7 Things Buried In Rishi Sunak's 'Coronavirus Budget'

Spoiler: There is no cash for social care and the 'Brexit dividend' is definitely not £350m-a-week.

Chancellor Rishi Sunak has delivered the new Conservative government’s budget.

The headlines will be dominated by £30bn emergency funding package to help the country cope with coronavirus and the £100bn of extra cash for public services over the next four years.

Here are some of the things you might have missed.

1. There is no extra money for social care

Demand for funds to tackle the social care crisis have been growing, with an ageing population ramping up pressure on councils and the care sector.

The Conservative Party’s election manifesto pledged a solution which would mean workers did not have to pay a ‘dementia tax’ (as was once mooted by former PM Theresa May).

But despite announcing an extra £6bn for the NHS, there was no specific cash for social care.

Former health secretary Jeremy Hunt called this a “glaring omission”, adding: “Hospitals will continue to fill up and winter crises will be annual until we fix this issue, which – I fully accept – wasn’t solved when I was in office.

“We desperately need a social care long-term plan to go alongside the NHS plan,” he added.

2. The Brexit dividend is not £350m-a-week - at least not yet

The Treasury documents set out for the first time the net amount saved by Britain leaving the European Union.

Vote Leave famously promised it would amount to £350m-a-week which would be going back into the UK government’s coffers rather than Brussels’.

While Sunak is pumping huge sums into public services with this budget, the cash saved from no longer making EU contributions is listed as £42bn over the next five years.

This puts the figure closer to £161m-a-week.

The government has pointed out that the UK will continue to pay into some EU schemes and that this figure does not represent the long term benefit. It will also increase over time.

But some think that the commitments ministers have made to support sectors hit by Brexit, such as car manufacturing and farming, will eventually eat into the figure.

3. EU migrants will pay £624-a-year to use the NHS

Migrants from outside the EU currently face an annual £400 charge to use the NHS as part of a fee added on to their visa application called the immigration health surcharge.

Sunak is hiking this levy up to £624 for adults and £470 for children, the budget document confirms.

Budget

In December, the UK-EU transition period is expected to end and EU migrants will face the charge for the first time.

It means a family of four will face up to £2,200-a-year on top of their visa application to use the NHS post-Brexit.

The government’s defence for this is that voters want immigrants to pay more for UK public services.

4. Borrowing is going up *big time*

Sunak made a huge amount of spending commitments in the budget.

And with the government set to spend more than £600bn on major infrastructure projects, a rise in borrowing was to be expected.

But the raw figures for borrowing are huge - around £100bn over five years. While Sunak admitted borrowing would “increase slightly”, the Office for Budget Responsibility (OBR) laid out the numbers in full, with borrowing set to rise to £66.7bn in 2021/22 and £57.9bn by 2024/25.

With Brexit and coronavirus threatening to play havoc with the economy and growth, this is a bold move and one on which Boris Johnson’s opponents could pounce.

The government has said the investment is part of its “levelling up” strategy which will see cash reach some of the former Labour “red wall” voters it has persuaded to vote Tory.

It has also pointed out that borrowing rates are at a rare low.

5. Self-employed contractors to face higher tax bills

Tens of thousands of self-employed workers are going to face a higher tax bill.

Despite numerous calls from campaigners, Sunak refused to delay tightening up IR35 legislation and there will be a crackdown on self-employed people operating through a company.

The changes, which will come into effect in April, will see self-employed people who work for a company like an employee potentially pay the same level of tax that permanent staff members pay.

The Treasury reckons this will bring in £3.1bn in additional tax revenues between 2020 and 2024.

Chris Bryce, chief executive of the Association of Independent Professionals and the Self-Employed (IPSE), has sounded the alarm.

He said: “By forging ahead with these disastrous changes, the government risks hollowing out the UK contracting industry.”

He added: “Understandably, contractors are extremely concerned about this. Many we have spoken to are already seeing work dry up almost entirely, and our research shows at least one in three are planning to stop contracting in the UK. This will be catastrophic for the £305bn contracting sector and will do serious harm to the already troubled economy.”

6. Your energy bill will go up

Sunak decided to freeze the levy on electricity from April 2022, calling it the cleanest mode of energy.

But he chose to raise the levy on gas and introduced a green gas levy that industry experts predict could overall add £5 to your energy bill.

Mark Todd, co-founder of the Energy helpline, tweeted: “This is the first salvo in a war on gas that will be waged over the next ten years as it will be chased out of the energy system like coal and diesel.”

7. Taxes on flights to be raised despite Flybe collapse

A tax on air fares, known as Air Passenger Duty (APD), has been increased despite airlines calling for them to be scrapped.

Sunak confirmed that APD for long-haul economy tickets will increase by £2 to £80, while the rate for those travelling in premium cabins will rise by £4 to £176.

The changes come into effect on April 1.

APD for short-haul flights in economy will be frozen, however.

A spokeswoman for British Airways’ parent company IAG said: “This is a tax on business.

“Last year, IAG paid around one billion euros in APD to the Treasury.

“This costs UK jobs and growth.

“If the government is serious about making Britain a global trading economy, the world’s highest aviation tax should be scrapped now.”

Regional airline Flybe, which collapsed last week, blamed APD as one of the reasons for its financial struggles.

The news will be welcomed by eco-campaigners, however, who say fewer flights will be better for the environment.