Covid-19 and Brexit have brought extraordinary pressure to bear on a wide range of sectors. With so much at stake, the attention on Chancellor Rishi Sunak’s 2021 Budget was intense. In this article, several of Bevan Brittan’s partners discuss what some of the key announcements from the Budget will mean for the firm’s clients.
A headline-grabbing announcement, which was widely trailed before the Chancellor’s budget statement is the extension of the Coronavirus Job Retention Scheme. The Chancellor confirmed that the furlough scheme will continue until the end of September. Employers will be expected to pay 10% towards the hours their staff do not work in July, increasing to 20% in August and September.
"The chancellor's announcement that the furlough scheme is extending will bring some comfort, particularly to those in the hospitality, leisure and food and drink sectors that have been particularly hard hit by the lockdown,” says Marti Burgess, Corporate Partner.
‘Super deduction’ tax scheme
One surprise announcement in the budget was a more generous tax relief for firms that invest in new plant. The ‘super deduction’ scheme means that for the next two years companies can reduce their tax bill by investing.
The move was welcomed by Birmingham-based Corporate Partner Monica Macheng, but she highlighted some other areas where manufacturing businesses would liked to have seen the Chancellor go further: “This budget needed to deliver clear and comprehensive recovery policies to encourage investment. The announcement of the ‘super deduction’ in tax to encourage business investment is encouraging. Manufacturing businesses would I’m sure have liked more clarity to help with the red tape they are facing for exports post-Brexit.
“We would certainly like to see in the future new incentives to encourage lowering the carbon footprint of manufacturing supply chains, which are going to be a key part of reaching the government’s ambitions to lower emissions to net zero by 2050.”
Levelling-up and green recovery
Before the budget, there were calls for the Chancellor to deliver policies to drive a green recovery and deliver against promises to level-up the UK economy.
Nadeem Arshad, Head of Energy and Resource Management comments: “It was positive to see evidence of green shoots from the budget, including Green Savings Bonds being launched in Summer 2021 by NS&I, which will support the delivery of green energy projects. However, it would have been good to have seen further committed investment in both energy infrastructure and energy efficiency projects if we are to achieve our net zero carbon future.”
Christian Hunt, Corporate Partner based in Leeds comments: “It is encouraging to start to hear some detail, including the announcement of the UK Infrastructure Bank. It will provide a platform for capital projects investment as part of the Government’s levelling-up and green Industrial Revolution agenda and will be based in Leeds. For the Humber, mention of offshore wind and being included as one of the first eight Freeports in the UK is welcome. However, levelling up is not going to happen quickly, and given the challenges we will face as we come out of the Covid-19 pandemic, there needs to be continued investment over the years to come.”
Louise Leaver, Partner in the Housing Team at Bevan Brittan said: “To provide security for families living in unaffordable and insecure housing, we need to be building 3.1 million more social and affordable homes over the next 20 years. Whilst there was very little in the budget to specifically support this ambition, the new 5% deposit help to buy scheme announced by the Chancellor today and the extension of the stamp duty holiday will be welcome news to many first-time buyers.
“The announcement of a Modern Methods of Construction (MMC) Taskforce together with £10million of seed funding is a very positive step to support the delivery of MMC homes in the UK, which will be vital to achieve the target of new social and affordable homes, especially as the latest Affordable Homes grant funding programme will require a significant proportion of new homes to be delivered through MMC.
“Our Registered Provider clients will also be relieved that the furlough scheme and universal credit uplift have both been extended as they provide vital support to many of their tenants.”
The budget brought a mixed picture for local authorities, with some good news on initiatives to help with capital projects and local investment, but nothing to help with pressure on revenue budgets.
David Hutton, Partner and Head of Local Government said: “The response to the pandemic by local government has been extraordinary – and all in the context of unprecedented and continued financial pressures. It is disappointing that there was no mention or indication in the budget of a multi-year spending settlement to allow councils to plan and support their communities as they recover from the pandemic.
“While it seems there will be no immediate help for councils with pressures on their revenue budgets (and no mention of social care), it was encouraging to hear more details on previous announcements from the Chancellor that will help councils with capital projects and local investment into infrastructure.
“As councils look to facilitate the growth of their towns and cities and re-imagine future needs arising from climate; changes in the future of work; retail and community spaces, more Town Funds and the launch of the Levelling Up Fund plus the National Infrastructure Bank may be supporting factors provided monies can flow quickly and minimise repeated applications to Government for pots of money.
“However, unless there is a way to accelerate these capital schemes, they will take years to deliver and may leave communities questioning whether levelling up is happening. We await the National Infrastructure Commission Towns and Regeneration with interest.”