an ambition to recruit 20,000 new police officers
• Extra £2.2bn for courts, prisons and probation services, including £500m to reduce the backlog in courts
• Programmes to tackle neighbourhood crime, reoffending, county lines crimes, violence against women and girls, victims’ services, and improved response to rape allegations
• £3.8bn for the “largest prison-building programme in a generation”
• £11.5bn to build up to 180,000 affordable home – 20% more than the previous programme
• £1.8bn to bring 1,500 hectares of brownfield land into use
• £640m a year to help those who are rough sleepers and homeless
• £5bn to remove unsafe cladding from the highest risk buildings, partly funded by a residential property developers’ tax, which will be levied on developers with profits over £25m at the rate of 4%
• £21bn for roads as part of a larger investment in transport
• £2.6bn for upgrades of over 50 local roads
• More than £5bn for road maintenance – enough to fill one million more potholes a year
• More than £5bn for buses, cycling and walking improvements
• HGV levy (previously suspended until August) will now be suspended until 2023
• Vehicle excise duty for heavy goods vehicles to be frozen
• Funding to improve lorry park facilities
• £46bn investment in railways, with an integrated rail plan to be published soon
• £5.7bn for London-style transport settlements in Greater Manchester, Liverpool City Region, Tees Valley, South Yorkshire, West Yorkshire, West Midlands, West of England
• £300m for parenting programmes for families, tailored services to help with perinatal mental health
• £150m to support training and development for early years workforce
• £200m for Supporting Families programme which helps families with varied needs
• Over £200m to continue the holiday activity and food programme
• £560m for youth services – enough to fund up to 300 youth clubs in England
• More than £200m to build or transform up to 8,000 community football pitches in the UK
• £2bn new funding to help schools and colleges, bringing total support (some already announced) to almost £5bn
• Restoring per pupil funding to 2010 levels in real terms, equivalent to a cash increase for every pupil of more than £1,500
• 30,000 new school places for children with special needs and disabilities
• New 50% business rates discount for businesses in the retail, hospitality and leisure sectors, including pubs, music venues, cinemas, restaurants, hotels, theatres, and gyms
• This will mean any eligible business can claim a discount up to a maximum of £110,000 – a tax cut worth almost £1.7bn
• Mr Sunak says that, together with small business rates relief, this means more than 90% of all businesses in these sectors will see a discount of at least 50%
• An overhaul of alcohol duty, cutting the number of main duty rates from 15 to six – the stronger the drink, the higher the rate
• Small producer relief will extend the principle of small brewers’ relief to small cidermakers and others making alcoholic drinks of less than 8.5% ABV
• Sparkling wines will pay the same duty as still wines of equivalent strength, rather than the 28% they currently pay. Duty will also be cut for fruit cider
• Planned rise in fuel duty will be cancelled, meaning that – after 12 consecutive years of frozen rates, the average car driver will save a total of £1,900
• National living wage to increase next year by 6.6% to £9.50 an hour. For a full time worker, that’s a pay rise worth over £1,000
• This move will help more than two million of the lowest-paid workers, Mr Sunak says
• Mr Sunak says his goal is to reduce taxes and the universal credit taper, which reduces financial support as people work more hours, is in his sights
• The rate is currently 63%, so for every extra £1 someone earns, their universal credit is reduced by 63p. Mr Sunak announces plans to cut this by 8 percentage points (from 63% to 55%). This will come into effect “within weeks”
• Work allowances being increased by £500 – combined with the change to the taper, this is a tax cut worth more than £2bn, he says. Nearly two million families will keep, on average, an extra £1,000 a year
The taxpayer is to help drive the switch to non-polluting vehicles through a new grant of up to £3,750, but some of the cheapest electric cars are to be excluded.
The Department for Transport (DfT) said a £650m fund was being made available for the Electric Car Grant, which is due to get into gear from Wednesday.
Users of the scheme – the first of its kind since the last Conservative government scrapped grants for new electric vehicles three years ago – will be able to secure discounts based on the “sustainability” of the car.
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It will apply only to vehicles with a list price of £37,000 or below – with only the greenest models eligible for the highest grant.
Buyers of so-called ‘Band two’ vehicles can receive up to £1,500.
The qualification criteria includes a recognition of a vehicle’s carbon footprint from manufacture to showroom so UK-produced EVs, costing less than £37,000, would be expected to qualify for the top grant.
It is understood that Chinese-produced EVs – often the cheapest in the market – would not.
BYD electric vehicles before being loaded onto a ship in Lianyungang, China. Pic: Reuters
DfT said 33 new electric car models were currently available for less than £30,000.
The government has been encouraged to act as sales of new electric vehicles are struggling to keep pace with what is needed to meet emissions targets.
Challenges include the high prices for electric cars when compared to conventionally powered models.
At the same time, consumer and business budgets have been squeezed since the 2022 cost of living crisis – and households and businesses are continuing to feel the pinch to this day.
Another key concern is the state of the public charging network.
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The Chinese electric car rivalling Tesla
Transport Secretary Heidi Alexander said: “This EV grant will not only allow people to keep more of their hard-earned money – it’ll help our automotive sector seize one of the biggest opportunities of the 21st century.
“And with over 82,000 public charge points now available across the UK, we’ve built the infrastructure families need to make the switch with confidence.”
The Government has pledged to ban the sale of new fully petrol or diesel cars and vans from 2030 but has allowed non-plug in hybrid sales to continue until 2025.
It is hoped the grants will enable the industry to meet and even exceed the current zero emission vehicle mandate.
Under the rules, at least 28% of new cars sold by each manufacturer in the UK this year must be zero emission.
The figure stood at 21.6% during the first half of the year.
The car industry has long complained that it has had to foot a multi-billion pound bill to woo buyers for electric cars through “unsustainable” discounting.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, said the grants sent a “clear signal to consumers that now is the time to switch”.
He went on: “Rapid deployment and availability of this grant over the next few years will help provide the momentum that is essential to take the EV market from just one in four today, to four in five by the end of the decade.”
But the Conservatives questioned whether taxpayers should be footing the bill.
Shadow transport secretary Gareth Bacon said: “Last week, the Office for Budget Responsibility made clear the transition to EVs comes at a cost, and this scheme only adds to it.
“Make no mistake: more tax rises are coming in the autumn.”
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