The Treasury announced yesterday that it was to support hundreds of thousands of people as part of a £500m expansion to the government’s Plan for Jobs scheme
As part of his speech at the Conservative party conference in Manchester, Rishi Sunak ramped up his message that he is ‘ready to double-down’ on his promise to ‘do whatever it takes’ to recover from the Covid-19 pandemic.
Sunak announced that the Plan for Jobs extension will specifically target workers leaving the furlough scheme and those who are unemployed over the age of 50.
The new package aims to ensure that older workers will receive ‘better information and guidance’ on later life planning which aims to help people make informed choices that will allow them to plan their career and remain in work.
The Government is also prioritising support for those coming off furlough through the job finding support (JFS) scheme as well as extending the job entry targeted support scheme (JETS) to September 2022.
This scheme provides online ‘intensive and tailored support’, one-to-one support for people unemployed for less than 3 months, including recruitment advice from a skilled adviser, support with CVs, and mock interviews.
Starting in April 2022, the Government also announced that it will enhance its support for those on universal credit by offering coaching support and advice to aid career progression as well as providing more Job Centre Plus specialists who will work with local employers to identify local opportunities for people to progress in work.
Measures included in the new package will include a four-month extension of the £3,000 incentive for employers to take on apprentices, there will also be an extension to the kickstart scheme which provides funding to create jobs for 16 to 24-year-olds at risk of long-term unemployment – until the end of March.
The government is also extending its Youth Offer to 2025 and expanding eligibility to include 16- and 17-year olds in addition to 18-24-year-olds.
Commenting on the announcement Ed Hussey, director of people solutions at Menzies LLP said:‘This support package is welcome news for the many thousands of UK workers finding themselves out of work and without the support of the furlough scheme. The only question is, will it be enough to help them to find jobs, so they can, at last, get on with their lives?
‘Businesses can play their part in helping people back to work, at the same time as strengthening their skills base, by taking advantage of the Government’s decision to extend the Kickstart Scheme until March next year. This scheme is designed to benefit young people on Universal Credit and has been proving popular with both employers and workers.
‘The decision to extend the £3,000 incentive for businesses taking on a new apprentice to the end of January 2021 could also help to fill skills gaps. Employers can maximise their subsidies and support by using the KickStart Scheme as a trial period for new employees, the best of whom can then become an apprentice, and there is lots of free support available for companies to navigate the process and maximise their benefits.
‘The decision to extend the period of support is significant as it is clear that the pandemic is continuing to cause disruption for many sectors, at a time when households are being affected by rising costs. The measures announced are just for the short-term, however, and there is a risk that the economic cliff-edge facing many households has just been pushed a bit further away.’
The Chancellor will confirm the specific funding for each measure of the scheme at the spending review before the government department releases its Autumn Budget on 27 October 2021.
The shadow work and pensions secretary, Jonathan Reynolds, said: ‘The government’s struggling plan for jobs has failed to hit its original targets; it is not creating the number of jobs needed and has failed to address the supply chain crisis Britain is experiencing.
‘Giving himself an extended deadline will do nothing to compensate for the Chancellor’s tax rises, cost of living crisis, and cuts to Universal Credit which are set to hammer millions of working families.’
In our handy guide to tax filing deadlines, we provide an at-a-glance guide to key dates from the deadline for notifying chargeability for income tax and capital gains tax to final claims for coronavirus job retention scheme
Corporation tax payment for companies with 31 December 2020 year end (where payments not required by quarterly instalments)
Notify chargeability for income tax/capital gains tax for 2020/21 if not registered for self-assessment
Corporation tax second quarterly instalment payment for accounting periods ending 31 December 2021
Deadline to claim for Coronavirus Job Retention Scheme (CJRS) for September 2021 claims
PAYE cheque payments for the month ended 5 October should reach HMRC by this date (22 October for electronic payments)
File online Construction industry scheme return for the month ended 5 October
Paper submission of personal tax returns for 2020/21 if HMRC is to calculate liability (unless notice issued by HMRC after 31 July 2021, in which case deadline is three months after date of issue of notice)
Forms P46(Car) for quarter ended 5 October (where benefits not payrolled) to reach HMRC by this date
Employment intermediary’s quarterly report (6 July to 5 October) of agency workers paid gross (end user organisation can be classed as the employment intermediary in some circumstances)
PAYE cheque payments for the month ended 5 November should reach HMRC by this date (22 November for electronic payments)
File online Construction industry scheme return for the month ended 5 November
Corporation tax third quarterly instalment payment for very large companies with annual taxable profits exceeding £20m (reduced if company is a member of one or more 51% groups) with an accounting period beginning on 1 April 2021
PAYE cheque payments for the month ended 5 December should reach HMRC by this date (22 December for electronic payments)
File online Construction industry scheme return for the month ended 5 December
Deadline for online submission of personal tax returns for 2020/21 where the taxpayer wishes to settle outstanding underpayments of tax of less than £3,000 as deductions through the PAYE system
Deadline for filing corporation tax returns for accounting periods ended 31 December 2020
HMRC is urging working tax credit claimants to check if they need to update their working hours if these have reduced as a result of coronavirus as relaxed reporting rules end
During the pandemic, working tax credit customers have not needed to tell HMRC about temporary short-term reductions in their working hours as a result of coronavirus – for example if they were working fewer hours or were furloughed. It is one of several measures HMRC introduced to help those facing uncertainty around their hours.
If a working tax credit employee’s hours temporarily fell because of coronavirus, they have been treated as if they were working their normal hours.
Customers do not need to tell HMRC if they re-establish their normal working hours before 25 November 2021, but from then, they must do within the usual one-month window if they are not back to working their normal hours shown in their working tax credit claim.
Myrtle Lloyd, HMRC’s director general for customer services, said: ‘We introduced this measure last year to help support working families. It is vital that working tax credit claimants who have benefitted from it update HMRC with their working hours if they have reduced, and they won’t return to their normal level before 25 November.
‘Anyone who is no longer eligible for working tax credit due to a change in their circumstances may be able to apply for other UK government support, including Universal Credit.’
It is important to inform HMRC about any permanent changes to working circumstances within one month – for example, in the case of redundancy, job loss or permanent changes to hours.
Any changes can be reported online on Gov.uk, where it is possible to check current working tax credit claim details.
If there are mistakes on claims, such as overpayment, the recipient must inform HMRC within one money and repay the money, otherwise penalties will be charged.
HMRC is also reminding claimants that Post Office card accounts are closing. From 30 November 2021 HMRC will stop making payments of child benefit, guardians allowance and tax credits into Post Office card accounts.
Child benefit and tax credits customers who use Post Office card accounts to receive their payments will need to notify HMRC of their new bank, building society or credit union account details. HMRC is encouraging customers to act now so they do not miss any payments once their Post Office account closes. They can contact HMRC’s helplines (0345 300 3900 for tax credits or 0300 200 3100 for child benefit) or use their Personal Tax Account.
The lack of available workers has been all over the news in recent weeks, Tom Pugh, UK economist at RSM details the reasons why and how this problem will ease over the coming months
As long as we are right about labour shortages and big wage rises being limited to a few sectors then underlying pay growth across the economy as a whole should remain relatively steady. In this case, the Monetary Policy Committee (MPC) will probably continue to signal that rate hikes remain some way off. But if labour shortages start to push up pay growth more widely and inflation expectations start to rise, then the MPC may act to tighten monetary policy in the first half of next year before the economy has properly recovered from the crisis.
The lack of available workers has been all over the news in recent weeks, but labour shortages will start to ease over the rest of this year. There are three key reasons for that.
First, the government’s furlough scheme ends this month. According to the latest official data, there are still almost two million people on the scheme. While most of them will probably return to their jobs, other workers will find their old jobs are no longer viable and seek employment elsewhere.
Second, the number of people fully vaccinated against coronavirus continues to grow. Even though around 350,000 people were asked to self-isolate in the first week of August, that’s a significant drop from the height of the ‘pingdemic’ in June, when almost 600,000 people a week were told to stay home. The number in self-isolation should continue to fall as this fourth, and hopefully final, wave of the pandemic eases.
Third, university students have been learning from home so have not taken up their normal part-time jobs. Students in this position aren’t technically unemployed because they are classed as ‘inactive’ ie haven’t looked for a job for at least four weeks.
The number of ‘inactive’ students has risen by about 250,000 compared to before the pandemic, a number that more than accounts for the total ‘inactivity’ rise across the UK of 160,000. Many of these students should re-enter the workforce once universities go back to in-person learning in September.
Workers in all three situations are already classified as either employed, if they’re on the furlough scheme or have a job but are self-isolating, or inactive if they’re students, so their return to work won’t affect the unemployment rate, which will probably still be around 4.7% by the end of the year.
Instead, it’s the labour force participation rate that will change. It will probably rise from 63.3% to about 64% as inactive people become employed. The large number of people becoming available to work over the next few months will ease most of the labour shortages, especially in areas like retail and hospitality. What’s more, this influx of labour should prevent wages rising too quickly and feeding into higher inflation and interest rates. That said, shortages will persist in certain sectors, especially those that have been heavily reliant on labour from the EU. To boost output, it will be essential for middle market business leaders in these areas to invest in productivity-enhancing technology, rather than relying on hiring more labour.
The surge in flexible working has meant that a large number of formerly office-based workers have moved out of cities – particularly London – in search of bigger homes and more green space.
This has shifted some demand for goods and services out of London but left the supply of labour roughly the same. Think of fewer coffees being served around central London Tube stations and more served in local town centres.
As a result, at 6.4%, London’s June unemployment rate was the highest in the country. The south west of the UK, which has experienced a boom in staycation visits, had an unemployment rate of just 3.6%. It will take some time for the labour market to adjust to where the new demand for goods and services is.
The million pound question is how much of the labour shortage can be attributed to Brexit and is likely to be permanent. Of course, it’s impossible to distinguish between the impact of Brexit and the pandemic, but it’s probably not a coincidence that the industries that traditionally have relied most on labour from the EU are experiencing the biggest rise in vacancies.
The government has made it clear that it has no intention of relaxing visa requirements for affected industries and it can take a long time to train people (it can take three months to become a qualified lorry driver), so labour shortages and disruptions in these industries are likely to continue well into next year.
The policy response
The labour shortages have led to eye-catching headlines about bonuses and pay rises in some industries. The shortages have also prompted worries that a jump in pay growth will push up inflation and cause the Bank of England’s Monetary Policy Committee to raise interest rates prematurely. These concerns seem well founded, given that headline wage growth, which is measured as a three-month average of the annual rate (3myy), was a whopping 8.8% in June.
However, pay growth has been heavily distorted by the pandemic. More low-paid workers lost their jobs early in the pandemic and this bumped up average pay without anyone being paid more money. After all, if the shortest person in a room leaves the average height of those left in the room increases, despite none of them getting any taller.
The furlough scheme also had an impact when millions of workers took a temporary pay cut this time last year. As a result, the annual rate of pay growth has been pushed sharply higher. Once we take account of these factors pay growth looks much more reasonable. We estimate that underlying pay growth is around 2.5% 3myy, roughly in line with its long-run average.
So what does this mean for the MPC’s next move?
There is clearly a risk that the prospect of large pay rises spooks the MPC into tightening monetary policy in the first half of next year, before the economy has properly recovered from the pandemic. But as long as underlying pay growth across the wider economy remains relatively steady and inflation expectations don’t jump then the MPC will probably continue signalling that rate hikes are still some way off.
In a statement to MPs today, new financial secretary to the Treasury Lucy Frazer has confirmed that the introduction of Making Tax Digital (MTD) for income tax will be postponed by a year
The quarterly digital reporting for landlords and the self employed was due to start in 2023, but it will be pushed back by 12 months, the second delay to the digitisation programme.
‘The government recognises the challenges faced by many UK businesses and their representatives as the country emerges from the pandemic over the last year. In recognition of this and of stakeholder feedback, we will now be introducing MTD for ITSA a year later, in the tax year beginning in April 2024,’ said Frazer in a written statement.
‘General partnerships will not be required to join MTD for ITSA until the tax year beginning in April 2025.
‘The date at which all other types of partnerships will be required to join will be confirmed later.’
This delay will also affect the introduction of the new penalty scheme for late filing and late payment of tax for ITSA. This will now be introduced for those who are mandated for MTD for ITSA in the tax year beginning April 2024, and for all other income tax self assessment customers from April 2025.
Alongside the regulations – statutory instrument – laid in parliament today, HMRC has also published a tax information and impact note (TIIN) setting out the projected benefit and cost impacts of MTD for ITSA, as well as a policy paper to help different businesses understand what their transition to MTD could look like in more detail.
‘A later start for MTD for ITSA provides more time for those required to join to make the necessary preparations and for HMRC to deliver the most robust service possible, affording additional time for testing in the pilot,’ Frazer said.
‘HMRC will continue to work in close partnership with business and accountancy representative bodies and software developers to ensure taxpayers are well supported as they adopt MTD for ITSA.’
Nimesh Shah, CEO of Blick Rothenberg said: ‘HMRC are buying themselves some time by not introducing MTD for income tax, especially with the new social care levy and the backlog from covid. There’s also the recent consultation on moving the tax year, and aligning the basis period, and various proposals from OTS.
‘This give HMRC some time to deal with the IT infrastructure which is notoriously difficult and to do proper testing of the systems. Government IT projects are fraught with problems and the extension would give HMRC a better chance of ensuring that everything works smoothly.
‘It might even be possible for them to align the MTD changes with the basis period, to bring the tax year in line for all businesses. We’ll have to wait and see what else the government says.’
HMRC estimates a transitional cost for MTD adoption by businesses of around £1.3bn and a net increase in the ongoing costs of tax compliance of around £152m for those businesses mandated to use MTD for ITSA. This equates to an average transitional cost of £330 per business and an annual cost of £35 per business within scope.
This delay has also had a knock-on effect on the plans to introduce basis period reporting for the self employed and partnerships, which is currently out for consultation and has come in for some criticism due to the rushed nature of the original time scale, particularly as businesses were recovering from the pandemic.
‘The government has also recently consulted on a reform of the complex basis period rules that govern how self-employed profits are allocated to tax years,’ Frazer said. ‘Many respondents said that the reform was a sensible simplification but asked for more time to implement the changes.
‘In recognition of these concerns, these changes will not come into effect before April 2024, with a transition year not coming into effect earlier than 2023. The government will respond to the consultation in due course providing the next steps.’
The move was welcomed by the Chartered Institute of Taxation (CIOT) as there was a general view that there had been little time for full testing of the rollout or a communications effort to educate taxpayers about the upcoming changes.
Richard Wild, head of tax technical at the CIOT, said: ‘We are pleased that the government has listened to feedback from stakeholders such as ourselves and today announced a deferral of the start date for MTD for Income Tax Self Assessment so that it will now commence from April 2024 (and April 2025 for general partnerships).
‘There is still much to be done to ensure that MTD delivers its purported benefits without adding significant costs and burdens for businesses and their advisers. We would urge HMRC to prepare and publish a detailed implementation roadmap to ensure there is adequate time for software development, testing and communication before April 2024.’
David Menzies, director of practice at ICAS, said: ‘ICAS supports the need for a modern, digital tax administration but the various steps towards this need careful planning and preparation to make it work and to have public trust.
‘There are huge pressures on members’ practices and businesses at the moment as we come out of the pandemic, and changes to tax compliance need to be factored in carefully, so this delay is very welcome.’
Frazer took over from Jesse Norman who lost his Treasury job in last week’s reshuffle and had been instrumental in pushing through the government’s ambitious tax digitalisation programme.
On Wednesday it was announced that Green Supplier and Avro Energy had gone bust which brings the total to six energy companies to have gone under in September 2021
The collapse of the latest two energy companies has affected 735,000 customers and with Pfp Energy, MoneyPlus Energy, Utility Point and Peoples energy having all gone into administration this month, over 1.5m people have now been affected.
It was also revealed that that energy company Bulb was seeking a cash injection to help improve its finances although the company along with Octopus have told their customers ‘not to panic’.
Many of the smaller energy companies failed to hedge prices for the winter which put them under increasing financial pressure, exacerbated by low margins and soaring prices in a highly competitive market.
There has been concern in recent weeks that more companies are under pressure over the skyrocketing cost of natural gas and its impact on energy prices. In a statement in parliament today, business secretary Kwasi Kwarteng said that the government’s primary focus was ‘protecting consumers’ and that they will continue to protect consumers with the energy price cap, which keeps bills capped at £1,277 from 1 October.
He also stated that the government ‘will not be bailing out failed energy companies’.
In a Business, Energy, and Industrial Strategy Select Committee earlier this week, Kwarteng told MPs that the government was ‘looking at all options’ in response to the crisis, with the business secretary not ruling out an introduction of a windfall tax on businesses that have benefitted from soaring wholesale gas prices, referencing what is currently happening in Spain.
Kwarteng also indicated that he would be prepared to appoint a ‘special administrator’ that would see the energy companies taken on by the government, but he dismissed calls to scrap green levies to help alleviate the pressure on companies.
After crisis talks with Ofgem on Monday, Kwarteng said that there were ‘well-rehearsed plans’ in place to ensure consumers were not cut off with Ofgem announcing that customers will continue to receive gas or electricity even if the energy supplier goes bust as the regulatory body will move customers’ accounts to a new supplier.
The origins of this crisis can be traced back to last winter, which was particularly harsh and saw cold weather extend into April, depleting many natural gas stockpiles which has driven up the price of gas by 250% since January 2021.
The falling supply and rising demand is the overarching factor with data from Gas Infrastructure Europe showing that the continent’s natural gas stockpile is at 75% of what it was this time last year, the lowest level for the time of year since 2013.
This has put energy companies under pressure to increase consumer prices as their own costs have soared by 70% in August alone according to industry group Oil & Gas UK. There is some protection for customers as companies cannot charge above the price cap which has been set by the energy regulator Ofgem. This is set to rise by an extra £139 to £1,277 in response to the crisis from 1 October.
The government plans to overhaul tipping practices, helping around 2 million people top up their income by ensuring all tips are given to staff rather than retained by business owners
All tips will go to staff under new plans to overhaul tipping practices set out by the government, providing a financial boost to hospitality workers across the country.
Legislation on tipping will be supported by a statutory Code of Practice, developed in partnership with workers and employers to set out the principles of fairness and transparency.
Most hospitality workers – many of whom are earning the national minimum wage or national living wage – rely on tipping to top up their income. But research shows that many businesses that add a discretionary service charge onto customer’s bills are keeping part or all of these service charges, instead of passing them onto staff.
The government will make it illegal for employers to withhold tips from workers. The move is set to help around 2m staff working in one of the 190,000 businesses across the hospitality, leisure and services sectors, where tipping is common place and can make up a large part of their income.
This will ensure customers know tips are going in full to workers and not businesses.
Kate Nicholls, CEO of UKHospitality said: ‘UKHospitality supports the right of employees to receive the deserved tips that they work incredibly hard for. The hospitality sector as it begins to rebuild after 18 months of restrictions and enforced enclosure is already creating new jobs and driving the jobs recovery. Ensuring employees receive the tips they earn will further strengthen the sector’s ability to create jobs and support the wider economic recovery.
‘For hospitality businesses, though, customers tipping with a card incurs bank charges for the business, and many also employ external partners to ensure tips are fairly distributed among staff. With restaurants, pubs and other venues struggling to get back on their feet, facing mounting costs and accrued debts, we urge the government to continue to work closely with the sector as it introduces this legislation to ensure this works for businesses and employees.’
Tipping legislation will build on a range of government measures to protect and enhance workers’ rights. In the past 18 months, the government has introduced parental bereavement leave, protected new parents on furlough, and given millions a pay rise through a higher minimum wage.
Labour markets minister Paul Scully said: ‘Unfortunately, some companies choose to withhold cash from hardworking staff who have been tipped by customers as a reward for good service.
‘Our plans will make this illegal and ensure tips will go to those who worked for it. This will provide a boost to workers in pubs, cafes and restaurants across the country, while reassuring customers their money is going to those who deserve it.’
Moves towards a cashless society have accelerated dodgy tipping practices, as an increase in card payments has made it easier for businesses to keep the funds.
80% of all UK tipping now happens by card, rather than cash going straight to staff. Businesses who receive tips by card currently have the choice of whether to keep it or pass it on to workers.
The legislation will include:
- a requirement for all employers to pass on tips to workers without any deductions;
- a Statutory Code of Practice setting out how tips should be distributed to ensure fairness and transparency; and
- new rights for workers to make a request for information relating to an employer’s tipping record, enabling them to bring forward a credible claim to an employment tribunal.
Cash tips are taxable but are not generally liable for National Insurance, and have to be included on self assessment tax returns. When tips are pooled together and shared out – this is called a tronc. The person who looks after it is called the ‘troncmaster’ and they are responsible for making sure income tax is paid through the PAYE system.
Tronc systems pool tips and service charges and distribute them through a separate payroll. Where a troncmaster or other independent person determines how the funds will be distributed, no National Insurance contributions are due.
‘The most effective way to ensure fairness amongst employees and to comply with the expected new legislative requirements, is to have an independent troncmaster oversee the process and I am glad the government has recognised this,’ said Peter Davies, managing director at WMT Troncmaster Services.
‘We are concerned that the proposals will force businesses to absorb costs and deductions from tips imposed by others (such as card companies) and that not all businesses will be able to afford this in the current financial climate.’
Under the changes, if an employer breaks the rules, they can be taken to an employment tribunal, where employees can be forced to compensate workers, often in addition to fines.
Tipping legislation will form part of a package of measures which will provide further protections around workers’ rights.
UK businesses and consumers have paid 42% more in customs duties on goods since Brexit came into force on 1 January 2021.
The jump to £2.2bn in customs duties from January to July 2021 is a new record and is up from £1.6bn in the same period last year.
These increased costs are due to new tariffs which have arisen as a result of leaving the EU. The main increase in customs costs comes from the rule of origin tariff, which applies to goods imported from the EU which were originally made, or contain components made, outside of the EU.
The increased cost of customs duties places further burden on UK businesses who have already been hit hard by the pandemic and increased staffing costs caused by the change in Brexit immigration rules.
Importing goods from the EU has also become far more complicated and time-consuming for UK businesses due to the bureaucracy involved. In some cases, hauliers have needed to supply documentation of up to 700 pages long at borders, causing significant delays.
‘UK businesses weren’t given enough time or help to prepare for the cost of Brexit or the masses of paperwork.
‘The result is that the cost of tariffs and extra paperwork is now causing serious difficulties for many businesses who are already struggling to stay profitable in the face of mounting pandemic-induced costs.’
Businesses are set to face further issues from 1 October, when a new import ban on EU products of animal origin is being implemented for goods such as chilled mincemeat. This new ban will likely cause longer queues at borders, leaving businesses with increased disruption and costs.
HMRC is warning university students to be wary of potential scams, especially if they have a part-time job and are new to interacting with the tax office
University students taking part-time jobs are at increased risk of falling victim to scams, HMRC said.
By June this year, more than 680,000 students had applied to university, and over 900,000 held part-time jobs during the 2020 to 2021 academic year.
Higher numbers of students going to university this year means more young people may choose to take on part-time work. Being new to interacting with HMRC and unfamiliar with genuine contact from the department could make them vulnerable to scams.
In the past year almost one million people reported scams to HMRC.
Nearly half of all tax scams offer fake tax refunds, which HMRC does not offer by SMS or email. The criminals involved are usually trying to steal money or personal information to sell on to others. HMRC is a familiar brand, which scammers abuse to add credibility to their scams.
Links or files in emails or texts can also download dangerous software onto a computer or phone. This can then gather personal data or lock the recipient’s machine until they pay a ransom.
In the two-month period April to May this year, 18 to 24-year olds reported more than 5,000 phone scams to HMRC.
Mike Fell, head of cyber security operations at HMRC, said: ‘Most students won’t have paid tax before, and so could easily be duped by scam texts, emails or calls either offering a ‘refund’ or demanding unpaid tax.
‘Students, who will have had little or no interaction with the tax system might be tricked into clicking on links in such emails or texts.
‘Our advice is to be wary if you are contacted out of the blue by someone asking for money or personal information. We see high numbers of fraudsters contacting people claiming to be from HMRC. If in doubt, our advice is do not reply directly to anything suspicious, but contact HMRC through gov.uk straight away and search gov.uk for ‘HMRC scams’.’
In the last year (September 2020 to August 2021) HMRC has:
- responded to 998,485 referrals of suspicious contact from the public. Nearly 440,730 of these offered bogus tax rebates;
- worked with the telecoms industry and Ofcom to remove 2,020 phone numbers being used to commit HMRC-related phone scams;
- responded to 413,527 reports of phone scams in total, an increase of 92% on the previous year. In April last year we received reports of only 425 phone scams. In August 2021 this had risen to 3,269;
- reported 12,705 malicious web pages for takedown;
- detected 463 Covid-19 related financial scams since March 2020, most by text message; and
- asked internet service providers to take down 443 Covid-19 related scam web pages.
The Chancellor has confirmed that government spending plans will be outlined at the Spending Review on 27 October alongside a second Budget
This will be the second Budget of the year, following the March Budget which happened in mid-March, the week before the country went into lockdown due to covid-19.
The three-year review will set government departments’ resource and capital budgets for 2022-23 to 2024-25 and the devolved administrations’ block grants for the same period.
Mean core departmental spending will grow in real terms at nearly 4% per year on average over this parliament, the Treasury confirmed. By 2024-25 that means that core departmental spending will be £140bn more per year in cash terms than at the start of the parliament.
Part of the Spending Review will focus on plans to level up across the UK to increase and spread opportunity; ways to improve outcomes UK-wide where they lag and working closely with local leaders; and strengthen the private sector where it is weak. There will also be more detail about the government’s ambitions to lead the transition to net zero across the country.
Chancellor Rishi Sunak said: ‘At the Spending Review later this year, I will set out how we will continue to invest in public services and drive growth while keeping the public finances on a sustainable path.’
Core day-to-day departmental spending will follow the path set out at spring Budget 2021, with the addition of the net revenue raised by the new Health and Social Care Levy and the increase to dividend tax rates. The government will make available around an additional £12bn per year for health and social care on average over the next three years.
In total, day-to-day spending will increase to £440bn by 2024-25, increasing by nearly £100bn a year in cash terms over the parliament.
The spending increase is part of a broader plan to return public finances to a sustainable footing over the medium-term after the pandemic. The Treasury added that the ‘spending plans and focused tax changes to fund the Health and Social Care levy, alongside the measures taken at the last Budget, show that we are determined to get our fiscal position back on track, so that we can continue to fund excellent public services in the future’.
Departments have been asked to identify at least 5% savings and efficiencies from their day-to-day budgets as part of these plans.