Autumn Budget 2021 - Early indications, announcements and more.
Updated: Oct 27, 2021
Rishi Sunak will deliver his budget and spending review to the Commons this Wednesday and the Chancellor has already announced a series of spending pledges ahead of the fiscal event.
Rishi Sunak set to extend the UK's recovery loan scheme until June 2022
Chancellor Rishi Sunak Expected to delay the closure of the UK's emergency lending guarantee for small businesses until the second half of 2022.
the scheme was launched in April as a bridge between the more generous Bounce Back Loan Scheme and Coronavirus Business Interruption Loan Scheme and regular bank lending. It was made clear at the time that the deadline would be the end of the year, subject to a review.
Administered by the British Business Bank, the RLS includes a government backed guarantee on business loans from £25,000 up to a maximum of £10 million, with interest rates capped at 14.99%.
Lisa Jacobs, UK managing director at RLS-accredited lender Funding Circle, welcome news the extension, which she said : “has provided small businesses with invaluable finance at a crucial time.”
“Many of the UK's SMEs are optimistic about their future, With a third telling us they intend to expand over the coming year. Finance is the key to unlocking these growth plans, and we look forward to continuing helping businesses access the scheme, create jobs and drive the economic recovery.”
Lenders are allowed to ask for personal guarantees from directors on loans over £250,000. Plus fees must be paid from the start and businesses must show that they would be viable where it not for being blindsided by the pandemic.
Mike Cherry, national chairman of the Federation of Small Businesses, welcome news of an extension, saying that it “will help firms access finance as they try and manage inflation, staff shortages, spiralling energy costs and supply problems.”
He also called for further measures, including a cut to VAT on energy bills for small businesses and an exemption for more companies from paying business rates.
This morning the British Business Bank published data for the first time on the uptake of the RLS, showing that just £1.06 bn worth of loans had been extended to some 6,200 businesses (actual drawdown figures were lower, with just £822.8m of lending being used).
That compares to CBILS and BBLS which helped facilitate over £80 bn in small business lending throughout 2020 and early 2021.
“Businesses up and down the country are beginning to look beyond the pandemic towards the opportunities available to them in the recovery. The British Business Bank Is committed to supporting smaller businesses in accessing the finance they need to grow sustainably in the future,” said the banks CEO Catherine Lewis La Torre.
“In meeting the £1bn milestone, the Recovery Loan Scheme is demonstrating its impact by helping thousands of companies to fund their further development.”
The RLS Was also criticised for the slow speed at which lenders were accredited, despite many lenders having already been accredited for CBILS and BBLS.
On Wednesday, Sunak is also expected to add £312m to the British Business Bank’s Start-Up Loans programme, Which equates to loans for an additional 33,000 entrepreneurs to start or grow their businesses.
Minimum wage set to rise to £9.50 per hour
The National Living Wage will rise from £8.91 per hour to £9.50 in the budget for those aged 23 and over, which the government says will give full time workers an extra £1,000 a year.
The national living wage is what the government has called the national minimum wage for anybody above 22 years old since 2016. The rise is more than twice the current consumer price inflation rate of 3.1%.
Chancellor Rishi Sunak today (25 October 2021) Firm the increase, saying the Government was “on the side of workers”.
“this wage boost insurers were making work pay and keeps us on track to meet our target to end low pay by the end of this Parliament.”
The rise was as recommended by campaign group the Living Wage Foundation.
The move follows households facing an economic squeeze from the soaring cost of energy and rising consumer prices.
The Bank of England's chief economist, Hugh Pill, has also warned that UK inflation is likely to hit or surpass 5% by early next year.
Minimum wage increases from 1 April 2022
National Living Wage for over-23s: From £8.91 to £9.50 an hour.
National Minimum Wage for those aged 21-22: From £8.36 to £9.18.
National Minimum Wage for 18 – 20-year-olds: From £6.56 to £6.83.
National Minimum Wage for under-18s: From £4.62 to £4.81.
The Apprentice Rate: From £4.30 to £4.81.
Further Spending Pledges ahead of the Budget
The Chancellor has announced a series of other spending pledges ahead of the Autumn Budget as he promised to do “whatever it takes” to support families with the cost of living, including:
£1.4bn to encourage foreign investment into UK businesses and attract overseas talent.
£700m to be spent mainly on the new post-Brexit borders and immigration system as well as a new maritime patrol fleet
£435m for victims services, crime prevention and the Crown Prosecution Service’
£560m for adult maths coaching to help increase numeracy.
Further points to look out for….
What does recovery look like and how will this be presented in the budget?
Can the Government keep running a deficit or will the chancellor have to raise yet more taxes?
Will there be any more incentives to help businesses grow?
Will capital gains tax rates go up?
Will there be more taxes on businesses?
Will there be a business rates reform?