Corporation tax rise and threshold freeze as Sunak vows ‘fairer’ UK in COVID victims’ memory
Written by Hit Music Radio News on 03/03/2021
The chancellor has vowed to build a “fairer” country in the memory of those who have died during the coronavirus pandemic.
A special edition of the Sky News Daily podcast will be available from 7pm
He said: “To the family and friends left behind, your loss – felt most acutely in the quietest of moments – must be overwhelming.
“But I promise you we will meet this moment with the passion and energy it demands, and we will build a fairer and more just country in their memory. Our recovery begins today.”
He added: “It is going to take us a long time to fully recover from the damage coronavirus has done to our economy.”
The chancellor earlier unveiled a further £65bn in support for employees and businesses amid the coronavirus pandemic, as part of a three-part plan to “protect jobs and livelihoods of the British people”.
But he warned “corrective action” would be needed to tackle the UK’s rising debt, with the government now committed to spending £407bn on support during the COVID crisis and borrowing at levels last seen in the 1940s.
The budget included a freeze in income tax thresholds and a rise in corporation tax to help pay back the UK’s rising debts.
The key announcements from the chancellor included:
• An extension to the furlough scheme until the end of September and more support for the self-employed
• The £20-a-week uplift in Universal Credit will continue for another six months
• The rate of corporation tax will rise to 25% in 2023, but with protections for smaller businesses
• A freeze of the income tax personal allowance from next year until 2026, with a freeze in the higher rate threshold over the same period
• A new “super deduction” scheme to allow companies to reduce their tax bill by 130% of the cost of new investments
• The UK economy is forecast to grow by 4% this year and by 7.3% in 2022 but, overall, is set to be 3% smaller than it would have been due to the COVID crisis, according to the Office for Budget Responsibility (OBR).
Mr Sunak told the Number 10 briefing that he would be “honest” with the public about the problems the country faces as it emerges from the pandemic.
“It is going to take us a long time to fully recover from the damage coronavirus has done to our economy,” he said.
Asked by Sky’s economics editor Ed Conway if he was worried about being the chancellor with the highest tax burden since the 1960s, Mr Sunak replied: “We haven’t had a pandemic like this in over 100 years, so I think remember that’s why we’re having this conversation, that’s the problem that we’re grappling with.
“Unsurprisingly, when you’ve had a shock like that, and then when you’ve had a response in the likes of which we have done, I don’t think any of those other chancellors probably ever had to do as much fiscal support for the country as I have had to.”
The chancellor defended the lack of a pay rise for public sector workers, saying it job losses and falling wages in the private sector, as well as the “very obviously difficult fiscal situation that we face”, meant it was “reasonable to take a more targeted approach to public-sector pay this year”.
Responding to the chancellor in the Commons, Labour leader Sir Keir Starmer claimed his budget “fell far short of the transformative change we needed to turbocharge our recovery for the decades to come”.
He said there was “no credible plan to ease the burden of debt hanging over so many businesses” and accused Mr Sunak of “itching to get back to his free-market principles and to pull away support as quickly as he can”.
“This is a budget that didn’t even attempt to rebuild the foundations of our economy or to secure the country’s long-term prosperity,” Sir Keir added.
“Instead, it did the job the chancellor always intended, a quick-fix, papering over the cracks.”
Got a question about what the budget means for you? Tweet with hashtag #SkyNewsBlog or email email@example.com and our economics editor will answer them on our live blog at 7.30pm
© Sky News 2020