5 Bits Of Budget News Rishi Sunak Tried To Bury

The chancellor's public image is carefully managed, but that doesn't mean his tax and spend statement didn't have hidden nasties.

Rishi Sunak has become known for the careful management of his public image, with slickly produced images pushed on Twitter and Instagram suggesting the chancellor has an insatiable hunger for publicity.

But when Boris Johnson’s biggest ally delivered his budget on Wednesday, it revealed a slew of bad news for millions of people that Sunak would rather bury. Here are some of the hidden nasties in the 2021 budget.

1. Sunak’s own constituency prioritised for levelling up funding

A policy priority of the Conservative government is to “level up” the inequalities between different region of country. To that end, a £4.8bn Levelling Up fund will direct funds to “places in need, those facing particular challenges, and areas that have received less government investment in recent years”.

On Wednesday, it was announced which areas would be a “priority” for the money – doubtless a move to garner positive headlines from local media. But journalists soon examined the detail, and it emerged Sunak’s own Richmond constituency would be given preference by the government.

He was even asked at a Downing Street press conference if he was using the fund for “naked pork barrel politics”.

2. Pensions ‘stealth tax’

The pensions lifetime allowance – the amount people can save before tax charges kick in – will be held at its current level of £1,073,100 until April 2026.

Pensions experts have described this as a “stealth tax” and have warned more of middle Britain, including NHS doctors, could be caught in the tax net.

Baroness Altmann, a former pensions minister, said the decision “may well damage confidence in long-term pension planning”.

Many doctors may leave the NHS or cut their hours rather than face big tax bills as a result of the freezing of the pensions lifetime allowance, the British Medical Association (BMA) has warned.

The move could also trigger strikes among lecturers, the University and College Union has warned.

Chancellor Rishi Sunak heads to the Commons to deliver his budget
Chancellor Rishi Sunak heads to the Commons to deliver his budget
Press Association

3. Universal Credit £20 uplift not made permanent

Sunak has extended the £20-a-week uplift to Universal Credit for a further six months.

But the move has disappointed campaigners who say the decision to eventually return to a lower rate will leave families struggling and create a cliff-edge when the furlough scheme ends in September.

Those who receive tax credits, who did not receive the £20 uplift, will get a one-off payment of £500.

4. Sick pay faces a real terms cut

Sunak has repeatedly faced calls to raise sick pay, which opponents claim is so low that it forces people facing poverty to work, even if they have Covid.

The chancellor said statutory sick pay of £95.85 would go up 0.5% (50p a week) from next month.

But as inflation in 2021 is 1.5% (CPI) and 2.5% (RPI), that is likely to amount to a real terms cut.

5. Workers dragged into paying more income tax

More than a million people could start paying income tax in the next five years.

This is due to Sunak’s decision to freeze income tax and personal allowance thresholds from April.

It means that as many as 1.3m people whose pay goes up could be pulled into a higher rate of tax, the Office for Budget Responsibility (OBR) said.

The move is expected to raise £8bn per year by 2025-26 if incomes rise with inflation, according to the OBR.

And what wasn’t in the budget?

The budget could also lead to a number of other headaches for Sunak, largely as a result of concerns he failed to address in his update.

Unions have hit out after the chancellor failed to announce any pay rise for public sector workers.

The news came as a particular disappointment to NHS and social care workers, who are buckling under pressure amid Covid.

Sunak also failed to outline a hoped-for review of funding for local authorities.

Jonathan Carr-West, chief executive of the Local Government Information Unit, said town halls were facing “another ad hoc one year financial settlement” and “deep uncertainty”.

He said: “The state of local government finances is not only unsustainable, it is failing fast.”

Sunak also failed to set aside funding for a cancer care backlog that is estimated to affect some two million people.

Campaigners say no “super boost” that ring-fenced NHS funding for cancer care means “tens of thousands of cancer patients will die needlessly”.

Opposition parties are also angry there were no funds for social care.

Sam Monaghan, chief executive of the charitable care provider MHA, said older people and those who care for them were “forgotten and still underfunded”.

He tweeted: “Are those of us in social care surprised by the lack of funding laid out in today’s budget? I think not – but disappointment rings heavy.”


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