What Rishi Sunak’s new budget means for people in Greater Manchester

Rishi Sunak has said he wants to be honest about the government’s plans for fixing the public finances.

The chancellor says there has been ‘acute damage’ to the economy, with more than 700,000 people losing jobs and the economy shrinking by 10% – the largest fall in 300 years.

Borrowing has also been as high as during wartime.

He said: “It’s going to take this country, and the whole world, a long time to recover from this extraordinary situation.”

Here are the key points from his 2021 budget announcement….

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Furlough

• Sunak explains that 1.8 million fewer people are expected to be out of work than previously thought, with the peak at 6.5% down from the forecasted peak of 11.9%.
• Furlough is set to be extended until the end of September this year, however, firms will be asked to contribute 10% of employee’s wages in July and 20% in August and September as the scheme is gradually phased out.
• A fourth grant worth 80% of average trading profits up to £7,500 covering February to April that will help self-employed people.
• The £20 increase in universal credit will extend for six months

Business Support

• Total cash support to businesses has reached £25bn. A further £5bn restart grant has now been confirmed to help companies get going after lockdown.
• Hospitality and leisure businesses will pay no business rates for three months, then discounted for the remaining nine months of the year by two-thirds.
• The 5% VAT cut will be extended to the end of September and gradually increased at 12.5% for six months before returning to the normal rate in April 2022.

David Dixon/Geograph

Housing

• The stamp duty holiday will be extended on properties up to £500,000 to the end of June. It will return to normal levels from October 1st.
• Mortgage guarantees were also confirmed to help first-time buyers access 95% mortgages, with just 5% deposits.

Public Finances

• The government will take a ‘fair’ approach to ‘fixing the public finances’ the chancellor confirms.
• There will be no increase in national insurance, income tax or VAT.
• The personal allowance will remain at £12,750 until 2026 and the higher rate will increase to £50,270 next year.
• Inheritance tax threshold, pensions lifetime allowance, annual exempt allowance from capital gains tax and VAT exemption thresholds will all be frozen.
• New minimum wage rates come into force in England on April 1st. Basic rate workers will see a 2.2% increase, with the National Living Wage rising to £8.91 an hour.

David Dixon/Geograph

Borrowing

• The budget deficit will reach £355billion this year (17% of GDP) – the highest level in peacetime.
• Sunak said: “It’s going to be the work of many governments over many decades to pay it back, just as it would be irresponsible to withdraw support too soon, it would also be irresponsible to allow our future borrowing and debt to rise unchecked.”

Growth

• The chancellor explains that the economy will recover more quickly than previously thought.
• GDP will grow by 4% this year and 7.3% next year according to official forecasts.