The fall budget for 2021 has finally been revealed.
Following the government’s budget announcement in March, Chancellor Rishi Sunak outlined a number of initiatives to help the economy continue to recover from the impact of COVID-19. This includes expanding the scope of COVID support measures, as well as introducing programs designed to provide struggling sectors with the help they need to get back on their feet.
But what does that mean for UK workers? How will the 2021 budget affect you?
Here’s everything you need to know:
National living wage rise
One of the biggest changes announced for workers was an increase in minimum wage rates.
Advertise the consultant national living wage (Available to those over 23) Will increase from £8.91 an hour to £9.50, effective 1 April 2022 National minimum wage (And it’s available for those under 23) It will also increase – rising from £8.36 per hour to £9.18 per hour.
From April 2021, the minimum wage for interns will rise from £4.30 an hour to £4.81 an hour as well. Each of these increases reflects the government’s goal of raising the minimum wage to two-thirds of the average wage by 2024.
The government also continued to build on its previously announced ‘Jobs Scheme’, where the chancellor announced an investment of £3 billion in skills and education to help people find higher paying jobs.
This will include supporting everything from free math training for half a million adults who did not qualify while in school, to providing funds for modern vocational training, skills training camps, and continuing to roll out new “T-level” qualifications for 16-19 year olds.
This revolution will also include promoting green jobs, as the Prime Minister previously claimed that the government’s green economy would create 440,00 jobs.
Taken together, these actions aim to provide the country with more sustainable skills, and help build a “high wage economy” going forward.
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The end of the public sector wage freeze
There was some positive news for public sector workers, too – with a year-long wage freeze for five and a half million workers ending.
This means that public sector workers will be entitled to a wage increase from April 2022 (although the wage increase will go back to the independent bodies, and is not necessarily a guarantee).
The NHS has also promised an additional cash injection of £5.9 billion to help reduce increased waiting times, and invest in developing new technologies in healthcare.
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Comprehensive credit rate change
The chancellor announced that universal credit rates are also being fixed.
Although they do not go back to the previous high of £20 per month introduced during the pandemic’s peak (and recently ended), there will be a change in the ‘gradual rate’ (how much universal credit is withdrawn for every pound someone earns) .
The taper rate will drop from 63% to a new rate of 55%, which essentially means families will save an extra 8p for every pound they earn. Mr Sunak explained that this meant a single mother of two children in rented accommodation and working full time to earn the national living wage would be better around £1,200.
Changes will be submitted ‘no later than December 1, 2021’. However, it will only apply to those who work.
Taxes will increase
As expected, some taxes will be raised to help the country’s economy recover.
As such, there will be a 1.25% increase in National Insurance – the highest increase in personal taxes in two decades. This means, for example:
- Those who earn £20,000 a year You’ll pay an extra £130
- Those who earn £30,000 a year You’ll pay an extra £255
- Those who earn £50,000 a year Will pay an extra £505
The additional tax will pay for the state’s health and social care costs. The increase will expire in April 2023, but will be replaced by new health and social care fees.
More investment in infrastructure
Sunak also pledged to help local transport networks across the country and said £5 billion would be spent on improving local roads, both for repairs (by promising to plug a million potholes) and general maintenance.
The chancellor claimed that the budget was introducing an “infrastructure revolution” – something that we hope will be able to create a number of jobs in the construction sector, among other things.
All of these changes (plus some of the other measures introduced) will mean unemployment will peak at 5.2%, according to Sunak, lower than previously expected.
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What was covered?
Other announcements made by the Chancellor that may affect UK workers include:
- Business Price Reduction The retail, hospitality and leisure industries received a boost, with the chancellor revealing that she will receive a 50% discount on business rates for one year. As a result, businesses such as pubs, music venues, hotels, gyms and others will be allowed to claim up to £110,000 in relief.
- fuel duty – As a result of the recent fuel crisis, and fuel prices rising to their highest levels in more than eight years, fuel surcharges will not increase. This government said this would help save the average family around £1,900 a year.
- Alcohol duty Changes have been made to the way alcohol is taxed, meaning that drinks with less alcohol will have lower tax rates. The move will cut the price of a pint of beer by 3 pence, and help hospitality companies and breweries cut some of their costs.
- housing improvements – The government is committing £11.8 billion to build new affordable homes across the country. Another £5 billion will be spent on eliminating unsafe cladding from the most dangerous buildings.
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