The end of October saw the announcement of Chancellor Rishi Sunak’s 2021 Budget. In the first episode of Jasmine’s Column on our Youtube channel, MoneyMagpie founder and personal finance expert Jasmine Birtles responds to the spending budget.
“He’s been spending on some things, but he hasn’t spent on me and I don’t think he’s spent on you,” is Jasmine’s first remark regarding the announcements. In fact, she thinks the 2021 Budget is a very odd one to have if the Government want to grow the economy!
How will this new budget be paid for? Through increased taxes, Jasmine believes. Although this increase in taxes was not explicitly stated by the Chancellor, this is the likely result due to personal tax thresholds – the amount of money we are allowed to earn before we are taxed – being frozen for the next three years. Thus, as wages increase in 2022, we will actually be paying more tax as a result.
Jasmine’s main concern, as previously stated, is that the spending Budget has not been spent on those who live in the United Kingdom. Although money has been put towards various services, which is a helpful and valuable move, these changes need to be paid for somehow. This responsibility is likely to heavily fall on the taxpayers’ shoulders.
Jasmine was glad to see the increase in Universal Credit payments, however. A strong advocate for keeping the £20 a week uplift that was bought in at the beginning of the pandemic in 2020, the new work-based rules allow more Universal Credit to be kept even for those who are working. For every £1 you earn, only 55 pence will be deducted from your benefit payments, rather than the previous 63 pence.
The increase in the living wage is also a very positive move, according to Jasmine. “Personally, I think we should raise it even further, so people really can live off their earnings,” Jasmine suggests in her recap.
But what can we take away from this budget overall? Consumers and small businesses are likely to be the ones paying for these changes. Small businesses will not receive help with these changes, either through decreased taxation or regulation. Jasmine suggests, “There should be more help for entrepreneurs and businesses, and certainly more help for us, the individuals and consumers.”
Jasmine also suggests there should be less tax to pay, so that there is more disposable income to be spent, growing the economy. It may be an interesting ride over the next six to 12 months, as the country sees increased living costs and interest rates.
In conclusion, Jasmine states, “Has it been a helpful budget for us as individuals? I don’t really think so.”
Watch the full video now.