Is the 2021 Budget a missed opportunity?

THE Budget is always a political hotbed, many are saying Rishi Sunak has missed the opportunity to set things right. Also, he has been accused of not having a clear vision for a Post Pandemic, Post Brexit UK. 1 of the biggest allegations to hit headlines so far ids that he has come under fire for is handing out 90% of ₤1bn new Towns Fund cash to Tory seats, but this has been good news for Southport. As well as, not having set up a better self isolation payment system ort adding more support to help the 3m Excluded UK business owners and freelancers. Bit others are saying this is a fantastic Budget. We would love to know your thoughts on it...  So in short, the 2021 Budget is as follows:-

As part of the UK Governments Plan for Jobs businesses across the North West can expect to benefit from a new Restart Grant; a 1 off cash payment of up to ₤18,000 for hospitality, accommodation, leisure, personal care and gym businesses; a new UK wide Recovery Loan Scheme is to make available, between ₤25,000 and ₤10 million, to help businesses of all sizes through the next stage of recovery; an extension of the VAT cut to 5% for the hospitality, accommodation and tourism sectors until the end of September; additional cash flow support through an extension to the loss carry back rules worth up to ₤760,000 per company; and a 3 month extension to the 100% business rates holiday, with the vast majority of eligible businesses receiving 75% relief across the year.

Rishi Sunak has also added that:- "To protect the incomes of individuals as we begin to unlock through the Prime Minister's roadmap, we're extending the furlough scheme and Self Employment Income Support Scheme through to September; maintaining the ₤20 per week uplift to Universal Credit for another 6 months; and eligible Working Tax Credit claimants are set to benefit from a 1 off payment of ₤500, to provide continued support over the equivalent period as those in receipt of Universal Credit."

The Budget also sets out steps towards an investment led recovery; including:- extending the Annual Investment Allowance, freezing Alcohol and Fuel Duties, and introducing a mortgage guarantee scheme; to help generation rent become generation buy.

In addition to UK wide measures to extend support for people and businesses the Budget also included several announcements which will boost jobs and opportunities across the North West.

Chancellor of the Exchequer Rishi Sunak said:- "Levelling up means spreading opportunity and investment across the United Kingdom; ensuring everyone has a fair shot at life no matter where they are from. That's why today I was pleased to announce that 8 Towns throughout the North West will benefit from ₤186m of funding via our Towns Fund to support their regeneration and recovery from Covid19. This support is complemented by initiatives such as our ₤4.8bn Levelling Up Fund; ₤220m Community Renewal Fund; and ₤150m Community Ownership Fund; all of which will result in substantial levels of Government investment in communities across the Region."

For the Liverpool City Region, this years Budget has given the green light to the Port of Liverpool to become the Liverpool City Region Freeport. Freeports will create national hubs for trade, innovation and commerce, levelling up communities across the UK, creating new jobs, and turbo charging our economic recovery.

Other highlights that should help or Region include the new Town Deals, that is aimed at supporting:- Preston, Workington, Bolton, Cheadle, Carlisle, Leyland, Southport, and Rochdale. These areas will benefit from ₤186 million funding from the Towns Fund to support their long term economic and social regeneration as well as their immediate recovery from the impacts of COVID19. This means Southport will get 37.5m funding that will help improve tourism opportunities through initiatives that capitalise on its natural beauty spots and proximity to the sea, agreed under the new Town Deals. It is also hoped that Southport will also benefit from Preston also being given funding. Both schemes are hoped to create more new jobs within the area.

It was also announced that the High Potential Opportunities Programme, that is promoting opportunities in molecular diagnostics and early detection for healthy ageing will be used to attract inward investment into the North West, within the Greater Manchester, Cheshire and Warrington areas.

Responding to the Budget, Steve Rotheram, Metro Mayor of the Liverpool City Region, said:- "It's welcome that the Chancellor took steps to protect the economy in the short term by extending the furlough scheme and much needed support for sectors that have been hit hardest by the Paramedic. In my view, the measures announced today fall short of the comprehensive long term recovery plan and investment in our public services like the NHS, Schools and local Councils, which Regions like ours need if the Government is to achieve its stated aim of levelling up. I was equally disappointed that the Chancellor had almost nothing to say about devolving more power and funding away from Whitehall, when areas like ours could be taking steps now to boost the economic recovery, had we been given more backing by Government. My heart goes out to the 3 million people excluded from Government support since last March, who were hoping for something today to address their plight. They deserved better. Overall, I think today was a missed opportunity for the Government to set out a clear long term vision for our economic recovery in a post Paramedic, Post Brexit world."

So far reactions have been very mixed and these are just a few of them:-

Statement from Roger Marsh OBE DL, Chair of the NP11 and Leeds City Region Local Enterprise Partnership, in response to the Budget:- "Today's Budget contains much welcome news for the North. The announcements of the new Treasury Economic Campus in Darlington, a new Infrastructure Investment Bank in Leeds City Region, Freeports for the Humber, Teesside and Liverpool City Region, plus welcome news on the extension of the furlough scheme and a range of support to help businesses and individuals recover from the Paramedic, will all play a crucial role in helping the North's economy rebuild from the biggest economic crisis in 300 years. Our economic fight back will not be accomplished overnight, and we need long term partnership between Government and northern leaders to ensure a truly national revival. Delivering on the Government's levelling up commitments will require sustained focus and investment in those areas where the North can unlock transformational growth and job creation, not just within our own communities, but as a beacon for investment that will benefit the whole country. The Net Zero agenda is just one area where the North is in pole position to spearhead a new era of global innovation and competitiveness for the UK and the NP11 stands ready to work with Government and lead thinking on this and other economic recovery plans for the North."

Responding to the Budget, Cllr James Jamieson, Chairman of the Local Government Association, said:- "Tackling the economic challenges ahead is a huge task. It is Councils who know their local areas best and must be able to lead efforts to rebuild and level up our economy, get people back into work and create new hope for communities. It is good that Councils have been placed at the heart of the delivery of new funds such as the Levelling Up Fund and Community Renewal Fund. We look forward to working with Government on the detail, but are concerned by the prospect of competitive bidding processes at a time when Councils want to be fully focused on protecting communities and businesses from the impact of the Paramedic. Also, the Emergency Government Grants distributed by Councils have been a vital lifeline to struggling businesses worried about the future during the Paramedic. It is good that further funding will be provided to support businesses and Councils remain ready to use their local knowledge and expertise to distribute this new money quickly."

Cllr James Jamieson, continued:- "The Covid19 Paramedic could lead to the number of long term unemployed people across England reaching 1.2 million. The furlough scheme has been vital in securing jobs that may have otherwise been lost so it is important that it has been extended. It will be crucial to ensure people seeking to re-enter the labour market get the local support, advice and training they need to face the future. Councils stand ready to work in partnership with the Government at the earliest stage to shape new and re-design existing Plan for Jobs initiatives, so they are effective and connected on the ground to ensure no community is left behind."

Local Government Association's Chairman, Cllr James Jamieson, then commented on the Budget's Universal Credit section, saying:- "Many households could be economically vulnerable for some time so we are pleased that the Chancellor has announced an extension to the universal credit uplift. We remain clear that this must be kept in place for as long as it is needed so that households are not pushed into financial hardship as a result of vital support being withdrawn. The mainstream benefits system will need to provide the first line of support to those in need with Councils given adequate local welfare funding to provide additional help."

Cllr James Jamieson, also commented on Council funding and Social Care, saying:- "Councils continue to lead local efforts to protect lives and livelihoods from Covid19, but still face substantial cost pressures and income losses. The Government has provided a significant financial package of support so far to help but the ongoing financial impact and unpredictability of the Paramedic means this support must be kept under review. We continue to call on Government to meet; in full; all cost pressures and income losses incurred by Councils as a result of the Paramedic. Further action is also desperately needed to immediately shore up social care services, and to secure the long term future of care and support. The Government must urgently bring forward its proposals, including a clear timetable for reform, so that we can finally put social care on a sustainable footing and enable people to live the lives they want to lead. Public finances are undoubtedly under huge strain, but investment in our local services will be vital for our national economic and social recovery. Alongside sustainable long term investment for Councils in the forthcoming Spending Review, bringing power and resources closer to people is the key to improving lives, tackling deep set inequalities and building inclusive growth across the country as we move forward."

The Low Incomes Tax Reform Group (LITRG) welcome the announcement of additional funds for HMRC's compliance work in the Budget, but point out that the 2 main areas earmarked for money; Job Retention Scheme fraud and the loan charge, contain intricacies that need specialist case handling.

The Chancellor announced that the Government will invest over ₤100 million in a Taxpayer Protection Taskforce of 1,265 HMRC staff to combat fraud within Covid19 support packages, including the CJRS and SEISS, representing 1 of the largest responses to a fraud risk by HMRC.

In a separate announcement, the Government said it will invest a further ₤180 million in 2021 to 2022 in additional resources and new technology for HMRC, some of which will be used to continue to fund compliance work on the loan charge, historic disguised remuneration cases and early intervention to encourage individuals to exit tax avoidance schemes. LITRG has said that they welcome the announcement of this extra funding for HMRC. But the group cautions that to use the money most effectively, the department needs to become fully conversant with the intricacies around the Job Retention Scheme and the loan charge.

Victoria Todd, Head of LITRG, said:- "HMRC have made good progress in terms of improvements to their general compliance work, but nevertheless cases can still be difficult and time consuming for staff, particularly where they are dealing with vulnerable taxpayers or those that need extra support. Moreover, while many compliance interventions can be dealt with by non-specialists, the Job Retention Scheme and the loan charge are not just 'general' compliance issues. They are one off initiatives in the system, that present complex, technical and often knotty issues. HMRC need to use the money wisely; to invest in education and training of their staff, which could help them direct their energy and resources most efficiently and effectively. Learning from the experiences of bodies such as LITRG or TaxAid for example, in dealing with employer queries over the last year, could help them differentiate between an employer who has made a mistake with their Job Retention Scheme grants, due to the complexity of the scheme, and one who has made a fraudulent claim. On the surface, the two can sometimes be difficult to distinguish between. For example, take John; who is a truck driver who was asked to set up a limited company by an agency he worked through. John, without the support of an accountant, had no idea how to furlough himself, how to calculate his furlough pay or how to account for the Job Retention Scheme funds received. Although he did his best to comply, the upshot is that he has no furlough paperwork, has probably applied for the wrong amount of support and had the support paid into his personal bank account rather than running it through his limited company's payroll. At 1st glance, an HMRC officer might assume this is a case of fraudulent use of the scheme. Education and training could assist them in recognising that this is a complex support scheme and it is easy for people like John to make mistakes. We hope that HMRC will take a reasonable approach when dealing with taxpayers who have done their best to comply with the complex rules of each support scheme. Education and training at a corporate level on the inner workings of the labour market could also help HMRC deal with the outstanding loan charge cases and the ongoing usage of disguised remuneration schemes. It has become very clear to us during the course of our work that many of the people affected by the loan charge were put into loan schemes by their employers. This meant they were paid in loans by their employers (umbrella companies) without their knowledge. This may help explain the fact that HMRC have received nowhere near as many 2018/19 tax returns reporting the loan charge as they were expecting. In addition, many of those they have received are incorrect. If you look at the problem through this lens, it means HMRC's communication, enforcement, penalty and compliance strategy are currently falling wide of the mark because they assume people proactively exercise a choice when entering such schemes. We are confident that this situation can be turned around if HMRC are able to recognise that disguised remuneration schemes can be driven by engagers bent on cost savings rather than traditional tax avoidance by individuals, which they may be able to do through some education and training about the different types of taxpayers involved."

The Association of Taxation Technicians (ATT) have also welcomed most of the announcement of the extension to the Self Employment Income Support Scheme (SEISS) to include those who started to trade in tax year 2019/20, but cautions that not all of them will qualify for a grant. It confirms that newly self employed individuals, who commenced self employment in 2019-20, who filed their self assessment return by midnight on 2 March 2021, and meet the other qualifying criteria for the scheme, will be able to claim the 4th and 5th grants. It will not be possible to make a retrospective claim for the 1st, 2nd or 3rd grants. Grants for those already in self employment will now be based on the four years to 2019-20, which could impact on the quantum of, or eligibility for, the 4th and 5th grants. In the Budget presented by the Chancellor's announcement that future grants under the SEISS will take into account tax returns for tax year 2019 to 2020 for the 1st time.

Jeremy Coker, President of the ATT, said:- "This announcement is very welcome, as it means the scheme is now open potentially to individuals who became self employed for the first time between 6 April 2019 and 5 April 2020. But it should not be assumed that all of these individuals will now qualify for a grant. In particular, to be eligible for future grants under the SEISS, individuals will need to have filed their self assessment tax return by midnight on 2 March 2021. Anyone who has not yet filed their return is therefore prevented from making a claim Those who moved from employment to self employment part way through tax year 2019/20 may also struggle to meet the requirement of having trading profits which are at least equal to their non-trading income. For example, an individual who left a job in December 2019 and then started a self employed business in January 2020 could easily find that their salary in the tax year exceeded their trading profits, meaning they are not entitled to a SEISS grant. There are a number of qualifying conditions which need to be met to be eligible for a SEISS grant. Individuals will need to review these carefully and make sure they meet them all before proceeding with a claim when the service opens in late April."

The Chartered Institute of Taxation (CIOT) Head of Technical, Richard Wild, said:- "The Chancellor is right to extend this scheme to those who became self employed in the year before the Paramedic. Excluding them was always rather rough justice. It's a case of better late than never. Potential claimants should be aware of 2 important factors within today's announcements. 1st, the 5th grant will vary depending upon the extent that a reduction in turnover can be demonstrated, and the extent of that reduction. There is no detail yet regarding the period over which turnover will be evaluated, and it would be advisable for business owners to start recording their weekly or monthly turnover if they aren't already doing so. Secondly, HMRC announced new measures enabling HMRC to recover grants where an individual was entitled to the grant at the time of claim, but subsequently ceases to be entitled to all or part of it.1 This seems to be part of a ₤100m investment in HMRC to combat fraud within the Covid19 support packages. Again there is scant detail at the moment, but it remains vital that business owners retain evidence which demonstrates that they made a valid grant claim."

Notwithstanding significant pressure from a variety of sources, the Chancellor did not extend SEISS or CJRS to fill the remaining gaps in the schemes. Richard Wild continued:- "It is disappointing that the Chancellor has not felt it appropriate to fill some of the other gaps in support,2 which may leave many individuals with no regular income for well over a year. As far back as last spring the Government was presented with suggestions as to how these gaps could be filled. Indeed, we have offered to work alongside HMRC and HMT to review the proposals objectively, and assist with their further development with a view to implementation at the earliest opportunity. But the Government seems to have concluded that the risk of fraud, together with the necessary resourcing requirements to provide more targeted grants, outweighs the need to provide comparable support across the board."

Also adding to the voices commenting on the Budget was The Low Incomes Tax Reform Group (LITRG) who have pointed out that furlough pay from now until September 2021 could be based on 2 year old pay data and would not take into account recent pay rises, including the April 2021 minimum wage rate rise, if existing rules remain in place.

The Government is extending the Job Retention Scheme until September 2021. The Budget confirms that it will continue in its current form until the end of June 2021. As the economy reopens and demand returns, the Government will require increased employer contributions until September 2021.

LITRG say the furlough scheme is a lifeline for small employers, but point out that the JRS has now been in place since March 2020. By the scheduled current end date of September 2021, the JRS will have therefore run for more than 18 months; which, the group say, will cause complexities in some employees' furlough pay calculations.

Victoria Todd, Head of LITRG, says:- "HMRC have already confirmed that for some variably paid employees, when working out their furlough pay for the corresponding period in March and April 2021, wages for March 2019 and April 2019 must be used for the 'higher of' calculation and not March 2020 and April 20201. Without this change, the relevant reference periods employers use to calculate the JRS grant would overlap with periods during which the JRS has been running. This could result in employers basing furlough pay for March and April 2021 on periods during which the employee was on furlough and may have had only 80% pay, meaning their furlough pay for these months could be 80% of 80% of wages, which would be unfair. If the calculations from May 2021 onwards follow this same methodology, it is important for both employers and employees to be aware that some future furlough pay calculations could, counter intuitively, be based on 2 year old pay data."

LITRG also point out that this methodology means that variably paid furloughed workers will not feel the benefit of any pay rises they may have received, including National Minimum Wage pay rises in April 2021, until they are back at work.

Victoria Todd continues:- "The Government have today confirmed the minimum wage rates from 1 April 2021. We know that some staff currently on furlough are on the minimum wage and we also know that some sectors like hospitality, won't fully reopen for some months. Because of the look back when calculating furlough pay, workers who are expecting a National Living Wage rise to ₤8.91 from 1 April 2021 for example, won't see the benefit of this while they remain on furlough. The furlough pay calculation will also bypass the ₤8.72 rate rise in April 2020. This is likely to come as an unwelcome surprise to employees. This could feel quite unfair, but, practically speaking, finding a solution presents challenges. Higher pay rates could be used, but then you have the problem that overall, weekly or monthly pay is likely to be lower in 2020 or 2021 anyway, due to the impact of lockdown on working hours skewing the result. As an example, say you have Dav, who is variably paid, according to the hours he works. Dav's furlough pay for April 2021 will be based on his monthly pay in April 2019 of ₤1,100 which was calculated using the then NMW rate of ₤8.21. The alternative is that his furlough pay for April 2021 is based on the higher minimum wage rate in force in April 2020 or April 2021, but with actually a much lower monthly pay amount, due to it being a furlough period, which would be to his detriment.  The only way around this is for employers to do many better off calculations to work out what might give the best outcome. But there has to be a balance between doing the right thing for an individual employee and making things administratively manageable for employers. Adding further complexity to an already complicated scheme means employers may simply refuse to furlough people."

CIOT President Peter Rayney said:- "This is excellent news; and something CIOT has been suggesting over the past year. Allowing businesses to benefit from a 3 year carry back of trading losses arising during the Paramedic will give businesses with a track record of making profits and paying tax; a good proxy for long term viability, but which have suffered during the Paramedic, a much-needed cash injection. It will also be cost-effective. The Government's figures show it will essentially give businesses an extra billion pounds now, thanks to tax refunds, while their future bills will be collectively about a billion pounds higher because, having used them, they won't have the losses to carry forward and use against future profits."

Commenting on the corporation tax increase to 25% and reintroduction of a small profits rate, CIOT President, Peter Rayney said:- "This is a big change in direction of Government policy, following a decade of corporation tax cuts and the abolition of the previous small profits rate after 2014. The reintroduction of the small profits rate will obviously be welcomed by those who benefit from it. However it does miss an opportunity to allow the increased corporation tax rate to reduce the imbalance between the tax burdens on employment, self employment and those operating through a company. Although the upper limit of ₤50,000 annual profits to the new small profits rate1 is lower than it was in the past, it will still benefit very many of those service providers who might have remained unincorporated (or might even have operated as employees) but for perverse fiscal incentives. It will also add to the complexity of the system. The combination of the corporation tax increase and extended loss carry back may give some businesses a dilemma; use current losses for relief on past corporation tax bills at 19%, getting the money now, or banking on profits returning in future and keeping the losses to get relief at 25% in a few years' time. But most businesses will probably think it better to have that choice than not."

Commenting on the introduction of a 'super deduction,' allowing companies to reduce their corporation tax bill by 130% of the value of their investment for 2 years, Peter Rayney said:- "This will be a real incentive to investment, and will help tip the balance in favour of some marginal investment proposals. It will make most difference to larger businesses, as smaller ones benefit proportionally more from the existing Annual Investment Allowance; indeed the smallest businesses that do invest often pay no tax as a result. The Chancellor may have feared that without this new break, larger companies would have had a fiscal incentive to defer investment until 2023 when the higher rate of corporation tax came in, in order to attract the corresponding higher rate of relief. That said, the CIOT believes there has been too much tinkering with rules and rates of capital allowances, and that frequent changes more often than not bring complexity and uncertainty, and undermine investor understanding of, and confidence in, what is on offer at any one time. This further temporary measure leaves unresolved the question of what is the ongoing permanent level of support through tax system for corporate investment."

Responding to the Chancellor's statement in the Commons outlining the Government's Budget, Dr Katherine Henderson, President of the Royal College of Emergency Medicine, said:- "This budget is disappointing for the Health and Social Care service which urgently needs a revised funding and investment plan. There are only 10 mentions of the NHS in the published budget. The NHS entered the Paramedic underfunded, short of staff and short of resources. Now more than ever the NHS must have an adequate recovery plan that includes funding, investment, and a strategy to fix the workforce crisis. This budget failed to build on last year's spending review, which itself did not go far enough. Pressures on the NHS before the Paramedic were anything but normal and the added pressure has taken a huge physical and mental toll on existing staff, who have been stretched too thinly. In Emergency Medicine we need an additional 2500 consultants and 4,000 nurses, in England alone. The wider NHS is hugely short of staff and fixing this will require an increase in the number of training school places, which in turn requires funding. Failing to address the workforce crisis does our staff a disservice. While Covid is receding, we cannot drift towards being complacent about the state of our NHS. It is regrettable that this budget will do little to address the longer term underlying problems we have."

Commenting on the Budget, Dr Charmaine Griffiths, Chief Executive of the British Heart Foundation, said:- "Today's Budget leaves life saving research at risk, and does not give the NHS the means to clear the vast backlogs of treatment and care caused by the Paramedic. Without Government support, charity funded medical research faces devastation, and could leave a generation of young researchers without funding. This could reverse decades of scientific progress in developing new ways to prevent, diagnose and treat heart and circulatory diseases. NHS cardiac services meanwhile face a huge challenge, with tens of thousands of life saving operations and procedures delayed or cancelled. The reality is the health service needs more funding now and in the long term to restore and expand services so they are able to meet increased demand."

Responding to a Government announcement of ₤100 million extra funding for healthy weight programmes, including ₤35 million allocated to Councils, Cllr Ian Hudspeth, Chairman of the Local Government Association's Community Wellbeing Board, said:- "This new funding is a positive step and a reflection of our shared commitment with Government to helping people of all ages achieve a healthier weight, by investing in prevention. Tackling obesity and helping their communities live healthier and more active lives is a top priority for Councils. Sadly, the impact of unhealthy weight has been brought into sharper focus by the Coronavirus pandemic. This extra investment in Councils' weight management services is recognition of their excellent work to date, allowing them to reach out and support more people. It is good this funding will be targeted, so that those areas most in need will receive the greatest support. Councils are keen to work in partnership with Government and the NHS in building the case for weight management services. Sustainable, long term funding is also needed to provide healthy lifestyle services, which will help reduce health inequalities and obesity rates."

CARE England, who are the largest representative body of independent adult social care providers, has written to the Department of Health and Social Care (DHSC) to express immense frustration with the publication of the staff movement guidance.

Professor Martin Green OBE, Chief Executive of Care England, says:- "The adult social care sector received no forewarning as to when this major piece of guidance would be issued or what it would look like. The sector is juggling a great many pressures and this unexpected guidance may well have unintended consequences.”

On 1 March 2021, the DHSC issued guidance for care home providers on limiting staff movement between settings in all, but exceptional circumstances to help reduce the spread of Covif19 infection. The guidance can be found at:- Gov.UK.

Care England holds that the decision to stop staff movement between care settings will struggle to work in practice and has
outlined a number of outstanding issues including:-

►  Unworkable requirement for providers to ensure that there is a 10 day interval between a member of staff attending two care settings.

►  Lack of clarity around date of implementation.

►  No discussion as to how this policy will be funded post March.

►  Growing gap between what the Infection Control Fund is intended to cover versus what it can actually cover.

►  No clarity about what constitutes an:- 'exceptional circumstance.'

►  No guidance as to what the role of the CQC is with regards to enforcing the guidance.

►  No reference to the Covif19 vaccinations and what this means in the longer term.

Martin Green continues:- "This represents another bureaucratic hoop for providers to jump through. We are at a loss to understand why if these measures are to be introduced across adult social care settings, the movement of NHS staff between NHS settings is not being subjected to the same policy.”

Southport MP Damien Moore: Budget shows Conservatives' commitment to protecting jobs and livelihoods as we build our future economy

Total UK cases Covid19 cases in and around Liverpool City Region