Rishi Sunak today outlined how the government plan to help the UK economy recover following the global Covid pandemic.

The Chancellor said the Budget will focus on the “post-Covid” era but was keen to stress that the government is aware that the battle with Covid is not over.

Here are the highlights from the Budget 2021 announcement.

UK recovery from Covid

He told MPs: “Today’s Budget does not draw a line under Covid, we have challenging months ahead.

“And let me encourage everyone eligible to get their booster jabs right away. But today’s Budget does begin the work of preparing for a new economy post-Covid.

“The Prime Minister’s economy of higher wages, higher skills, and rising productivity. Of strong public services, vibrant communities and safer streets. An economy fit for a new age of optimism.

“Where the only limit to our potential is the effort we are prepared to put in and the sacrifices we are prepared to make.”

Banbury Cake: Rishi Sunak stressed that this Budget would be for a "post-Covid" era. (PA)Rishi Sunak stressed that this Budget would be for a "post-Covid" era. (PA)

Universal Credit 'tax'

The Chancellor announced that the Universal Credit taper rate will be cut by 8%, bringing it down from 63% to 55%.

He said: “The Universal Credit taper withdraws support as people work more hours. The rate is currently 63%, so for every extra £1 someone earns, their Universal Credit is reduced by 63p.

“Let us be in no doubt: this is a tax on work – and a high rate of tax at that.”

He added: “To make sure work pays, and help some of the lowest income families in the country keep more of their hard-earned money, I have decided to cut this rate, not by 1%, not by 2% – but by 8%.”

Mr Sunak said the tax cut would be worth more than £2 billion and would be introduced by no later than December 1.

Sunak announces overhaul of alcohol duty

The Chancellor said he was “radically” simplifying alcohol duty by introducing a system designed around the principle of “the stronger the drink, the higher the rate”.

Mr Sunak said he is ending the “irrational” 28% duty premium on sparkling wines and duty on fruit ciders will be cut.

The Chancellor told MPs: “First, to radically simplify the system, we are slashing the number of main duty rates from 15 to just six.

“Our new system will be designed around a common-sense principle: the stronger the drink, the higher the rate. This means that some drinks, like stronger red wines, fortified wines, or high-strength ‘white ciders’ will see a small increase in their rates because they are currently undertaxed given their strength.”

Banbury Cake: Sunak announces overhaul of alcohol duty. (PA)Sunak announces overhaul of alcohol duty. (PA)

Mr Sunak added many lower alcohol drinks are “currently overtaxed”, adding: “Rose, fruit ciders, liqueurs, lower strength beers and wines – today’s changes mean they will pay less.”

The Chancellor announced proposals for a new “small producer relief” to include small cidermakers and other producers making alcoholic drinks of less than 8.5% alcohol by volume (ABV).

In relation to sparkling wines, Mr Sunak said: “I’m going to end the irrational duty premium of 28% that they currently pay. Sparkling wines – wherever they are produced – will now pay the same duty as still wines of equivalent strength.”

Mr Sunak said the planned increase in duty on spirits, wine, cider and beer will be cancelled from midnight tonight, a tax cut worth £3bn.

Fuel duty to be cut saving the average driver £1,900

Banbury Cake: The planned rise in fuel duty will be cancelled. (PA)The planned rise in fuel duty will be cancelled. (PA)

The planned rise in fuel duty will be cancelled because of pump prices being at their highest level in eight years, the Chancellor said.

He told MPs: “With fuel prices at the highest level in eight years, I’m not prepared to add to the squeeze on families and small businesses.

“So I can confirm today the planned rise in fuel duty will be cancelled. That’s a saving over the next five years of nearly £8 billion.”

Responding to the fuel duty freeze, RAC fuel spokesman Simon Williams said: “We welcome the Chancellor’s confirmation that duty will continue to remain frozen at 57.95p a litre until next year. With pump prices at record highs, now would have been the worst possible time to change tack and hike up costs still further at the forecourt

50% cut to business rates

The Chancellor said there will be a new 50% business rates discount in the retail, hospitality, and leisure sectors, with eligible concerns able to claim a discount on their bills of up to a maximum of £110,000.

The Chancellor added: “First, we will make the business rates system fairer and timelier with more frequent revaluations every three years. The new revaluation cycle will be delivered from 2023.”

He went on: “We’re introducing a new investment relief to encourage businesses to adopt green technologies like solar panels. And I’m announcing today that we’ll accept the CBI and the British Retail Consortium’s recommendation to introduce a new ‘business rates improvement relief’.

“From 2023, every single business will be able to make property improvements – and, for 12 months, pay no extra business rates.”

Mr Sunak said his third step would be to cancel next year’s planned increase in the multiplier, adding: “I’m announcing today, for one year, a new 50% business rates discount for businesses in the retail, hospitality, and leisure sectors.”

Mr Sunak said the Budget “cuts business rates by £7 billion”.

Support for ‘working families’

The chancellor said the Budget will offer “further support for working families” and the Government’s fiscal policy will “keep in mind the need to control inflation”.

Mr Sunak said: “I have written to the Governor of the Bank of England today to reaffirm their remit to achieve low and stable inflation.”

The OBR has downgraded its unemployment forecast due to the coronavirus pandemic from 12% down to 5.2%, the Chancellor told MPs.

Mr Sunak said the OBR expects the UK’s “recovery to be quicker”, adding: “They forecast the economy to return to its pre-Covid level at the turn of the year – earlier than they thought in March.

“Growth this year is revised up from 4% to 6.5%. The OBR then expect the economy to grow by 6% in 2022, and 2.1%, 1.3% and 1.6% over the next three years.

“In July last year, at the height of the pandemic, unemployment was expected to peak at 12%. Today, the OBR expect unemployment to peak at 5.2%.

“That means over two million fewer people out of work than previously feared.”

Multiplying maths skills

A UK-wide £560 million numeracy programme, Multiply, will be set-up to help improve basic maths skills among millions of adults, Rishi Sunak confirmed.

NHS spending to increase by £44 billion

Sunak says that by the end of this parliament, healthcare spending will increase by £44bn, taking the overall spending to £177bn.

The extra revenue from the Health and Social Care Levy will go directly to the NHS.

Schools will receive extra funding

Banbury Cake: Mr Sunak said schools will get an extra £4.7 billion by 2024/25. (PA)Mr Sunak said schools will get an extra £4.7 billion by 2024/25. (PA)

Mr Sunak said schools will get an extra £4.7 billion by 2024/25 with with just under £2 billion of new funding to help schools and colleges to recover from the pandemic.

Rishi Sunak outlined funding for children, telling MPs: “We are responding today with £300 million for a Start for Life offer for families, high-quality parenting programmes, tailored services to help with perinatal mental health, and, I’m pleased to tell (Conservative MP Fiona Bruce), funding to create a network of family hubs around the country too.

“To improve the quality of childcare, we’re going to pay providers more – with today’s Spending Review providing an extra £170 million by 2024-25.”

Mr Sunak said the Spending Review also provides “£4.7 billion by 2024-25” for schools.

He said: “Combined with the ambitious plans we announced at Spending Review 2019, this will restore per pupil funding to 2010 levels in real terms – equivalent to a cash increase for every pupil of more than £1,500.

“And for children with special educational needs and disabilities we’re more than tripling the amount we invest to create 30,000 new school places.”

The Chancellor went on: “We’ve already announced £3.1 billion to help education recovery. Today, as promised by the Prime Minister and Education Secretary, we will go further – with just under £2 billion of new funding to help schools and colleges – bringing this Government’s total support for education recovery to almost £5 billion.”

Tax relief for museums and galleries

Mr Sunak said tax relief for museums and galleries will be extended for two years, to March 2024.

Rishi Sunak said creative tax reliefs would be made “more generous”, telling MPs: “On current plans, the tax relief for museums and galleries is due to end in March next year – just as exhibitions are starting to tour again, so I’ve decided to extend it, for two years, to March 2024.”

He added: “To support theatres, orchestras, museums and galleries to recover from Covid, the tax reliefs for all those sectors will – from today until April 2023 – be doubled.

“And they won’t return to the normal rate until April 2024.”

Mr Sunak said the tax relief for culture is worth almost quarter of a billion pounds.

Funding for affordable housing

Banbury Cake: Rishi Sunak has committed to a £24bn multi-year housing settlement. (PA)Rishi Sunak has committed to a £24bn multi-year housing settlement. (PA)

Rishi Sunak has committed to a £24bn multi-year housing settlement, saying £11.5bn will go towards building new affordable homes.  

£1.8bn will go towards work on brownfield land which will mean one mollion more homes can be built.

Another £5bn will also be spent on removing unsafe cladding from buildings. 

Transport funding and road upgrades

Banbury Cake: Rishi Sunak said the funding is enough to fill one million more potholes a year. (PA)Rishi Sunak said the funding is enough to fill one million more potholes a year. (PA)

Rishi Sunak, on transport funding, said £2.6 billion is committed via a “long-term pipeline” for more than 50 local road upgrades while more than £5 billion is being committed to local roads maintenance.

He told MPs: “Enough to fill one million more potholes a year.”

Mr Sunak said funding for buses, cycling and walking totals more than £5 billion adding: “The Prime Minister promised an infrastructure revolution – this Budget delivers an infrastructure revolution.”

Inflation likely to rise further

Banbury Cake: Autumn Budget 2021 GDP growth forecast. (PA)Autumn Budget 2021 GDP growth forecast. (PA)

Rishi Sunak says inflation was 3.1% in September and "is likely to rise further".

He said “demand for goods has increased more quickly than supply chains can meet” as economies around the world reopen, while global demand for energy has also “surged”.

Mr Sunak said: “In the year to September, the global wholesale price of oil, coal and gas combined, has more than doubled. The pressures caused by supply chains and energy prices will take months to ease.

“It would be irresponsible for anyone to pretend that we can solve this overnight. I am in regular communication with finance ministers around the world and it’s clear these are shared global problems, neither unique to the UK, nor possible for us to address on our own.”