Press Office

Budget 2021 reaction

Budget 2021: comment and analysis

Published on: 3 March 2021

Responding to the Budget, our experts give their views on some of the measures announced.

Recognition of the vital role of culture and the creative industries

Professor Vee Pollock, Dean of Culture and the Creative Arts

The Chancellor’s funding for arts, culture and heritage announced in the Budget is most welcome. It signals clear recognition of the vital role culture and the creative industries will play in the nation’s social and economic recovery. The creation of the flexi-job apprenticeship will enable more and smaller industry bodies to act as agencies for the sector, as well as promising to open up opportunities for those wishing to join the industries that make such a valuable contribution to our economy.

Bolstering the recovery of the cultural and creative sectors is undoubtedly crucial, but the issue of rebuilding a sustainable, robust and thriving cultural sector reaches beyond recovery, and beyond venues and organisations; it rests on supporting and developing our full cultural ecology for the foreseeable future. Integral to this are the contributions of graduates and emerging creatives, many of whom go on to be at the heart of our freelance creative community. It is these young people who will work with venues and organisations and across sectors to drive this country’s world class reputation for high-quality cultural content and catalyse innovation.

It is only through rethinking skills provision and pathways between FE, HE and the cultural sector, and enhancing career pathways, that we will equip the sector of the future for the challenges of the future. We need more initiatives to support freelancers and those at early stages of their careers to enable their creativity, to support the creative economy, and to safeguard the significant steps the sector has taken in diversity and inclusion. Put simply, it is not about enabling the cultural sector to survive, but about ensuring that it thrives.

An image of the Houses of Parliament

Little of the investment needed to acheive a zero carbon future

Dr Sara Walker, Director, National Centre for Energy Systems Integration

With the Government’s 10 Point Plan and Energy White Paper, there was momentum and belief around the idea that this Government would plan for a green economic recovery. Sadly, the March 2021 budget delivered very little of the needed investment for our Zero Carbon Future.

There are some glimmers of good news. The December 2020 White Paper had a target of 1GW of floating offshore wind energy by 2030, and the budget has proposed a £20m investment programme to support the development of technologies for this. The North East is well placed to deliver on this ambition with the Floating Offshore Wind Centre of Excellence, as well as the University’s own work on stability for floating turbines.

The White Paper also proposed 5GW of hydrogen production by 2030, with a hydrogen strategy expected in early 2021. The budget allocated £4.8m for a ‘Holyhead Hydrogen Hub’, although this is well short of the £1bn+ investment into hydrogen which the White Paper outlined.

On transport, much of the White Paper and 10-point-plan has a focus on zero-emission road vehicles. The North East is, again, well placed given the production of Nissan Leaf batteries in Sunderland. The budget also announced investment for rail, with the £30m Global Centre for Rail Excellence. No doubt colleagues in the University’s Future Mobility group will have a keen eye on these road and rail developments.

Our research at Newcastle University tells us that all of these sectors interact, and so it is vital to take that big picture, whole systems view. As Director of CESI, I hope our research can have lasting impact in highlighting how sectors such as wind, hydrogen and transport can link and be developed in a way that benefits from those interactions. I hope we can see more ambitious spending plans announced ahead of COP26, to demontrate our commitment as a country to achieving a zero carbon future.

A Budget framed by historical precedent

Dr Martin Farr, Senior Lecturer in Contemporary British History

Particularly in unprecedented times are there benefits in precedents; historic events demanding a sense of history. Yesterday’s was an unusually time-deferred Budget, and felt – not unreasonably – like a holding exercise in the middle of a national emergency, but it’s unusual for a Budget so immediately to be framed by earlier ones. The first and most obvious historical precedent, as is has been throughout the pandemic, was wartime. but others peppered responses to the Chancellor of the Exchequer’s second budget. Given the quite unprecedented – and uncosted – personal branding in which he’s been engaging, Rishi Sunak’s Second Budget is how it may come to be known.

Reginald McKenna in the First World War, or Kingsley Wood in the Second, would not have recognised, or sought, such self-promotion, though Hugh Dalton most certainly would. Dalton it was who was resigned by Clement Attlee in 1947 for disclosing to a journalist a minor measure in his budget minutes before he delivered it. Sunak would be an ex-Chancellor today were Boris Johnson’s standards those of Attlee; as the Speaker grumpily replied when the Prime Minister heralded the widely-leaked budget minutes beforehand, “I think I already know most of it”.

Though some resist the comparison, the closest equivalent to the pandemic, in both time and degree, is the Second World War. So it was convenient – and not immaterial – for the Chancellor – “our borrowing is the highest it has been outside of wartime … the highest level of borrowing since world war two … comparable only with the amount we borrowed during the two world wars” – to invoke a time of national peril.

The 1960s, whatever Thatcherites went on to say, wasn’t quite that, but Roy Jenkins beams out from the morning newspapers more than at any time since his death thanks to reference to him by the Office for Budget Responsibility, a body he’d have cherished had it been around when he was Chancellor. Sunak revealed that the tax burden is scheduled to be the highest since 1968, the first full year of Jenkins’s Chancellorship; that was the age, George Harrison sang, to “declare the pennies on your eyes”.

Public sector net debt has risen above 100 per cent of GDP for the first time since the first year of that benighted decade. Corporation Tax, introduced by Jenkins’s beleaguered predecessor James Callaghan in 1965, was by 1969 raising 3.3 per cent of GDP, the highest on record. The extraordinary increase Sunak announced yesterday – from 19 to 25 per cent – will take Corporation Tax to 3.2 per cent in 2025-26. It’s the first time Corporation Tax has been raised since Denis Healey did so in 1974, a year which made 1968 feel like a land of honey.

The problem Jenkins had was that he became Chancellor during a crisis and had, by his own estimation, “two years’ hard slog” before the general election. Sunak, at least, has four, which helps; the government lost in 1970, and the Chancellor was blamed. As it is, the Chancellor known as Rishi has the time and the inclination – neither of which Jenkins had – to cut taxes before the next election. And for that there are precedents aplenty.

What does this mean for the skills and lifelong learning agendas?

Professor René Koglbauer, Dean of Lifelong Learning and Professional Practice

The budget announcement offers a further injection of funding towards closing the skills gap and the levelling up agenda. The newly allocated funds of £126m for ‘high quality traineeships’ will give an additional 40,000 young people aged 16 to 24 access to vitally important experience through workplaces and help them to acquire soft skills, and where necessary the literacy and numeracy skills that employers look for in apprentices, graduates and future employers. A traineeship offers life changing opportunities, particularly for those young people who have not been served well by the academic curriculum in their school experience to date.

For many young people, these traineeships are essential to help them to engage and/or re-engage with further education, training and work-based learning. In order to maximise the impact of traineeships it is essential though that enough apprenticeship places and/or employment opportunities are created for trainees to apply to and move into. Since the start of the pandemic, it has been widely reported that apprenticeship starts have declined. Therefore, the increased financial incentive of £3,000 for employers who hire a new apprentice between 1 April and 30 September 2021 has been positively received by employer representatives. Time will tell if the additional payment will entice employers to recruit new apprentices as part of re-energising their own businesses and ultimately the economy in the COVID-19 recovery phase.

The third pot of money of £7m to support the setting up and expanding of portable or flexible apprenticeships across different employers has been particularly welcomed and may open opportunities for the cultural sector and may lead to some innovative training solutions and partnerships.

All these additional monies are funding short-term measures. Whilst the incentives are intended to entice employers, funding alone may not always lead to engagement: it is essential that the bureaucracy and red tape in getting involved and demonstrating progress and success are feasible and manageable, particularly as trainees and future apprentices, employers, career advisors, apprenticeship training providers and other stakeholders will need to act fast to maximise the impact of these additional funds. 

The Conservatives have shape-shifted to become a party of public spending

Dr Alistair Clark, Reader in Politics

Against the backdrop of the COVID-19 and ongoing Brexit crises, Chancellor Rishi Sunak’s second budget has been one of continuing to spend today, but with the warning of ‘tough decisions’, and with many commentators predicting increased taxes and/or spending cuts alongside inflation, to come in future. Support for various COVID-19 measures such as Furlough have been pushed further down the road, to at least September for many of them. There are four points of political context worth remembering while poring over the detail of Sunak’s speech. Firstly, the difficulty of exiting from COVID-19 support measures when much of the economy is being supported by them. Secondly, the tension between the promised ‘levelling-up’ agenda from 2019 and support for new ‘Red Wall’ Conservative voters, and maintaining support in the Conservative Party, which is ideologically more oriented towards cuts than spending. Thirdly, Sunak’s ongoing positioning for leadership of the Conservative Party when Boris Johnson stands down. Fourthly, the forthcoming sub-national elections in May 2021, which will be the first, and overdue, electoral test of the Johnson government.

The emphasis on the economy and the claim that there will be no income tax, national insurance or VAT rises will suffice in the interim to keep a section of the Conservative Party happy, even if there may be grumbling about longer term rises in Corporation Tax. An infrastructure bank for Leeds, port infrastructure and a Freeport in Teesside, and a new economic campus with the Treasury and other economic departments relocating some capacity and jobs to Darlington, indicates that ‘Red Wall’ arguments are also being heard. Local politics has clearly mattered. The Conservative Tees Valley Mayor Ben Houchen was mentioned, and the area spoken about at length, arguably more than any other area in the budget. It is, of course, entirely co-incidental that the Tees Valley Mayoral position is up for election in May 2021.

Support for high streets, communities and levelling-up may be welcome, but the answer in resolving these issues is not more pots of centrally-held money which can be applied for, but in more meaningful devolution and ability to raise money locally without central control. This was not addressed, although the speech contained a major hint about the UK government’s view of devolution. Sunak’s speech contained a direct attack on Scottish and Welsh devolution in proposing to spend directly in both countries. Scottish and Welsh governments, already at loggerheads with the Johnson government on Brexit, will no doubt respond forcefully. More broadly, Labour will also find it difficult to challenge a Conservative Party which, enabled by the pandemic and its so-called ‘levelling-up’ agenda, has shape-shifted to become a party of public spending, robbing Labour of a key argument. In the meantime, as with most things this Conservative government has touched, the can of dealing with the COVID-19 finances has been politically kicked down the road, while major pressing issues such as health and social care barely merited a mention.

Can £5bn save our High Streets?

Dr Luca Panzone, Senior Lecturer in Consumer Behaviour

The retail sector has been clearly affected by changes of lifestyle brought by COVID, as research we recently carried out shows. The idea of announcing support for the high-street is important, because physical stores are those that have been affected the most as a result of the coronavirus pandemic.

The government has opted for investments in the High Streets rather than focus on retail more generally, an indication that this retail channel is considered particularly important. But does the support announced today, of £5bn to help High Streets reopen, go far enough? The figure seems on the low side, as we estimated joint losses of £40bn for each non-food and restaurant businesses. At the same time, it does not seem to differentiate much within the high-street where large and small stores can co-exist, and it is not clear if stores who are not on the High Street, but which have had to close due to COVID, are eligible.

A key question is also whether stores will be able to remain open if habits - both in terms of purchasing habits and the frequency of going to the office - have shifted in the long-run. If shopping online stays, and people spend less time in their office in city centres, the money spent for reopening may not be conducive to long-term growth in the sense that the government expects. Retail in high streets is still heavily dependent on physical footfall, and a lot of the success of this monetary support will depend on the ability to have people return in the high streets in sufficiently large numbers.

It would have been more appropriate under the circumstances to provide grants to allow these businesses to diversify their retail, whether that is selling more online or adopting new forms of retail such as food box delivery schemes.

Rural small businesses need a joined-up approach to supporting the digital transformation

Dr Paul Cowie, Research Fellow, National Innovation Centre for Rural Enterprise
The COVID-19 pandemic has highlighted the vital role digital connectivity plays in every aspect of people’s lives. Consequently, a lack of high-quality digital connectivity in rural communities is having a significant impact on those communities.
The ‘Help to Grow – Digital’ is all very well but is dependent on small businesses having the necessary digital connectivity to begin with. 
The roll-out of super-fast broadband to all rural areas continues to substantially lag the roll-out in urban areas. The additional money for rural broadband outlined in the budget is not a complete solution. The way the roll-out is managed and procured needs to be reconsidered. Setting a percentage coverage target means marginal rural areas face astronomical costs to connect. A place-based approach is needed for what is now a public service. Openreach’s Community Fibre Partnership scheme is a start but more funding for alternative providers (i.e. community and not-for-profit broadband initiatives) is needed.
Rural super-fast broadband is only half the battle when it comes to digital connectivity in the future. Technology such as 5G is fundamental to many next-generation technologies such as autonomous vehicles, digital health and education services and robotics.
Whilst initiatives such as Shared Rural Network for 4G is a welcome start, a more joined-up strategy and more financial support is needed to deploy these technologies in rural areas. In particular, there is a need to lay the foundations of a shared rural 5G network.
There also needs to be a joined-up approach to supporting the digital transition for rural small businesses - one that covers digital connectivity, digitally-enabled business premises and skills and training. Doing each of these in isolation risks wasting resources.

Giving organisations the flexible, work-based management education they want

Dr Joanne James, Reader in Leadership Development and Organisational Futures
We support greater investment from Government in the growth of small businesses although we would also welcome more flexible funding for all organisations to access up to date research and best practice to develop leadership capacity. The pandemic has forced every organisation to respond very quickly to sustain their operations, support wellbeing and connectivity of staff and innovate products and services to meet changing needs.
Working with ambiguity, speed and complexity is challenging for leaders whatever the stage of their business growth.  Our experience tells us that organisations want flexible, work-based management education that is contextualised to their real world challenges. Furthermore, leaders value the support of peer group action learning, coaching and mentoring and access to professional networks. We know leadership at every level is critical to the post-Covid recovery and to economic, societal and environmental sustainability.  Universities have a role to play in developing critical thinking, self-reflexive leaders who can operate with confidence in our volatile and uncertain future.

All in the same storm, but not all in the same boat

Dr Fiona Whitehurst, Senior Lecturer in Management 

I’m not sure who first used the phrase ‘all in the same storm, but not all in the same boat’, but I’ve heard it a few times recently and it has certainly applied to those who work for themselves during the pandemic.

In his Budget Speech delivered nearly a year ago on 11th March 2020, Rishi Sunak promised the Government would do everything it could “to keep this country, and our people, healthy and financially secure”. Maybe it was a sign of choppy waters ahead that the self-employed had no equivalent of the Coronavirus Job Retention Scheme until, after substantial public pressure, 12 days later the Self-Employment Income Support Scheme was introduced.

However, it very soon became very apparent that there were significant gaps in support for those who work for themselves. Communities such as Excluded UK and #ForgottenLtd quickly formed to highlight the gaps, and the Treasury Committee have published a series of reports, the most recent on 15 February 2021 highlighting the gaps and proposing solutions. The All-Party Parliamentary Group on Gaps in Support made up of 262 MPs drawn from every political party in Parliament and from every nation of the United Kingdom have also been working together to find solutions, gather evidence and make recommendations.

Don’t misunderstand me – I work with many small businesses and in the early months of the pandemic I followed twenty of them as they navigated their way through everything the storm of the pandemic threw at them. Many of them did feel they had been well-supported, but many of the business owners couldn’t access support. The evidence I submitted to the Treasury Committee is here.

So, what were the main gaps, and very nearly 12 months on from last budget, has Rishi Sunak filled them with the 2021 Budget?

Newly Self-Employed excluded from SEISS

Okay, so there has been some progress here. Previously those who were newly self-employed and hadn’t submitted a 2018-19 tax return were excluded from the Self-Employment Income Support Scheme (SEISS). Rishi Sunak has announced today that those who submitted a 2019-20 tax return will also be eligible to receive the payments. However, they might be excluded by the next couple of rules …


To be eligible for SEISS at least 50% of a person’s income has to come from the trading profits of self-employment. Many freelancers choose to have a portfolio career with either a permanent PAYE job or a series of short-term PAYE contracts and therefore were excluded if that income accounted for more than 50% of total income…and of course if you went self-employed mid-tax year having left a paid job, it could be quite unlikely that your new business would have generate more income than your previous role. These individuals are still excluded.

Little or no profit

According to ExcludedUK more than half a million self-employed people found themselves not showing a profit over the 3-year profit calculation period. This could have been due to investing in growth or having had a period of ill-health or caring responsibilities. They are still excluded.

Directors of Limited Companies

Now this one is unfair on so many levels. Limited Company Directors are not self-employed, but many small businesses are limited companies. Those who pay themselves by dividends – and believe me the word dividends should not conjure up images of opulent lifestyles – may have no PAYE income and therefore would not benefit from furloughing themselves. Those drawing a salary could potentially furlough themselves, but remember - you cannot work for your company if you are furloughed. This is very different from the SEISS where the self-employed can continue to work. Therefore directors choosing to furlough themselves would have had to pause all operations and potentially risk the long term future of their business (and the jobs of any of their employees). Part-time furlough was introduced in July 2020, but would not have been an option for many.

This could have been resolved. A Director’s Income Support Scheme has been proposed based on the trading profits of the company, which are contained in the corporation tax return. Has this gap been addressed? – no.

So those who work for themselves are not all in the same boat, and tragically, to continue the metaphor, some are drowning. Homes are being lost, families are breaking up, and worse. Both #ForgottenLtd and ExcludedUK are supporting mental health programmes for those who have not been entitled for any support for 12 months and continue to relentlessly campaign.

I have always been impressed by the resilience, stamina and ingenuity of the micro-businesses I have had the privilege to work with. Following those twenty business owners as they steer their businesses through unprecedented times, often having substantial caring issues too, has been nothing short of inspirational. I have seen micro-business owners go to exceptional lengths to support their customers, staff, supply chain and wider community during these times. Yet the FSB suggests that at least 250,000 small businesses are set to fold this year without further help.

There are still significant gaps in support. The Treasury has had the opportunity to review the support packages that were put in place at remarkable speed last year and rectify those holes, but many gaps remain and some of the boats in the storm will sink.


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