The budget set out the Government’s plans for taxation and spending over the next five years. It also included the Office for Budget Responsibility’s assessment of the economy and forecasts for growth, the public sector finances, unemployment and inflation. It illustrated the effect of coronavirus on the economy and described how the Government aims to deal with the recovery from the pandemic.
Spring Budget 2021: Tax, Spending, the Economy and Coronavirus (284KB PDF)
On 12 March 2021, the House of Lords is due to debate a government motion that “this House takes note of the economy in light of the budget statement”.
The Chancellor of the Exchequer Rishi Sunak delivered the budget on 3 March 2021. The Office for Budget Responsibility (OBR) described it as having three functions:
On support for households and businesses, the chancellor extended many of the schemes and temporary changes so they would expire later than previously planned. These included the coronavirus job retention scheme, business grants and rate relief and the £20 a week uplift to universal credit. He also extended and widened the support package for self-employed people.
To aid the recovery, the Government announced a temporary capital allowance to promote corporate investment. It also provided additional funding for traineeships and apprenticeships.
The chancellor announced various steps to improve the public finances once the economy has recovered from the pandemic. For businesses, there will be an increase in corporation tax from April 2023. For individuals, a range of tax thresholds and allowances will be frozen from 2022/23. There were also measures to improve tax compliance and reduce fraud in welfare and coronavirus support systems. Finally, there were some further cuts to projected departmental spending.
The Government announced a range of other policies, including a new mortgage guarantee scheme, a new UK infrastructure bank and a widening of the Bank of England’s remit, when setting monetary policy, to account for environmental issues.
Alongside the budget, the OBR published its latest forecasts. It said the economy would return to its pre-pandemic level in mid-2022, six months earlier than previously forecast. Likewise, it reduced its forecast for peak unemployment. However, it predicted the virus would cause a permanent economic “scarring” effect of 3% of GDP. The public sector deficit and debt have also been severely impacted.
Spring Budget 2021: Tax, Spending, the Economy and Coronavirus (284KB PDF)
The Sovereign Grant Bill is a government bill which would amend how the sovereign grant is set. This is a grant paid to the King to support the work of the sovereign. The bill would enable the size of the sovereign grant to be reduced following the completion of a 10-year works project on Buckingham Palace. The bill received cross-party support and was not amended in the House of Commons.
The Commercial Payments Bill [HL] seeks to tackle late payments to small businesses. It would impose minimum payment periods for invoices, prohibit the use of retentions in construction contracts and provide the small business commissioner with greater powers. The bill received an unopposed second reading in the House of Lords on 9 June 2026. 30 government amendments were made to the bill at committee stage.
![Commercial Payments Bill [HL]: Progress in the Lords](https://lordslibrary-parliament.studio24.dev/content/uploads/sites/2/2020/01/Business-VIGs-568x426.jpg)
The Financial Services and Markets Bill [HL] is a wide-ranging bill that aims to reform the way the UK financial services sector is regulated. This briefing provides a summary of the bill’s second reading and committee stage in the House of Lords ahead of its further consideration at report.
![Financial Services and Markets Bill [HL]: Progress in the Lords](https://lordslibrary-parliament.studio24.dev/content/uploads/sites/2/2020/09/Economy-568x426.png)