Budget 2021: What Rishi Sunak's spending plans mean for the North East and North Yorkshire

Credit: PA

Chancellor of the Exchequer Rishi Sunak has unveiled the government's tax and spending plans for the year ahead.

The Richmond MP revealed a Budget intent on fulfilling Boris Johnson's promise to 'level up the UK' while also seeking to reduce the UK's national debt - which rose to 106% of GDP during the pandemic.

Universal Credit boost but inflation 'likely to rise' and pints to get cheaper

The Chancellor admitted that inflation is 'likely to rise' further and pledged a living wage increase of 6.6% to help offset that.

Universal credit has been boosted for around two million claimants and total department spending is set to increase by £150 million a year.

But while Sunderland, the Tees Valley and even York Railway Museum were all mentioned in Mr Sunak's address, people in our region will be wondering: what does the 2021 Budget mean for us?

Cost of living

The North East is among the UK's more deprived regions, with over 250,000 families hit by October's removal of the government's temporary universal credit uplift.

This makes it likely that the region has been disproportionately impacted by rising inflation levels largely caused by gas prices and supply issues.

To combat rising living costs, the national living wage (the minimum adults over 22 can legally be paid) will increase by £0.59 to £9.50 from 1 April next year.

That's an inflation-busting increase of 6.6%, more than double the 3.1% rise in the cost of living.

There will also be a boost on Universal Credit, with low earners able to keep more of the benefit as they earn more.

It comes after the government cut the £20 per week temporary uplift which was added to help people deal with the impacts of the Covid-19 pandemic.

The Universal Credit "taper rate" - the amount of benefit taken away for every £1 earned above the claimant's work allowance - will be cut by eight percentage points from no later than 1 December, bringing it down from 63% to 55%.

Prominent Labour figures have said Mr Sunak's efforts to offset rising living costs for working people do not go far enough.

Among many other policies, Shadow Chancellor of the Exchequer Rachel Reeves criticised the government's decision to increase National Insurance tax by 1.25%.

Transport and infrastructure

Boris Johnson has previously referred to transport as "one of the supreme leveller uppers", and the March budget set up Teesside as the poster child for green infrastructure projects.

The following North East transport and infrastructure projects were presented as part of today's budget, although many had previously been announced:

  • City Region Sustainable Transport Settlements: £310 million over five years to transform local transport networks in the Tees Valley for schemes such as upgrading Middlesbrough and Darlington stations and improving local rail links.

  • Levelling Up Fund (newly announced allocations): £100 million in total for 5 projects in the North East:

    • Reopening the UK’s oldest road suspension bridge (the Whorlton Bridge over the River Tees).

    • Restoring Grainger Market in Newcastle.

    • Establishing the Housing Innovation and Construction Skills Academy inSunderland.

    • Regenerating town centres in the towns of Yarm and Eaglescliffe.

    • Building a state-of-the-art sports facility in West Denton.

  • Community Ownership Fund: £600,000 will be allocated to 2 projects in North Shields and Whitley Bay from the first round of the Fund to protect valued community assets.

  • £210 million funding for new Nexus trains over the Spending Review period, to improve journeys for passengers and level up opportunity.

  • Almost £690,000 will be allocated towards the regeneration of Church Lane North estate in Redcar and Cleveland from the £14 million estates regeneration share of the Brownfield Land Release Fund.

  • Up to £50,000 through the Restoring Your Railway ‘Ideas Fund’ to develop an early-stage proposal to reinstate passenger rail links between Darlington and Weardale.

  • Selecting East Coast Cluster (combining Teesside and Humberside) as one of two Carbon Capture Utilisation and Storage clusters to be deployed by the mid-2020s.

  • The UK Infrastructure Bank has supported its first investment: a £107 million loan to Tees Valley Combined Authority to develop a site for the manufacturing of wind turbine blades, creating around 800 high quality jobs directly, with the potential to unlock thousands of jobs in total across the site.

A number of national transport and infrastructure commitments were also made - many of which will affect the North East. These include £5.7 billion allocated for transport improvements in city regions.

As part of an £800m investment in museums and libraries, the Chancellor also announced improvements to York Railway Museum.

Controversially, Mr Sunak halved air passenger duty for domestic flights. Pandemic-hit airlines and airports (like Newcastle) will welcome the news, but environmentalists and others have voiced concern in the run up to next month's COP26 summit.

  • Laura Phoenix owner of Earth Warriors in Darlington

Alcohol

But today's most-discussed announcement was the Budget's overhaul of alcohol duties.

The Chancellor announced "five steps today to create a system that is simpler, fairer and healthier".

Alcohol is the leading cause for death, ill-health and disability amongst 15-49-year-olds in England.

2020 was a record year for alcohol-specific deaths and the North East was disproportionately affected.

Mr Sunak said the Alcohol Duty, first introduced in 1643 to help pay for the civil war, was "outdated, complex and full of historical anomalies" and announced plans to "radically" simplify it."

The new system will be designed around a common sense principle - the stronger the drink, the higher the rate," said Mr Sunak.

He announced the government will slash the number of main duty rates from 15 to six and will cut the “irrational” 28% duty premium on sparkling wines and duty on fruit ciders.

The planned increase in duty on spirits, wine, cider and beer will also be cancelled - a tax cut worth £3 billion.

A draught relief will apply a lower rate of duty on draught beer and cider, cutting the tax by 5% on drinks served from draught containers over 40 litres - bringing the price of a pint down by 3p.

The announcement came just a few days after a charity and health experts urged the Government to increase all alcohol duties by 2%.

Balance, a North East organisation that works on programmes to reduce the harm, death and disease caused by smoking and alcohol have responded to the comments made today.

  • Sue Taylor

Education

Students in our region receive some of the lowest A-level grades in the country - an education gap that has widened during the pandemic.

The percentage of A-level entries in 2021 awarded the top grades (A* or A) by each region:

  • North-east England 39.2%

  • North-west England 41.4%

  • Yorkshire & the Humber 41.1%

  • West Midlands 40.9%

  • East Midlands 41.3%

  • Eastern England 44.8%

  • South-west England - 44.7%

  • South-east England - 47.1%

  • London - 47.9%

Under the new budget, schools are to get an extra £4.7 billion by 2024-25. This means funding will return to 2010 levels in real terms - an equivalent per pupil increase of more than £1,500.

But some figures in the sector say the increase still leaves education underfunded.

"Whilst it is important to recognise the progress being made in education spending, we must also be aware that bringing spending back to 2009 levels within the next 3 years still leaves the sector underfunded," said Craig Knowles, head teacher of Hetton School in Sunderland.

Reaction

Politicians in the region, in government and in the shadow cabinet have been giving their reactions to the Budget.