UK chancellor Rishi Sunak has said the UK Government will do 'whatever it takes' to fix the UK Economy, but not everything announced in his budget will apply to Wales.

Key announcements:

  • Furlough scheme extended until September 2021
  • £20-per-week Universal Credit increase extended for six months
  • Basic rate of income tax threshold rises to £12,570 next year 
  • No income tax or VAT rises 
  • 25% corporation tax increase for UK’s biggest companies by 2023
  • Funding for Holyhead Hydrogen Hub and Welsh city and growth deals.
  • £19 million for domestic violence programmes
  • Planned increases on fuel and alcohol duty scrapped

Speaking in the House of Commons, the chancellor said Covid has “fundamentally altered” our way of life, pointing to the 700,000 people who have lost jobs as the UK economy shrank by 10%.

Mr Sunak confirmed the UK-wide furlough scheme will be extended until the end of September, with employees continuing to receive 80% of their salaries.

As businesses reopen, they will be asked to contribute to the cost of paying their employees with a contribution of 10% in July and 20% in August and September.

On Universal Credit, an increase of £20-per-week for claimants is extended for a further six months, while the national minimum wage will increase to £8.91 an hour.

Mr Sunak also announced that the self-employment income support scheme will be extended, with a fifth grant available from May.

The basic rate of income tax rises to £12,570 next year, with the highest threshold frozen at £50,270 until 2026. 

Inheritance tax thresholds, the pensions lifetime allowance, and the annual exempt amount in capital gains tax will be maintained at current levels until April 2026.

Corporation tax on profits over £250,000 will increase from 19% to 25% by 2023. Rates will be tapered on profits above £50,000 and small businesses with profits of £50,000 or less will be maintained at the current rate of 19%

UK-wide VAT reduction of 5% to tourism and hospitality sector will continue until September 30, 2021.

On duties, Rishi Sunak told MPs: “I can confirm that the planned increases in duties for spirits, wine, cider and beer will all be cancelled.

“Right now, to keep the cost of living low, I’m not prepared to increase the cost of a tank of fuel. So the planned increase in fuel duty is also cancelled.”

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In Wales specifically, £4.8million will be provided for a hydrogen hub in Holyhead to pilot the creation of hydrogen using renewable energy and its use as a zero emission fuel for Heavy Goods Vehicles.

Up to £30 million will be provided for the construction of the Global Centre of Rail Excellence, a train testing facility being driven by the Welsh Government near Onllwyn in Neath Port Talbot.

Three Welsh City and Growth Deals in Swansea Bay, North Wales and Mid Wales will get an extra £5.4 million, £4.4 million and £1.9 million respectively.

Eight freeports have been announced in England, and Mr Sunak said discussions are continuing between the UK and Welsh Governments to ensure the delivery of freeports in Wales.

£19 million for domestic violence programmes to support victims has also been announced for England and Wales.

How did the opposition respond?

Labour leader Sir Keir Starmer suggested that the Budget papers over the cracks, rather than rebuilding the foundations of the economy.

He told the Commons: “After 11 months in this job, it’s nice finally to be standing opposite the person actually making decisions in this Government.

“The trouble is it’s those decisions that have left us with the mess we find today – the worst economic crisis of any major economy in the last 12 months, unemployment at 5% and as the Chancellor said, forecast to rise to 6.5%, with debt of over £2 trillion.

“After the decisions of the last year and the decade of neglect, we needed a Budget to fix the foundations of our economy, to reward our key workers, to protect the NHS and to build a more secure and prosperous economy for the future.

“Instead, what we got was a Budget that papered over the cracks rather than rebuilding the foundations.”

Plaid Cymru’s Treasury spokesperson, Ben Lake, MP for Ceredigion, said: “This is a Budget of half measures and quick fixes – a Budget that does not begin to measure up to the scale of the challenges we face.

“The decision to delay the cut to Universal Credit instead of securing incomes in the long-term by making it permanent will lead to 26,000 families in Wales not being able to afford essentials in six months’ time.

“Meanwhile, hundreds of thousands of self-employed remain excluded, despite the welcome extension of the self-employment scheme.

"After acknowledging the errors of the past year by including those with 2019-20 tax returns, the Government must now provide compensation to those deprived of support for an entire year due to the Treasury’s decisions."

The Welsh Government is expected to make a statement on the Chancellor's deal later this afternoon.