Budget date set as triple pension lock is suspendedby
News of the Autumn Budget date comes on the same day the government unveiled two policy announcements that wouldn’t look out of place at the actual Budget - a suspension of the pension triple lock and a new health and social care levy.
Save the date in your diaries - Rishi Sunak has confirmed 27 October as the date for the Autumn Budget. The Chancellor announced the Budget as he launched today a spending review which will conclude on 27 October.
Along with the government’s plans post-Covid, and any economic belt tightening, it would be a safe bet to predict that the Budget will likely feature a grandstanding economic climate change commitment, as the fiscal event is days before the COP26 summit at Glasgow on 31 October.
However, Westminster watchers could be fooled into thinking that date arrived earlier than expected by the government’s double manifesto-breaking day of policy announcements.
The mini-policy blast started at midday today when the Prime Minister revealed to the House of Commons the government’s expected plan to increase national insurance by 1.25% to pay for health and social care.
Pension triple lock announcement
Shortly after, work and pension secretary Thérèse Coffey added another Budget-worthy announcement with the temporary suspension of the triple lock pension next year.
The basic and new state pension will increase by 2.5% in line with inflation, rather than the expected 8%. The suspension of the link between pension payment increases and the consumer price index or average earnings will be introduced in the Social Security Uprating and Benefits Bill for 2022-23 only.
“This will ensure pensioner spending power is preserved and protected from higher costs of living but will also ensure that as we are having to make difficult decisions across public spending pensioners are not unfairly benefitting from a statistical anomaly,” Coffey told the House of Commons.
“Setting aside the earning element is temporary and only for one year. This means we can and will apply the triple lock as usual from next year for the reminder of the parliament in line with our manifesto commitment.”
What’s to expect in the Budget
The government’s decision to ditch manifesto pledges by increasing taxes and suspending the triple lock sets the table for October’s post-Covid Budget.
With the end of the furlough scheme at the end of the month, and the winding down of other Covid support, the October Budget will be seen as the next chapter in the government’s economic plans. However, Sunak’s letter to Mel Stride, the chair of the Treasury Select Committee confirming the spending review, suggests that the pandemic may still be an agenda item at the Budget.
Outlining the spending challenges ahead, Sunak told Stride: “Given the continued uncertainty around the path of the virus, we recognise that some additional spending on top of [our spending review] plans may be required in the immediate term as part of the remaining response to Covid-19. This will be considered in exceptional circumstances only, where reform and efficiencies are not sufficient to fund essential activity,” Sunak said.
The government will set out at the spending review how it will “build back better” with a focus on:
- Strong and innovative public services
- Levelling up across the UK to increase and spread opportunity
- Leading the transition to net zero
- Advancing global Britain post-Brexit
- Delivering the government’s plan for growth, which includes a “cementing the UK as a scientific superpower” and its plans for infrastructure and innovation revolution.
Sunak continued: “[O]ur plans will see core departmental spending grow in real terms at nearly 4% per year on average over this Parliament – a £140 bn cash increase, and the largest real-terms increase in overall departmental spending for any Parliament this century."
“This includes a step-change in capital investment, building on the significant multi-year commitments we have already made at Spending Review 20 [SR20], as we continue with our plans to deliver over £600bn in gross public sector investment from 2020-21 to 2024-25.
“Departments will be expected to carefully prioritise their bids, and we will need to make trade-offs to ensure that this increased spending is focused on the delivery of our key commitments.”
As always, the Chancellor is inviting policy ideas and proposals for the upcoming Spending Review and Autumn Budget. Individuals and organisations outside central government have until 30 September to submit ideas through the stakeholder representation process.
What do you expect the Chancellor to announce at the Budget?