When the Covid Pandemic hit the world, we were not prepared, and we should have been. But it was unprecedented, and nothing like it on that scale had been around since 1918, so over 100 years ago.
One major thing the governments were not prepared for, in addition to the loss of life, and strain on the healthcare systems, was the loss to the economy.
People could not go to work, and only essential shops were open during the lock downs.
Here and elsewhere in the world, the government stepped in to shore things up.
Employees were put on furlough, and the government paid money to these companies so that employees received 80% of their wages.
Self-employed people also could apply for and receive grants and loans to hold them over until the virus was reduced.
Those losing their jobs could apply for benefits, usually Universal Credit, and the government increased Universal Cried payments by £20 a week. Which really helped those in need.
These and other bail-outs, helped the economy, but at a price to the government. That price was estimated to be around £400 billion!
The virus and pandemic now seeming to be under control, and life as we know it going back to a new normal, the bill needs to be paid. The Piper needs to be paid for all this pandemic cost. The government needs to recoup £400 billion.
The Hero – The Goat
If you are fan of Charlie Brown, then you know the saying The Hero or The Goat. And if you know Charlie Brown, he rarely is the hero.
Chancellor of the Exchequer Rishi Sunak, was faced with a huge and daunting task when the pandemic hit, how to save the economy.
He and other MP’s put together the plan to save the economy, and it made Mr. Sunak look like a Hero. He really came to the rescue and rose to the occasion.
Now that it is time to repay the bills for that rescue, Mr. Sunak in his new budget, many see him as the Goat.
I am not defending anyone or pointing figures, but both tasks were incredibly difficult; fund a pandemic, then repay those funds.
The Budget and Changes
Now that it is time to get on with repaying money spent for the pandemic, where is that money going to come from….us!
Those receiving Universal Credit have lost the extra £20 a week. However, those on UC who are working will see the percentage of the benefit taken from them for every pound they earn reduced from 63% to 55%. This will allow them to earn and keep more money.
The National Living Wage will increase to £9.50 an hour, which is a 6.6% increase.
Business rates for retail, hospitality and leisure will be reduced by 50%. This is to stimulate those sectors, and they were also the ones hit the hardest due to the pandemic and lock downs.
As a whole, the new budget does not look like it addresses paying back the cost of the pandemic, until you look closer.
Changes in personal taxes is where those will be hit the hardest.
Some households will see a 2% increase in the taxes they pay on their wages.
National Insurance rates will increase next year as well, by 1.25%. This in part, and projecting over the next four (4) years, is how the government proposes to repay the pandemic debt.
The bill has to be paid.