Chancellor of the Exchequer Rishi Sunak is due to deliver his next Budget in the autumn, so here’s our round-up of the latest rumours.
Whether or not you agree with his decisions, Mr Sunak is under huge pressure to deliver bold policies to help the nation through the coronavirus pandemic, which has already put thousands out of work and tanked the economy.
At the moment, nothing is confirmed. But there’s a lot of speculation about what the Chancellor could, and should, do when he next steps up to the dispatch box.
When is the Autumn Budget 2020?
We don’t know exactly when the Autumn Budget will be, as the Treasury hasn’t set a date.
The earliest it will happen is ‘mid to late November’, as this is when Mr Sunak asked the Office for Budget Responsibility (OBR) to publish an economic forecast – a prerequisite to holding a Budget.
But this doesn’t mean the Budget will definitely take place in November. Reports emerged in The Telegraph over the weekend that the statement could be delayed in the event of a large second wave.
According to The Telegraph’s sources, a December date would be ‘unlikely’ due to time constraints in parliament, so it would likely be pushed into next year if it is delayed.
This echoes reports in the Financial Times from August, which said a delay until spring 2021 could be a possibility, but with an autumn ‘mini spending review’ to tide us over.
There’s much speculation over how Mr Sunak will hold back a wave of redundancies that could come after the end of the furlough scheme on 31 October. However, it’s now clear a Budget won’t come before that date.
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What will the Autumn Budget include?
It’s all speculation at this stage, but that doesn’t mean there won’t end up being truth to at least some of the following rumours.
Living Wage U-turn
Ministers and officials are considering putting an ‘emergency brake’ on the already announced increase in the National Living Wage due to concerns the pandemic has made it unaffordable, according to The Telegraph.
The National Living Wage is the lowest rate anyone over the age of 25 can legally be paid per hour. It’s currently set at £8.72 and was set to rise to £10.50 by 2024 – for everyone over the age of 21 – as outlined in Mr Sunak’s March Budget.
As part of that process, the wage was expected to reach £9.21 next tax year, but The Telegraph reports that the Low Pay Commission, which advises the Chancellor on the rate, believes many companies could now struggle to pay it.
In March, Mr Sunak did say the increase was conditional on ‘sustained economic growth’, which coronavirus has quite seriously dented.
The compulsory National Living Wage is separate from the optional Real Living Wage, which is calculated by the independent Living Wage Foundation, based on the cost of living. It’s currently set at £9.30 for outside London and £10.75 for London.
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After borrowing and spending billions on the COVID-19 response so far, the Chancellor is reportedly considering different ways he could earn back funds for the Treasury.
The Sun reports that Mr Sunak is considering increasing Class 4 National Insurance – paid by the self-employed – from 9% to 12%, which could add £200 to the average self-employed tax bill.
This would bring self-employed National Insurance contributions in line with those paid by employees. He hinted at a move like this when he announced the self-employed support scheme in March. He said: ‘If we all want to benefit equally from state support, we must all pay in equally in future.’
Former Chancellor Philip Hammond announced an increase to self-employed National Insurance in his first Budget in 2017, but he was forced into a U-turn a week later when backbench Conservatives revolted.
The Sun reports that he’s also mulling a 5p increase to fuel duty.
However, these suggestions have been met with resistance from Conservative backbenchers and some business leaders, according to The Telegraph, potentially casting doubt over whether they will materialise.
There have also been reports that tax breaks for businesses are being considered alongside these proposals.
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Mr Sunak dubbed his summer fiscal statement his ‘Plan for Jobs’. It included schemes to entice employers into bringing employees back from furlough and into creating new jobs for young people, but that hasn’t put a stop to fears that unemployment could reach historic highs towards the end of the year.
Unions have urged the Chancellor to do more to combat unemployment, including extra support for sectors that are struggling the most.
If October really is the end of the furlough scheme, Mr Sunak could offer alternative measures to keep people in work.
In a recent speech to Conservative MPs, Boris Johnson hinted at a ‘new green industrial revolution for the UK’, which would create ‘hundreds of thousands of new green jobs’, The Guardian reports. He said announcements on this were due in the autumn, so it could well make its way into the Budget.
- Find out more: what the Summer Statement means for your money
Although Mr Sunak resisted widespread calls to continue the Eat Out to Help Out scheme into September, it’s possible that he could announce another unconventional way to stimulate consumer spending. Especially as people may be less likely to continue their trips out to restaurants and high streets as the weather cools.
There are so far no indications of what these measures could be, but another discount scheme, or more vouchers akin to the Green Homes Grant may be less of a surprise this time around.
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This article was first published on 2 September 2020 and has been updated since. The latest update was on 14 September 2020 to include new reports of a potential delay.