I’ve had a very large number of emails from constituents asking for things to be included in the Budget, including from local businesses calling for action to support them in the light of the Covid crisis and the huge effects it has had on the night-time economy, pubs, music, the arts, hospitality, and other sectors. I hope you will forgive me, therefore, if I try and cover as many of these as possible in this single reply.
For those of you who wrote about coronavirus business support, as you will have seen, the Chancellor did respond to a number of the representations that had been made to him about the need to maintain economic support as the restrictions ease. Furlough is to be extended until the end of September although employers will be asked to contribute 10% in July and 20% in August and September. Support for the self-employed is also to be extended until September but the large number of self-employed people who have been excluded from this will have been very disappointed that there was almost nothing for them. The lower VAT rate for hospitality firms is to be maintained at 5% until September with an interim 12.5% rate then applying for the following six months, but there was no other changes in VAT rates. The business rates holiday for firms in England will continue until June with a 75% discount after that, and there will be restart grants for shops and other businesses in England forced to close; these will be £6,000 per premise for non-essential outlets due to re-open in April and £18,000 for gyms, personal care providers and other hospitality and leisure businesses.
On excise duties, all alcohol duties will remain frozen, as will fuel duty.
The continuation of business support was clearly necessary given the really difficult time that so many businesses have been going through because the epidemic and the restrictions that followed which mean that we are in the midst of the worst economic crisis for 300 years. We all hope, however, that the vaccination programme will enable the economy to re-open but the Budget didn’t really address the need to rebuild our economic foundations or tackle the unfairness in our society that has been exposed by the Covid epidemic.
For example, although the £20 weekly uplift in Universal Credit worth £1,000 a year will be extended for another six months, it will then be taken away. This will mean a significant reduction for families on the lowest incomes at the very moment when unemployment is forecast to be continuing to rise. I really don’t think the Government can claim to be levelling up if it implements this decision which will hit the poorest hardest. And ministers are also forcing through a council tax hike that will hit households right across the country.
The Government’s handling of the epidemic has left Britain with the worst economic crisis of any major economy, a fact confirmed by the independent Office for Budget Responsibility (OBR). We were hit harder because we had longer and stricter restrictions than other countries as a result of the failure to get the virus under control. I was also very disappointed that there was no plan for the NHS’s recovery, so we can get people the health care they badly need, no reference to social care and nothing about a pay rise for NHS and care staff who have worked so hard to care for us during the pandemic.
The OBR has also revealed that, far from providing much-needed investment to support the recovery from the pandemic, the Chancellor plans to cut capital spending by £500m in the next financial year, relative to pre-pandemic plans. This comes after a series of Government delays and failures on capital spending; for example, there was no mention of the HS2 route to the Leeds or of funding for a rapid transit system in Leeds (we are the largest city in Europe without one).
The Chancellor is also in denial about the consequences of the Government’s limited deal with the EU and its impact on UK industries. Ministers have consistently refused to provide a detailed economic impact assessment of their deal; however, the OBR believes that it will reduce the UK’s economic output by 4% over a 15 year period, compared to the situation had we remained in the EU. Given this, it is extraordinary that the Chancellor did not even mention these consequences in his speech.
Finally, I was hoping to have seen a plan to rebuild the foundations of our economy for the long term, with a focus on supporting new jobs across the entire UK, helping our high streets to thrive, protecting family finances and backing our key workers. These are all things which we should continue to campaign for.
I hope this helpful and thank you very much for getting in touch. If I can be of any further assistance then please don’t hesitate to let me know.
Hilary Benn MP