The Budget Statement
Earlier this afternoon, the Chancellor delivered his Budget Statement to Parliament.
This email will focus on the measures that will be of most help to my constituents (based on my postbag) and how the Budget impacts the north east.
The furlough scheme will be extended to the end of September. Employees will continue to receive 80 per cent of wages for hours not worked, but as businesses reopen, we will ask them to contribute 10 per cent of wages in July, and 20 per cent in August and September.
Furlough remains among the most generous schemes of its kind anywhere in the world and has supported 350,000 jobs in the north east.
Two further grants for the self-employed. We will introduce a fourth grant covering the period February to April, worth 80 per cent of people’s average monthly revenues. From May, a fifth grant will be available which is more targeted towards those most affected by the pandemic: people whose revenues have fallen by more than 30 per cent will receive the 80 per cent grant, while those whose profits have fallen by less than 30 per cent will receive a 30 per cent grant.
Crucially, more people will be eligible: the newly self-employed can claim these grants as long as they submitted their 2019/20 tax return before midnight last night.
Overall, we will have spent £33billion on the self-employed during this crisis, among the most generous anywhere in the world. In the north east 70,000 self-employed workers have received nearly £500million in support through this scheme.
Non-essential retail businesses will open first and therefore receive grants of up to £6,000, while hospitality and leisure businesses–including personal care, hairdressers and gyms–will likely open later or with more restrictions and so receive grants of up to £18,000.
These will be worth an extra £5 billion–taking our total cash grant support to £25billion. We are also providing local councils with £425 million discretionary funding to support other local businesses.
Last year we provided an unprecedented 100 per cent business rates holiday for all eligible businesses in the retail, hospitality and leisure sectors–a tax cut worth £10 billion.
This year, we will continue that 100 per cent holiday for the first three months until June, before cutting rates by two-thirds for the remaining nine months, up to a maximum £2 million per business. That means the vast majority of businesses will receive a 75 per cent cut in their bill next year–a tax cut worth £6 billion.
To protect the 150,000 hospitality and tourism businesses which employ around 2.4 million people and have been hardest hit, especially here in Northumberland, we are extending the 5 per cent reduced rate of VAT for a further six months until the end of September.
The rate will then increase to 12.5 per cent from October until the end of March, before returning to the normal 20 per cent rate from April 1 2022. Overall, that’s a tax cut of nearly £5 billion next year for our tourism industry.
The Mortgage Guarantee Scheme will help first time buyers with smaller deposits get on the housing ladder with 95% mortgages offered by Lloyds, Santander, Barclays and HSBC from next month.
Until June, no one will pay Stamp Duty Land Tax on properties under the value of £500,000. From June, the threshold will be a property value of £250,000, only returning to the normal rate in October.
We have already launched the Restart scheme to help hundreds of thousands of long term unemployed; doubled the number of Work Coaches; introduced the Lifetime Skills Guarantee to fund Level 3 Qualifications for all adults; and launched the Kickstart scheme to help 250,000 young people into work.
Today we go further by doubling the incentive payment to small businesses to take on apprentices of any age to £3,000, alongside £126 million to triple the number of traineeships next year.
Today we found out that Northumberland is a priority 1 area for the new £4.8billion levelling up fund. You can read more about that HERE.
Some other measures announced which will boost our region:
- Nine local authorities in the North East, including Northumberland, will be priority places for the £220 million Community Renewal Fund, which will invest in people, communities and businesses across the UK.
- Supporting the aviation industry. Teesside and Newcastle airports will benefit from Airport and Ground Operations Support Scheme extension and will help support their fixed costs, such as business rates. The freeze in air passenger duty for short-haul flights will benefit flights departing from the North East, while the long-haul economy rate will only increase by £2.
- Improving transport infrastructure across the North East. Tees Valley Combined Authority is set to receive £3.5 million to develop comprehensive transport plans as part of the Intra-City Transport Settlement Program. We have also confirmed £135 million development funding to progress the A66 Trans-Pennine scheme to start of construction in 2024. This builds on the Spending Review announcement that construction would be halved from 10 to 5 years.
- A new integrated manufacturing port hub in Teesside will support significant amounts of high-quality employment in the coastal communities in the North East. This will support up to 3,000 green jobs and helping to level up the UK as we move towards our net zero goal.
- Northumberland will benefit from investment through the Borderlands Growth Deal, the full Deal Document will be published soon after the Budget.
- Investing in flood defences. The next £5.2 billion Flood and Coastal Defence programme kickstarts in April. The Pallion Flood Alleviation Scheme in Sunderland, which will better protect 70 homes from flooding, is among the schemes that will start construction in 2021-22.
- We are moving parts of the Civil Service up to the North East, with Treasury North to be located in Darlington.