The Spring Budget, March 202019-Mar-2020
The newly appointed Chancellor of the Exchequer recently presented his Budget to Parliament, announcing a collection of measures designed to support public
services, individuals and businesses affected by Covid-19.
Rishi Sunak became Chancellor in February 2020 amid the cabinet reshuffle. Although it was seen that he took the opportunity to reinforce the promises made by the Prime Minister before the election, such as major spending on transport and electronic communications, he also announced a range of measures in response to the coronavirus outbreak.
Although there are had been growing fears of a recession and the recent heavy losses on stock markets around the globe, as well as calls for EU governments to provide financial support for their economies for fear of economic crash: The Chancellor’s main focus was to set out an economic action plan for tackling a potential crisis.
The £12 Billion package announced by The Chancellor aimed at tackling the UK coronavirus shock, included:
- Statutory sick pay of up to 14 days for organisations with 250 employees or less – Charities that are employers are included for this support.
- A £500m hardship fund for councils to support financially vulnerable individuals and households. Although details of how this would work were not revealed, the Government expects most of it to be used for Council Tax relief.
- A temporary Coronavirus Business Interruption Loan Scheme - designed to guarantee 80% of the value of relevant loans worth up to £1.2m to give lenders further confidence in lending to small and medium-sized enterprises and should also include social enterprise. Worth up to £1 Billion in the first instance, more details should be announced shortly.
A £5 Billion Emergency Response Fund for the NHS was also announced, and The Chancellor added that The Government stands ready to provide any support needed in the event of an emergency.
In a public letter produced by NCVO with other sector bodies, the Treasury was asked to also support the many charities and community organisations that will play an important part in supporting individuals and communities, but who would be just as affected by cash flow and other financial challenges.
Other announcements also relevant to VCS included:
Scrapping the Tampon Tax
Duty on menstrual and female sanitary products is to be ended. The 5% VAT currently added to women’s products is to be scrapped by the time Britain leaves the EU at the end of the year.
The Government will be setting aside £1 Billion for green transport solutions, this includes electric vehicle use. An additional £640m will be for tree planting. There will also be an increase in the climate change levy on gas, as well as a new plastic packaging tax from April 2022.
And in partnership with local communities, a nature recovery network fund will also be established to protect wildlife.
Because of the concerns that high street retailers are being hindered by not reflecting the growing online world, there will be a review of the Business Rates System.
Based on example reports from national press, the review would examine proposals for a land value tax levied on landlords, instead of tenants.
Other announcements included
- Further funding for the NHS in England
- Support services to help people off the streets
- An increase in National Insurance threshold
- £30m to the Changing Places Project
- Scrapping tax on e-books, e-magazines and academic journals
- £10 Million fund to deliver schemes and initiatives that support veterans with mental health needs
- Funding for innovative approaches to stop domestic violence
- A review of the Treasury’s ‘Green Book’, and
- Increases to Employment Allowance
The sentiment from NCVO suggests the investment in infrastructure spending would suggest a different direction from the conventional Conservative approach of the past decade, and even though there is no evidence their joint letter was recognised, there is an indication to suggest that public services will need essential resources to provide relief in the light of upcoming financial strain they are yet to face.
At the time of writing, there was also no detail about the upcoming Shared Prosperity Fund.
This aside, in light of the Government’s spending review and budget later this year; the NCVO would look to continue speaking to officials in Government about the importance of supporting social infrastructure, not just physical infrastructure.