Budget 2021 live: Rishi Sunak unveils tax and spending plans

Sunak says providing a world class education is also crucial. That leads to higher productivity, and higher wages.

Skills spending over this parliament is increasing by £3.8bn, or 42%, he says.

But millions of adults have numeracy skills lower than those expected from a nine-year-old.

This costs people up to £1,600 a year.

He says a new scheme, Multiply, will address this, changing lives across the UK.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, suspects the chancellor is teeing up some pre-election sweeteners in the future….judging by today’s borrowing forecasts.

Sunak says the R&D tax relief rules will change.

The scope will be expanded to cover cloud computing and data.

But the current system subsisies R&D happening outside the UK. That is not fair, and inconsistent with what is happening in other countries.

From April 2023 the relief will have to subsidise investment at home, he says.

Sunak says a £1.4bn British investment fund is being set up to promote inward investment.

And a new scale-up visa will make it easier for firms to hire talented people from around the world.

By revising down its estimate of the long-term scarring caused by the pandemic, from 3% to 2% of GDP, the OBR are signalling that Covid-19 will cause less permanent damage to the economy.

That should give the chancellor more fiscal room for manoeuvre.

But, that’s still above the Bank of England’s recent estimate of 1%.

It should still mean higher tax revenues and lower borrowing requirements, as shown by the new estimates for public sector net borrowing as a share of the economy:

• 2021–22: 7.9% of GDP, down from 10.3% of GDP in March’s Economic and fiscal outlook
• 2022-23: 3.3% of GDP, down from 4.5% of GDP in March
• 2023-24: 2.4% of GDP, down from 3.5% of GDP in March
• 2024-25: 1.7% of GDP. compared with 2.9% of GDP in March
• 2025-26: 1.7% of GDP, compared with 2.8% of GDP in March
• 2026-27: 1.5% of GDP

Sunak says the government will invest more in innovation.

The UK has four of the world’s top 20 universities, he says.

By the end of this parliament spending on R&D will be £20bn a year. That is a 50% increase. And it is in addition to the R&D tax relief, he says.

That will take R&D spending to 1.1% of GDP, he says. The OECD average is just 0.7%, he says. For Germany the figure is 0.9%, for France 1%, and for the US 0.7%

Sunak says, if the government wants growth, it must tackle the country’s uneven economic geography.

There is a choice – retrench or invest. This government will invest, he says.

He says infrastracture drives productivity and levels up.

He summarises the transport spending announcements that were briefed at the weekend.

Sunak says what matters is not what is spent, but what is delivered.

Sunak says the devolved governments are also getting record settlements.

Sunak says museums and cultural attracting are getting £800m.

And the tax relief for museums and galleries, that was due to end in March next year, will be extended for another two years, he says.

Sunak is now running through a list of places that will benefit from the levelling up fund. The first round of successful bids to the fund, worth £1.7bn, are being announced today, he says.