Chancellor of the Exchequer Rishi Sunak has delivered the 2020 Budget in the House of Commons.
Announcing the Conservative Government’s financial plan to MPs on Wednesday afternoon, Mr Sunak revealed new measures to tackle coronavirus and invest in Research and Development among other major changes.
It marks the first budget for Boris Johnson’s Government and the first outside the European Union in almost 50 years.
Here, we take a look at the 10 biggest takeaways from the Budget 2020.
1) Tackling coronavirus
Mr Sunak launched straight into the recent coronavirus outbreak and how the Government plans to dampen its financial impact.
A £30bn package to boost the economy was announced, with the Government and Bank of England seeking to protect jobs and livelihoods.
Mr Sunak said there was “likely to be a temporary disruption” to the economy as a result of coronavirus but insisted his plans would bring “stability and security”.
Measures set out by the Chancellor included:
– A £1bn business rates holiday for retail, leisure and hospitality firms with a rateable value of under £51,000.
– The Government will fully meet the cost of providing statutory sick pay for up to 14 days for workers in firms with up to 250 employees, providing over £2bn for up to two million businesses.
– Reforms to the benefits system to make it easier to access funds will provide a £500m boost to the welfare system, along with a £500m hardship fund.
– Those self-employed or in the gig economy will have support to make accessing benefits quicker, as they are not eligible for statutory sick pay.
– A £3,000 cash grant to businesses eligible for small business rates relief. They will be able to apply for up to £1.2m loans to assist through the crisis.
Chancellor Rishi Sunak promised “whatever extra resources our NHS needs” to combat coronavirus.
2) Research and development
The Budget will raise the investment in research and development to £22bn per year.
Mr Sunak said more than £600bn would be spent investing in future prosperity over the next five years, taking net public investment to the highest levels in real terms since 1955.
He spoke of “history filled with ideas, invention and discovery” in the UK.
To succeed in further innovation, he wants to “invest in ideas”.
The Chancellor said £1.4bn would be invested in the science institute at Weybridge, which is analysing samples of coronavirus, and more than £900m in nuclear fusion, space and electric vehicles.
3) NHS funding
Mr Sunak announced £6bn of new funding to support the NHS over this Parliament.
He pledged a package of measures to benefit the health service including clamping down on “aggressive tax avoidance, evasion and non-compliance” with extra funding for the HMRC to secure £4.4bn of extra revenue.
The Chancellor also said he was raising the immigration health surcharge to £624, with a discounted rate for children.
4) Reading tax and tampon tax abolished
The so-called reading tax will be scrapped from December 1, meaning people will no longer pay VAT on books, newspapers, magazines and academic journals.
This includes hardback or e-books, fiction or factual, Mr Sunak said.
The so-called tampon tax – five per cent VAT on sanitary products – will also be abolished since the UK is no longer bound by EU rules.
5) The “green” Budget
Outlining green policies, Mr Sunak said he would freeze the levy on electricity from April 2022 and raise the levy on gas to help tackle the climate crisis.
A “plastics packaging tax” charging manufactures and importers £200 per tonne on packaging made of less than 30 per cent of recycled plastic will be introduced in April 2022.
A “forest larger than Birmingham” will also be planted as part of plans for the Government to “leave the natural environment in a better state than we found it”.
This comprises of 30,000 hectares of trees to be planted over the next five years and 35,000 hectares of peatland to be restored.
6) Education
The Chancellor said he was committing £1.5bn of new capital over five years to improve the further education college estate.
“My predecessor wanted to level up further education. Saj, we’re getting it done,” Mr Sunak said.
He also announced he was providing every region in the country with funding for special 16 to 19 maths schools.
There will also be an average of £25,000 per year for secondary schools to invest in arts activities and £30m a year to improve PE teaching.
7) Infrastructure and housing
More than £600bn is set to be spent on roads, rail, broadband and housing by the middle of 2025.
The Chancellor said he was committing to “the biggest ever investment in strategic roads and motorway” spending more than £27bn.
£2.5bn will be made available to fix potholes and resurface roads over five years.
In terms of housing, Mr Sunak said he would extend the affordable homes programme with a new multi-year settlement of £12bn.
A £650m package to tackle homelessness, providing an extra 6,000 places for rough sleepers will also be introduced.
Mr Sunak announced a £1bn building safety fund to ensure all unsafe combustible cladding is removed from buildings above 18 metres tall.
The Treasury will make £120m available immediately to repair defences damaged in the winter floods and the Government will double investment to £5.2bn flood defences over six years.
8) Broadband and 4G boost
Mr Sunak said the Budget provides £5bn to get gigabit-capable broadband into the hardest to reach places.
There will be £510m of new investment for the shared rural mobile phone network.
He said this means 95 per cent of the country will get 4G.
9) Devolution
Mr Sunak said he wants to move 22,000 civil servants outside of London.
Treasury’s Green Book rules will be reviewed to put regional prosperity at heart of spending decisions.
The Chancellor also said he would establish Treasury offices in Scotland, Wales and Northern Ireland and open a new “economic campus” in the north with over 750 staff.
He said he was providing an additional £640m for the Scottish Government, £360m for the Welsh Government, £210m for the Northern Ireland executive and £240m for new city and growth deals.
10) Tax, public finances and borrowing
Mr Sunak said he wants a “dynamic low tax economy”.
The economy is predicted to grow by 1.1 per cent this year, not taking into account the impact of coronavirus. This would be slowest growth since 2009.
The Chancellor said borrowing will increase from 2.1 per cent of GDP in 2019/20 to 2.4 per cent in 2020/21 and 2.8 per cent in 2021/22.
Borrowing will then fall to 2.5 per cent, 2.4 per cent and 2.2 per cent in the following years.
Debt as a percentage of GDP is forecast to be lower at end of current Parliament than now.
The National Insurance threshold will increase from £8,632 to £9,500 and the National Living Wage will rise to £10.50 per hour by 2024 if economic conditions allow.
Fuel duty will be frozen for another year as will duties on beer, cider, wine and spirits.
The Government will provide £1 million to support Scottish food and drink overseas and £10 million to help distilleries “go green”.
It will abolish £2.4bn annual tax relief on red diesel in two years’ time, but agriculture, rail, domestic heating and fishing will be exempt.
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