UK Budget 2021: Four things missing from Chancellor Sunak

Chancellors like to claim their Budgets include something for everyone, and Rishi Sunak’s tax and spend statement on Wednesday certainly cast the net wide. There were short-term policies to tackle the impact of Covid-19 and long-term plans for righting the nation’s finances.

But some people still feel there were gaps, areas where he could have done more: for those struggling to make ends meet, for example, and on action to fast-track the switch to a low carbon economy.

Here are four areas where critics and commentators were surprised by what was left out of the chancellor’s economic recovery Budget.

The BBC has put their points to the Treasury for a response.

Rishi Sunak wasn’t silent on the environment in the Budget. He handed the Bank of England a duty to support the move to zero emissions. He set up a new infrastructure bank, to invest mainly in green projects, and a new green savings scheme.

But does that amount to the revolution many people hoped would be kick-started in the Budget? Hardly, say critics.

Mr Sunak held off a fuel duty rise for the 11th year in a row. And he is accused of clawing back money from a key home insulation scheme that supporters say was an easy win for the environment.

The £1.5bn Green Homes Grant (GHG), launched last year, offered money for people to insulate their homes and install low carbon heating such as heat pumps.

The deadline to apply is the end of this month and people must have their improvements completed by March 2022.

But many householders couldn’t contact installers, and some installers didn’t get paid because the system was so creaky. Only 6% of the cash has been spent, so environmentalists want the money to be rolled over.

But Sunak didn’t mention it in the Budget so that won’t happen and the scheme will be withdrawn as planned at the end of March.

Money has been showered on government departments to deal with pandemic costs: £150bn this year and the same again next.

But there was no planning for Covid costs beyond April 2022, said Richard Hughes, chairman of the Office for Budget Responsibility, which provides independent financial forecasts to the Treasury. He called it a “source of risk” for the public finances.

The government’s own roadmap out of lockdown has talked of the possible need for an annual vaccination programme and continuing test and trace capacity.

Add to this the backlog of hospital appointments, additional help needed for school children, and reduced revenues for public transport, and many economists calculate that Covid costs will continue well beyond the next two years.

Mr Hughes said: “We don’t know what the government’s plans are for dealing with these legacy costs beyond this year.

“Faced with these looming pressures, the chancellor’s response so far has been to cut around £15bn a year from total departmental spending in the years beyond 2021-22, including a further £4bn cut in this Budget.”

Another respected economist, Paul Johnson, director at the Institute of Fiscal Studies, agreed that the Budget left a big question mark over Covid costs. He tweeted: “Spending plans from 2022 include precisely nothing for dealing with additional pressures arising from the pandemic, of which there are plenty. In fact they involve spending cuts relative to pre-pandemic plans. Is that really credible?”

There was no support for struggling renters in the Budget, pointed out social research group the Joseph Rowntree Foundation.

“The chancellor was silent on support for the 700,000 households already in rent arrears,” it said.

The Local Housing Allowance which is used to work out housing benefit will be frozen from April too, piling further pressure onto renters, the Foundation added.

On the other hand, for those buying a home, the chancellor extended the stamp duty holiday for another three months and launched a new 95% mortgage guarantee scheme.

“These policies will compound the UK’s housing crisis, driving up house prices and making it harder to address the issues faced by people in poverty,” the JRF said.

Higher house prices can have a knock-on effect, pushing up rents, and squeezing the finances of renters who are often struggling already.

Jon Sparkes, chief executive of homeless charity Crisis, said: “It is very disappointing to see the housing support announced is limited to home buyers. Hundreds of thousands of renters in arrears are facing eviction in a matter of weeks and must not be forgotten.”

Extending the £20 boost to universal credit and the furlough scheme until September will help tenants plan ahead, “but much more is required to avoid a mounting crisis in the private rented sector,” said Timothy Douglas, policy & campaigns manager for letting agents’ organisation Propertymark.

“As the impact of Covid continues to bite and unemployment rates rise, we are increasingly concerned about how tenants will avoid future rent arrears,” he added.

After the pandemic took the lives of more than 40,000 mostly elderly care residents there were widespread calls for reform of the social care sector.

But the chancellor failed to offer even a whisper of fresh support for care homes or their staff.

“The sector was already on its knees before the pandemic hit, and now it is at crisis point,” said Helen Wildbore, director of the Relatives & Residents Association.

“Following a year of unremitting challenges, with care services stretched to breaking point and staff burnt out, support from the chancellor was desperately and urgently needed.”

She said the Association’s helpline hears daily from people who are relying on these services who already feel neglected and left behind by the government.

“The Budget is an insult to older people needing care, and their families,” she added.

The day after the Budget, parliament’s Housing, Communities and Local Government Committee launched an enquiry into the impact of COVID-19 on adult social care, conceding that the problems in the sector aren’t simply a consequence of the pandemic.

“We have seen year-on-year the demand on services increasing, while local authority budgets have been stretched more and more,” said committee chair Clive Betts MP.

“Unless the funding of social care is resolved there will continue to be more cuts to other council services.”

But many wish reforms to social care and how it is funded had been tackled much earlier.

“The silence on social care funding proposals in the Budget was deeply disappointing,” said Steven Cameron, director at pension firm Aegon.

“The devastating impact the pandemic has had on our most elderly has shown just how valuable but stretched our care system is, making it even more urgent that the government delivers on previously promised reforms to social care funding.”