The 2021 Budget is scheduled for 3 March and there are a number of pressing issues that The Chancellor needs to address.
The economic cost of Covid-19 – who is going to pay the bill?
The Government has rightly supported the UK economy and jobs over the last year, with a range of measures including the furlough scheme remaining in place until 30 April 2021, CBILS loans, bounce back loans and deferred VAT payments.
With the announcement this week of the 4 step plan to emerge from lockdown by 21 June, many businesses are being forced to remain closed beyond the date that the furlough scheme is set to end on 30 April. This is the third time now that lockdown changes have been announced over the last year, before the accompanying business support – which is very unhelpful to struggling businesses.
The imposing cost of Covid support will have to be paid for and rumours are that there could be a 5% increase in Corporation Tax, up from the current 19% to help pay the bill.
Range anxiety as 2030 approaches
Longer term, the 2030 deadline for all new cars to be either hybrid or full electric is getting ever closer. Jaguar have announced ambitious plans to switch Jaguar to an electric only brand from 2026 and Ford have committed to every car they sell in the UK being at least a plug in hybrid by 2026.
This is all fine, but the current poor state of the EV charging infrastructure across the UK means this is a very big leap into the unknown. Colossal investment will be needed within a very short space of time in the EV charging infrastructure and the question is, how will this be paid for? In addition, the extensive amounts of duty and VAT raised from petrol and diesel will have to be replaced, presumably by taxing EVs.
On a Zoom Q&A last autumn, I had the opportunity to ask this question to Nadhim Zahawi, the then Under Secretary of State for Business and Industry and now the Under Secretary of State for Covid-19 vaccine deployment.
His answer was simple… The Chancellor will announce how this will be funded in due course.