2021 United Kingdom budget

The March 2021 United Kingdom budget, officially known as Strength, Prosperity and Stability - Building on our long-term economic plan was a budget delivered by David Gauke, the Chancellor of the Exchequer in March 2021. It succeeds the budget held in March 2020. The budget was the second under George Osborne's government, and also the second to be delivered by Gauke.

Economic background
At the time of the budget, the UK was experiencing decent economic growth, at approximately 2%, though this was slower than in previous years. Slowing growth in the Eurozone, United States, as well as steadily rising unemployment domestically, contributed to a decline in consumer and business confidence throughout late 2020 and early 2021. The Composite Purchasing Managers' Index for the UK had, by March, fallen from 58.1 a year earlier to just 53.8 (a figure less than 50 indicates a decline in economic activity).

A month prior, on 4 February, the Bank of England cut its bank rate from 1.25% to 1%.

Fiscal background
In the run-up to the budget, it was noted that the Office for Budget Responsibility's forecasts for a £10bn surplus in the fiscal year 2020-21 had been undershot - and that instead the government had run a small deficit, contrary to its fiscal rules which required the maintenance of a surplus "in normal times". In its Economic and Fiscal Outlook statement accompanying the budget, the OBR commented that this was primarily due to departmental overspend, and slower than expected economic growth (leading to lower tax receipts). It was also noted that the Mortgage Help To Pay scheme, introduced in the 2020 budget, had also overshot its estimated £1.7bn cost by approximately £4bn.

Measures in the budget include:

Taxation

 * The Income tax personal allowance raised by 5%, 2% above inflation, to £8,804:
 * A change in the tax code was announced so that the higher rate threshold would be automatically set to the personal allowance multiplied by 10;
 * Hence, the higher rate threshold was also raised, from £80,450 to £88,040.
 * The Mortgage Help To Pay allowance was cut from £70,000 to £65,000, owing to "greater than expected cost";
 * The reduced rate of VAT was to be raised from 7.5% to 10% from April 2021.
 * The rate of corporation tax was cut from 15% to 14%.

Business, digital and science

 * Tax breaks were introduced for firms to "unlock" £20 billion worth of business investment;
 * Contactless payment limit was increased to £100 from 15 October 2021;
 * Alcohol duty rates were raised by 5%;
 * Fuel duty to be frozen for eleventh consecutive year;
 * Tobacco duties to rise by inflation plus 2%.

Health

 * £4 million for domestic violence programmes and funding network of respite rooms for homeless women;
 * £10 million funding for victims of 1960s Thalidomide scandal and lifetime support guarantee;
 * £5 million to support armed forces veterans with mental health needs.

Welfare

 * The post-tax deduction taper rate for Universal Credit was cut from 60% to 55%;
 * The so-called 'triple lock' on state pensions was maintained, despite rumours prior to the budget that it could be scrapped;

Departmental spending

 * The government would maintain its previous spending plans until 2023-24.
 * Thereafter, spending would be frozen for two years, a measure which was forecast by the OBR to decrease government spending in 2025-26 from 36.1% of GDP to 35.5%, and to replace the expected £20bn deficit for that year with a surplus of £18bn.

Reactions
Labour Party leader Jeremy Corbyn lambasted the budget for the increase in the higher rate income tax threshold, as it was seen to benefit the richest the most. Shadow Chancellor John McDonnell also criticised the budget for doing little to address inequality and accused the Chancellor of prioritising voter blocs which are typically loyal to the Conservative Party, and argued that the budget would weaken to "the foundations of our economy and exacerbate already dire inequality".

Leader of the Liberal Democrats Vince Cable made similar criticisms, particularly with regards to the raising of the top income tax threshold, saying that the money used for the increase could have gone towards increasing the income tax personal allowance further, to £12,000. Green Party co-leader Jonathan Bartley has asserted that the budget fails to include new incentives to shift towards a low-carbon economy.

Former Secretary of State for Work and Pensions Iain Duncan Smith welcomed the cut in the Universal Credit taper rate, saying it would "leave low hours workers with more money, helping accelerate them into full-time work and off benefits", and claimed that this would in turn reduce the total amount of money spent on the benefit, as people move on into work and start to pay tax.