On 27 October, Chancellor Rishi Sunak delivered a Budget to ensure the UK economy bounces back following the coronavirus (Covid-19) pandemic.

The Chancellor announced that total departmental spending will grow by £150 billion per year in cash terms by 2024/25, marking the largest real term increase in overall departmental spending for any Parliament this century.

Public research and development (R&D) investment will increase to a record level of £20 billion by 2024/25. Combined with R&D tax reliefs, which the government intends to modernise and refocus, total government R&D support as a proportion of GDP is forecasted to increase from 0.7% in 2018 to 1.1% in 2024/25.

The Chancellor unveiled a new temporary business rates relief in England for 2022/23 for eligible retail, hospitality and leisure properties, worth almost £1.7 billion. The government stated that the reform of business rates will make the system fairer, more responsive and more supportive of investment.

Mr Sunak also announced significant changes to fuel duty and alcohol duties: fuel duty will be frozen at 57.95p per litre for 2022/23, and drinks will be taxed in proportion to their alcohol content, making the system ‘fairer and more conducive to product innovation in response to evolving consumer tastes’.

Meanwhile, the government will give £11.5 billion to help build up to 180,000 affordable homes, whilst an additional £4.7 billion will be invested in the core schools budget in England.

The Chancellor also confirmed that the government will increase the National Living Wage to £9.50 per hour from April 2022 and cut the Universal Credit taper rate from 63p to 55p.

Internet link: GOV.UK speeches

Business groups gave a mixed response to Chancellor Rishi Sunak’s 2021 Autumn Budget speech.

Responding to the speech, the Confederation of British Industry (CBI) said that the Chancellor had shown a willingness to listen to business with measures that will help firms innovate and the economy grow.

However, Tony Danker, Director General of the CBI, warned:

‘This Budget alone won’t seize the moment and transform the UK economy for a post-Brexit, post-Covid world. Businesses remain in a high-tax, low-productivity economy with concerns about inflation.’

Meanwhile, the Federation of Small Businesses (FSB) also voiced concerns over the Chancellor’s Budget announcements.

Mike Cherry, National Chair of the FSB, said:

‘This Budget has delivered some measures that should help to arrest the current decline in small business confidence.

‘But against a backdrop of spiralling costs, supply chain disruption and labour shortages, is there enough here to deliver the government’s vision for a low-tax, high-productivity economy? Unfortunately not.’

The British Chambers of Commerce (BCC) welcomed the changes to the business rates system in England. Shevaun Haviland, Director General of the BCC, commented:

‘The Chancellor has listened to Chambers’ long-standing calls for changes to the business rates system and this will be good news for many firms. This will provide much needed relief for businesses across the country, giving many firms renewed confidence to invest and grow.’

Internet links: CBI press release BCC press releaseFSB press release

The government’s Coronavirus Job Retention Scheme (CJRS) ended on 30 September after supporting millions of workers during the pandemic.

The government said the wages of more than 11 million people were subsidised for at least some of the scheme’s duration at a cost of around £70 billion.

Economists say there is likely to be a rise in unemployment due to new redundancies, despite the fact that some may be able to find work in recovering sectors such as travel and hospitality.

The Federation of Small Businesses (FSB) said the end of the furlough scheme, the scrapping of the small employer sick pay rebate and the closure of the government’s apprenticeship incentive scheme will only add pressure on companies.

Mike Cherry, the FSB’s National Chair, said:

‘It’s potentially a dangerous moment. As the weather turns colder, so too will the operating environment for many firms. With recent economic growth numbers having fallen below expectations, the upcoming festive season may not provide as much of a boost as hoped to many small businesses’ bottom lines.’

Internet link: GOV.UK FSB website

The government’s scheme that enables small businesses to recoup statutory sick pay costs caused by COVID-19 closed at the end of September.

Legislation ending the Coronavirus Statutory Sick Pay Rebate Scheme (SSPRS) was laid before parliament on 9 September.

Before the COVID-19 pandemic, employers were obliged to pay Statutory Sick Pay (SSP) to eligible employees unable to work because of sickness. It is paid at a flat rate of £96.35 (at the current rate) for up to 28 weeks. The full cost of SSP is met by the employer.

To support employers during the pandemic, the government legislated to allow certain small and medium size employers to reclaim some, or all, of their SSP costs from HMRC via the SSPRS.

Under the new regulations, employers will not be able to reclaim SSP from 30 September 2021 and any claims relating to periods prior to that date must have been filed by 31 December 2021.

The Institute of Chartered Accountants in England and Wales (ICAEW) said:

‘It would appear that the suspension of the requirement to wait for three days before SSP is paid has not yet been repealed. The three-day rule was suspended temporarily during the peak of the COVID-19 crisis to encourage people to stay at home as soon as they felt ill.’

Internet link: ICAEW website GOV.UK