What Budget 2021 means for Derry
The extension of the furlough and self-employed support schemes until September are among several important measures in Budget 2021 that will stave off uncertainty for citizens in Derry in the short term.
The announcement the Executive will get additional funding to extend the £20 Universal Credit uplift for a further six months will provide some limited relief to unemployed workers.
There will be a one-off payment of £500 to eligible Working Tax Credit claimants.
Under Budget 2021 the threshold for paying income tax is to rise in April but it will then be frozen for five years.
At present Derry workers are exempt from paying the 20 per cent tax on income if they are earning less than £12,500. This exemption threshold will rise slightly to £12,570 next month but will then be frozen until 2026.
The threshold for the 40 per cent income tax rate will rise from £50,001 to £52,700.
The British Office for Budget Responsibility (OBR) estimates this will bring a further 1.3m people across the UK into the income tax net.
In his budget paper the British Chancellor Rishi Sunak confirmed: "The income tax Personal Allowance and higher rate threshold (HRT) will be uprated in line with Consumer Prices Index (CPI) as planned in April 2021, then maintained at that level until April 2026. This decision will not reduce take-home pay and the highest income households will continue to contribute more. This will take effect in April 2022."
Fuel duty has been frozen and alcohol duties will be frozen across the board for the second year running.
The extension of the 5% VAT cut for hospitality, accommodation and attractions until the end of September, followed by a 12.5% rate for a further six months until March 2022 has been welcomed by the Derry Chamber of Commerce.
The local trade lobby had hoped the Coronavirus Business Interruption Loan Scheme (CBILS) that provides government backed loans to businesses would have been extended beyond March but it won't be.
While the above measures apply generally across the UK Mr. Sunak has announced that under the Barnett formula which is used by the Treasury to work out how much money the North should get for public spending based on how much is spent in England and Wales there will be an additional £410 million in 2021/22.
"Taken together with the Spending Review 2020 settlement, this means the Executive is receiving an additional £1.3 billion in 2021/22 through the Barnett formula, on top of their baseline of £12.9 billion, as well as more than £350 million of non-Barnett funding, notably for farms and fisheries," according to Mr. Sunak's budget paper.
The Derry and Strabane City Deal is mentioned in the Budget six times.
It states: "The government also welcomes the signing of Heads of Terms for the Derry-Londonderry and Strabane City Deal on February 24, to which it is contributing £105 million. The project proposals for this Deal focus on inclusive and sustainable growth and have the potential to create an additional 7,000 jobs."
The Treasury is, it states, looking forward to 'full deal implementation.'
The paper states: "The Budget delivers further investment on top of the £2 billion New Decade New Approach commitment announced in January 2020 and the £400 million New Deal for Northern Ireland (NDNI) package announced in December 2020.
"In addition to the UK-wide policies which apply in Northern Ireland, the following measures are specific to Northern Ireland:
• The Northern Ireland Housing Executive will be exempted from Corporation Tax (NIHE) – This will bring the NIHE into line with comparable public housing sector bodies across the UK and save the Northern Ireland Executive around £10 million annually.
• New Deal for Northern Ireland – The Budget announces that almost half of the £400 million NDNI funding package has been allocated across four areas, subject to business cases: new systems for supermarkets and small traders to manage new trading arrangements; building greater resilience in medicine supply chains; promoting Northern Ireland’s goods and services overseas; and supporting skills development.
• The Derry–Londonderry and Strabane Growth Deal – Partners signed the Heads of Terms for the deal on 24 February, enabling it to progress towards full deal implementation across the priority areas of digital innovation, tourism, regeneration, skills and employability.
• Tackling Paramilitary Programme – The government is extending funding for the Tackling Paramilitary Programme with a further £5 million in 2021-22. The Budget confirms an additional £410 million of Barnett consequentials for the Northern Ireland Executive."
Another significant development given our cross-border position is the decision to increase Corporation Tax to 25%.
The British government says this is the the lowest rate in the G7 but come 2023, unless Pascal Donohoe or his successor intervenes in the interim, the Corporation Tax rate at the eastern end of Killea will be 25 per cent while at the west end of the village it will be 12.5%.
Budget 2021 also commits to continued discussions towards the delivery of Freeports in the North.
And there are implications for Derry taxi-drivers who will be affected by a move to make the renewal of certain licences in the North conditional on applicants completing checks that confirm they are appropriately registered for tax, consistent with reforms which come into force in England and Wales in April 2022.
In Derry, this will apply to licences to drive taxis and licensing bodies will have to obtain confirmation that an applicant has completed the check before deciding on their renewal application, making it more difficult for traders to operate in the hidden economy.
The government will consult on how to implement this reform which will come into force from April 2023.
A new Recovery Loan Scheme will allow businesses in Derry to access loans of between £25,000 and £10 million.
Inheritance tax thresholds will be maintained at their current levels until April 2026.
There will be an extension to the temporary cut in Stamp Duty Land Tax in the North until September and a new mortgage guarantee scheme to allow homebuyers to secure a mortgage up to £600,000 with a 5% deposit
Budget 2021 also refers to the centenary of partition.
"In the year that the UK hosts the COP26 climate change conference in Glasgow and marks the Northern Ireland Centenary, the government continues to work for every part of the UK, protecting and promoting the combined strengths of the Union, building on 300 years of partnership and shared history," it says.