Budget speech delivered by Chancellor Rishi Sunak
Madam Deputy Speaker, A year ago, in my first Budget, I announced our initial response to coronavirus.
What was originally thought to be a temporary disruption to our way of life has fundamentally altered it.
People are still being told to stay in their homes; businesses have been ordered to close; thousands of people are in hospital.
Much has changed.
But one thing has stayed the same. I said I would do whatever it takes; I have done; and I will do so.
We have announced over £280 billion of support, protecting jobs, keeping businesses afloat, helping families get by.
Despite this unprecedented response, the damage coronavirus has done to our economy has been acute. Since March, over 700,000 people have lost their jobs.
Our economy has shrunk by 10% – the largest fall in over 300 years.
Our borrowing is the highest it has been outside of wartime.
It’s going to take this country – and the whole world – a long time to recover from this extraordinary economic situation.
But we will recover.
This Budget meets the moment with a three-part plan to protect the jobs and livelihoods of the British people.
First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis.
Second, once we are on the way to recovery, we will need to begin fixing the public finances – and I want to be honest today about our plans to do that.
And, third, in today’s Budget we begin the work of building our future economy.
Madam Deputy Speaker, Today’s forecasts show that our response to coronavirus is working.
The Prime Minister last week set out our cautious but irreversible roadmap to ease restrictions whilst protecting the British people.
The NHS, deserving of immense praise, has had extraordinary success in vaccinating more than 20 million people across the United Kingdom.
And combined with our economic response, one of the most comprehensive and generous in the world, this means the Office for Budget Responsibility are now forecasting, in their words:
“A swifter and more sustained recovery” than they expected in November.
The OBR now expect the economy to return to its pre-covid level by the middle of next year – six months earlier than previously thought.
That means growth is faster, unemployment lower, wages higher, investment higher, household incomes higher.
But while our prospects are now stronger, coronavirus has done and is still doing profound damage.
And today’s forecasts make clear repairing the long-term damage will take time.
The OBR still expect that in five years’ time, because of coronavirus, our economy will be 3% smaller than it would have been.
Before I share the detail of the OBR’s forecasts, let me thank Richard Hughes and his team for their work.
The OBR forecast that our economy will grow this year by 4%, by 7.3% in 2022, then 1.7%, 1.6% and 1.7% in the last three years of the forecast.
And the OBR have said that our interventions to support jobs have worked.
In July last year, they expected unemployment to peak at 11.9%. Today, because of our interventions, they forecast a much lower peak: 6.5%.
That means 1.8 million fewer people are expected to be out of work than previously thought.
But every job lost is a tragedy, which is why protecting, creating and supporting jobs remains my highest priority.
So, Madam Deputy Speaker, Let me turn straight away to the first part of this Budget’s plan: to protect the jobs and livelihoods of the British people through the remaining phase of this crisis.
First, the furlough scheme will be extended until the end of September.
For employees, there will be no change to the terms – they will continue to receive 80% of their salary, for hours not worked, until the scheme ends.
As businesses reopen, we’ll ask them to contribute alongside the taxpayer to the cost of paying their employees.
Nothing will change until July, when we will ask for a small contribution of just 10% and 20% in August and September.
The Government is proud of the furlough – one of the most generous schemes in the world, effectively protecting millions of people’s jobs and incomes.
Second, support for the self-employed will also continue until September with a fourth grant covering the period February to April, and a fifth and final grant from May onwards.
The fourth grant will provide three months of support at 80% of average trading profits.
For the fifth grant, people will continue to receive grants worth three months of average profits, with the system open for claims from late July.
But as the economy reopens over the summer, it is fair to target our support towards those most affected by the pandemic.
So people whose turnover has fallen by 30% or more will continue to receive the full 80% grant.
People whose turnover has fallen by less than 30% will therefore have less need of taxpayer support and will receive a 30% grant.
And I can also announce a major improvement in access to the self-employed scheme.
When the scheme was launched, the newly self-employed couldn’t qualify because they hadn’t all filed the 2019-20 tax return.
But as the tax return deadline has now passed, I can announce today that, provided they filed a tax return by midnight last night, over 600,000 more people, many of whom became self-employed last year can now claim the fourth and fifth grants.
Over the course of this crisis, we will have spent £33 billion supporting the self-employed; one of the most generous programmes for self-employed people anywhere in the world.
Third, we’re also extending our support for the lowest paid and most vulnerable.
To support low-income households, the Universal Credit uplift of £20 a week will continue for a further six months, well beyond the end of this national lockdown.
We’ll provide Working Tax Credit claimants with equivalent support for the next six months.
And Because of the way that system works operationally, we will need to do so with a one-off payment of £500.
And over the course of this year, as the economy begins to recover, we are shifting our resources and focus towards getting people into decent, well-paid jobs.
We reaffirm our commitment to end low pay, increasing the National Living Wage to £8.91 from April – an annual pay rise of almost £350 for someone working full time on the National Living Wage.
And My Right Honourable Friends the Education Secretary and the Work and Pensions Secretary, are taking action to give people the skills they need to get jobs or get better jobs:
The Restart programme – supporting over a million long term unemployed people.
The number of work coaches – doubled.
The Kickstart scheme – funding high quality jobs for over a quarter of a million young people.
The Prime Minister’s Lifetime Skills Guarantee – giving every adult the opportunity for a fully-funded Level 3 qualification.
And we want businesses to hire new apprentices so we’re paying them more to do it.
Today, I am doubling the incentive payments we give businesses to £3,000 – that’s for all new apprentice hires, of any age.
Alongside investing £126 million of new money to triple the number of traineeships we’re taking what works to get people into jobs and making it better.
Madam Deputy Speaker, One of the hidden tragedies of lockdown has been the increase in domestic abuse.
So I’m announcing today an extra £19 million – on top of the £125 million we announced at the Spending Review – for domestic violence programmes to reduce the risk of reoffending, and to pilot a network of ‘Respite Rooms’ to provide specialist support for vulnerable homeless women.
To recognise the sacrifices made by so many women and men in the Armed Forces community, I’m providing an additional £10 million to support veterans with mental health needs.
And, on current plans, the funding to support survivors of the Thalidomide scandal runs out in 2023.
They deserve better than to have constant uncertainty about the future costs of their care.
So not only will I extend this funding with an initial down payment of around £40 million; I am today announcing a lifetime commitment, guaranteeing funding forever.
And let me thank the Thalidomide Trust and the Honourable Member for North Dorset for their leadership on this important issue.
As well as supporting people’s jobs, incomes, the lowest paid and most vulnerable, this Budget also protects businesses.
We’ve been providing businesses with direct cash grants through the recent restrictions. These grants come to an end in March.
I can announce today that we will provide a new Restart Grant in April, to help businesses reopen and get going again.
Non-essential retail businesses will open first, so they’ll receive grants of up to £6,000 per premises.
Hospitality and leisure businesses, including personal care and gyms, will open later, or be more impacted by restrictions when they do, so we’ll give them grants of up to £18,000.
That’s £5 billion of new grants; on top of the £20 billion we’ve already provided; taking our direct total cash support to business to £25 billion.
And I pay tribute to My Right Honourable Friend the Member for Romsey and Southampton North for highlighting the particular needs of the personal care sector.
And, with My Right Honourable Friend the Culture Secretary, we’re making available £700 million to support our incredible arts, culture and sporting institutions as they reopen;
Backing the United Kingdom and Ireland’s joint 2030 World Cup bid, launching a new approach to apprenticeships in the creative industries, and extending our £500 million film and TV production restart scheme.
Even with the new Restart Grants, some businesses will also need loans to see them through.
As the Bounce Back Loan and CBIL programmes come to an end, we’re introducing a new Recovery Loan Scheme to take their place.
Businesses of any size can apply for loans from £25,000 up to £10 million, through to the end of this year. And the government will provide a guarantee to lenders of 80%.
Last year, we provided an unprecedented 100% business rates holiday, in England, for all eligible businesses in the retail, hospitality and leisure sectors – a tax cut worth £10 billion.
This year, we’ll continue with the 100% business rates holiday for the first three months of the year, in other words, through to the end of June.
For the remaining nine months of the year, business rates will still be discounted by two thirds, up to a value of £2 million for closed businesses, with a lower cap for those who have been able to stay open.
A £6 billion tax cut for business.
One of the hardest hit sectors has been hospitality and tourism: 150,000 businesses that employ over 2.4 million people need our support.
To protect those jobs, I can confirm that the 5% reduced rate of VAT will be extended for six months to 30th September.
And even then, we won’t go straight back to the 20% rate.
We’ll have an interim rate of 12.5% for another six months; not returning to the standard rate until April of next year.
In total, we’re cutting VAT next year by almost £5 billion.
Madam Deputy Speaker, The housing sector supports over half a million jobs.
The cut in stamp duty I announced last summer has helped hundreds of thousands of people buy a home and supported the economy at a critical time.
But due to the sheer volume of transactions we’re seeing, many new purchases won’t complete in time for the end of March.
So I can announce today the £500,000 nil rate band will not end on the 31st of March, it will end on the 30th of June.
Then, to smooth the transition back to normal, the nil rate band will be £250,000, double its standard level, until the end of September – and we will only return to the usual level of £125,000 from October 1st.
Even with the stamp duty cut, there is still a significant barrier to people getting on the housing ladder – the cost of a deposit.
So I’m announcing today a new policy to stand behind homebuyers: a mortgage guarantee.
Lenders who provide mortgages to home buyers who can only afford a five percent deposit, will benefit from a government guarantee on those mortgages.
And I’m pleased to say that several of the country’s largest lenders including Lloyds, NatWest, Santander, Barclays and HSBC will be offering these 95% mortgages from next month, and I know more, including Virgin Money will follow shortly after.
A policy that gives people who can’t afford a big deposit the chance to buy their own home.
As the Prime Minister has said, we want to turn Generation Rent into Generation Buy.
So, Madam Deputy Speaker:
The furlough – extended to September.
Self-employed grants – extended to September.
Universal Credit uplift – extended to September.
More money to tackle domestic violence.
Bigger incentives to hire apprentices.
Higher grants to struggling businesses.
Extra funds for culture, arts and sport.
New loan schemes to finance businesses.
Kickstart, Restart, a Lifetime Skills Guarantee.
Business rates – cut.
VAT – cut.
Stamp duty – cut.
And a new mortgage guarantee.
The first part of a Budget that protects the jobs and livelihoods of the British people.
And, Madam Deputy Speaker, As you can see, we’re going long, extending our support well beyond the end of the Roadmap…
… to accommodate even the most cautious view about the time it might take to exit the restrictions.
Let me summarise for the House the scale of our total fiscal response to coronavirus.
At this Budget we are announcing an additional £65 billion of measures over this year and next to support the economy in response to coronavirus.
Taking into account the significant support announced at the Spending Review 20, this means our total COVID support package, this year and next, is £352 billion.
Once you include the measures announced at Spring Budget last year, including the step change in capital investment, total fiscal support from this Government over this year and next amounts to £407 billion.
Coronavirus has caused one of the largest, most comprehensive and sustained economic shocks this country has ever faced.
And, by any objective analysis, this Government has delivered one of the largest, most comprehensive and sustained responses this country has ever seen.
So, Madam Deputy Speaker, We’re using the full measure of our fiscal firepower to protect the jobs and livelihoods of the British people.
But the damage done by coronavirus, combined with a level of support unimaginable only twelve months ago, has created huge challenges for our public finances.
The OBR’s fiscal forecasts show that this year, we have borrowed a record amount: £355 billion.
That’s 17% of our national income, the highest level of borrowing since World War Two.
Next year, as we continue our unprecedented response to this crisis, borrowing is forecast to be £234 billion, 10.3% of GDP – an amount so large it has only one rival in recent history; this year.
Without corrective action, borrowing would continue at very high levels, leaving underlying debt rising indefinitely.
Instead, because of the steps I am taking today, borrowing falls to 4.5% of GDP in 22-23, 3.5% in 23-24, then 2.9% and 2.8% in the following two years.
And while underlying debt rises from 88.8% of GDP this year to 93.8% next year, it then peaks at 97.1% in 2023-24, before stabilising and falling slightly to 97% and 96.8% in the final two years of the forecast.
Let me explain why this matters.
The amount we’ve borrowed is comparable only with the amount we borrowed during the two world wars.
It is going to be the work of many governments, over many decades, to pay it back.
Just as it would be irresponsible to withdraw support too soon, it would also be irresponsible to allow our future borrowing and debt to rise unchecked.
When crises come, we need to be able to act.
And we need the fiscal freedom to act.
A freedom that you only have if you start with public finances in a good and strong place.
[POLITICAL CONTENT REMOVED]
When the next crisis comes, we need to be able to act again.
And while our borrowing costs are affordable right now, interest rates and inflation may not stay low for ever; and just a 1% increase in both would cost us over £25 billion.
And as we have seen in the markets over the last few weeks, sovereign bond yields can rise sharply.
This Budget is not the time to set detailed fiscal rules, with precise targets and dates to achieve them by – I don’t believe that would be sensible.
But I do want to be honest about what I mean by sustainable public finances, and how I plan to achieve them. Our fiscal decisions are guided by three principles.
First, while it is right to help people and businesses through an acute crisis like this one, in normal times the state should not be borrowing to pay for everyday public spending.
Second, over the medium term, we cannot allow our debt to keep rising, and, given how high our debt now is, we need to pay close attention to its affordability.
And third, it is sensible to take advantage of lower interest rates to invest in capital projects that can drive our future growth.
So the question is how we achieve that; how we balance the extraordinary support we are providing to the economy right now, with the need to begin the work of fixing our public finances.
I have and always will be honest with the country about the challenges we face.
So I’m announcing today two measures to begin that work.
Let me take each in turn.
Madam Deputy Speaker,
Our response to coronavirus has been fair, with the poorest households benefiting the most from our interventions.
And our approach to fixing the public finances will be fair too, asking more of those people and businesses who can afford to contribute and protecting those who cannot.
So this government is not going to raise the rates of income tax, national insurance, or VAT.
Instead, our first step is to freeze personal tax thresholds.
We’ve nearly doubled the income tax personal allowance over the last decade, making it the most generous of any G20 country.
We will of course deliver our promise to increase it again next year to £12,570, but we will then keep it at this more generous level until April 2026.
The Higher Rate threshold will similarly be increased next year, to £50,270, and will then also remain at that level for the same period.
Nobody’s take home pay will be less than it is now, as a result of this policy.
But I want to be clear with all Members that this policy does remove the incremental benefit created had thresholds continued to increase with inflation.
We are not hiding it, I am here, explaining it to the House and it is in the Budget document in black and white. It is a tax policy that is progressive and fair.
And, I will also maintain, at their current levels, until April 2026:
The inheritance tax thresholds.
The pensions lifetime allowance.
The annual exempt amount in capital gains tax.
And, for two years from April 2022, the VAT registration threshold which, at £85,000, will remain more than twice as generous as the EU and OECD averages.
We’ll also tackle fraud in our covid schemes, with £100m to set up a new HMRC taskforce of around 1,000 investigators as well as new measures, and new investment in HMRC, to clamp down on tax avoidance and evasion.
The full details are set out in the Red Book.
Madam Deputy Speaker, The government is providing businesses with over £100 billion of support to get through this pandemic, so it is fair and necessary to ask them to contribute to our recovery.
So the second step I am taking today is that in 2023, the rate of corporation tax, paid on company profits, will increase to 25%.
Even after this change the United Kingdom will still have the lowest corporation tax rate in the G7 – lower than the United States, Canada, Italy, Japan, Germany and France.
We’re also introducing some crucial protections.
First, this new higher rate won’t take effect until April 2023, well after the point when the OBR expect the economy to have recovered.
And even then, because corporation tax is only charged on company profits, any struggling businesses will, by definition, be unaffected.
Second, I’m protecting small businesses with profits of £50,000 or less, by creating a Small Profits Rate, maintained at the current rate of 19%.
This means around 70% of companies – 1.4 million businesses – will be completely unaffected.
And third, we will introduce a taper above £50,000, so that only businesses with profits of a quarter of a million or greater will be taxed at the full 25% rate.
That means only 10% of all companies will pay the full higher rate.
So yes, it’s a tax rise on company profits. But only on the larger, more profitable companies. And only in two years’ time.
And I wanted to announce this now because I think for business, certainty matters.
For the next two years, I’m also making the tax treatment of losses significantly more generous by allowing businesses to carry back losses of up to £2 million for three years providing a significant cash flow benefit. This means companies can now claim additional tax refunds of up to £760,000.
And because of the current 8% bank surcharge, the implied overall tax rate for banks would be too high. So we will review the surcharge, to make sure the combined rate of tax on the United Kingdom banking sector doesn’t increase significantly from its current level and to make sure this important industry remains internationally competitive.
Madam Deputy Speaker,
These are significant decisions to have taken.
Decisions no Chancellor wants to make.
I recognise they might not be popular.
But they are honest.
And let’s consider the alternatives.
The first is to do nothing.
To leave our deficit problem untreated.
Our debt problem for someone else in future to deal with.
[POLITICAL CONTENT REMOVED]
And Nor do I believe it can be the way of a responsible Chancellor.
Another alternative would be to try to find all the savings we need from public spending.
[POLITICAL CONTENT REMOVED]
The only other alternative would be to increase the rates of tax on working people – but I don’t believe that would be right either.
So I believe our approach, while bold, is compatible with our duty as a fiscally responsible and business friendly government.
This is the right choice and I’m confident it will command public assent.
I have one final announcement on business tax.
With the lowest corporation tax in the G7, and a new, small profits rate, the United Kingdom will have a pro-business tax regime.
But we need to do even more to encourage businesses to invest right now.
Business investment creates jobs, lifts growth, spurs innovation and drives productivity.
For decades we’ve lagged behind our international peers.
Right now, while many businesses are struggling, others have been able to build up significant cash reserves.
We need to unlock that investment; we need an investment-led recovery.
So today I can announce the ‘Super Deduction’.
For the next two years, when companies invest, they can reduce their taxable profits* not just by a proportion of the cost of that investment, as they do now or even by 100% of their cost, the so-called full expensing some have called for, with the Super Deduction they can now reduce their taxable profits by 130% of the cost.
Let me give the House an example.
Under the existing rules, a construction firm buying £10 million of new equipment could reduce their taxable income, in the year they invest, by just £2.6 million.
With the Super Deduction, they can now reduce it by £13 million.
We’ve never tried this before in our country.
The OBR have said it will boost business investment by 10%; around £20 billion more per year.
It makes our tax regime for business investment truly world-leading, lifting us from 30th in the OECD, to 1st. And, worth £25 billion during the two-years it is in place this will be the biggest business tax cut in modern British history.
Bold, unprecedented action.
To get companies investing.
Creating jobs.
And driving our economic recovery.
Madam Deputy Speaker,
Let me now turn to duties.
This is a tough time for hospitality.
So I can confirm that the planned increases in duties for:
Spirits like scotch whisky.
Wine.
Cider.
And beer, will all be cancelled.
All alcohol duties frozen for the second year in a row – only the third time in two decades.
And right now, to keep the cost of living low, I’m not prepared to increase the cost of a tank of fuel. So the planned increase in fuel duty is also cancelled.
Madam Deputy Speaker,
This Budget protects the jobs and livelihoods of the British people.
This Budget is honest about the challenges facing our public finances, and how we will begin to fix them. And this Budget does one other thing:
It lays the foundations of our future economy – the third part of our plan.
If we want a better future economy, we have to make it happen.
We have to do things that have never been done before.
The world is not going to be any less competitive after coronavirus.
So it’s not enough to have some general desire to grow the economy.
We need a real commitment to green growth.
It’s not enough to have a general desire to increase productivity.
We need a real commitment to give every business, large or small, the opportunity to grow, innovate and succeed. It’s not enough to have a general desire to create jobs.
We need a real commitment to create jobs where people are and change the economic geography of this country.
And we can’t strengthen our domestic economy without remaining a global, outward-looking nation.
This future economy won’t be created in any one Budget, but today we lay the foundations.
Madam Deputy Speaker,
Our future economy needs investment in green industries across the United Kingdom. So I can announce today the first ever UK Infrastructure Bank.
Located in Leeds, the Bank will invest across the United Kingdom in public and private projects to finance the green industrial revolution.
Beginning this spring, it will have an initial capitalisation of £12 billion and we expect it to support at least £40 billion of total investment in infrastructure.
[POLITICAL CONTENT REMOVED]
Offshore wind is an innovative industry where the United Kingdom already has a global competitive advantage. So we’re funding new port infrastructure to build the next generation of offshore wind projects in Teesside and Humberside.
And in November I announced we would launch a world-leading Sovereign Green Bond.
Today we’re going further, announcing a new, retail savings product to give all United Kingdom savers the chance to support green projects…
[POLITICAL CONTENT REMOVED]
We’ve also asked Dame Clara Furse to establish a new group to position the City as the global leader for voluntary, high quality carbon offset markets.
And underpinning all of this will be an updated monetary policy remit for the Bank of England. It reaffirms their 2% target.
But now, it will also reflect the importance of environmental sustainability and the transition to net zero.
Madam Deputy Speaker,
Our future economy will also address our productivity problem and support small businesses.
Too often smaller firms don’t have the time or resources to acquire the extra skills and training they need to be more efficient, more digital, and more productive.
Thanks to Be the Business, we have made a good start at supporting these firms.
Today, the Business Secretary and I are going further with a new set of UK-wide schemes: Help to Grow.
First, Help to Grow: Management will help tens of thousands of small and medium sized businesses get world-class management training.
Dozens of business schools across the United Kingdom will offer a new executive development programme with mentoring and peer learning, and government will contribute 90% of the cost.
A real commitment to learn more, make more and earn more.
Second, Help to Grow: Digital.
With the pandemic, many businesses have moved online. This has been a challenge. But we want to turn it into an opportunity.
We’re going to help small businesses develop digital skills by giving them free expert training and a 50% discount on new productivity-enhancing software, worth up to £5,000 each.
Both programmes will commence by the autumn; and I’d urge interested businesses to register today on Gov.UK/HelpToGrow.
A real commitment to help over a hundred thousand businesses become more innovative, more competitive and more profitable.
Madam Deputy Speaker,
A future economy requires us to be at the forefront of the next scientific and technological revolutions.
Becoming a scientific superpower is something we can be; I don’t think that’s hubristic or unrealistic.
Our incredible vaccination programme has shown the world what this country is capable of.
So I’m providing an extra £1.6 billion today to continue the rollout and improve our future preparedness.
And I want to make the United Kingdom the best place in the world for high growth, innovative companies.
So I’m launching two wide-ranging consultations today: to make sure our research and development tax reliefs – and our Enterprise Management Incentives – are internationally competitive.
And, My Right Honourable Friend the Home Secretary knows that a scientific superpower needs scientific superstars so together we’re announcing ambitious, visa reforms aimed at highly skilled migrants, including:
A new unsponsored points-based visa to attract the best and most promising international talent in science, research and tech.
New, improved visa processes for scale-ups and entrepreneurs.
And radically simplified bureaucracy for high skilled visa applications.
Now as well as support for innovation and access to talent, high growth firms need access to capital.
To do that, we’re taking steps to give the pensions industry more flexibility to unlock billions of pounds from pension funds into innovative new ventures launching a new Future Fund Breakthrough, to help fill the scale-up funding gapand changing the rules to encourage more companies to list here.
Let me thank Lord Hill for leading this landmark review, the FCA will be consulting on his proposals very shortly.
Madam Deputy Speaker,
Our future economy depends on remaining a United Kingdom.
Millions of families and businesses in Scotland, Wales and Northern Ireland have contributed to and benefitted from our coronavirus response.
And central to that has been a Treasury that acts for the whole United Kingdom.
That’s not a political point, it’s an undeniable truth.
The majority of today’s Budget measures will apply directly to people in all four nations of the United Kingdom. And I’m taking further specific steps, with:
Three accelerated Scottish City and Growth Deals in Ayrshire, Argyll and Bute, and Falkirk;
Three more in North Wales, Mid Wales, and Swansea Bay;
And funding for the Holyhead hydrogen hub.
The Global Centre of Rail Excellence in Neath Port Talbot.
The Aberdeen Energy Transition Zone.
As well as the Global Underwater Hub and the North Sea transition deal.
Along with the first allocations of the £400m New Deal for Northern Ireland.
And through the Barnett formula, the decisions I’m taking in this Budget also increase the funding for the devolved administrations, by:
£1.2 billion in Scotland;
£740 million in Wales;
And £410 million for the Northern Ireland executive.
And Madam Deputy Speaker,
Our future economy demands a different economic geography.
If we are serious about wanting to level up, that starts with the institutions of economic power.
Few institutions are more powerful than the one I am enormously privileged to lead – the Treasury.
Along with the other critical economic departments, including BEIS, DIT, and MHCLG, we will establish a new economic campus in Darlington.
[POLITICAL CONTENT REMOVED]
Redrawing our economic map means rebalancing our economic investment.
I have already revised the Treasury’s Green Book; and set out the highest sustained levels of public investment across the United Kingdom since the 1970s.
But we can go further.
I’m announcing today over a billion for 45 new Towns Deals.
From Castleford to Clay Cross; Rochdale to Rowley Regis; and Whitby to Wolverhampton.
And let me pay tribute to local leaders like the brilliant Mayor for the West Midlands, Andy Street, who are making the case for investment in their area.
We’re also creating a £150 million fund, to help communities across the United Kingdom take ownership of pubs, theatres, shops, or local sports clubs at risk of loss – putting more power in the hands of local people.
And I am launching the first round of the Levelling Up Fund today, inviting applications from local areas across the United Kingdom.
And I’m grateful to My Right Honourable Friends the Transport Secretary and the Communities Secretary for their support on this crucial initiative.
Madam Deputy Speaker,
I have one final announcement that exemplifies the future economy.
A policy on a scale we’ve never done before;
A policy to bring investment, trade, and, most importantly, jobs, right across this country.
To replace the industries of the past with green, innovative, fast growing new businesses.
To encourage free trade and reinforce our position as an outward-looking, trading nation, open to the world. A policy we can only pursue now we’re outside the European Union:
Freeports.
Freeports are special economic zones with different rules to make it easier and cheaper to do business. They’re well-established internationally, but we’re taking a unique approach.
Our Freeports will have:
Simpler planning – to allow businesses to build;
Infrastructure funding – to improve transport links;
Cheaper customs – with favourable tariffs, VAT or duties;
And lower taxes – with tax breaks to encourage construction, private investment and job creation. An unprecedented economic boost across the United Kingdom.
Freeports will be a truly UK-wide policy – and we’ll work constructively with the Scottish, Welsh and Northern Irish administrations.
Today, I can announce the eight freeport locations in England:
East Midlands Airport.
Felixstowe and Harwich.
Humber.
Liverpool City Region.
Plymouth.
Solent.
Thames.
And Teesside.
Eight new Freeports in eight English regions unlocking billions of pounds of private sector investment, generating trade and jobs up and down the country.
I commend Members from across the House for their campaigning…
[POLITICAL CONTENT REMOVED]
Madam Deputy Speaker,
Let’s take just one of those places – Teesside.
In the past, it was known for its success in industries like steel.
Now, when I look to the future of Teesside I see old industrial sites being used to capture and store carbon. Vaccines being manufactured.
Offshore wind turbines creating clean energy for the rest of the country.
All located within a Freeport with the Treasury just down the road and the UK Infrastructure Bank only an hour away.
I see innovative, fast-growing businesses hiring local people into decent, well-paid, green jobs.
I see people designing, manufacturing and exporting incredible new products and services.
I see people putting down roots in places they are proud to call home.
I see a people optimistic and ambitious for their future.
That, Madam Deputy Speaker, is the future economy of this country.
And so, whilst this last year has been a test unlike any other, that which we are, we are.
The fundamentals of our character as a people have not changed.
Still determined. Still generous. Still fair.
That’s what got us through the last year; it’s what will guide us through the next decade and beyond.
This time last year we set out to deliver on the promises we made to the British people.
But the most important promise was implicit and, in truth, is made by every government, irrespective of their politics.
And that is to do what must be done, when the danger is imminent, and when no one else can.
Today we set out a plan to protect the jobs and livelihoods of the British people, but the promises that underpin that plan, remain unchanged from those we pledged ourselves to twelve long months ago.
To unite and lead.
To level up.
To create a world class education system.
To keep our streets safe.
To keep our NHS strong.
To support the most vulnerable.
To reform and improve public services.
To grow the economy.
To spread prosperity.
To extend the awesome power of opportunity to all corners of the United Kingdom.
And, yes to be honest and fair in all that we do.
Madam Deputy Speaker.
An important moment is upon us.
A moment of challenge and of change.
Of difficulties, yes, but of possibilities too.
This is a Budget that meets that moment.
And I commend it to the House.
Keir Starmer MP, Leader of the Labour Party, responding to the Budget, said:
Thank you Madam Deputy Speaker. After 11 months in this job it’s nice finally to be standing opposite the person actually making decisions in this Government.
The trouble is, the trouble is, it’s those decisions that have left us with the mess we find today. The worst economic crisis of any major economy in the last 12 months, unemployment at five per cent and as the Chancellor said, forecast to rise to 6.5 per cent, debt at over £2 trillion.
I’m sure this Budget will look better on Instagram.
In fact, this week’s PR video cost the taxpayer so much, I was half expecting to see a line in the OBR forecast for it.
But even the Chancellor’s film crew will struggle to put a positive spin on this. After the decisions of the last year and the decade of neglect, we needed a Budget to fix the foundations of our economy, to reward our key workers, to protect the NHS and to build a more secure and prosperous economy for the future.
Instead, what we got was a Budget that papered over the cracks, rather than rebuilding the foundations. A Budget that shows the Government doesn’t understand what went wrong in the last decade or what’s needed in the next.
The Chancellor may think that this is the time for a victory lap but I’m afraid this Budget won’t feel so good for the millions of key workers who are having their pay frozen, for the businesses swamped by debt and the families paying more in council tax and the millions of people who are out of work or worried about losing their job.
And although the Chancellor spoke for almost an hour, we heard nothing about a long-term plan to fix social care.
The Chancellor might have forgotten about it, but the Labour Party never will.
The British people will rightly ask: why has Britain suffered a worse economic crisis than any major economy? The answer is staring us in the face.
First, the Chancellor’s decisions in the last year.
This is the Chancellor who blocked a circuit break in September, ignoring the science he told the British people to “live with coronavirus and live without fear.”
A few weeks later, we were forced into an even longer and more painful lockdown. Whatever spin the Chancellor tries to put on the figures today, as a result of his decisions, we’ve suffered deeper economic damage and much worse outcomes.
And Madam Deputy Speaker, that is nothing compared with a decade of political choices that meant Britain went into this crisis with an economy built on insecurity and inequality.
The Chancellor referred to the last 10 years, we’ve got an economy as a result of those 10 years with 3.6 million people in insecure work; where wages stagnated for a decade; over four million children living in poverty and, critically, we went into this crisis with 100,000 unfilled posts in the NHS and where social care was ignored and underfunded for a decade. Members Opposite voted for all of that. Today’s Budget doesn’t even recognise that – let alone rectify it.
It’s clear that the Chancellor is now betting on a recovery fuelled by a consumer spending blitz.
In fairness, if my next door neighbour was spending tens of thousands of pounds redecorating their flat, I’d probably do the same.
But the central problem in our economy is a deep-rooted insecurity and inequality and this Budget isn’t the answer to that. The Chancellor barely mentioned inequality – let alone tried to address it.
So rather than the big, transformative Budget we needed this Budget simply papers over the cracks. If this had been a Budget for the long-term it would have had a plan.
A plan to protect our NHS, a plan to fix social care.
But I can tell you this, a Labour Budget would have had the NHS and care homes front and centre.
But this Budget is almost silent on those questions.
If this had been a Budget to rebuild the foundations, it would have fixed our broken social security system.
Instead, the Chancellor has been dragged – kicking and screaming – to extend the £20 uplift in Universal Credit – but only for a few months.
Once again deferring the problem. As a result, insecurity and the threat of losing £1,000 a year still hang over six million families.
They ask what would we do, we would keep the uplift until a new, fairer system can be put in place.
If this Budget was serious about rebuilding our shattered economy, it would have included a credible plan to tackle unemployment.
The Chancellor said very little about the Kickstart scheme that’s no doubt because the Kickstart is only helping one in every 100 eligible young people.
In six months it supported just 2,000 young people, yet youth unemployment is set to reach one million. Like so much of this Budget – the Chancellor’s offer is nowhere near the scale of the task.
And of course the biggest challenge to this country is the climate emergency.
The Chancellor just talked up his green credentials, but his Budget stops way short of what was needed or what’s happening in other countries.
This Budget should have included a major green stimulus – bringing forward billions of pounds of investment to create new jobs and new green infrastructure.
Instead, the Government is trying to build a new coal mine which we now learn might not even work for British steel. If anything sums up this Government’s commitment to a green recovery and jobs of the future, it’s building a coal mine we can’t even use.
If the Government was serious about tackling insecurity and those most at risk from Covid, this Budget would have fixed the broken system of statutory sick pay and at the very least filled the glaring holes in isolation payments.
This isn’t difficult to fix – the Government should just make the £500 isolation payment available to everyone who needs it. That would be money well spent. And a year into the pandemic, it’s a disgrace that it’s not.
If the Government were serious about fixing the broken housing market, it would have announced plans for a new generation of genuinely affordable council houses.
Instead, 230,000 council homes have been lost since 2010.
Yet the Chancellor focused today on returning to subsiding 95 per cent mortgages.
Now, I know what you’re thinking, I’ve heard that somewhere before. I’ve heard that somewhere before. Maybe it was because the Prime Minister announced it five months ago in his conference speech.
No, I don’t think anybody heard that. I remember now, I remember now – it’s what Osborne and Cameron came up with in 2013. And what did that do? What did that do?
It fuelled a housing bubble, it pushed up prices, and made owning a home more difficult.
So much for “generation buy.”
I’ve been saying for weeks that this budget will go back.
I didn’t expect the Chancellor to lift a failed policy from eight years ago. This Budget fell far short of the transformative change we needed to turbocharge our recovery for the decades to come.
There was no credible plan to ease the burden of debt hanging over so many businesses. This is estimated at £70bn.
This Budget asks businesses to start paying this money back whether they’re profitable or not.
That affects millions of businesses, it will hold back growth because businesses will have to pay back money they never wanted to borrow instead of being able to invest in their futures and create jobs in their local areas.
It’s both unfair and economically illiterate.
This Budget also fell far short of what was needed to support the self-employed and freelancers, unless, of course, you’re one of the Chancellor’s photographers.
After a year of inaction, we’ll look at the details of what the Chancellor announced, but it certainly looks like, from the figure of 600,000 that he mentioned, that millions will still be left out in the cold.
The Chancellor’s one nominally long-term policy was his references to “levelling up.”
But what does this actually look like? It’s not the transformative shift in power, wealth and resources we need to rebalance our economy.
It’s not the bold, long-term plan we need to upskill our economy, to tackle educational attainment or to raise life-expectancy.
It certainly isn’t a plan to focus government’s resources on preventative services and early years. For the Chancellor “levelling up” seems to mean moving some parts of the Treasury to Darlington, creating a few freeports and re-announcing funding.
That isn’t levelling up: it’s giving up.
And instead of putting blind faith in freeports, the Chancellor would be better served making sure the Government’s Brexit deal actually works for Britain’s manufacturers, who now face more red-tape when they were promised less.
For our financial services – still waiting for the Chancellor to make good on his promises.
For the small businesses and fishing communities whose goods and produce are now left unsold in warehouses. And for our artists and performers who just want to be able to tour.
Turning to other parts of the Statement, we’ll wait for the detail about the so-called super-deduction, but it’s unlikely to make up for the last 10 years, when the levels of private investment growth have trailed so many other countries.
Of course, we welcome the creation of a National Infrastructure Bank. Something we’ve called for, for years.
Although it would have been better if the Government hadn’t sold off the Green Investment Bank in the first place.
We also welcome the introduction of green savings bonds. I have to say: What a good idea it is to introduce a new set of recovery bonds.
The trouble is that the scale of what the Chancellor announced today is nowhere near ambitious enough.
And the long-overdue commitments to extend furlough, business rate relief and the VAT cut on hospitality are welcome. But there is no excuse for holding the announcement of this support back until today – and, of course, we will look at the detail.
But Madam Deputy Speaker, there are very few silver linings in this Budget.
The IMF and the OECD have said now isn’t the time for tax rises. We’re in the middle of a once in 300-year crisis. Our economy is still shut. Our businesses are on life-support.
So it’s right that corporation tax isn’t rising this year or next.
Of course, in the long-run corporation tax should go up.
The decade long corporation tax experiment by this government has failed.
But no taxes should have been raised in the teeth of this economic crisis.
So it’s extraordinary that the Chancellor is ploughing ahead with the £2bn council tax rise – affecting households across the country.
So why is he doing that? Why is he doing that when every economist would tell him not to do it.
Perhaps we find an answer in this weekend’s Sunday Times: “Rishi’s argument was, ‘Let’s do all this now as far away from the election as possible.’”
Or the Telegraph on 27 January: “Raising taxes now means they can be reduced ahead of the next election, Sunak tells MPs.”
Or the Mail in September: “Sunak to hike taxes and lower them before the election.”
Let me be crystal clear. The proper basis for making tax decisions is the economic cycle, not the electoral cycle.
Madam Deputy Speaker, behind the spin, the videos and the photo ops, we all know the Chancellor doesn’t believe in an active and enterprising government.
We know, we know he’s itching to get back to his free market principles and to pull away support as quickly as he can.
One day these restrictions will end.
One day we’ll all be able to take our masks off – and so will the Chancellor.
And then you’ll see who he really is – and this Budget sets it up perfectly.
Because this is a Budget that didn’t even attempt to rebuild the foundations of our economy.
Or to secure the country’s long-term prosperity. Instead it did the job the Chancellor always intended: a quick fix.
Papering over the cracks.
The Party opposite spent a decade weakening the foundations of our economy. Now they pretend they can rebuild it.
But the truth is: they won’t confront what went wrong in the past and they have no plan for the future.
Commenting on today’s budget statement from chancellor Rishi Sunak, TUC General Secretary Frances O’Grady said: “The chancellor is making a dangerous bet on the economy bouncing back on its own. He is gambling with the recovery when he should have acted to create jobs.
“We are in the worst recession of our lifetimes. But while President Biden acts big, the chancellor thinks small. We saw nothing like the investment we need to stop unemployment and level-up the UK with millions of new green jobs.
“Freeports don’t create jobs – and around the world they allow freeloading employers to dodge taxes.
“And after a year of key workers going above and beyond, it’s an insult that the chancellor announced no new support for our hard-pressed NHS or public services and no guarantee of a decent pay rise for all our public sector key workers.
“The last-minute extension of furlough, while welcome, ends too soon, which will risk jobs and businesses. Cutting universal credit in October will risk family incomes. And failing to fix decent sick pay for all risks more infections and another lockdown.”
Where the budget falls short
The budget falls far short of the level of action called for in the TUC’s budget submission.
The overall level of public investment to stimulate recovery has not been increased by the budget.
The TUC budget submission called for the chancellor to:
- Extend the job retention scheme to the end of 2021, and bring in a wage floor to prevent furlough pay falling below the minimum wage
- Fast-track £85 billion investment in green infrastructure to create 1.2 million jobs over the next two years
- Make permanent the £20 per week increase in universal credit, and end the five-week wait for new universal credit claimants to receive payment.
- Unlock the 600,000 jobs in public services needed to fill vacancies and gaps.
- Fix statutory sick pay by raising it to £330 per week (to match the level of the real Living Wage) and extend eligibility to the two million low-paid workers currently excluded from SSP.
- Raise the national minimum wage to at least £10 per hour.
- Retain the Union Learning Fund, which supports 200,000 workplace learners annually.
- Increase child benefit and child tax credit and remove the two-child limit.
Responding to the Chancellor’s statement in the Commons outlining the Government’s Budget, Dr Katherine Henderson, President of the Royal College of Emergency Medicine, said: “This budget is disappointing for the Health and Social Care service which urgently needs a revised funding and investment plan. There are only 10 mentions of the NHS in the published budget.
“The NHS entered the pandemic underfunded, short of staff and short of resources. Now more than ever the NHS must have an adequate recovery plan that includes funding, investment, and a strategy to fix the workforce crisis. This budget failed to build on last year’s spending review, which itself did not go far enough.
“Pressures on the NHS before the pandemic were anything but normal and the added pressure has taken a huge physical and mental toll on existing staff, who have been stretched too thinly.
“In Emergency Medicine we need an additional 2500 consultants and 4,000 nurses, in England alone. The wider NHS is hugely short of staff and fixing this will require an increase in the number of training school places, which in turn requires funding. Failing to address the workforce crisis does our staff a disservice.
“While covid is receding, we cannot drift towards being complacent about the state of our NHS. It is regrettable that this budget will do little to address the longer-term underlying problems we have.”
“Physical infrastructure and economic growth is not enough. We need new solutions for sustainable recovery”, said Sarah Gillinson, chief executive, Innovation Unit.
“The Chancellor’s Budget today was understandably focused on national economic survival in the short-term and sustainable recovery in the longer term. These are welcome non-negotiables for a country emerging from crisis.
“But for a government ostensibly focused on “levelling up” there was little evidence of deepening investment or understanding of what it will really take to improve the lives and life chances of people in places that have had a raw deal over the decades.
“Evidence gathered over many years about the success or otherwise of place-based transformation points to the need for change to be grounded in a locally-owned vision that encompasses all aspects of life – from health and education and a secure home to meaningful work and successful relationships.
“The government’s actions have been all about physical infrastructure and economic growth. It is not enough.
“This change is unbelievably hard and evolves as we learn over 10 years or more. There are scant examples of successful, long-term, place-based transformation that really works for the people who already live there – rather than the people who move in after change has happened.
“If the government is serious about “levelling up” or seriously transforming places with and for the people who live there, it should be investing in much more ambitious and holistic innovation in places, and in loud, transparent learning about what emerges. As we said in November last year, 10% of the £4.8bn levelling-up fund should be dedicated to innovation.
“We need new solutions, not partial old ones. Trains, roads and enterprise are important – but they are far from being the whole story. Emerging from Covid-19 gives us a once-in-a-generation opportunity to design forward differently. Let’s seize it, as a broad coalition that wants to learn what it really takes to transform places, rather than being stuck in the inadequate models of the past.”
Centre for Cities’ Chief Executive Andrew Carter has released this statement on yesterday’s Budget: “The extension to furlough and the UC increase will be a relief to people in places hit hard by the pandemic.
“However, the Chancellor’s vision for our economic recovery is too centralised. Governing directly from the Treasury – whether in London or Darlington – will not level up the country.
“Rather than moving civil servants out of Whitehall, the Government should be moving powers and money out and handing them over to local leaders who understand their areas and the challenges that people face.”
Reacting to the Budget statement, the leader of the country’s leading union, Unite, warned that the government’s flagship freeports policy could cause wage `sinkholes’ and demanded more action on jobs creation.
Unite general secretary Len McCluskey said: “In this time of crisis, workers and communities are desperate for action on a scale that meets this enormous moment and takes us to a fairer future.
“Instead, the chancellor plundered his back catalogue to pull out a sketchy policy, a return of freeports, a failed experiment of the last decades where the only winners are tax avoiders and bad bosses.
“Freeports are sinkholes, draining decent jobs and wages away from our communities.
“Further, we want the chancellor to answer why English freeports will sidestep employment rights, minimum wages and basic standards while Scottish workers will keep all these protections.
“These ports stand in utter contradiction to the pledge to level up, and we will oppose them.
“We need a coherent industrial strategy and real action to underpin jobs creation, not spin, gimmicks and dangerous wheezes.
“There is now also the very real worry now that we face an autumn incomes and jobs emergency, created by this Budget when it ought to be charting the course out of this economic crisis.
“Furlough support will fall away and Universal Credit will be cut by £20 a week at precisely the time when unemployment could well be rising.
“The comfortably off will be pleased by the extension of the stamp duty relaxation for those with expensive properties, but where is the proper assistance for those at the sharpest end of the economy in desperate need of help on sick pay, wages and rent debt?
“Frontline workers kept this country safe and supported during this crisis, putting their own health on the line. Where this Budget should have recognised their heroic contribution with an end to a decade of wage cuts and the justified pay rise that the public wants to see, it failed them.
“The Budget was about choices. The danger is that this government has chosen to be timid in its actions for our people and our economic renewal but ambitious in advancing the Conservative party.”
