The Chancellor will undoubtedly be pleased with the headlines as the nation digests the reality of Wednesday’s budget, and thinktanks have had the chance to look underneath the hood.
Rishi Sunak’s plans to ‘Splash the cash’ may provide a short-term boost for his intended ‘age of optimism.’ However, pots of money are being handed out against the backdrop of the biggest tax rises in over 25 years, many of which haven’t yet kicked in, not to mention the fact that economic uncertainty is still looming post pandemic.
In between talk of the Chancellor’s ambitious spending plans and how much a pint or a nice glass of fizz might cost us in the forthcoming year, here’s three budget announcements to take note of…
As of April, the minimum wage will rise from £8.91 to £9.50 an hour for any worker over 23. The Chancellor pointed out that this equates to an extra £1,000 a year for a full-time worker.
The minimum wage for people aged 21-22 will rise from £8.36 to £9.18 an hour and the apprentice rate will increase from £4.30 to £4.81 an hour.
However, what this equates to is different to the reality of what will land in people’s pockets. With a pending inflation hike, recent cuts to Universal Credit (despite yesterday’s changes to its format) and an imminent rise in National Insurance, for millions of workers this is more likely to mean being about £200 per year better off.
Slightly better news for those working in the public sector, for whom the last few years has seen a freeze on annual pay rises. The Chancellor has confirmed that this freeze is now over.
The Chancellor announced £7billion in business rate cuts as well as a 50% discount on business rates for another year for a number of retail and hospitality venues. Labour recently pledged at their Party conference to scrap them altogether, something the Treasury has rebutted with a pledge to, over time, make the system “more fair and timely.”
The Chancellor also announced a business rates improvement relief, meaning that from 2023, any business will be able to make property improvements for 12 months and pay no extra business rates.
And, finally, how much is it now going to cost to have a pint and go on holiday?
Sunak promised a new, lower rate of air passenger duty on domestic flights, arguably mostly benefitting businesses who need to mobilise employees around the country. However, this has led the green lobby to question how this fits with the government’s ambitions to tackle climate change.
There were also a series of reforms to alcohol duties, including a cut in the cost of a pint by 3p, and investment in the nation’s pubs, worth £100 million a year. Meanwhile, taxes on sparkling wines such as Champagne and prosecco, will be reduced to the same level as still wines, which is a silver lining for many. This ends what Sunak called an “irrational” 28% duty premium.
Fuel duty was touted to be on the rise for the first time since 2011 but the Chancellor has paused this to reflect current fuel prices.
The road ahead
Whilst analysis over what a high spend high tax budget means for Conservatism begins, the Labour Party are focusing on the cost of everyday living which they say is “still a real challenge for families and pensioners around the country” after Sunak’s Budget.
Whatever view is taken, with pending rising inflation and a potential interest rate rise, the reality of how healthy people feel their pockets are remains to be seen.