The Budget is focused on the “post-Covid” era, allowing for the “Prime Minister’s economy of higher wages, higher skills, and rising productivity,” according to Sunak.
In terms of the impact of the Covid-19 pandemic on the economy, the independent forecaster the Office for Budget Responsibility (OBR) has scaled down its assumption of the scarring effect of the event on the economy from 3 per cent to 2 per cent.
By 2022, it is forecasted that the UK economy will return to pre-Covid levels.
So let’s take a look at what Sunak’s plan of action actually means for us in terms of minimum wage, flying and drinking alcohol.
Inflation (i.e. the rise in the prices of most goods and services) is set to increase from September’s figure of 3.1 per cent up to 4 per cent within the next year – disappointed, but not surprised.
Minimum wage increase
Minimum wage is set to increase from the current £8.91 an hour to £9.50 next year.
Universal Credit taper rate cut
Universal Credit taper rate – the amount of Universal Credit payments that claimants lose, as they work and earn more above a certain threshold – will be cut by 8 per cent no later than 1 December, bringing it down from 63 per cent to 55 per cent.
This means Universal Credit claimants will take home some more money each month.
Funding to help with NHS backlogs
In order to help the NHS with its backlogs, as well as allow it to invest in technology, the Chancellor has set aside a £6 billion funding package.
Fuel duty rise scrapped
Due to the highest fuel prices in eight years, plans to increase fuel duty will be scrapped.
Affordable housing plans
More affordable homes are set to be built with £24bn put aside for the project.
Tax fund for removing unsafe cladding
A 4 per cent levy (tax) will be placed on property developers whose profits are more than £25m to help create a £5bn fund to remove unsafe cladding.
Schools get funding boost
Schools are set to get an extra £4.7bn by 2024-25
To help schools and colleges to recover from the pandemic, there will be nearly £2bn of new funding set aside.
A per-pupil cash increase of more than £1,500, which means school funding will return to 2010 levels in real terms.
Parenting programmes and additional childcare funding
“Start for Life” parenting programmes will be given £300m and an additional £170m by 2024-25 promised for childcare.
Lower rate of Air Passenger Duty
Holidaymakers will be glad to hear that flights between airports in the UK will be subject to a new lower rate of Air Passenger Duty from April 2023.
Alcohol duty simplified
This simplification means in basic terms that the stronger the drink, the higher the rate.
It’s good news for beer lovers, as a “draught relief” will apply a lower rate of duty on draught beer and cider.
This means a 5 per cent tax cut on drinks served from draught containers over 40 litres, bringing the price of a pint down by 3p.