Budget 2021

Following a year of unprecedented challenges and economic uncertainty, the Chancellor, Rishi Sunak MP, yesterday announced the new budget for the UK.

Taking to the House of Commons floor for just under an hour, the Chancellor described the Government’s roadmap that will help the UK overcome the challenges witnessed due to the Covid-19 pandemic and associated lockdowns and achieve economic recovery.

Committing to more Government spending and support related to the pandemic, the Office for Budget Responsibility also projected that the economy will recover to its pre-crisis peak around six months earlier, with GDP around 0.75% higher in Spring and Summer 2021.

Main Points

  • The Budget confirms an additional £410 million of Barnett consequentials for the Northern Ireland Executive.

  • The Coronavirus Job Retention Scheme (CJRS) has been extended until the end of September 2021. For more information visit Extension to the Coronavirus Job Retention Scheme | NICVA

  • Rates of income tax, national insurance and VAT kept at the same level

  • Support for self-employed to be extended until September with an increase in those now eligible for help

  • Working Tax Credit claimants will get £500 one-off payment

  • Minimum wage to increase to £8.91 an hour from April

  • Temporary £20-a-week increase in Universal Credit payments to continue for a further six months.

  • Communities will benefit from policies aimed at supporting people and places directly, in all parts of the UK. Examples of these policies include:

    • Levelling Up Fund prospectus launch – The government is launching the prospectus for the £4.8 billion Levelling Up Fund alongside Budget. The Levelling Up Fund will invest in infrastructure that improves everyday life across the UK, including town centre and high street regeneration, local transport projects, and cultural and heritage assets. In GB, local Councils will bid to a UK central pot for this funding.  A different approach is being taken in Northern Ireland whereby UK Government will accept bids at the most local level, from a range of local applicants, including but not limited to businesses, voluntary and community sector organisations, district councils, the Northern Ireland Executive and other public sector bodies.

    • UK Community Renewal Fund prospectus launch – The government is launching the prospectus for the £220 million UK Community Renewal Fund alongside Budget. This will support communities across the UK in 2021-22 to pilot programmes and new approaches as the government moves away from the EU Structural Funds model and towards the UK Shared Prosperity Fund. Funding will be allocated competitively. Northern Ireland is expected to receive £11 million of this funding.

    • Community Ownership Fund – The government will create a new £150 million Community Ownership Fund to help ensure that communities across the UK can continue to benefit from the local facilities and amenities that are most important to them. From the summer, community groups will be able to bid for up to £250,000 matched funding to help them to buy local assets to run as community-owned businesses. In exceptional cases up to £1 million of matched funding will be available to help establish a community-owned sports club or buy a sports ground at risk of loss from the community. This will help ensure that important parts of the social fabric – like pubs, sports clubs, theatres and post office buildings – can continue to play a central role in towns and villages across the UK.

What does it mean for Northern Ireland?

In addition to the UK-wide policies the following measures are specific to Northern Ireland:

  • The Northern Ireland Housing Executive will be exempted from Corporation Tax (NIHE) – This will bring the NIHE into line with comparable public housing sector bodies across the UK and save the Northern Ireland Executive around £10 million annually.

  • New Deal for Northern Ireland – The Budget announces that almost half of the £400 million NDNI funding package has been allocated across four areas, subject to business cases: new systems for supermarkets and small traders to manage new trading arrangements; building greater resilience in medicine supply chains; promoting Northern Ireland’s goods and services overseas; and supporting skills development.

  • The Derry–Londonderry and Strabane Growth Deal – Partners signed the Heads of Terms for the deal on 24 February, enabling it to progress towards full deal implementation across the priority areas of digital innovation, tourism, regeneration, skills and employability.

  • Tackling Paramilitary Programme – The government is extending funding for the Tackling Paramilitary Programme with a further £5 million in 2021-22.

It should be noted however that Finance Minister Conor Murphy has expressed his disappointment in the provisions stating that Northern Ireland will in fact only receive an extra £4.2 million for everyday public services as “Almost all of this money is one-off funding for the Covid response which is welcome as we look to the recovery phase, however, it still leaves us with a flat-cash budget for mainstream public services… It is also disappointing that there is no extra capital money to spur economic recovery.”

To read the Budget in full, you can access it here

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