Autumn budget and spending review 2021: What do Conservative MPs want from Chancellor Rishi Sunak?

Chancellor Rishi Sunak will later this month deliver an autumn budget as well as set out departmental budgets as part of a Whitehall spending review.

But while the Treasury and Mr Sunak might want to keep a close eye on spending due to the massive outlay during the COVID crisis, they are coming under pressure from Conservative MPs to take action in a number of areas on 27 October.

Keep VAT lower for hospitality and tourism

In July last year, the chancellor slashed VAT for the hospitality and tourism sectors from 20% to 5% as part of efforts to boost the UK’s economic recovery after the first coronavirus lockdown.

Mr Sunak later extended the reduced rate until 30 September this year, with an interim 12.5% rate set to remain in place until 31 March next year.

He is now under pressure from some Tories to keep a permanently reduced rate of VAT for the UK’s hospitality and tourism industry.

Eastbourne MP Caroline Ansell told Sky News: “The VAT reduction since 2020 has been mission critical for the tourism and hospitality industry in Eastbourne and across the UK and I think the government should be congratulated for doing so and for extending it.

“The new 12.5% rate until April next year is also really helpful for these sectors as they continue the recovery from the pandemic.

“The chancellor has tough decisions to make to get the balance between keeping the economy ticking over and making sure the books start to be balanced – I don’t envy him at all.

“However, I have written to him asking him to keep the lower rate indefinitely for these sectors.

“Even before the pandemic, there was an excellent lower VAT argument for tourism in particular. It is something European countries do and I think it works.

“So, the point I have made to the Treasury is to look at a VAT reduction, not just through the COVID lens, but for the longer term.

“A more competitive domestic tourism industry will attract more staycationers and more foreign visitors. It might even lead to more VAT being collected.

“It will certainly underpin the COVID recovery in Eastbourne and keep businesses and jobs in coastal communities like the one I represent.”

Action on alcohol duty to support pubs

In his budget statement on 3 March 2021, the chancellor announced a further one-year rate freeze for all alcohol duties – the second year in a row he had done so and only the third rate freeze in 20 years.

Although Mr Sunak might be tempted to once again return to alcohol duties as a useful revenue-raiser, the chancellor is also facing calls to do more to help pubs as they continue to recover from COVID lockdowns.

Over the past few months, North West Durham MP Richard Holden has been leading a campaign for lower beer duty on draught sales in pubs, clubs and bars.

He told Sky News: “Having led a campaign of over 80 MPs to see a cut in Draught Beer Duty, this is clearly an issue close to my heart as well as many of the pubs in my constituency.

“I have raised it consistently and am mindful that the chancellor has a very difficult balancing act with the need to build back better from the pandemic at the heart of it.

“But I have been assured that they keep all ideas under consideration.”

Cuts to business rates

At his budget on 27 October, Mr Sunak is expected to announce the results of a review of the business rates system, which sees firms charged based on the value of the property they occupy.

The chancellor had been due to set out the findings in his March budget, but delayed it as he extended measures to deal with the coronavirus pandemic.

The last few weeks have seen both Labour – who used their party conference to pledge to scrap business rates – and business groups add to pressure on Mr Sunak to reform the system.

He is also facing calls from among his fellow Conservative MPs to take action.

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One of those Tories leading a campaign for an overhaul of business rates is Rossendale and Darwen MP Jake Berry, who chairs the Northern Research Group of Conservatives.

He said: “The public are clear: the burden of tax on bricks-and-mortar retail is too high.

“Without a cut in business rates at the budget we risk losing support in our most marginal seats, including in the North and the Midlands.

“Cutting rates would be a huge boost to our local communities and would show quick delivery of the central mission of this government: levelling up.”

Former cabinet minister Esther McVey, chair of the Blue Collar Conservatives group, has also joined calls for business rates to be cut.

The Tatton MP said: “The burden of tax on bricks and mortar retail is too high, and the best single policy to revive our high streets would be to cut business rates.

“Levelling up must include ensuring taxes come down.”

Help for motorists

Amid warnings that fuel prices could reach record levels over the next few weeks – and following the UK’s fuel crisis – the chancellor is being urged to take action to help motorists across the country.

Ahead of the budget, the FairFuel UK campaign – which is supported by a number of Tory MPs – has asked Mr Sunak to cut fuel duty or “at the absolute very least” keep it frozen.

South Thanet MP Craig Mackinlay said: “With the pump price of fuel at an eight-year high and other inflationary price rises hitting households this winter, it would be grotesque for fuel duty to be raised at the forthcoming budget and I hope the chancellor will heed calls for a further freezing of duty.”

Support for schools

Earlier this year the government’s education catch-up “tsar”, Sir Kevan Collins, quit his role after ministers failed to back his £15bn proposals to help schools recover from the COVID pandemic.

At the time, the chancellor was reported to have refused to stump up the cash for Sir Kevan’s plans.

However, Prime Minister Boris Johnson has since signalled an extension to the school day to help pupils catch up with lost learning – which was among Sir Kevan’s ideas – could yet be brought in following a Department for Education study ahead of this autumn’s spending review.

Conservative MP Robert Halfon, the chair of the House of Commons’ education committee, told Sky News that Mr Sunak should take the opportunity to announce a long-term plan for education.

He said: “Just as the health service now has a long-term plan and the Ministry of Defence has a long-term plan following the strategic review, I’d like to see a long-term plan for schools over the next few years and a secure funding settlement.

“This would be a wholesale look at overcoming the challenges of COVID, preparing the curriculum for the world of work, building an apprenticeships and skills nation and maintaining standards.

“If the health service can have a long-term plan and a serious funding settlement then education should have that as well – to overcome the challenges of COVID and of deep social injustice in education because there is an agenda as big as the Eiffel Tower.

“There’s a special needs review that hasn’t yet been published by the government – there’s a million challenges, serious challenges.

“Ensuring proper catch-up from COVID means not just academic catch-up but also dealing with the significant mental health problems that kids are facing.”

Balance the books

The government is estimated to have spent more than £350bn on its response to the COVID crisis, which has left some Tory MPs worried about how the bill will be paid.

Former cabinet minister Sir John Redwood wants Mr Sunak to do more to encourage economic growth as a means of getting the deficit down.

The Wokingham MP wrote on his blog: “It is clear the tax rises already announced and the Bank of England rate rise threats have slowed the economy badly in recent weeks, alongside the media driven petrol scare and the lack of wind power.

“It appears that there some gas turbine power stations that have been closed that could be brought back into use quite quickly and cheaply. The business department should commission them for stand by and back up power for when renewables fail.

“The supply issues over petrol and diesel are resolved. The shortages were caused by panic top ups, not an underlying shortage of fuel. The HGV driver shortage will take a bit longer to clear, but training and recruitment numbers are rising. The on line delivery networks have shown the right offers can secure a big expansion of capacity.

“The budget needs to go for growth. An austerity budget now would be a bad idea. Injecting some good control over spending to secure more value for money is also crucial.

“The Treasury needs to slim Test and Trace and redirect some of the additional £64bn awarded to the NHS in the last two years to tackling waiting lists and non COVID treatments.”

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