Against a backdrop of severe financial hardship caused by Covid-19, Rishi Sunak is set to announce the government’s 2021 budget tomorrow.
The Chancellor has indicated he will extend emergency support packages as the coronavirus lockdown is unwound and did not deny he would first raise taxes before cutting them ahead of the election.
There’s already been plenty of discussion around new schemes or extended support measures that could be implemented to help the nation recover from the pandemic, though we won’t know the full details until the chancellor officially presents the plans in parliament.
But some schemes have already been announced, from a Covid fraud prevention unit to a new scheme for prospective homeowners.
Here’s a quick guide to what we already know about Wednesday’s budget.
Mortgage guarantee scheme to help buyers with 5% deposit
Sunak is set to announce a mortgage guarantee scheme aimed at helping aspiring homeowners with small deposits as part of his budget statement.
The chancellor plans to incentivise lenders to provide mortgages to first time buyers, and current homeowners, with just 5% deposits to buy properties worth up to £600,000.
Boris Johnson said: “I want generation rent to become generation buy and these 95% mortgage guarantees help to deliver this promise.
“Young people shouldn’t feel excluded from the chance of owning their own home and now it will be easier than ever to get onto the property ladder.”
The scheme, which will be subject to the usual affordability checks, will be available to lenders from April.
It is based on the Help to Buy mortgage guarantee scheme introduced in 2013 by David Cameron and George Osborne, that ran until June 2017.
Aiming to reinvigorate the market following the 2008 financial crisis, that scheme – distinct from the Help to Buy equity loan scheme – was said to have helped more than 100,000 households buy a home across the UK.
But there were also concerns that it artificially inflated prices and housebuilders’ profits.
Shadow housing secretary Thangam Debbonaire raised concerns about the plan and urged Sunak to deliver a budget “with a relentless focus on jobs and growth”, with Labour having said now is the wrong time for tax rises.
“What young people need to get on is the secure future that comes with a decent job and genuinely affordable new houses to be built for them to make homes of, not going back to the days of sky-high mortgages,” she said.
£5bn business grants for firms hit hardest by Covid
Pubs, restaurants, shops and other businesses hit hardest by the coronavirus pandemic will be boosted by a £5bn grant scheme to help them reopen as the lockdown is eased.
Sunak will announce the “restart grants” worth up to £6,000 per premises to help non-essential retailers reopen and trade safely at his Budget on Wednesday.
Hospitality, hotels, gyms, as well as personal care and leisure firms, will be eligible for up to £18,000 per premises as they are due to open later under the plans for easing lockdown.
Culture and sports support
The Chancellor will provide more than £400m of additional support for the badly hit culture sector to help museums, theatres and galleries in England to reopen once coronavirus restrictions start to ease in the coming months.
Many theatres have not been able to open their doors since March 2020.
In a slew of pre-Budget teasers, Treasury officials also said Sunak will use his fiscal package on Wednesday to give a “significant chunk” of a £300m sports recovery package to cricket as fans prepare to return to stadiums this summer.
On Monday evening the Treasury revealed a series of funding packages targeting support at the beleaguered culture, sport and pub trades which have seen profits and activity knocked since social distancing was introduced at the start of the Covid outbreak last year.
Sunak is expected to pump an extra £300m into the £1.57bn Culture Recovery Fund, as part of the measures.
National museums and cultural bodies will also receive £90m to help keep them afloat until they can open their doors on May 17 at the earliest and £18.8m will be provided for community cultural projects.
An additional £77m will be given to the devolved administrations in Scotland, Wales and Northern Ireland to provide their culture groups with similar backing.
Specialist unit to ‘crack down’ on Covid support scheme fraudsters
A dedicated unit to crack down on Covid-19 fraudsters exploiting government financial rescue schemes like furlough is also due to be announced.
The Taxpayer Protection Taskforce, underpinned by £100m and 1,250 staff, will investigate and hunt down people swindling cash through coronavirus income support programmes, said the Treasury.
Sunak said in a statement: “Our coronavirus support schemes have helped millions of honest, hard-working people – but a small minority have seen this pandemic as an opportunity to defraud the taxpayer.
“This will not be tolerated – which is why the new taskforce will crack down on this criminal activity.”
HM Revenue and Customs has around 10,000 open inquiries into suspected Covid fraud and some criminal investigations are under way.
Support for small businesses
The Chancellor is to launch a £520m initiative to support small UK businesses with training and software.
Sunak said the Help to Grow scheme could help 130,000 SMEs (small and medium enterprises) become more productive by providing access to some of the UK’s top business schools.
The Treasury said that firms will receive expert technology advice and discounted software, as it aims to spark innovation as the UK plots its recovery out of the pandemic.
Sunak said: “Our brilliant SMEs are the backbone of our economy, creating jobs and generating prosperity – so it’s vital they can access the tools they need to succeed
“Help to Grow will ensure they are embracing the latest technology and management training, fuelling our Plan for Jobs by boosting productivity in all corners of the UK.”
£126m boost for traineeship schemes
Sunak is set to announce a £126 million boost for traineeships, enabling the creation of 40,000 additional schemes in England.
At the same time, Sunak is set to promise to increase the cash incentives for employers who take on an apprentice to £3,000 – regardless of age.
Currently firms can claim £2,000 for each apprentice they hire aged 16 to 24, or £1,500 for those aged 25 and over.
The chancellor will also set out plans for new “flexi-job” apprenticeships, enabling trainees to develop their skills with a range of employers within a particular sector.
Instead of having a single employer, they will be linked to an agency that will place them with various relevant organisations.
From July, employers will be able to bid for money from a £7 million fund to create new agencies, with the first apprenticeships expected to start in January 2022.
Ministers believe the scheme is likely to be picked up in sectors with flexible working patterns such as the television and film industries.
Corporation tax rises
The Chancellor is said to be considering raising corporation tax to as much as 25% from 19%, in a move that has caused splits within Labour.
Shadow chancellor Anneliese Dodds Dodds used a speech on Monday to argue that now is “not the time” for tax rises but signalled she could support an increase in corporation tax in the future.
In an article for the Guardian, she went even further, saying: “There is a clear long-term case for rises in the rate of corporation tax – as well as action against loopholes – where the Conservatives have made us an international outlier for a decade.
“If there were a sensible plan to raise the rate across this parliament, of course Labour would look at that carefully – but now is not the time for immediate tax rises.”
Fast-track visa for ‘highly skilled’ workers
Migrants deemed to be ‘highly skilled’ will be eligible for fast-track visas in a bid to attract new staff to fast-growing companies in the UK, under new measures to be announced in the budget.
Migrants with job offers with so-called scale-up companies, which are innovative and grow quickly, will qualify for fast-track visas without needing sponsorship or third party endorsement, the Treasury said.
“Now we’ve left the EU and taken back control of our borders, we want to make sure our immigration system helps businesses attract the best talent from around the world,” Sunak said.
“This new fast-track scale-up stream will make it easier for fintech firms to recruit innovators and job creators, who will help them grow.”
The scheme will open in March 2022, with the government set to release more details this July.
The move is largely targeted at financial technology, or fintech, companies, such as Monzo and OakNorth, which contribute £11 billion to the UK economy every year.
The country has a 10% share of the global fintech market, and attracts more fintech investment than the next four European countries combined.
Around 42% of the UK’s 76,500 fintech workers come from overseas, an independent report released this week found.