Budget 2021 - comment and details
key update from John Bridge OBE DL

There’s much to welcome in this Budget for business as the Chancellor has listened and acted on the calls made for immediate support to help struggling businesses reach the finishing line of this gruelling marathon and to begin their recovery. Extensions to furlough, business rates relief and VAT reductions give firms a fighting chance not only to restart, but also to rebuild.

We particularly welcome the massive ‘super deduction’ investment incentive that the Chancellor has put in place for the next two years. This responds directly to the call to encourage those businesses that can to invest and grow.

While no business will relish paying higher rates of Corporation Tax in future, the impact of the Chancellor’s tough decision is blunted by the big new incentives for investment, lower rates for the smallest firms, and the extension of Coronavirus support measures in the short term.

This Budget provides reassurance to businesses, provided that they are able to restart and rebuild according to the Government’s road map. If firms face unexpected bumps in the road, the Chancellor must be prepared to take action until the economy is firing on all cylinders again.

Accessing finance remains crucial to the lifeblood of a business and so the announcement of a new loan scheme to succeed CBILS and BBLS is welcome. The acid test for the new scheme will be whether it is able to support the recovery by getting credit flowing to the firms who most need it.

The scheme must be right from day one to ensure that businesses and banks can use it to help SMEs return to growth. Businesses will need an approach to operation of the new scheme that is clear, consistent and considerate to the impact of the pandemic on their financial position.

To boost productivity, businesses of all sizes need to invest more in skills and innovation. Funded access to high quality, flexible management training will help SMEs maximise the growth potential of innovation, but it must also give managers the skills to understand the training and development needs of its adult workforce and increase the digital and technical skills needed for the rapidly changing workplace.

Apprenticeships and jobs with training opportunities have been severely impacted by the pandemic, particularly for young people.

We welcome this additional investment in traineeships, employer incentives and more flexible apprenticeships that will help businesses create more high-quality earning and learning opportunities for people and boost skills in the workplace.

Despite the widening of the self-employment support scheme, there are still many businesses and individuals who have, through no fault of their own, been unable to access any government support since the start of the pandemic. Many require help if they are to navigate a difficult few months ahead before the economy is able to reopen more fully.

Here is a summary of the main points:

Coronavirus support
  • Furlough to be extended until the end of September
  • Government to continue paying 80% of employees’ wages for hours they cannot work
  • Employers to be asked to contribute 10% in July and 20% in August and September
  • 600,000 more self-employed people will be eligible for help as access to grants is widened
  • £20 uplift in Universal Credit to be extended for another six months
  • Minimum wage to increase to £8.91 an hour from April.
State of the economy and public finances
  • UK economy forecast to return to pre-Covid levels by middle of 2022
  • Annual growth set to rebound by 4% this year, followed by 7.3% growth in 2022
  • Unemployment expected to peak at 6.5% next year, lower than 11.9% previously predicted
  • UK to borrow a peacetime record of £355bn this year.
  • Borrowing to total £234bn in 2021-22
  • Debt as a share of GDP to fall from 4.5% next year to 3.5% in 2022-23.
  • No changes to rates of income tax, national insurance or VAT
  • Personal income tax allowance to be frozen at £12,570 from 2022 to 2026
  • Higher rate income tax threshold to be frozen at £50,270 from 2022 to 2026
  • Corporation tax on company profits to rise from 19% to 25% in April 2023
  • Super-deduction - companies investing can reduce tax bill by 130% of cost of the investment
  • Rate to be kept at 19% for about 1.5 million smaller companies.
Business, digital and science
  • Incentive grants for apprenticeships to rise to £3,000 and £126 for traineeships
  • VAT cut for hospitality firms to be maintained at 5% until September
  • Interim 12.5% rate to apply for the following six months
  • Business rates holiday for firms in England will continue from April until June
  • £5bn in re-opening grants for non-essential businesses of up to £6,000 per premises.
Health and education
  • £19m for domestic violence programmes, funding network of respite rooms
  • £40m of funding for Thalidomide victims and lifetime support guarantee.
The arts and sport
  • £400m to help arts venues in England, including museums and galleries, re-open
  • £300m recovery package for professional sport and £25m for grassroots football.
The full Budget Report - “Protecting the Jobs and Livelihoods of the British People” can be found here.

Contact the Chamber

01223 237414 •  chamber@cambscci.co.uk
Cambridgeshire Chamber of Commerce
Clifford House, 2 Station Yard, Oakington, Cambridge, CB24 3AH