The decision which impacts the most people, I believe, will be the extension of the furlough scheme until September. As of February, 11.2 million people are on furlough according to Statista’s D. Clark. This hopefully means that these 11.2 million people will not have to fear redundancies and unemployment for the time being. Grants have also been given to self-employed workers, hopefully having a similar impact.
Universal credit’s £20 weekly increase is here to stay, helping with living costs for low-income or unemployed households. Similarly, Working Tax Credit claimants will get a one-off £500 sum. Above all this, the minimum wage is increasing to £8.91 in April. Thus, most people will have some type of income support under the plan, a massively positive outcome. Many view these schemes as excessive in generating national debt, which will haunt us later, yet the high stability of the pound (bouncing around $1.39 after the announcement) makes me believe the consensus is mostly positive in the finance world.
Nonetheless, it should be noted that cuts will have to be made because of this spending. It seems, on the 6th of March, the first of these cuts was made; aid to Middle Eastern countries has been halved from last year. This means that Syria, Yemen and other struggling countries could bear the brunt of the above schemes. Here, issues of moral obligation and national/global interest are raised.
To return to positives, income tax, national insurance and VAT remain fixed for now, as is the alcohol tax. This will be accompanied by dozens of grants, such as £5bn for businesses closed due to lockdown. The contactless payment cap has also been increased to £100, meaning payment is more convenient. 8 more freeports have been opened across the country, meaning more global commerce for cities with seaports. £1bn is going to 45 specific towns, although I am not fully sure why those specific 45 were chosen. In the grand scheme, this should help us reach a pre-COVID economy quicker. The offset for this is that, for businesses making more than £250,000, corporation tax will increase by 6% by April 2023. Some complaints have been raised about this approach, but I prefer it to the cuts in humanitarian aid.
The health sector announcements also appear mostly positive. £1.65bn is going into vaccinations, the most notable payment. Smaller ones, such as £40m for victims of the Thalidomide disaster, £19m for supporting domestic abuse victims and £10m supporting veterans’ mental health schemes, were also announced. However, to me, these all taste bitter after hearing of the 1% pay-rise for NHS staff, with all the money going into ‘schemes’ and none going into the people working to support these schemes. If this embarrassing 1% is changed, I will consider the health sector budget positive overall.
The entertainment sector is equally positive. £400m is going to art venues, such as galleries and museums. £300m is going to professional sports and £25m to non-professional football. Finally, £1.2bn is going into making sure the 2022 Women’s Euros can go ahead in England, which should be both enjoyable and profitable for the country if all goes as planned.
The only sector which I am not optimistic about is the environment. The key announcement is £15bn going into ‘green bonds’, aiming to get more investments into eco-friendly infrastructure and energy. On paper, this sounds amazing. However, the equivocal ‘green’ makes me sceptical of how ‘green’ something needs to be to get this aid. It seems highly likely that this money will be drained into quasi-green sources, leaving us thinking “since when has oil been green?”. Many were hoping for more direct action in using the post-COVID rebuild to create a more environmentally friendly Britain, yet this seems to have been wishful thinking.
So — how will it affect you? That depends on who you are and what you value. It seems that jobs and incomes will be somewhat safe, and that the economy should recover quickly. However, red flags wave over the treatment of NHS staff, the responsibilities taken for foreign aid and the possibility of an eco-friendlier country post-COVID. As a final note, promises and action are different animals, so all could change once the government have to roll their sleeves up and start implementing this. Only time will tell.