Speaking in Parliament today, Chancellor Rishi Sunak said that he would continue to ‘do whatever it takes’ during the pandemic.
The Government was borrowing ‘an amount comparable only to the amount we borrowed during the world wars’, he said, announcing an extra £65 billion extra in borrowing this year and next.
In total the Government will have borrowed £400bn to support the country during the coronavirus pandemic.
Mr Sunak said that 700,000 people have lost their jobs during the pandemic, and the economy has shrunk by 10 per cent - the largest fall in 300 years.
‘It’s going to take this country, and the whole world, a long time to recover from this extraordinary economic situation. But we will recover,’ he said.
As had been already trailed before his speech today, both the furlough scheme and the self-employed support scheme will be extended until September.
The £20 uplift to Universal Credit will also be extended until September.
In his response to the Chancellor's speech, Labour leader Keir Starmer accused the Government of 'papering over the cracks', and criticised the omission of investment in social care.
'We heard nothing about a long-term plan to fix social care. The chancellor may have forgotten about it but the Labour party never will.'
Budget - key points
Business support
Business rates relief extended -
- In line with retail, hospitality and leisure businesses, nurseries in England will qualify for 100 per cent business rates relief from 1 April 2021 to 30 June 2021.
- This will be followed by 66 per cent business rates relief from 1 July 2021 to 31 March 2022, capped at £2 million per business for properties that were required to be closed on 5 January 2021, or £105,000 per business for other eligible properties.
- New recovery loan scheme to offer businesses loans from £10,000 to £10m.
- Help to Grow – management and digital training for small businesses, with Government paying 90 per cent of costs.
Furlough
- Furlough extended until September
- Employees will continue to receive 80 per cent of their wages until the scheme ends, but companies will be asked to contribute 10 per cent in July and 20 per cent in August and September as the scheme is gradually phased out.
- Self-employment income support scheme has also been extended. The fourth grant will cover February to April, worth 80 per cent of average trading profits up to £7,500.
- 600,000 more people now eligible for the fourth and fifth grants, who weren’t eligible last year, because they had not been trading long enough.
Universal credit
- £20 a week increase in universal credit extended for six months
VAT
- 5 per cent reduced rate of VAT will be extended until the end of September. Gradually increased, at 12.5 per cent for six months, before returning to the standard rate from April 2022.
Apprenticeships
- Doubling incentives for businesses to hire new apprentices to £3,000 per hire.
Sector response
Purnima Tanuku, chief executive of the National Day Nurseries Association (NDNA), said that the business rates announcement would ‘be a huge source of relief’ for nurseries, and urged the Government to make this permanent.
‘This will help nurseries in the short term who are struggling with low attendance levels and rising operating costs, but the relief really should be made permanent for these businesses. Business rates remain an unfair tax on space which nurseries give children to grow, learn and develop.
‘But with 58 per cent of nurseries telling us they may not make it to the end of the term, they clearly need urgent support now to plug the gap created by low attendance and higher costs. There were no specific measures for childcare settings to support them with these. Without more financial support we are likely to see more closures and ultimately, we risk there being insufficient childcare places for all children.
‘The furlough scheme has been a vital lifeline to childcare providers and also to parents but as demand increases the need for this in nurseries will reduce. We have previously seen a Job Retention Bonus in place to support employers at the end of the furlough scheme. Over 70 per cent of the early years workforce have been furloughed at some point. They are skilled workers who are vital to children’s development and employers should be supported to retain them.
‘As people look at their workforce needs and consider the future, support for apprenticeships and trainee positions will help employers cover some of the costs and extra work involved in taking on these roles and developing future early years professionals and leaders.
‘Support for investment is welcome but many early years providers are focused on survival and sustainability for the coming months. The Chancellor has promised to do whatever it takes to protect businesses and jobs. Early years remains critical to children’s life chances as well as the wider economy for working families. “Whatever it takes” would have included overturning the spring term funding decision which has hit settings’ funding as well as offering targeted financial support to help settings weather this storm.’
Commenting, Neil Leitch, Early Years Alliance Chief Executive, said it was ‘both disappointing and hugely frustrating’ that there was no specific financial support for the early years sector in the budget.
‘While the extension of the business rates holiday will provide welcome relief to some providers, this is only one piece of a very complex financial puzzle, and there are many in the sector who will not benefit at all from today's announcement,’ he said.
‘With early years attendance levels still well below normal, and ongoing additional costs associated with coronavirus, urgent help is needed to ensure our vital sector can continue delivering quality care and education to the children and families that need it.
‘Limited financial support throughout this crisis, combined with years of sector underfunding, has already led to the unnecessary closure of nurseries, pre-schools and childminders across the country. Without urgent action, this trend will undoubtedly continue.
‘That is why, on top of emergency support during the pandemic, Government must undertake a full review of early entitlement funding to ensure that the sector is able to remain sustainable in the long term.’
Kevin Courtney, joint general secretary of the National Education Union, said, ‘It is short-sighted and disappointing that the Government continues to ignore the funding pressures the education sector faces. The Government has said schools are a “national priority”, yet this Budget has provided schools with no new resources to manage coronavirus. Once again, this Government has failed to pay attention to the educational professionals who see first-hand, every day, the detrimental impact under-funding of our education system has on the children and young people they teach or care for.’
Anna Feuchtwang, chief executive of the National Children’s Bureau, said, ‘The full effect of the pandemic on families’ finances will only be fully appreciated as the furlough scheme and other measures that protect jobs are wound up at the end of September. Yet this is the moment that the Chancellor will claw back £20 per week from struggling families who rely on Universal Credit to survive. This extra money must be made a permanent increase to benefits, to counter the soaring levels of child poverty seen even before the pandemic struck and should be offered to those living on other legacy benefits too.’
‘While measures to improve apprenticeship and trainee schemes will be welcomed by young people facing a deeply uncertain future, the Chancellor failed to acknowledge the full impact of the disruption to children’s lives over the past year. We urgently need a plan that supports children to catch-up for lost school time, which factors in the emotional and psychological stresses of a year growing-up in isolation and chaos.’
While extra money for domestic violence programmes was welcome, investment in children’s social care is long overdue, she added.
‘Local authorities need to be able to meet the increasing demands for their help, something they have found increasingly difficult to do given the steady erosion in funding for children’s services over the last decade.’
Community assistant general secretary (Voice Community education and early years section) Deborah Lawson said, 'For the education and early years sector, this is a Budget remarkable more for what it didn’t include than for what it did.
'While we welcome the extension of the furlough scheme, the lack of investment in our children and young people and those who work with them is shocking.
'The Government seems to have forgotten that without schools being open for their children, thousands of NHS and other key workers and parents of vulnerable children would not have been able to work. Without nurseries being open to all children, they and even more parents would have been unable to work.'
- The budget documents are available here
