Autumn Budget 2021 briefing
The Chancellor delivered his Budget and Spending Review today, which included some announcements for the North East as part of spending on transport in city regions, from the Levelling Up Fund, the Community Ownership Fund, and an investment from the UK Infrastructure Bank in Teesside.
The Treasury has summarised these announcements in a set of regional fact sheets here.
Our initial comment from our policy director Jonathan Walker is here: “The Budget had some welcome announcements for North East businesses but our wait for a long-term levelling up strategy goes on.”
But how did Rishi Sunak’s announcements compare to the priorities we outlined for the region in our submission to him last month?
We said that this Budget and Spending Review must…
- provide a clear, bold definition of levelling up
- fund departments and public bodies in a way that makes them responsible and accountable for levelling up
- advance the cause of decentralisation and devolution
There were a number of announcements in the Budget either made from the Levelling Up Fund or under the wider auspices of ‘levelling up’. These include regeneration projects in Newcastle, Sunderland and Teesside. However, the long-awaited White Paper on levelling up is yet to be published, while other related strategies such as the Integrated Rail Plan have also been much delayed.
The projects announced today are all extremely welcome and will make a difference to their local communities. However, the fact that they are being awarded from a central funding pot after a national competition speaks to the centralised nature of the country. Without a greater commitment to long-term devolved funding settlements we are unlikely to see much progress in levelling up.
- provide support for exporters
There was a £67.6 million budget increase for the Department for International Trade (DIT) over the Parliament to maintain capacity to secure trade agreements and support exporters.
An announcement of £180 million to build a UK ‘Single Trade Window’ which aims to reduce the cost of trade by streamlining trader interactions with border agencies.
Funding for EU-focused Export Support Service from DIT as part of Export Strategy to be published shortly.
£838 million over three years to 2024-25 to complete delivery of Customs Declaration Service (CDS).
£107 million next year for the Trader Support Service (TSS) which helps traders move goods to Northern Ireland.
- establish the UK Shared Prosperity Fund based on regional economic need
The first announcement was made from the Shared Prosperity Fund, which will distribute £2.6bn over the next three years, including through the £560m ‘Multiply’ scheme which is aimed at adult numeracy. The Treasury suggests regions such as the North East, where adult numeracy levels are lower, will benefit most from this.
The schemes so far are national in focus, and don’t reflect the structure of EU funds, which were distributed direct to regions based on need.
- deliver on aspirations for broadband investment
The Government in the Budget confirmed its target to invest £5 billion in to support the rollout of gigabit capable broadband in across the whole of the UK.
The Government will also provide £180 million over the next three years as part of its £500 million investment in the Shared Rural Network, to deliver 4G mobile coverage to 95% of the UK
There weren’t any particularly new announcements around broadband but we welcome the Government committing to targets to improve digital connectivity. We now need to see this investment take place to improve connectivity for the region.
- properly fund rail investment across the North, including the eastern leg of HS2
There has been welcome investment confirmed in the Budget for improving local rail links in Teesside including redevelopment schemes for Darlington and Middlesbrough stations. We are still waiting for the Government’s integrated rail plan to set out plans for investment around HS2 and Northern Powerhouse Rail.
- ensure the long-term success of regional airports
We welcome the Government extending the Airport and Ground Operations Support Scheme (AGOSS) for a further six months to help airports as they recover from Covid travel restrictions.
The Budget also announced a 50% cut in domestic APD and a new ultra-long-haul distance band.
- incentivise investment in low-carbon housing and retrofitting
The Government set out plans to invest £450 million in growing the heat pump market and reduce costs by 25-30% by 2025 to allow the technology to be rolled out across the UK.
The Government is also providing business rates exemptions and relief in England to support the decarbonisation of non-domestic buildings.
- support arts and culture as a means of regenerating communities
The arts and culture sector will benefit from 50% business rates relief for retail, hospitality and leisure sector businesses, as well as specific Covid recover funding of £52m next year. There is also tax relief for museums, galleries, theatres, orchestras and film and TV projects.
- properly fund and support our further and higher education sectors
Skills funding will increase by £3.8 billion compared to 2019/20. This funding will quadruple places at skills bootcamps, expand the Level 3 qualifications on offer to adults and fund the newly announced Multiply scheme, which will equip adults with basic numeracy skills. The £560 million investment in the Multiply scheme will benefit the North East disproportionately due to the region’s lower-than-average numeracy levels.
Schools and colleges
The Budget outlined a £1.6 billion increase to 16-19 education funding over three years which will help maintain funding rates and expand the rollout of T Levels. Rishi Sunak also outlined a £4.7 billion boost for schools budgets by 2024-2025, amounting to a cash increase per-child of £1500. Also announced was £2.6 billion of funding to be spent on creating new school places for children with special needs and disabilities. Whilst these investments are a step in the right direction, it is unlikely they will counter the record cuts which schools and colleges have faced since 2010.
The Chancellor also announced additional funding for the schools recovery fund of £1.8 billion, aimed at supporting schools. The total investment of £ 5 billion is still much lower than the £15 billion Sir Kevan Collins, the Government’s former catch up advisor, argued was necessary to support young people to catch up on lost learning.
The Government’s increase in public investment in Research and Development (R&D) to £20 billion will provide a funding increase for the UK’s universities and research institutions of £1.1 billion per year more by 2024-25 compared to 2021-22.
- increase funding flexibility to encourage employer investment in training
There were no significant announcements which would enable this additional flexibility. We considered this an important change to make to enable businesses to engage with a broader range of spending under Apprenticeship Levy rules and adjust how the scheme worked to fit the needs of modern employers.
- recognise the damaging economic impact of welfare cuts in our region
The Budget announced a reduction in the taper rate that applies in Universal Credit from 63% to 55% by 1 December 2021. This is welcome as it will help people working on Universal Credit and keep more money within the region, however those not in work will not feel the benefit.
- put in place the necessary business support measures to reduce the impact of future Covid restrictions, including a limited reintroduction of the Job Retention Scheme
The Government announced business rates relief of 50% for retail, hospitality and leisure sectors in 2022-23. Eligible properties will receive 50% relief, up to a £110,000 per business cap.
This is positive for businesses in these sectors, however other sectors won’t benefit.
There was no mention of wider Covid business support packages, or how these might be reintroduced should restrictions return.