UK chancellor Rishi Sunak has announced the budget for 2021, including an extension of the furlough scheme and grants for the self-employed.
In a series of measures set to help people through the Covid-19 pandemic, he put forward a three-step plan to support people and business, fix public finances and build the future economy.
Sunak said that the government’s coronavirus response was working. He said that the Office for Budget Responsibility had told him the economic recovery would be swifter and more sustained than they had predicted. The economy should be recovered by the middle of next year, six months earlier than forecast.
However, the economy will still be three per cent smaller in five years’ time. Unemployment is forecast at 6.5 per cent, which is lower than predicted. This means that 1.8 million fewer people will be unemployed.
The furlough scheme will be extended to the end of September and there will be no changes to the terms. Furloughed employees will receive 80 per cent of their salary. Employers will be asked to contribute to the cost, along with the taxpayer.
The self-employed will continue to receive grants from the government to support them during the pandemic, which will be based on an average of profits. The fourth grant will be available until April and the fifth grant will be available from August onwards.
Claims can be made from late July. Those whose turnover has fallen by more than 30 per cent are eligible for the full grant. This comes to a total of £33 billion from the Treasury to support the self-employed. Anyone who has filed their tax return will be eligible to claim the grant.
Universal Credit to support those on low incomes will increase by £20 a week for another six months. Working tax credit claimants will also receive equivalent support through a one-off payment of £500. The living wage will also increase to £8.91.
The government will fund a ‘Restart Programme’, offering £18,000 to highstreet businesses in need of support to recover from the pandemic. It will also give £3000 to employers to take on new apprentices and pump money into a new traineeship scheme, in a bid to help young people get into work.
Businesses will also receive support, with a recovery loan scheme available to help them recover from the pandemic. Loans from £25,000 to £10 million will be offered. Businesses will also benefit from a business rates holiday until the end of June and a two thirds discount after that. VAT will also be reduced.
The housing sector will also receive a boost from the government. Those with small deposits looking to buy a property can apply for a mortgage with a mortgage guarantee from the government, which will be offered from next month. They will need just a five per cent deposit under the new scheme. The stamp duty holiday will also be extended until June.
There will also be a freeze on fuel duty and alcohol duty.
Sunak said that borrowing levels were very high and were not sustainable. He said that the personal allowance threshold for income tax would increase from £12,500 to £12,570 but would then be frozen until April 2026. The higher rate for income tax would rise from £50,001 to £50,270 but would also be frozen until April 2026.
However, the budget was met by criticism from Labour opposition leader Sir Keir Starmer, who said that it merely “papered over the cracks” and did not offer a long-term economic solution for the country. In particular, it neglected the NHS and social care, he said.