Budget 2021

More money for local government, significant investment in R&D, funding for culture, a freeze on fuel duty (again) a reform of alcohol duty (sorry Port connoisseurs), public sector pay rises, and an increased National Living Wage (NLW) - just a few of the announcements from yesterday’s Budget. With most already pre-briefed, there weren’t too many rabbits left to pull, but we’ve rounded up the key takeaways below.

This Budget, the Chancellor claimed is about creating “higher wages, higher skills, and higher productivity”. Caution though is still required as our post-pandemic recovery continues to be “challenging” with inflation expected to rise to 4% over the coming year. We were also warned that supply chain issues and the energy crisis will “take months to ease”. That said, it’s not all doom and gloom; there were some positive announcements, some of which the REC has actively campaigned for, and the ambition to boost skills and productivity is very welcome and much needed. Although there were some missed opportunities, particularly around apprenticeships, overall, this Budget is a step in the right direction. More on the specifics below!

To read our full reaction to yesterday’s Budget, click here.

Education and skills

An additional £4.7 billion will be added to the core schools’ budget in England by 2024-25. The government committed to increase teacher starting salaries to £30,000 a year, as well as a long-term school rebuilding programme to rebuild 500 schools over the next decade. This settlement also makes available £2.6 billion over the Spending Review 2021 (SR21) period for new school places for children with special educational needs and disabilities (SEND) in England.

To help recover lost learning as a result of the pandemic, SR21 provides a new package of £1.8 billion to help schools deliver evidence-based approaches to support the most disadvantaged pupils and more learning hours for 16–19-year-olds.

The number of places on Skills Bootcamps will be quadrupled, the Lifetime Skills Guarantee expanded on free Level 3 qualifications, and numeracy skills improved through the new Multiply programme. While we are pleased that more places will be available on Skills Bootcamps, but there was no mention of funding or provision for entry-level skills – we’ll be looking for more detail on that.

Elsewhere, funding for apprenticeships will increase to £2.7 billion by 2024-25. More spending on skills (£3.8 billion) is a step in the right direction but the announcements don’t amount to the revolution we’d been hoping to see in terms of how we actually deliver training and skills. Once again, this government is focused on apprenticeships – while they work for some, for many others, the levy is costly and unworkable – government must embrace alternatives that work for everyone.

Health and Social Care

Clearing the NHS backlog continues to be an immediate priority for government along with putting the workable adult social care funding mechanism in place through the so-called social care levy announced earlier this year.

The Chancellor announced, “hundreds of millions of pounds” of additional funding to build “a bigger, better trained NHS workforce.” While the £5.9 billion to reduce NHS waiting lists is a welcome and much needed investment, first and foremost, we need staff. We were pleased that the Chancellor reiterated the government’s commitment to recruit 50,000 more nurses, and the public sector pay increase will certainly help with staffing issues, but aside from the present issue of burnout and a retiring workforce, attracting and retaining staff will remain a challenge – unfortunately the social care levy will do nothing to immediately address social care issues.

Driving and Logistics

As part of our labour and skills shortages campaign, the REC has been pushing government to address the shortages in the driving and logistics sector – in addition to increasing testing capacity and expanding skills bootcamps for this sector, we were delighted that, after months of asking, the Government has finally listened to our members and is investing £32.5 million in roadside facilities for HGV drivers. As always, the devil will be in the detail, and we’ll be reaching out to DfT to get more information on exactly what this investment will look like.

In addition, government is freezing vehicle excise duty (VED) for HGVs and suspending the HGV road user levy for another 12 months from August 2022. The Chancellor also announced a relaxation to cabotage rules temporarily for international HGV journeys within Great Britain to provide greater resilience for supply chains.

Hospitality and Retail

The government is introducing a new temporary business rates relief in England for eligible retail, hospitality, and leisure properties for 2022-23. Over 90% of retail, hospitality and leisure businesses will receive at least 50% off their business rates bills in this period. Although we wait to hear more detail about exactly what sort of business will qualify, up to 400,000 retail, hospitality and leisure properties will be eligible. While struggling sectors will be pleased to see these cuts to business rates, this felt like a missed opportunity for more radical, long-term reform.

To recognise the importance of pubs, the government will cut duty rates on draught beer and cider by 5%, taking 3p off a pint. The duty rates on beer, cider, wine, and spirits will also be frozen for another year.

Levelling up and Global Britain  

£68 million (by 2024-25) will be invested to level up the adult skills system and ensure local areas can spend funding where it’s needed most – this is something that the REC has been particularly vocal about, including in our own Spending Review submission – it’s good to see government recognising that local leadership and training providers are best placed to understand what skills and specialisms are needed in a particular area.

The REC was also pleased to see investment in public transport – we already know that some of the biggest barriers facing people getting into work is actually getting to the place of work itself so investment in making everyday journeys easier is extremely welcome. This includes more money for cycling and buses, and £5.7 billion of investment over five years in eight City Regions, including West Yorkshire, Greater Manchester, Liverpool City Region, and the Tees Valley.

The Global Britain Investment Fund and the Annual Investment Allowance extension should also help to boost local and regional economies and growing businesses. In spring 2022, the government will launch the Scaleup, High Potential Individual, and Global Business Mobility visas to attract highly skilled people and support inward investment, as announced in the summer as part of the UK’s Innovation Strategy. The government is also launching a Global Talent Network to proactively find and bring talented people to the UK in key science and technology sectors.