The Chancellor of the Exchequer, Rishi Sunak, is expected to announce that the Government will be pumping extra billions into the economy when he sets out details of the Budget and Spending Review on October 27.
The review will give details of the next three years of spending priorities while the Budget is expected to provide details of how the country balances its books after the huge outlays during the pandemic.
Capital budgets for 2022-23 and 2024-2045 and resources for Government departments will be laid out, as will grants for the devolved administrations in the UK.
The Chancellor says that by 2024-25, core departmental spending will be £140 billion more per year in cash terms than at the start of the Parliament.
In total, day-to-day spending will increase to £440 billion by 2024-25, increasing by nearly £100 billion a year in cash terms over the Parliament.
To help pay for it, Government departments have been asked to identify savings and efficiencies of at least five per cent from their day-to-day budget to invest in prioritised areas.
On the Spending Review, the Government says it will set out how it will:
The Spending Review and Budget will be carefully intertwined and may suggest future tax rises on the horizon, despite previous pledges.
This follows the announcement of the increase in National Insurance to cover health and social care and means core departmental spending will grow in real terms at nearly four per cent per year on average over this Parliament.
The Chancellor seems limited on other tax raising methods. However, with inflation on the rise which may lead to an increase in interest rates, the Chancellor is likely to be concerned about the cost of servicing the nation’s huge pandemic debt.
As a result, he has already temporarily suspended the triple lock on pensions, which faced a substantial rise of eight per cent due to earnings increasing, which was an anomaly due to furlough. Stealth wealth taxes could be an option, including Inheritance Tax (IHT) being suggested as a possible target.
IHT revenue has been rising substantially, driven by big increases in house prices, so the Chancellor could look at ways of maximising revenue through restricting reliefs and exemptions without altering headline tax rates.
There are also ongoing rumours of a possible link to Capital Gains Tax, which could see people taxed more on the assets they dispose of, particularly investment property, which has been in the Government’s cross hairs for some time.
Pension allowances could also be an area where revenue could be raised by lowering the £40,000 annual allowance together with freezing other allowances and thresholds.
Mr Sunak said: “Since the start of the pandemic, we’ve delivered on an unprecedented scale to protect people’s jobs and livelihoods.
“Despite the worst economic recession in 300 years, we have not only got people back into work through the Plan for Jobs but continued to deliver on the priorities of the British people.”
The Office for Budget Responsibility (OBR) will also prepare an economic and fiscal forecast, which will be presented alongside the Budget and Spending Review.
“Richard Anthony case study – Terry Lewis – Jaques Samuel Pianos Widely considered to be London’s leading piano retailer, Jaques Samuel Pianos has grown considerably from its humble beginnings in the front room of Mr Samuel’s home in Notting Hill. They are now internationally recognised and have provided pianos for high-profile clients like Queen and […]”
Terry Lewis – Jaques Samuel Pianos
“Richard Anthony: ‘a super-star firm’ MT Finance is a property finance lender, specialising in bridging loans and auction finance. They assist numerous property professionals, business owners, and individuals with their finance requirements and specialise in short-term asset-based lending. Founder and Director, Tomer Aboody, knew that as an asset-based lender, the business would require an expert […]”
Tomer Aboody – MT Finance
“A family fairground success story The Botton family have been running a traditional fairground, arcade and amusement park in the heart of Skegness since taking over the Pleasure Beach in 1965. Jim, the Director of the company, took over from his father and now heads day-to-day activities and administration. He said: “The Pleasure Beach is […]”
Jim Botton – Pleasure Beach (Skegness)