Prosecco and beer could get cheaper after today's budget
Rishi Sunak has given his second budget of 2021
Last updated 27th Oct 2021
Chancellor Rishi Sunak has delivered his budget today including big changes on alcohol duties, changes in Universal Credit for those who are working and a levy on property developers to help remove unsafe cladding.,
The Chancellor painted a positive picture about the health of the economy as it recovers from the pandemic.
He said the Office for Budget Responsibility (OBR) had forecast a faster bounce back, with growth expected to be 6.5% this year rather than the 4% previously expected.
But he acknowledged rising inflation, with the OBR expecting it to average 4% over the next year.
Highlights from the 2021 Budget announcements
There were a number of announcements that were made ahead of today's budget including a pay freeze on public sector workers being cancelled and increases in the National Living Wage.
Here are the other big announcements from Chancellor Rishi Sunak's budget today (27th October).
Prosecco and beer to get cheaper
The tax system for alcohol is to be changed, the new system means the stronger the drink, the higher the tax.
Mr Sunak said 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.”
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.”
The duty on draught beer and cider is also going to be cut by 5%.
Mr Sunak said the reforms will come into effect in February 2023.
On his final announcement on alcohol duty, the Chancellor said: “I can confirm that the planned increase in duty on spirits like Scotch Whisky, wine, cider and beer, will all, from midnight tonight, be cancelled. That’s a tax cut worth £3 billion.”
Tax relief for pubs, clubs, hotels, restaurants and cinemas
The Chancellor announced that businesses in the retail, hospitality & leisure sector will get a 50% discount on business rates with eligible concerns able to claim a discount on their bills of up to a maximum of £110,000.
Fuel rate increases cancelled
As expected, Rishi Sunak said the planned fuel duty rise would be cancelled.
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.”
Universal Credit change
After widespread condemnation of the decision to cut £20 a week from Universal Credit, Mr Sunak set out plans to reform the benefit to enable claimants to earn more without losing as much of it – a measure he claimed amounts to a £2 billion tax cut for the lowest paid.
The chancellor 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.
Money for Scotland, Wales and Northern Ireland
Devolved administrations will be given the “largest block grants” since 1998, according to the Chancellor, with an increase to Scottish Government funding in each year rising by an average of £4.6 billion, £2.5 billion for the Welsh Government, and £1.6 billion for the Northern Ireland Executive.
'Levelling Up' cash for regions
Rishi Sunak said he was allocating the first round of bids from the “Levelling Up Fund”, noting it would be £1.7 billion to “invest in the infrastructure of everyday life in over 100 local areas”.
He added: “With £170 million in Scotland, £120 million in Wales, and £50 million in Northern Ireland, this will benefit the whole United Kingdom.”
Mr Sunak said the Government is backing projects in Aberdeen, Bury, Burnley, Lewes, Clwyd South and Stoke-on-Trent – along with Labour areas of Ashton under Lyne, Doncaster, South Leicester, Sunderland and West Leeds.
Levy on property developers for un-safe cladding removal
Mr Sunak confirmed a levy will be placed on property developers with profits over £25 million at a rate of 4% to help create a £5 billion fund to remove unsafe cladding.
Funding for local and national government
The Chancellor said local government will get new grant funding over the next three years of £4.8 billion, the largest increase in core funding for over a decade.
MrSunak also promised that every Whitehall department will receive a “real terms rise in overall spending” as part of the Spending Review, amounting to £150 billion over this Parliament.
Childcare and education funding
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.
“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.
Labour’s shadow justice secretary David Lammy tweeted:
Mr Sunak said the Spending Review also provides “£4.7 billion by 2024-25” for schools.
Schools will get an extra £4.7 billion by 2024/25 with just under £2 billion of new funding to help schools and colleges to recover from the pandemic according to the Chancellor
The Chancellor also announced £300 million for “A Start for Life” parenting programmes, with an extra £170 million by 2024/25 going into paying for childcare.
Funding for adult education was also announced, with a UK-wide £560 million numeracy programme, Multiply, being set-up to help improve basic maths skills among millions of adults, Rishi Sunak confirmed.
Tax relief extended for museums and galleries
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 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.”
Transport funding
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.”
Money to help courts recover from pandemic
The Chancellor said he is providing an extra £2.2 billion for courts, prisons and probation services, including £500,000 to reduce the courts backlogs.
Overseas aid
The Chancellor said overseas aid would return to 0.7% of national income in 2024-25, before the end of the Parliament.
Labour's budget response
Responding to the measures, shadow chancellor Rachel Reeves said: “The Chancellor in this Budget has decided to cut taxes for banks.
“So at least the bankers on short-haul flights sipping Champagne will be cheering this Budget today.”