The Chancellor, Rishi Sunak, acknowledged the effects of the Coronavirus and its impact on the economy. He emphasised the coordinated approach being undertaken between the Government and the Bank of England, including today’s announcement by the Bank of England of an emergency 0.5% drop in interest rates from 0.75% to 0.25%.
The Chancellor made some additional pledges in relation to the Coronavirus outbreak that covered three main areas:
- A pledge to provide the NHS with whatever resources it needs to tackle the crisis, including funding for vaccine research and to recruit and support medical staff.
- Funding to support individuals who are ill and can’t work due to coronavirus. This includes access to Statutory Sick Pay (SSP) from day one (rather than day four) and a £500 million hardship fund provided via local authorities.
- Support for businesses.
– Those employing fewer than 250 staff will be refunded for sick pay payments for up to two weeks absence due to Coronavirus.
– SME businesses will be able to access ‘Business Interruption’ loans of up to £1.2 million. The Government will guarantee any loans up to 80%.
– The business rates for firms in the retail, leisure and hospitality sectors with a rateable value of less than £51,000 will be abolished for one year.
National Insurance and National Living Wage
The Chancellor announced that the National Insurance contributions threshold will increase from £8,632 to £9,500.
In addition, he outlined new Government ambitions that the National Living Wage would reach two-thirds of median earnings and be extended to workers aged 21 and over by 2024. The Chancellor was keen, however, to stress that this would only be achieved if economic conditions allowed.
Additional funding was announced for business start up initiatives and trade missions.
Entrepreneurs Relief will not be scrapped altogether, but the lifetime allowance will be reduced from £10m to £1m.
Investment will also be made in Research and Development, particularly to the Science Institute in Weybridge (that is in line to receive £1.4 billion investment) and £900 million to nuclear fusion, space and electric vehicle research.
Corporation tax will stay at 19%.
Infrastructure and flood alleviation
An investment of £5 billion was announced for broadband improvements and to extend 4G coverage to the majority of the United Kingdom.
In addition, £27 billion will be invested between now and 2025 to develop road infrastructure as well as connectivity to ports and airports and to fill potholes around the country.
Funding of £120 million was announced to repair damage across the country caused by the recent flooding. There will also be an immediate additional £200 million made available to build flood resilience and an additional £5.2 billion for flood defences between 2021 and 2027.
Amongst the green initiatives announced:
- From April 2022, a charge of £200 per tonne will be introduced for manufacturers and importers whose packaging contains less than 30% recyclable material
- Tax relief will be abolished in two years’ time on red diesel, except for agricultural users, domestic heating, rail and the fishing industry
- A £1 billion investment in green transport solutions
- A new £640 million ‘Nature for climate fund’ that will protect natural habitats and enable 30,000 hectares of new trees and peatland to be developed
- £800 million to establish two or more carbon capture and storage clusters by 2030.
‘Levelling up’ the country
In response to Government pledges during the December 2019 General Election, the Chancellor announced a number of measures to reduce inequalities and increase opportunities across the country.
These included a review of the ‘Green Book’, that sets out how decisions on major investment programmes are made, a pledge to move 22,000 civil servants out of London and the development of new Treasury offices in Scotland, Wales and Northern Ireland.
National Health Service
There was a pledge to increase NHS funding by £6 billion over the course of the parliament. The Chancellor said this will help to realise election promises to fund 50,000 new nurses and enable building to start on 40 new hospitals.
Education – Investments were announced for specialist maths programmes as well as in arts education and for developing sports pitches. Additional investment will also be made available to improve further education colleges.
Housing – Investment in new homes was announced, especially on brown field sites. A £650 million fund to help rough sleepers to find accommodation and a £1 billion fund to remove unsafe combustible cladding from high rise flats were also promised.
Fuel duty – frozen.
Wines, spirits and beer duty – planned rises have been cancelled.
Women’s sanitary products – VAT will no longer be chargeable on these products.
Please note this information is based on our understanding of measures announced by the Chancellor of the Exchequer during his Budget Speech on 11 March 2020. These measures may be subject to change. Independent confirmation should be obtained before acting or refraining from acting upon the information given.
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