Budget 2021 – Business Support for a Post Pandemic Recovery
The Chancellor has outlined further economic support to protect jobs and businesses across the UK in what is widely acknowledged as the most crucial Budget for businesses in a generation.
Chancellor Rishi Sunak has delivered his latest Budget to Parliament, setting out the Government’s tax and spending plans against his forecasts for the UK economy. Taking place against an unprecedented economic background caused by Covid-19’s unrelenting grip on the nation, this year’s Budget is titled Protecting the Jobs and Livelihoods of the British People.
Touted as ‘post-pandemic, post-Brexit, and jobs-led’, the Budget outlines the Chancellor’s planned interventions to take the country through the remainder of lockdown and beyond, with ongoing financial support.
Despite extraordinary levels of borrowing and spending over the past year, Rishi Sunak has vowed to continue doing ‘whatever it takes’ to support the UK throughout the pandemic, promising to deploy the full fiscal firepower of the Treasury through the challenging months ahead.
There follows a summary of the main financial initiatives announced in Budget 2021 specifically targeting businesses and entrepreneurs.
- The Coronavirus Job Retention ‘Furlough’ scheme has been extended until the end of September. Employers will be expected to pay 10% towards the hours their staff do not work in July, increasing to 20% in August and September, as the economy reopens.
- There will be an extension of the UK-wide Self Employment Income Support scheme to September, with 600,000 more people who filed a tax return in 2019-20 now able to claim for the first time. The fifth and final grant will open from late July.
- £5 billion for new Restart Grants from April – a one off cash grant of up to £18,000 for hospitality, accommodation, leisure, personal care and gym businesses in England. This takes direct government grant support for businesses over the pandemic to £25 billion.
- A new UK-wide Recovery Loan Scheme to make available loans between £25,001 and £10 million, and asset and invoice finance between £1,000 and £10 million, to help businesses of all sizes through the next stage of recovery.
- Extension of the Film & TV Production Restart scheme in the UK, coupled with an additional £300 million to support theatres, museums and other cultural organisations in England through the Culture Recovery Fund.
- Extension to the VAT cut to 5% for hospitality, accommodation and attractions across the UK until the end of September, followed by a 12.5% rate for a further six months until 31 March 2022.
- The business rates holiday for retail, hospitality and leisure sectors in England will continue until end of June. It will then be discounted for the remainder of the year by two thirds.
- Extension of the apprenticeship hiring incentive in England to September 2021 and an increase of payments to £3,000 per hire.
- £7 million for a new ‘flexi-job’ apprenticeship programme in England, that will enable apprentices to work with a number of employers in one sector.
- An additional £126 million for 40,000 more traineeships in England, funding high quality work placements and training for 16-24 year olds in 2021/22 academic year.
- Small and medium-sized employers in the UK will continue to be able to reclaim up to two weeks’ of eligible Statutory Sick Pay (SSP) costs per employee from the Government.
- A £375 million UK-wide ‘Future Fund: Breakthrough’ will invest in highly innovative companies such as those working in life sciences, quantum computing, or clean tech, that are aiming to raise at least £20 million of funding.
- A new Help to Grow scheme will offer up to 130,000 companies across the UK a digital and management boost with the Government contributing 90% of the costs. The scheme will offer free training and a 50% discount on software with vouchers of up to £5,000. The scheme will be open to those with between 5 and 249 employees, trading for more than 12 months.
- Green energy innovation schemes from the Government’s £1 billion Net Zero Innovation Portfolio will support the development of new solutions to cut carbon emissions and accelerate near-to-market low-carbon energy innovation, including:
- £20 million to fund a UK-wide competition to develop floating offshore wind demonstrators and help support the Government’s aim to generate enough electricity from offshore wind to power every home by 2030.
- £68 million to fund a UK-wide competition to deliver first-of-a-kind long-duration energy storage prototypes that will reduce the cost of net zero by storing excess low carbon energy over longer periods.
- £4 million for a biomass feedstocks programme in the UK to identify ways to increase the production of green energy crops and forest products that can be used for energy.
- A new UK Infrastructure Bank, based in Leeds, to work with the private sector on environmental projects and schemes to ‘level up’ the country. The bank, which will launch in the spring, will receive an initial £12 billion of equity and debt capital and a further £10 billion of government guarantees. It will offer a range of products including loans, equity and guarantees.
Announcing his Budget in the House of Commons, Rishi Sunak said:
‘Protecting, creating and supporting jobs remains my highest priority through the remaining phase of this crisis.
‘We will continue doing whatever it takes to support the British people and businesses through this moment of crisis.’