The 2021 Autumn Budget has finally been revealed.
Following on from the budget announcement the government put forward back in March, Chancellor Rishi Sunak outlined a number of initiatives to help the economy continue to recover from the impact of COVID-19. This includes extending a range of COVID support measures, as well the introduction of programmes designed to provide struggling sectors with the help they need to get back on their feet.
But what does it mean for UK workers? And how will the 2021 Budget affect you?
Here’s everything you need to know:
National Living Wage rise
One of the biggest changes announced for workers was a rise in minimum wage rates.
The Chancellor announced the National Living Wage (available to those over 23) will increase from £8.91 per hour to £9.50, from 1st April 2022. The National Minimum Wage (which is available to those under 23) will also increase – rising from £8.36 an hour to £9.18 an hour.
From April 2021, the minimum wage for apprentices will rise from £4.30 an hour to £4.81 an hour too. Each of these increases reflect the government’s aim of raising the Minimum Wage to two thirds of median average wages by 2024.
The ‘skills revolution’
The government has also continued to build upon the previously announced ‘Plan for Jobs’, with the Chancellor announcing a £3bn investment in skills and education to help people find higher paid jobs.
This will include backing everything from free maths coaching for half a million adults who didn’t get qualified whilst at school, through to providing money for modern apprenticeships, skills bootcamps, and continuing with the rollout of the new ‘T-level’ qualifications for 16 to 19-year-olds.
This revolution will also include promoting green jobs, with the Prime Minister previously claiming that the government’s greener economy will deliver 440,00 jobs
Collectively these measures are aimed at providing the country with more sustainable skills, and help to build a ‘high-wage economy’ moving forward.
End of pay freeze for public sector
There was some positive news for those working in the public sector too – with the one-year pay freeze coming to an end for five and a half million workers.
This means that public sector workers will be entitled to a pay rise from April 2022 (although pay rises will be up to the independent bodies, and are not necessarily a guarantee).
The NHS has also been promised a further £5.9bn cash injection to help curb rising wait times, and to invest in the development of new technologies in healthcare.
Universal Credit rates changing
Universal Credit rates are also being reformed, the Chancellor announced.
Although they’re not returning to the previous £20 a month uplift introduced during the height of the pandemic (and recently ended), there will be a change to the ‘taper rate’ (the amount of Universal Credit withdrawn for every pound someone earns).
The taper rate will be dropping from 63% to a new rate of 55%, essentially meaning families will save an additional 8p for every pound they earn. Mr Sunak explained that this would mean a single mother of two in rented accommodation and working full-time earning the National Living Wage would be better off by around £1,200.
The changes will be introduced ‘no later than 1st December 2021’. However, it will only apply to those who are in employment.
Taxes will be increasing
As expected, some taxes will be rising to help the nation’s economy recover.
As such, there will be a 1.25% increase to National Insurance – the highest rise in personal taxes in two decades. This will mean, for example:
- Those earning £20,000 per year will pay an additional £130
- Those earning £30,000 per year will pay an extra £255
- Those earning £50,000 per year will pay an extra £505
The additional tax will pay towards the nation’s health and social care costs. The increase will end in April 2023, but will be replaced by a new Health and Social Care Levy.
Further investment in infrastructure
Mr Sunak also pledged to help local transport networks across the country, and said that £5bn will be spent on improving local roads, both for repairs (by promising to fill one million potholes) and general maintenance.
The Chancellor claimed the Budget was delivering ‘an infrastructure revolution’ – something which will hopefully be able to provide a number of jobs in the construction sector, amongst others.
All of these changes (as well as some of the other measures introduced) will mean unemployment will peak at 5.2%, according to Mr Sunak, lower than had previously been expected.
What else was covered?
Other announcements the Chancellor made which may impact UK workers included:
- Business rate relief – The retail, hospitality, and leisure industries all received a boost, with the Chancellor revealing they will receive a 50% discount on business rates for one year. As a result businesses such as pubs, music venues, hotels, gyms and more will be allowed to claim up to £110,000 in relief.
- Fuel duty – As a result of the recent fuel crisis, and fuel prices rising to their highest in over eight years, the fuel duty will not be increasing. This government said this should help save the average household around £1,900 a year.
- Alcohol duty – Changes have been made to the way alcohol is taxed, meaning that drinks which are lower in alcohol content will have lower tax rates. The move will bring the price of a pint of beer down by 3p, and help hospitality businesses and breweries bring some of their costs down.
- Housing improvements – The government is committing £11.8bn to building new affordable homes across the country. A further £5bn will also be spent on getting rid of unsafe cladding from the highest risk buildings.
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