SALIENT POINTS FROM THE BUDGET 2021
This briefing utilises information from Gov.UK, CBI, Make UK and various press sources to give an overview of the budget relevant to our industry sector.
Jobs and Skills:
- As anticipated and widely broadcast beforehand the Job Retention Scheme (Furlough) will remain in place until the end of September 2021. Employers will have to contribute 10% in July, increasing to 29% in August.
- Self-employed support also extended until September with 600,000 more becoming eligible.
- The Recovery Loan Scheme will continue and provide lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million. It is open to all businesses, including those who have already received support under the existing COVID-19 guaranteed loan schemes.
- Businesses taking on new Apprentices between April and September will receive an increased payment of £3000. This extends the current programme. There is work being undertaken regarding the Apprenticeship Levy as the numbers fall and the scheme has “failed on all key measures” according to the CIPD. However, there is an additional £126Million for 40,000 more traineeships and £7Million for ne Flexi-job apprenticeships in England.
- Increases to the minimum wage.
- Corporation tax has been announced to increase from 19% to 25% from the financial year 2023/24. There is a lower threshold of 19% for profits under £50,000 with stepped increases to an upper threshold of £250,000, above which the full 25% rate will apply. A major area for concern here is for Northern Ireland who complete against the Republic of Ireland with a 12.5% level of Corporation Tax.
- “Super-deduction” tax incentives will allow companies to cut their taxes by up to 25p for every pound they invest. This Super deduction incentive will apply from 1st April 2021 until 31st March 2023 and contains a 130% capital allowance on qualifying plant and machinery investments and a 50% first-year allowance for qualifying special rate asset. It looks like the claims process could be complex, says the CBI. There are also concerns being raised by the CBI that that 2023 will be a big cliff edge with the end of the Super-Reductions and the increase in Corporation Taxes.
- No reforms announced yet for the Business Rates system.
- No incentives were announced to drive the zero carbon emissions policy forwards, and there has been some concerns raised that a freeze in fuel duty may have a negative impact on the PM’s recent Green Economy announcements.
- Red diesel: The Government has published a summary of the responses to the consultation on Red Diesel. This details that the Red Diesel discount will be removed from the steel sector from April 2022.
- Carbon Price Support: The government will maintain the freeze on Carbon Price Support rates at £18 per tonne of carbon dioxide in 2022-23.
- To give smaller businesses a digital and management capability boost, the Chancellor announced a new £520m Help to Grow initiative for Small and Medium Enterprises.
- A new UK INFRASTRUCTURE BANK is to be set up in Leeds with £12 billion of equity and debt capital to finance infrastructure projects across the UK. It is also able to issue £10bn of guarantees.
- A £4.8 billion Levelling Up Fund to support local areas across the UK to ‘invest in infrastructure that improves everyday life’. This includes local transport and high street projects.
- The Chancellor confirmed increased funding for the devolved Governments with an additional £1.2 billion for the Scottish Government, £740m for the Welsh Government and £410m for the Northern Ireland Executive for the coming financial year.
Research and Development:
- The government will review R&D tax reliefs, with a consultation published alongside the Budget.
- The government have announced £375 million to introduce “Future Fund: Breakthrough” to support the scale-up of R&D-intensive businesses. The British Business Bank will take equity in funding rounds of over £20 million led by private investors to ensure these companies can access the capital they need to grow and bring prosperity to communities across the UK.
- Announcement of 8 new free ports in England: Solent, Thames, Felixstowe & Harwich, Plymouth & South Devon, Liverpool City Region, East Midlands Airport, Teesside and Humber.
- The government will continue to discuss freeports in Wales, Scotland, and Northern Ireland with the devolved administrations.
- This will include (1) capital allowance of 100% for companies investing in plant and machinery, (2) an enhanced 10% rate of Structures and Buildings Allowance; (3) Full relief from Stamp Duty Land Tax, (4) Full Business Rates relief, and (5) employer National Insurance contributions relief.
- Concerns have been raised that Freeports will encourage movements of industry rather than new industries to the Freeports.
The BSSA agree in general with the Make UK view that distinct policy measures to benefit the steel industry were thin on the ground. However, the emphasis on manufacturing, infrastructure and levelling up presents an opportunity for the Stainless Steel industry to expand. Stainless steels are all around us and continues to be a growing material of choice. The BSSA will continue to push government policy to ensure fairness of Safeguarding measures, promote the life cycle cost advantages of stainless steel in infrastructure project, and the importance of our products in the Circular and Net Zero economies.
For further information please contact
Rob Cooper – Managing Director
Mobile: 07593 561160