Stick with Guido for live updates of Rishi’s budget announcements. Stay tuned…

Inflation

• Rishi says the house will recognise the “challenging backdrop” of inflation.
• OBR expects inflation to hit 4% next year, up from 3.1% currently
• Rishi blames this on a global rise in demand for goods, supply chains can’t keep up
• He also cites the surge in demand for energy, with oil coal and gas more than doubling
• “Will take months to ease”
• Rishi has written to BoE reaffirming their remit to keep inflation low & stable

State of the finances

• OBR expect economy to return to pre-Covid level at the turn of the year
• Growth expected to be 6.5% this year followed by 6% in 2022
  • 2022: 6%
  • 2023: 2.1%
  • 2024: 1.3%
  • 2025: 1.6%
• Unemployment to peak at 5.2%, way down on the 12% originally forecast
• OBR upgrades forecast for business investment
• OBR revised down their scarring assumption from 3% to 2%
• OBR describe Rishi’s plan as “remarkably successful” 

New charter for budget responsibility 

• Two new fiscal rules:
  • Underlying public sector net debt must be falling
  • In normal times the state should only borrow to invest in future growth and prosperity – day-to-day spending must be met by taxation
  • Supplemented by targets to spend 3% of GDP on capital spending
• The house will vote on Rishi’s new charter
• OBR report today that all Rishi’s fiscal rules have been met

Fiscal judgments

1. Will meet fiscal rules with a margin to protect against external economic risk
2. Continue supporting working families
3. Will meet obligations to the world’s poorest – 0.7% overseas aid will return from 2024/25
4. Increases total department spending by £150 billion – the largest increase this century with spending growing 3.8% a year in real terms. A real terms rise in overall spending for every single department.

Healthcare

• Health capital budget to rise from £133 billion by £44 billion
• Better newborn screening and wider R&D improvement
• More operating theatres
• 100 community diagnostic centres
• Local government to get new grant funding of £4.8 billion

Housing

• Multi-year housing settlement totally £24 billion
• £11.5 billion for affordable homes
• £1.8 billion in regenerating brownfield sites unlocking 1 million new homes
• £640 million for rough sleeping and homelessness

Children

• First 1001 days of a child’s life are the most important – £300 million for a start-for-life programme for families
• Funding to create a network of family hubs
• Pay childcare providers more
• £150m for training and development for early years workforce
• £200m in supporting families programme
• £200m to continue the holiday activity and food programme

Education

• £4.7 billion by 24/25. Will restore per pupil funding to 2010 levels in real terms. A rise of £1500 per pupil
• SEND children – more than tripling the amount they invest to more than triple the amount of new school places
• £2bn of new funding to help schools and colleges.
• £5bn total

Local

• £560m for youth services
• £200m for football pitches
• First round of funding for levelling up fund – £1.7bn to invest in the infrastructure of everyday life – £170m in Scotland, £120m in Wales and £50m in NI.
• £800m in local culture
• Tax relief on museums and galleries will be extended from March next year to March 2024
• Tax relief from the whole sector from today to 2023 will be doubled – won’t return to normal until 2024.

Economic growth

• Got to tackle the problem of uneven economic geography
• £20 bn a year on R&D – an increase of 50%
• This is in addition to the cost of the R&D tax reliefs
• R&D relief will be expanded to include file computing & data costs

Immigration

• Today’s budget confirms eligibility criteria for the new scale-up visa

Taxes

• Shipping tonnage tax will be reformed to reward companies for adopting the UK shipping flag, “entirely fitting for a country with such a proud maritime history as ours”. 
• Air passenger duty reformed. Domestic flights will be subject to a new lower rate of air passenger duty. A good look the week of COP?
• A new ultra long haul band on air passenger duty of £91. Tackling pollution.
• £1m annual investment allowance extended from December to March 2023
• Bank surcharge within corporation tax will be retained, increasing from 27% to 28%
• Small challenger banks, improving competition, the annual allowance will be raised to £100m
• Rishi attacks Labour’s business rates abolition policy. Rates will be more frequently reevaluated every three years
  • A new investment relief to encourage green technologies investment like solar panels
  • New business rates improvement relief from 2023. Property improvements won’t be charged business rates for 12 months
• Next year’s planned increase in the multiplier will be cancelled – £4.6 billion saving
• Announcing a new 50% business rates discount for those in hospitality, retail and leisure up to a maximum of £110,000