03 March 2021
03 March 2021
Policy and Public Affairs
Chancellor of the Exchequer, Rishi Sunak, announces details of the 2021 Budget.
The main focus of this year's Budget is the recovery of the UK’s economy after being hit hard by the impact of lockdown restrictions due to the ongoing coronavirus pandemic. The UK economy shrank by 10% in 2020, but is forecast to rebound in 2021 with a projected annual growth of 4%.
Furlough is to be extended until September 2021, with a 10% employer contribution from July and 20% contribution from August.
Self-employed support will also be extended until September. A fifth grant will include three months at 80% profits for those whose turnover has fallen by 30%. Those with less than a 30% drop in turnover will receive a 30% grant. As a result, 600,000 more people will now be eligible for support.
A £7 million fund will be made available from July 2021 to help employers in England set up and expand portable apprenticeships. This will enable people who need to work across multiple projects with different employers to benefit from the high-quality long-term training that an apprenticeship provides. Employers themselves will also benefit from access to a diverse apprenticeship talent pipeline. Incentive grants for apprenticeships and traineeships will increase to £3,000 (on top of the existing £1000 given for apprentices who are aged 18-24).
The national living wage will increase to £8.91 from April 2021, with Working Tax Credit claimants eligible for a one-off payment of £500. Universal Credit will also see a £20 uplift, worth £1,000 per year, to be extended for another six months.
In June 2020, the government entered into a reinsurance agreement with trade credit insurers to ensure coverage for vulnerable businesses and protect against the impact of insolvency. Under the scheme, the government assumes the majority of losses arising from insurance claims between 1 April 2020 and 30 June 2021, up to a total of £10 billion in insurance claims. Up to £190 billion of cover on businesses has been provided under the scheme.
The Trade Credit Reinsurance scheme has successfully maintained the vast majority of trade credit insurance coverage across the market throughout the pandemic, across the whole of the UK. Up to £190 billion of cover on around half a million businesses has been provided under the scheme. The government will continue to review the impacts of the scheme to assess whether there is a case for further interventions beyond the scheduled end date of 30 June 2021, in order to minimise disruptions in insurance coverage as the economy recovers.
No announcement was made regarding insurance premium tax (IPT). While it was hoped that it would be reduced, rates will at least remain set at the standard rate of 12% on most insurance premiums, and the higher rate of 20% for travel, electrical appliances and some vehicles. The next Insurance Premium Tax (IPT) Bulletin will be published on 30 July 2021.
This document is believed to be accurate but is not intended as a basis of knowledge upon which advice can be given. Neither the author (personal or corporate), Society of Underwriting Professionals or Chartered Insurance Institute, or any of the officers or employees of those organisations accept any responsibility for any loss occasioned to any person acting or refraining from action as a result of the data or opinions included in this material. Opinions expressed are those of the author or authors and not necessarily those of the Society or Chartered Insurance Institute.