Budget 2021: key points from Rishi Sunak’s speech, alcohol duty overhaul, public sector pay rise

Hello, welcome to NationalWorld’s liveblog coverage of the 2021 Autumn Budget and spending review.

The Chancellor’s speech later today won’t offer quite as many surprises as it should, thanks to a considerable briefing operation which has seen many of the big announcements already appearing in the papers in the days leading up to it - much to the speaker’s chagrin.

Though you can probably still expect Sunak to pull a few rabbits out of his hat, particularly thanks to the Office for Budget Responsibility’s forecasts, which are slightly better than anticipated and could mean the Chancellor has a bit more money to play with than he’d expected.

Either way, its set to be a busy day in Westminster, with the budget statement due to take place straight after Prime Minister’s Questions.

Here’s the full schedule -

8:30am - The Chancellor briefed the Cabinet on what’s in the budget

10:45am - Sunak will leave No. 11 Downing Street and head across to Parliament

12:00pm - Prime Minister’s Questions will take place as usual, in what could well be a particularly fiery affair

12:40pm - Sunak will stand at the dispatch box and deliver his Budget and Spending Review

1:30pm - Sunak due to finish his speech: reports suggest the speech will not be as long as some previous budget announcements, which would be in keeping with Sunak’s style, but Labour’s Shadow Chancellor Rachel Reeves will follow Sunak with her response

Much to the dismay of Sir Lindsay Hoyle, much of what’s set to be announced in the Budget today has already been reported in the press.

The speaker of the House of Commons was furious as he gave a statement criticising the leaks to the media yesterday.

This led to a Treasury minister officially confirming some of the measures, including the plans to increase the National Living Wage from £8.91 to £9.50, and to end the public sector pay freeze, although the pay increases will not be confirmed until next year.

Among the other announcements to come out before the Budget, the Government said it will provide a £5.9bn capital spending boost for the NHS, aimed primarily at clearing the backlog by upgrading key infrastructure.

Further spending pledges to be officially announced later today include a £6.9bn capital boost to improve transport links all over the country, £5bn toward scientific research and development, and a £3bn investment in skills training.

These pledges and a handful of others all relate to capital spending, while further information on departmental budgets - which set the levels of day to day spending - will come with the full speech, with some cuts expected.

The government has also been criticised already for attempting to present some of the pledges as entirely new, when some of the money has already been announced.

On transport spending for instance, Sunak admitted on the Andrew Marr Show that of the £6.9bn, only £1.5bn was new money which had not previously been announced.

What else has already been announced?

- An overhaul of the way alcohol is taxed in the UK, with speculation it could be changed to favour pubs and venues over supermarkets - this one is pretty much nailed on, considering reports that the Sunak and Johnson will be doing a press visit to a brewery this afternoon

- £2.6bn for more school places for children with special educational needs and disabilities, although there are reports that the Department for Education is set to lose out overall from the budget

- £1.8bn earmarked to turn brownfield sites into new homes

- £1.4bn for a new “Global Britain Investment Fund” aimed at bringing in foreign investment and talent to the UK

- £850m to revamp museums, galleries and cultural hotspots, with the V&A, Tate and Natural History Museum all set to benefit

- £700m to beef-up Britain’s border security, and immigration system, including new patrol boats for the Border Force

- £700m million for sport and youth clubs including 8,000 new sports pitches

- £560m on a numeracy scheme called Multiply to help half a million adults improve their maths skills

- A £500m package which will include 75 ‘family hubs’ - this has already been criticised as “not enought” by industry leaders

- £435m to be put toward crime prevention, including better CCTV systems and improved street lighting

Late reports are coming in that one of the rabbits Sunak has waiting to be plucked from his hat today is a u-turn on the planned cut to the £1000 per year Universal Credit uplift, which was withdrawn earlier this year despite pleas from charities that it would force millions of people into poverty.

Greater Manchester Mayor Andy Burnham told Radio 4 this morning that he has heard strong rumours that a u-turn is set to be delivered - perhaps in light of the revised OBR forecasts which predict the UK’s economy will fare slightly better than originally expected.

Burnham tried to cast the potential u-turn as a victory for Labour, who he says have campaigned hard for the uplift to be retained, but it’s hard to imagine the public seeing it that way.

Despite the anguish and worry that cutting the uplift in the first place will have caused, it will be a major boon for the Tories if the Chancellor does indeed confirm that as well as an increase in the National Living Wage, the UK’s poorest families will also be able to keep the uplift that has helped them through the worst of the pandemic.

An interesting pre-Budget Twitter thread here from CEO of the New Economics Foundation, Miatta Fahnbulleh, who says that all is not quite as rosy as the Chancellor has tried to imply in the run up to today’s announcement.

On the ubiquitous claim that the UK is enjoying a particularly strong Covid recovery, she says: “Our economy was one of the worst hit, so we are growing from a low base. The IMF says our economy is still 5% below its pre-pandemic path. & our economy is projected to lag behind all G7 countries in 2024.”

Fahnbulleh also plays down Sunak’s insistence that the Government must “balance the books” before the end of this parliament.

“We don’t,” she says, “The [Bank of England] bought up 99.5% of the debt the government borrowed during the pandemic.

“The Bank of England is the most patient creditor the government could hope for. This buys us time to invest now & solve the myriad of problems with the economy.”

Read the full Thread below.

While the Treasury team have been busily applying the finishing touches to the Autumn Budget, it seems Labour’s shadow treasury team have been putting together a Buzzfeed-style quiz, titled ‘What kind of Chancellor are you?’

Question one reads:

“It's your first day on the job. What do you decide to do?

A: Give dodgy contracts to your mates

or

B: Put together a hit squad to tackle government waste”

All good fun, I guess? But if this is the best Labour can do on Budget day then when Rachel Reeves takes the quiz herself to find out what kind of Chancellor she’d be, the answer will inevitably come back “Shadow”.

Play along for yourself, here to find out what kind of Chancellor you’d be.

It was once a tradition for the Chancellor to take an alcoholic drink with them to the dispatch box when delivering the budget.

The last Chancellor who did was Ken Clarke, in 1997, who sipped scotch as he delivered what would be the last Conservative budget for more than a decade.

Of the Chancellors since then - Gordon Brown, Alastair Darling (remember him?!), George Osbourne, Philip Hammond, Sajid Javid and now Sunak - none have readopted the boozy tradition.

As a teetotaller, Sunak was never likely to reprise it, though he did reveal his choice of pre-Budget boost speaking with Times Radio earlier this week.

“I have a sugar problem” Sunak confessed, revealing that he will have a can or Sprite and a Twix before he sets out the nation’s finances.

Perhaps that’s why his speech, billed at less than an hour, is set to be relatively short compared with many of his predecessors - he wants to be off the stage before the crash hits.

He’ll no doubt hope that the effect of the measures he lays out in the budget won’t mirror the impact his choice of pre-budget refreshments will have on him - a short sharp burst of energy which will all too soon give way to a significant crash.

Among the many people closely watching the Chancellor’s performance today will be his boss, Boris Johnson.

Though tensions between the pair seem to have simmered since a couple of high profile clashes earlier this year, there’s no doubt that Sunak is still widely regarded as the frontrunner to replace Johnson.

If Johnson has a vulnerability among his party’s base it might be his perceived keenness to solve every problem with money, although that could equally be said to be part of his appeal in the country at large.

Sunak has already made it clear that he intends to try and strike a similar balance, although while paying significantly more lip-service to fiscal responsibility than his prime minister - which could prove to be a potent strategy.

There’s no job in the cabinet more likely to lead to being prime minister than Chancellor, although Foreign Secretary comes close, which is interesting given the current holder of that office, Liz Truss, is also widely regarded as the next most likely to succeed Johnson after Sunak.

Truss will likely also be watching the Chancellor’s performance closely, and though a leadership challenge currently seems some way off, she might already be looking for potential weaknesses to exploit in a future contest.

For Truss, whose economic-liberal principles are as well-burnished as any in the Cabinet, the path to beating Sunak might lay in presenting herself as the only true Conservative when it comes to tax and spend.

I’ve written before about whether Sunak is in fact the PM-in-waiting he is often considered to be, or if he’s more of kind of political Icarus - we’ll have a better idea after today.

Sir Keir Starmer has tested positive for Covid and is not in the House of Commons today as he is isolating.

Good job it’s a fairly quiet day.

Ed Miliband is stepping in at PMQs (just starting now)

As I’ve just reported, Starmer isn’t in the House of Commons today so former Labour leader and shadow cabinet minister Ed Miliband is stepping in.

Before getting underway he jokes it is “just like the old days” and reassures MPs that it is “one time only,” that he is back.

His first question is on climate, with COP26 just on the horizon, and whether the PM agrees that the 1.5C climate goal means we need to half global emissions in the next decade.

Not sure how last minute this change was but the question seems very floaty on what should have been a massive day for the opposition to get some of its key messages across.

Miliband says we are only on course to reduce emissions by 7.5% rather than half.

“Does the PM acknowledge how far away we are from the action required?”

“Indeed I do,” says Boris Johnson, who probably can’t quite believe his luck.

“Every day countries are coming through with solid commitments... whether they’re going to be enough I’m afraid it is too early to say”.

Miliband urges PM not to “shift the goalposts” and keep the focus on 2030, rather than 2050.

Johnson says, “what you can’t do is go in advance of what is truly practicable for the world economy and what people can do.

He added: “This government will go as fast as we possibly can.”

Miliband showing an ease at the dispatch box and a quickness of thinking that was rarely present during his time as leader of the opposition.

Johnson criticises Labour’s plans and Miliband fires back to say “Statesmanship, not partisanship,” is what’s needed.

He adds: “He should not be trying to score party political points on such an important issue facing our country and world.”

Another joke from Ed, who looks to be enjoying himself: “That’s never the way I did PMQs!”

Ed Miliband finishes what has been a pretty uneventful PMQs.

“In these final days before COP26 we need more than warm words,” he says.

He adds COP26 has to be, “a summit of climate delivery not climate delay”.

Responding, Johnson says this government has a “sensible, pragmatic, conservative approach that cuts Co2 that tackles climate change and delivers high skill high wage jobs across this country”.

Johnson looks buoyed, seems to have enjoyed having a different sparring partner, particularly as the stakes were so low.

Dame Eleanor Lang MP, the deputy speaker of the House of Commons, has spoken out about the pre-briefing of policy announcements to the media, following a furious statement from the speaker Sir Lindsay Hoyle yesterday.

“before I call the chancellor of the exchequer to make his budget statement it is my duty to take the unusual step of saying a few words

“I share the concern of many members of this house about the apparent pre briefing of budget material to the media before any announcements had been made in this house.

“I understand the chancellors position and its well understood that for a number of years elements of the budget have been pre briefed to the media on an embargoed basis to aid their coverage of it.

“But such pre briefing where the embargo makes clear that the material can only be used after the chancellor has addressed this house is rather different to what we have apparently experienced this year. that is the briefing to the media of details of the budget statement to be published before the statement is delivered.

“As Mr Speaker has said and all ministers know, important policy announcements should be made first to Parliament.

“Given my responsibilities to the house with regard to the budget, I must put on record my support for Mr Speaker’s stance on this issue and express a firm hope, which I believe is felt on all sides of the house, that we do not find ourselves in this position again at future budgets.”

After some further preamble, she calls the Chancellor of the Exchequer, Rishi Sunak.

“Growth up, jobs up and debt down, let there be no doubt, our plan is working.”

Sunak kicks off the speech by highlighting the favourable economic outlook.

Less than a minute or so in we have our first mention of ‘levelling up’.

Talks about the “awesome power of opportunity” which should be available to everyone, regardless of whereabouts in the UK they come from.

He says Covid will give way to “the prime minister’s economy” of high wages, “where the only limit to our potential is the effort we are prepared to put in”.

He mentions rising inflation, and offers to explain what is happening (very kind, Rishi).

He says OBR expects CPI will go up over next year.

He says this is because of demand increasing globally faster than supply chains can account for.

He says it is also caused by growing energy demand, leading to increased prices.

He says the pressures caused by this will “take months to ease” but they aren’t unique to the UK.

But government will act to do as much as it can, he says.

Sunak announces that the suspension of the HGV levy, already extended until August, will be further extending 2023 and excise duties for heavy duty vehicles will also be frozen.

Sunak touts the OBR’s improved forecasts with a wide grin.

“In July last year at the height of the pandemic, unemployment was expected to peak at 12% now it is expected to peak at jjust 5.2% - that means over 2m fewer people out of work than previously feared.”

And wages are rising, he says, compared to February 2020 they’ve grown “in real terms by almost 3.5%”.

“Today’s forecasts confirm beyond doubt that our plan for jobs is working”.

Sunak says we need to strengthen public finances so that when the next crisis comes, we have the headroom to act.

He will set out two new fiscal rules.

They are:

“Underline public sector net debt excluding impact of BoE must as a percentage of GDP be falling”

and

“In normal times, the state should only borrow to invest in our future growth and prosperity. Every day spending must be paid by taxation.”

He says the House will have an opportunity to vote on these rules, practically daring Labour to vote against.

Sunak says it would be a vote on whether “to abandon our fiscal anchor and leave our economy adrift with reckless unfunded pledges or to vote for what we on this side of the house know is the right course. Sound public finances and a stronger economy for the British people.”

Sunak says the OBR report shows that all the fiscal rules are being met.

Today’s budget increases total departmental spending over this parliament by £150bn, biggest increase this century with spending growing more than 3% in real terms each year.

He says there will be a real terms rise in overall spending for every single department, and public sector net investment as a share of GDP will be at highest level for half a century.

He says this budget confirms it, “the Conservatives are the real party of public services”.