Since March 2020, the Chancellor stated that over 700k people had lost their jobs due to COVID-19, there has been a 10% downturn in the economy, and borrowing is at the highest level outside of wartime.
Not the brightest of pictures, but on a more positive note, The Office for Budget Responsibility (OBR) predicts that the economy could be at pre-COVID levels by mid-2022 which is significantly sooner than initially anticipated.
The Chancellor set out this three-part plan for recovery:
- Continue to do whatever it takes to support individuals and businesses;
- Ensure that there is an ongoing recovery for businesses;
- Today’s budget seeks to continue building future economic growth.
Here are some of the highlights from the budget speech:
Protecting jobs and livelihoods
- The current furlough scheme has been extended until the end of September 2021, with individuals able to be paid 80% of hours not worked as a result of COVID-19.
- Those businesses which can re-open are asked to contribute 10% in July and 20% in August and September.
- Support for self-employed also extended until September 2021 with a further 4th and 5th grant available, which would pay an average of 3 months earnings.
- Support for businesses whose turnover has been affected by over 30%, with a higher grant available than those businesses with less than 30% reduction in turnover.
Support for low income and seeking work
- The Universal Credit income of £20 per week has been extended for an additional six months.
- The national living wage will increase to £8.91 from April 2021.
- Incentive payments for businesses who employ apprentices through the apprenticeship scheme will increase to £3k per employee.
As well as those initiatives listed above, the Chancellor set out several areas which would support businesses who had been significantly affected by the pandemic, with the Hospitality sector being one of the areas impacted the most:
- Re-open grants are going to be made available to businesses outside of essential retail with up to £19k being available for hospitality and £6k for non-essential retail;
- A new loan to replace the CBILs and BBLs was advised with between £25k - £10million being available for businesses, of which the Government would guarantee 80%;
- Business rates will remain at 100% discounted for the first three months of the financial year (until June) and then discounted by 66.6% for the remaining nine months of the year;
- VAT will remain at the reduced rate until September for the hospitality sector and then be 12.5% for a further period to support growth.
Housing was also high on the Chancellors agenda with the current stamp duty holiday extended, and support for first-time buyers who can only provide a 5% deposit. Several lenders have already agreed to the proposals, that would see individuals able to get a foot on the property ladder with 95% mortgages additionally guaranteed by the Government, similar to the previous Help-to-buy schemes.
Overall, the budget is one of forecasted recovery quicker than initially anticipated whilst continuing to protect both individuals and businesses through this pandemic period.