Rishi Sunak had a choice to make: tightening the belt to get public finances under control or gamble on unleashing growth. He’s gone for the latter in a big way.

In doing so, he’s set the trap for his opponents – by making a tacit admission that the last 10 years of austerity was a mistake, he wants to put clear blue water between his approach and that of his predecessors. Sunak’s calculation is that every “gotcha” moment he faces in the coming days plays very nicely into his – and the Prime Minister’s – hands, burnishing their anti-austerity credentials.

The short precis of the Budget: Brexit bonus, climate-lite, red-wall focussed, banker bashing, small business backing, low-income household supporting, sin tax slashing (fuel, alcohol & air passenger duty), and International Development Aid restoring (in 2024).

But there’s plenty of small print and caveats.

The Budget gave the Government yet further opportunity to drive their tanks onto Labour’s turf with lashings of spending commitments. In responding to the Chancellor, Rachel Reeves (Keir Starmer is on sick leave) started by branding the Conservatives as ‘the party of high taxation.’ We live in a topsy-turvy political world nowadays.

The Chancellor set out how the Office for Budget Responsibility has upgraded its forecasts for the economy, allowing him to borrow and spend more. And spend he has done. This year’s growth is revised to 6.5%, up from 4% and continues at 6% through next year before dropping back in subsequent years.

Large swathes of the Budget were leaked ahead of the day and we knew about the rises in the minimum wage, public sector pay increases and extra money for waiting lists and infrastructure upgrades. The Speaker of the House of Commons suggested such was the extent of the leaking previous Chancellors would have resigned.

But Rishi Sunak had quite a bit more to add from the dispatch box, perhaps most noticeably changes to universal credit. The Government has been wounded recently by removing the temporary £20 weekly hike in payments, and the Chancellor has responded by a significant reduction in the taper rate from 63 per cent to 55 per cent – meaning for every extra pound earned by someone in receipt of Universal Credit they will keep 45p, as opposed to 37p.

He also announced a 50% business rates discount for the retail and hospitality sector in England for next year, targeting small businesses.

With air passenger duties reduced for domestic trips, fuel duty frozen, and no significant mention of COP26, the Budget is going to come in for significant criticism about its lack of commitment to the environment. Perhaps the rationale for this is that as the UK’s climate policies are discussed at COP26 within the fortnight the Government wants to keep their powder dry. Time will tell.

The Chancellor hinted this was only the beginning of his lower personal tax ambitions, and dependent on inflation and interest rates he plans to reduce personal taxes further throughout the Parliament.

Snapshot of announcements:

  • Two new public spending rules namely that go forwards ‘underlying public sector net debt, excluding the impact of the Bank of England, must, as a percentage of GDP, be falling’ and ‘everyday spending must be paid for through taxation.’
  • Universal Credit taper rate will be cut by 8% no later than 1 December, bringing it down from 63% to 55% – allowing claimants to keep more of the payment
  • Confirmation business rates to be retained and reformed
  • A 50% business rates discount for the retail, hospitality, and leisure sectors in England in 2022-23, up to a maximum of £110,000
  • Planned rise in fuel duty to be cancelled amid the highest pump prices in eight years
  • Consultation on an online sales tax
  • National Living Wage to increase next year by 6.6%, to £9.50 an hour
  • Whitehall departments to receive rise in overall spending, totalling £150bn over the course of this Parliament
  • Funding will rise by an average of £4.6bn for Scottish Government, £2.5bn for Welsh Government, and £1.6bn for Northern Ireland Executive
  • Levelling Up Fund will mean £1.7bn invested in local areas across the UK
  • Government backing projects in Aberdeen, Bury, Burnley, Lewes, Clwyd South, Stoke-on-Trent, Ashton under Lyne, Doncaster, South Leicester, Sunderland and West Leeds
  • Extra £2.2bn for courts, prisons and probation services
  • Tax relief for museums and galleries will be extended for two years, to March 2024
  • Core science funding to rise to £5.9bn a year by 2024-25
  • £6bn of funding to help tackle NHS backlogs
  • £7bn for transport projects in areas including Greater Manchester, the West Midlands and South Yorkshire
  • Schools to get an extra £4.7bn by 2024-25
  • There will be nearly £2bn of new funding to help schools and colleges to recover from the pandemic
  • Schools funding to return to 2010 levels in real terms – an equivalent per pupil cash increase of more than £1,500
  • £300m will be spent on a “Start for Life” parenting programme, with an additional £170m by 2024-25 promised for childcare
  • A UK-wide numeracy programme will be set up to help improve basic maths skills among adults
  • Schools cash returning to 2010 rate
  • Flights between airports in the UK nations will be subject to a new lower rate of Air Passenger Duty from April 2023
  • Financial support for English airports to be extended for a further six months
  • From April 2023, new ultra long haul band in Air Passenger Duty for flights of over 5,500 miles introduced
  • Planned rise in the duty on spirits, wine, cider and beer cancelled
  • Simplification of alcohol duties will see the number of rates drop from 15 to six
  • Stronger red wines, fortified wines, and high-strength ciders will see a small increase in their rates
  • Rates on many lower alcohol drinks including rose wine, fruit ciders, liqueurs, lower strength beers and wines to fall
  • All sparkling wines to pay same duty as still wines of equivalent strength
  • New, lower rate of duty on draught beer and cider will cut the rates by 5%
  • Taxes cut on sparkling wine and draught beer
  • £24bn earmarked for housing: £11.5bn for up to 180,000 affordable homes, with brownfield sites targeted for development
  • 4% levy will be placed on property developers with profits over £25m rate to help create a £5bn fund to remove unsafe cladding
  • £640m a year to address rough sleeping and homelessness