Wednesday 3 November 2021
What you need to know about the UK’s Budget announcement
Last month UK Chancellor Rishi Sunak announced the Autumn 2021 Budget. The announcement presented a new perspective on the UK’s green economy and the climate crisis. New proposals were also announced that will affect businesses of all sizes, across all industry sectors.
The Chancellor is using this updated autumn Budget to create an economy ‘fit for a new age of optimism’. Including new proposals surrounding boosts in wages, investing in skills and increasing overall productivity as the UK progresses into a greener future, and recovers from the Coronavirus pandemic.
So, let’s take a look at some of the main points addressed in this Budget announcement.
Business rates
The Chancellor announced that there will be a temporary 50% cut to business rates, up to a maximum of £110,000. In addition, the planned annual increase in rates for all firms in 2022 has now been cancelled, for the second year in a row.
Business rates are charges on commercial premises. These rates are based on the value of the property, which are divided into bands set by central government. They are devolved across the UK nations. Scotland, Wales and Northern Ireland could mirror the changes in England. Or, alternatively, they may keep their current business rates and spend the money in other ways. All while staying in line with the government’s aim to ‘build back better’.
Fuel duty
Fuel duty is a tax imposed on purchases of petrol diesel and other fuels used in vehicles for heating. This has been frozen at £57.95 per litre since 2011. And while many people expected it to increase, the price has remained the same.
This decision was made after recent fuel prices hit an all-time high. To keep cost of living low and help businesses to get back on their feet, the Chancellor explained that he is not ‘prepared to add the squeeze on families and small businesses’.
This also comes as a big relief for UK motorists, who have had to deal with shortages during the recent fuel crisis. Allowing fuel to stay at the same price while the supply recovers means that families and businesses can avoid yet another strain on their finances.
Boost in wages
The government plans to ease a cut to Universal Credit, by tweaking the taper rate. This will lessen the financial impact for those earning in the lower wage bracket. It comes after the government had previously cut the £20-a-week uplift, which had been provided for during the pandemic.
The minimum wage has also increased, from £8.91 to £9.50 an hour, which is an increase of 6%.
Public sector workers will also see their current pay freeze lifted.
Government loan schemes
The state-backed recovery loan scheme will also be extended to continue to assist businesses who are still feeling the effects of the pandemic. The programme allows businesses to borrow up to £10 million, with the state backing 80% of the money. This includes funding for innovative, technologically advanced and green assets, which can sometimes find it difficult to attract funding from traditional lenders.
£817 million will be spent on the electrification of vehicles, along with £620 million to support the transition to electric vehicles. £3.9 billion will also be spent towards the decarbonisation of buildings.
Funding will also continue for the Start Up Loans Scheme, that provides funding and mentoring to people who want to start their own business.
A ‘Levelling Up Fund’ will invest £1.7 billion in local areas across the UK, with the Government backing projects in Aberdeen, Bury, Burnley, Lewes, Stoke-on-Trent, Doncaster, West Leeds and other locations. £24 billion has also been set aside for housing, including £11.5 billion for 180,000 affordable homes.
Green investment relief will also be introduced to encourage businesses to adopt green technologies, such as solar panels and heat pumps.
But according to the Office for Budget Responsibility (OBR), government borrowing during the pandemic was at the highest levels since the Second World War, reaching 15.2% of GDP. Although borrowing levels have since decreased.
How can EIC help?
Staying ahead of the curve is essential for businesses of all sizes. And with such an influx of new legislation surrounding government budgets, it can be confusing and at times worrisome. And with a number of different options, it is important that you make the right decision for your business.
At EIC, we can assist you in creating a realistic and actionable Carbon Management Plan, that can also incorporate net zero goals. With a combination of smart procurement, bill validation and energy efficiency solutions, we are able to help you understand your business better and become more sustainable. We are already partnering with leading UK private and public sector organisations – supporting them in the transition to a net zero future.
Get in touch today to find out more about how EIC can help you understand developing legislation and budgeting.
