Budget: Sunak unveils high spending and business rates cutting post-Covid Budget
Rishi Sunak has increased day-to-day departmental spending by £150bn in today’s Budget, in what has been billed as the largest increase in the last century, and slashed business rates.
Sunak said the £150bn boost would see every government department’s budget increase, while the tax cuts will see business rates slashed by £7bn.
The chancellor also said that “by the end of this parliament, I want taxes to be going down not up”, signalling potential future cuts in corporation tax or income tax.
The large spending increases will come as something of a surprise, after there was much speculation that today’s Budget would not see big increases in day-to-day spending in the wake of the government’s record spending during Covid-19.
It comes off the back of upgraded economic forecasts from the Office for Budget Responsibility, which suggest GDP will increase by faster than expected this year.
“Today’s Budget increases total departmental spending over this Parliament by £150bn. That’s the largest increase this century, with spending growing by 3.8 per cent a year in real terms,” he said.
“As a result of this Spending Review, and contrary to speculation there will be a real terms rise in overall spending for every single department.”
This includes £11.5bn to the Ministry of Housing, Communities and Local Government to build up to 180,000 new affordable homes and a further £5bn to remove unsafe cladding.
There will be £3.8bn for “the largest prison-building programme in a generation” and £2.2bn for courts, prisons and probation services.
The Department for Education will get an extra £4.7bn for schools by 2024-25, while the Department for Digital, Culture, Media and Sport will be given £200m “to build or transform up to 8,000 state-of-the-art community football pitches across the UK”.
“Whilst today’s Budget delivers historically high levels of public spending, its success will be measured not by the billions we spend but by the outcomes we achieve and the difference we make to people’s lives,” Sunak said.
“The budgets are set, the plans are in place, the task is clear. Now we must deliver – because this isn’t the government’s money, this is taxpayer’s money.”
Sunak announced that the government would keep the business rates system, but would enact “key reforms to ease the burden and create stronger high streets”.
The changes will see business’ have their rateable value re-evaluated every three years, tax incentives for investment spending and next year’s planned increase in the business rates multiplier will be scrapped.
Businesses in the retail, hospitality, and leisure sectors that have been hardest hit by Covid-19 will also get a 50 per cent rates discount.
“We’re unleashing the dynamism and creativity of British businesses with a simpler, fairer, more competitive tax system,” the chancellor said.
“The biggest business tax cut in modern British history.”
Sunak also confirmed a cut to the bank surcharge from 8 to 3 per cent to counteract future corporation tax rises, while alcohol duty has been slashed.
Pubs will benefit from a 5 per cent cut in alcohol duties for “draught containers over 40 litres”, while Rosé, fruit ciders, liqueurs, lower strength beers and wines will have their duty slashed.
A planned rise in fuel duty will also be scrapped, while duty on domestic flights has also been cut.