Organisations and their internal audit functions face a dizzying pace of change and unprecedented uncertainty. The pandemic has destabilised operations and labour, disrupted supply and demand, and undermined previously sound business models to an extent few would have thought possible.

Set against this and a backdrop of escalating social care requirements and the unplanned costs of the ongoing pandemic, Chancellor Rishi Sunak delivered the Autumn Budget in October 2021.

This short reflective piece, from the perspective of a Chief Audit Executive, looks at the key points from the budget and related announcements due to take effect in the Finance Bill 2021-22.

Outlook

When announcing the Spring Budget, the Chancellor said, “it’s going to take this country, and the whole world, a long time to recover from this extraordinary situation,” a sober warning that difficult decisions still lie ahead. Not only for the Cabinet but for business leaders too.

Having borrowed 15.2% of GDP (£319bn) in 2020-21 and a further £183bn this year, it is forecast to fall to £83bn in 2022-23. Such unprecedented peace time borrowing will need to be repaid. 

2021 has been a year of tax raising measures impacting both employees and employers, from increased corporation tax, freezing personal allowances and the new Health and Social Care Levy.

The OBR (Office for Budget Responsibility) now forecasts:

• That the early 2022 economy should return to its pre-pandemic size
• That the economy will have grown by 6.5% in 2021 compared to its March forecast of 4%
• That GDP will grow 6% in 2022, 2.1% in 2023, 1.3% in 2024, 1.6% in 2025, and 1.7% in 2026
• That unemployment will peak at 5.2%. The extended furlough scheme attributed for mitigating against the 12% forecast in July 2020

Talent risk

Aside from the number crunching, a key takeaway from the budget…