RISHI Sunak today outlined how the UK government plan to help the 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.”

The National Wales: 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)

Cash for Wales

Devolved administrations will be given the “largest block grants” since 1998, according to the Chancellor, with an increase to Welsh Government funding in each year rising by an average of £2.5 billion, along with £4.6 billion for Scotland and £1.6 billion for the Northern Ireland Executive.

Universal Credit 'tax'

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

He said: “The Universal Credit taper withdraws support as people work more hours. The rate is currently 63 per cent, 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 one per cent, not by two per cent – but by eight per cent.”

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 per cent 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.”

The National Wales: 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 per cent 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

The National Wales: 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.

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 per cent down to 5.2 per cent, 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 four per cent to 6.5 per cent. The OBR then expect the economy to grow by six per cent in 2022, and 2.1 per cent, 1.3 per cent and 1.6 per cent over the next three years.

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

“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.

More cash for health, education, housing, and roads, as well as rate relief - in England

Mr Sunak also promised an extra £44 billion for the NHS, £4.7 billion for schools by 2024/25, and £24 billion for hosuing - of which £11.5 billion will go towards building new affordable homes.

However, as health, education, and housing are devolved, these will not apply to Wales - although the Welsh Government will be in line for extra funding as a result.

Meanwhile, a total of £7.6 billion will go towards road repairs and maintenance, while the retail, hospitality, and leisure sectors will be able to apply for up to 50 per cent off their business rates, up to a maximum of £110,000. Tax relief for museums and galleries will also be extended to April 2024.

However, again, these areas are devolved, so these will not apply to Wales.

Inflation likely to rise further

The National Wales: Autumn Budget 2021 GDP growth forecast. (PA)Autumn Budget 2021 GDP growth forecast. (PA)

Rishi Sunak says inflation was 3.1 per cent 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.”

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