Yesterday afternoon Chancellor Rishi Sunak announced the details of the Budget and Spending Review to the House of Commons, and Mo Hussein at PLMR has shared an early 10-page analysis, which you can find here. In case you want to save this for when you have more time, Matt has put together the following overview and some brief thoughts.
The whole budget is relevant to the socio-economic conditions in which our industry operates, and we would encourage you to read the full report and analysis. We’ll be bringing some MI industry thoughts in the coming weeks, but for now here’s a few key announcements that will have an impact:
- National Minimum Wage will be increased to £9.50 an hour – a 6.6% increase which represents a pay rise worth over £1,000;
- 50% business rate discount for the retail, hospitality and leisure sectors introduced (up to a maximum of £110,000);
- Business rate increases will be deferred for one year after business improvements or expansions;
- Overall, business rates cut by £7 billion;
- £4.6 billion over the next five years will be saved by businesses through cancellation of the multiplier tax;
- £4.7 billion of new funding will be given to schools by 2024/25;
- Per pupil funding will be restored to 2010 levels in real terms, equivalent to a cash increase for each pupil of over £1,500;
- To support theatres, orchestra, museums & galleries: tax reliefs for all these sectors will be doubled until April 2023. This is worth a quarter of a billion pounds;
- £130 million to support small and medium sized businesses in Wales, with similar schemes worth £150 million for Scottish business and £70 million for Northern Irish businesses;
- Research & Development funding target of £22 billion will be maintained, increasing R&D as a percentage of GDP from 0.7% in 2018/19 to 1.1% by the end of this parliament.
There’s some attractive headlines here such as the 50% discount on business rates which will be great for our retail members but it unfortunately doesn’t apply to our manufacturing members. The detail behind the headlines also shows that it’s for a period of 1 year so there’s a balance to find between taking advantage of it now but not finding it too much of a shock to your business when the discount is removed. It also has to be considered in the context of rising costs in other areas including pay, transport, products and the raw materials they are made from. The freeze in fuel duty and the suspension of the heavy vehicle levy may offer some help towards controlling rises in distribution costs but are unlikely to improve the situation from where we are now, and are slightly at odds with the push towards Net Zero.
The spending announcements for education are encouraging and it will be interesting to see how that can be used to the advantage of music education – a bigger conversation to have as the dust settles on the Red Book.
There’s plenty to consider over the coming weeks and months, but at least there is some clarity to enable planning. As ever, we’re keen to hear your thoughts and to keep the discussion open as it helps us in being a voice for the industry and in bringing MIA members together.
If you would like to read the Government’s Budget Report you can do so here.
