Two for One: A Quick Look at the Autumn ‘Double’ Budget
March 13, 2020
Two for One – A Quick Look at the Autumn ‘Double’ Budget
Chancellor Rishi Sunak must have known that the nation is in desperate need of cheer right now as he effectively delivered not one, but two budgets on Wednesday.
Addressing the potential financial and economic fallout from the spreading Covid-19 virus, Mr. Sunak first announced emergency measures for the sick, the self-isolated and their employers.
It was an emergency budget in all but name, featuring a £30bn support package to ensure viable businesses don’t fall prey to the virus.
The ‘second’ budget announced the most significant spend-and-borrow spree since 1992. Delivered almost as though coronavirus weren’t really happening, Mr Sunak put some flesh on the bones of the Conservatives’ election manifesto pledge to ‘level-up’ UK infrastructure.
Though not much flesh. The fine detail of autumn’s double-budget is yet to come. But much looks sure to please businesses – especially those outside London where Johnson’s government is working to make lifelong friends of new Tory voters.
Mr Sunak confirmed plans to review the government’s current investment rules, widely criticised for leaving towns and cities outside London and the South East cash-strapped.
Let’s take a look at some of the most significant talking points for business and the north.
What Businesses & Employees Need to Know
Starting with the nitty gritty, there will be no change to PAYE tax thresholds or personal tax allowance, which is set to remain at £12,500 for the 2020-21 tax year.
Workers will enjoy an £868 raise in the National Insurance threshold, from £8,632 to £9,500 for 2020-21. A further boost can be expected by 2024, when the National Living Wage for over-25s will increase from £8.72 to £10.50.
There are changes to tapered pension allowances, too. The threshold at which the controversial taper kicks in will rise from £110,000 to £200,000 and the minimum annual allowance set at £4,000 for those with incomes exceeding £300,000 in the new tax year.
The eligibility criteria for Employment Allowance is set to change – as is the amount businesses will receive. From April 2020, the allowance will only be available to businesses who paid less than £100,000 in employer National Insurance contributions over the previous tax year. In 2020-21, eligible businesses will receive £4,000 – a rise of £1,000 from 2019-20.
Employment Allowance isn’t available for employing freelancers – or for businesses which carry out more than half of their work in the public sector.
There are several reasons why Rishi Sunak’s 2020 budget is one for the history books. Chief among them is the £30bn pledged to ensure businesses – and the economy – make it through the dark days ahead unscathed.
Mr Sunak said £2bn would go to supporting businesses of less than 250 employees who may lose out due to staff sickness.
Around 700,000 of the smallest businesses will receive a cash grant of £3,000, and cheap loans will be made available through Lloyds and NatWest to avoid interruption.
HMRC is primed to accept deferred payments on VAT or CT and business rates below £51k rateable value are to be scrapped for the coming year.
Mr Sunak also eased pressure on workers – by confirming a previous commitment to pay statutory sick pay from day-one of absence, even for self-isolating heroes. The government will refund Statutory Sick Pay for 14 days to employers with less than 250 employees.
A further helping hand to businesses hit by the coronavirus comes in the form of an extension of the 50% retail discount which formerly only applied to businesses in leisure and hospitality. However, as business rates are administered by local authorities, it is difficult to find clear information on exactly how this will take place.
The cash pledged for tackling covid-9 is small beer beside the money set aside to build a ‘world-class’ UK infrastructure over the next five years.
Mr Sunak pledged a whopping £175bn over the period, to go on roads, rail, hospitals and digital projects.
He claimed this spending would give UK productivity a 2.5% boost, adding 0.5% per year to GDP.
It’s no secret that Boris Johnson is looking to make friends in the north and therefore no surprise that much of the spending is earmarked for regions outside London. However, the detail is again scant.
Greater Manchester will take a share of £4bn set aside for transport projects. In the past, mayor Andy Burnham has used such funds for cycle lanes and Metrolink expansion. At least some of this could go to extending the Metrolink to Stockport, as well as for much-needed M60 upgrades.
Outside Manchester, Yorkshire is to have a new mayoral post in West Yorkshire and Leeds’ very own British Library branch.
Leeds is also to be the northern terminus of the Northern Powerhouse Rail connecting the city to Manchester via a new Pennine route. Hull and Liverpool – conspicuous by their absence from Mr Sunak’s announcement appear to have been left out here – both have been campaigning to be part of the route.
Merseyside, Teeside, Humberside and St Fergus, Scotland were named as potential sites for two carbon capture and storage facilities that will create up to 6,000 highly-skilled, high-wage jobs by 2030. The project will cost £800 million.
Other regional projects include the plans to move 22,000 civil servants out of the capital but no news on when or to where.
Could this mean an influx of Dominic Cummings’ ‘weirdos and misfits’ to Manchester’s co-working offices?
Watch this space.