Autumn Budget 2021: Rishi Sunak slashes prices of pints and announces pay rises


Rishi Sunak has announced the largest increase in public spending in a century as he pledged an ‘optimistic’ new economy fit for the post-Covid era.

In a historic budget speech, the Chancellor announced £150bn of new spending on rising wages, cash for the NHS and investment into regional transport projects.

The huge raft of announcements also saw the fuel duty scrapped, the price of pints cut, a tax on domestic flights axed and a cut on the Universal ‘taper’ rate – meaning claimants will get 8p more for every pound they earn.

Mr Sunak said the budget does not draw a line under Covid, but does begin the work of building an economy post-pandemic.

‘Let there be no doubt: our plan is working,’ he said.

But Shadow chancellor Rachel Reeves accused him of living in a ‘parallel universe’ amid the rising cost-of-living demands.

‘The Chancellor in this Budget has decided to cut taxes for banks,’ she said.

‘So at least the bankers on short-haul flights sipping champagne will be cheering this Budget today.’

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In the opening remarks of his speech the Chancellor admitted that inflation was due to rise next year, sparking fears of a difficult winter for families already struggling with soaring energy bills.

He said inflation was 3.1% in September and ‘is likely to rise further’ – possibly to an average of 4% by next year.

The Chancellor said the problem was partly due to the surge in demand for energy and supply chain issues.

He insisted these were ‘shared global problems’ that he was working with other finance ministers to address – though experts say Brexit has exacerbated the situation in the UK.

The Chancellor said it would be ‘irresponsible for anyone to pretend that we can solve this overnight’.

But he pledged to take action where he can, saying a faster economic growth than predicted had given him billions more pounds to play with in his Budget.

The Chancellor revealed the economy is predicted to grow by about 6.5% this year – nearly twice as much as the 4% predicted by the Office for Budget Responsibility (OBR) in its March forecast.

He said the economy was expected to return to its pre-Covid level by the end of the year, much earlier than previously thought.

The better-than-expected public finances allowed Mr Sunak to make a series of major promises on public spending.

Mr Sunak told MPs: ‘Today’s Budget increases total departmental spending over this Parliament by £150 billion.

‘That’s the largest increase this century, with spending growing by 3.8% a year in real terms.

‘As a result of this Spending Review, and contrary to speculation, there will be a real terms rise in overall spending for every single department.’

Policies already unveiled from the chancellor’s Budget include:

  • NHS England will receive £5.9bn to tackle the backlog of people waiting for tests and scans
  • England’s city regions will receive a share of £6.9bn to improve public transport
  • The National Living wage will rise from £8.91 per hour to £9.50, to come into effect from 1 April
  • £2.6bn to be spent on creating 30,000 new school places for children with special educational needs and disabilities
  • £1.6bn over three years to roll out new T-levels for 16 to 19-year-olds and £550m for adult skills in England
  • 1.8bn has been pledged to build around 160,000 ‘greener homes’ on derelict or unused land.
  • £9m on ‘pocket parks’ the size of a tennis court across the UK to create more green space

What was contained in the Budget has been heavily briefed in recent days, much to the annoyance of Commons Speaker Sir Lindsay Hoyle, who suggested ministers should resign for dishing out details to the media before MPs have heard the speech.

The Treasury has released a flurry of announcements in past week, including in areas such as health, wages, transport, housing and education.

But Mr Sunak is under pressure to help people with the rising cost of living.

The Government has already confirmed a rise of the so-called ‘national living wage’ to £9.50 from April – an increase of 59p per hour for those aged 23 and over.

It has also announced the end of the year-long pay freeze the Chancellor imposed on public sector workers.

Mr Sunak said today that state employees such such as teachers, nurses and police officers will see ‘fair and affordable’ pay rises.

But he did not see if this would be above inflation rates, sparking anger from unions representing them.

One official said it was ‘meaningless’ to talk about increasing pay without information on how much workers will receive.

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GMB general secretary Gary Smith said: ‘The Chancellor’s Budget is big on headline-capturing announcements but scant on detail.

‘Saying you will lift the pay freeze that has ground down public sector workers is meaningless if we don’t even know if wages will increase above inflation.

‘Public sector workers must be guaranteed a proper real-terms pay rise if the Conservatives are to start making up for their ruinous decade of austerity.’

He said many of the Chancellor’s announcements were ‘vague at best’, adding: ‘It all reeks of vacuous gesture politics.’

Meanwhile Mark Serwotka, general secretary of the Public and Commercial Services Union, said: “For all the talk of lifting the public sector pay freeze, when it comes to the crunch, the Chancellor has shown his promises are merely fake news.

‘None of today’s rhetoric will do anything to alleviate the real economic hardship our members are experiencing every day.’

Rising wages come against a backdrop of soaring household bills and taxes.

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National Insurance Contributions for workers is being increased by 1.25% from April to help pay for the NHS and social care, while Mr Sunak ended the £20-a-week Universal Credit coronavirus uplift earlier this month.

The Chancellor promised to help families meet the rising cost of living by creating a stronger economy ‘for the people’.

However, he stopped short of cutting VAT on household energy bills, insisting investing into jobs, skills and education was the right way forward.

The chancellor said he will launch a UK-wide numeracy plan called ‘Multiply’ which will ‘improve basic maths skills and help to improve people’s lives across the whole United Kingdom’.

He said skills spending over parliament will be increased to £3.8bn.

On top of a raft of investments into public services, the Chancellor announced £7 billion in business rate cuts, with the cancellation of next year’s planned increases and a 50% discount on business rates for a year for a series of retail and hospitality venues.

Other reforms to corporate taxes included slashing the levy on bank profits and extending a corporation tax break on investment.

Mr Sunak also promised a new, lower rate of air passenger duty on domestic flights within the UK, benefiting nine million passengers and helping regional airports.

The Chancellor also announced a series of reforms to alcohol taxes from February 2023 – including a 5% cut in duty on draught products to help support pubs.

‘That’s the biggest cut to cider duty since 1923.The biggest cut to fruit ciders in a generation. The biggest cut to beer duty for 50 years,’ he said, adding: ‘It’s a long-term investment in British pubs of £100m a year. And a permanent cut in the cost of a pint by 3p.’

In a boost to the hospitality industry now, Mr Sunak announced a planned increase in duties would be cancelled – a tax cut worth £3 billion.

He also confirmed a widely-expected freeze in fuel duty.

Labour’s Response

Rachel Reeves welcomed the increase in the minimum wage but said the Government needed to go ‘further and faster’ and should have moved to a rise of at least £10 an hour.

She welcomed the end of the ‘punitive’ public sector pay freeze, but said: ‘We know how much this Chancellor likes his smoke and mirrors so we’ll be checking the books to make sure the money is there for a real terms pay rise.’

Ms Reeves welcomed the reduction of the Universal Credit taper rate from 63p to 55p but warned working people receiving the benefit ‘still face a higher marginal tax rate than the Prime Minister’.

She added: ‘Those unable to work through no fault of their own still face losing £1,000 a year.’

Key announcements in the Budget

Here are the main points from Chancellor Rishi Sunak’s Budget:

  • The Budget is focused on the ‘post-Covid’ era that the Chancellor says will will pave the way for the ‘Prime Minister’s economy of higher wages, higher skills, and rising productivity’.
  • Independent forecaster the Office for Budget Responsibility (OBR) has scaled down its assumption of the scarring effect of Covid-19 on the economy from 3% to 2%
  • The OBR has downgraded its unemployment forecast due to the coronavirus pandemic from 12% down to 5.2%
  • The minimum wage will increase to to £9.50 an hour next year, up from the current £8.91.
  • The Universal Credit taper rate will be cut by 8% from no later than December 1, bringing it down from 63% to 55%.
  • Alcohol duty is being ‘radically’ simplified by introducing a system designed around the principle of ‘the stronger the drink, the higher the rate’
  • A ‘draught relief’ will apply a lower rate of duty on draught beer and cider, cutting the tax by 5% on drinks served from draught containers over 40 litres and bringing the price of a pint down by 3p.
  • A planned rise in fuel duty will be cancelled because of pump prices being at their highest level in eight years.
  • Flights between airports in England, Scotland, Wales and Northern Ireland will be subject to a new lower rate of Air Passenger Duty from April 2023.
  • Every Whitehall department will receive a ‘real terms rise in overall spending’ as part of the Spending Review, amounting to £150 billion over this Parliament.
  • Mr Sunak confirmed a levy will be placed on property developers with profits over £25 million at a rate of 4% to help create a £5 billion fund to remove unsafe cladding.
  • Devolved administrations will be given the ‘largest block grants’ since 1998, with an increase to Scottish Government funding in each year by an average of £4.6 billion, £2.5 billion for the Welsh Government, and £1.6 billion for the Northern Ireland Executive.
  • An extra £2.2 billion has been announced for courts, prisons and probation services, including £500,000 to reduce the courts backlogs.
  • £300 million will go towards ‘A Start for Life’ parenting programmes, with an extra £170 million by 2024/25 going into paying for childcare.
  • The Chancellor said core science funding will rise to £5.9 billion a year by 2024-25, a cash increase of 37%.
  • A new 50% business rates discount will apply in the retail, hospitality, and leisure sectors, with eligible businesses able to claim a discount on their bills of up to a maximum of £110,000.
  • Ahead of the Budget statement, £7 billion transport funding was announced for areas including Greater Manchester, the West Midlands and South Yorkshire for projects ranging from tram improvements to introducing London-style improvements in infrastructure, but only £1.5 billion of this was believed to be “new” funding.
  • A £6 billion package of funding will help tackle NHS backlogs and invest in technology was also trailed ahead of the statement.

Rishi Sunak has also promised an additional £11million funding to support the UK’s bid to host the 2030 World Cup.

This is a breaking news story, more to follow soon… Check back shortly for further updates.

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