2021 Budget, Coronavirus and The Union


By Dillon Kennedy

The budget set out by Rishi Sunak aims to protect the jobs and livelihoods of the British people. The Budget follows a year of an extraordinary economic challenge due to the ongoing COVID-19 pandemic like many other countries around the world, the UK's economy has been hit, with both the direct effects of the virus and the measures necessary to control it leading to an unprecedented rise in unemployment and closures. While the SNP tussles with itself and seeks yet another referendum this budget delivers a great deal for Scotland and indeed other parts of the UK historically underserved.


Now with the pandemic on the retreat due to people's sacrifices and the initial stages of the vaccine rollout, there is now a light at the end of the path meaning the reopening of the UK economy. The Budget set out by the chancellor in the House of Commons will set how the government will extend its economic support to reflect the easing of social distancing rules and the reopening of the economy in line with the govts roadmap. As the economy starts to reopen, the budget sets out the steps the government is taking to support the recovery, ensuring the economy can "build back better", with radical new incentives for investment and help businesses to attract the capital, ideas and talent to grow and succeed post-pandemic. It is questionable how an increase in corporate tax rates (from 2023) fits in with this however the exemption for small firms and the relative competitiveness maintained make this measure less of an affront than it otherwise would have been.

Once the economic recovery is underway, then the whole of the UK public finances must be returned to a sustainable path, following a period of record peacetime borrowing during the pandemic of 2020. The Budget sets out in clear terms the size of the challenge and steps to deliver more sustainable public finances whilst providing certainty and stability to people and businesses and supporting a strong recovery. By taking the necessary action to protect the economy, support the recovery and repair the public finances, the government is taking the most sustainable route to continue funding to "Level Up" the UK. Many questions can be raised relating to the increasing of tax liabilities and the need to bring public spending under control and the chancellor appeared to recognise this imposition and also the need to balance the books in the long term.


Another key point, from yesterday's budget announcement, is that this budget is geared to protecting and promoting the union which is fantastic as this is key against independence. The budget has along with the already extensive support provided to Scotland proved without a doubt that Scotland is a valued member of the UK and that its inclusion is hugely beneficial. The measures set out in the Budget apply to individuals and businesses in every part of the UK. On top of these UK-wide measures, the Budget also confirms an additional £2.4 billion for the devolved administrations in Scotland, Wales and Northern Ireland in 2021-22 through the Barnett formula and targeted investment in specific places and sectors. In 2021 the UK hosts the COP26 climate change conference in Glasgow and marks the Northern Ireland Centenary, this UK 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. The collective fiscal strength of the UK has allowed the government to protect millions of jobs and livelihoods across the UK through its COVID-19 schemes and to drive the development and procurement of the UK's world-leading vaccine programme.

On top of this, the government has funded the devolved administrations to provide their own support schemes in Scotland, Wales and Northern Ireland. As a result of the pandemic and following discussions between the UK Government and the devolved administrations, the government announced the unprecedented Barnett guarantee in July 2020. This provided the devolved administrations with upfront funding certainty, enabling them to plan how and when to provide support in relation to COVID-19 in 2020-21. The government initially guaranteed an additional £12.7 billion on 24 July. This guarantee was increased multiple times and a further £2.1 billion in February. The devolved assemblies are not being left in the cold but wholeheartedly served by the UK govt in material ways.


Prior to the scheme's November extension, the Job Retention Scheme had already protected almost 780,000 jobs in Scotland, over 400,000 jobs in Wales and almost 250,000 jobs in Northern Ireland. In addition to this, across the first, second and third Self-Employment Income Support Scheme there have been 431,000 claims in Scotland, 295,000 claims in Wales and 210,000 claims in Northern Ireland, totalling over £2.5 billion of support. As well, the £20 a week increase to the Universal Credit standard allowance and Working Tax Credit basic element has provided additional support to the least well-off in all parts of the UK. In the budget, The Treasury and the Chancellor pledged to continue to support people and businesses in Scotland, Wales and Northern Ireland.

This is on top of their existing arrangements to transfer funding between years and is not included in the above figures for 2021-22. The Twenty City and Growth Deals across Scotland, Wales and Northern Ireland are joint collaborations between the government, devolved administrations, local and regional authorities and other partners in the communities. The government is also accelerating funding for six Deals – three in Wales and three in Scotland.


While the SNP Government in Scotland chases independence and embroils itself in Scandal the UK government has made unprecedented and difficult decisions to protect jobs, households and businesses. It also addresses the cracks emerging between the 4 corners of the UK and attempts to spread investment and growth across the entire nation. While certainly not ideal from a fiscally conservative perspective and tax increases are potentially capable of being avoided these plans are also necessary and will protect jobs and businesses while also promotes the future vision of a UNITED Kingdom with a vibrant and competitive economy post covid.