BRITAIN’S rookie chancellor yesterday vowed to spend billions — ‘whatever it takes’ — to tackle the impact of the coronavirus outbreak.
Rishi Sunak, promoted to 11 Downing Street less than a month ago, promised a £30billion stimulus package as the pandemic dominated his first Budget — although he was still accused of not doing enough to protect people.
His announcements could add as much as £100billion to public borrowing by 2024, according to Britain’s fiscal watchdog.
The Office for Budget Responsibility (OBR) forecast borrowing would soar to a six-year high of £66.7billion in 2021-22 — but the chancellor insisted his pledges were necessary to provide ‘temporary, timely and targeted’ spending, as well as ‘security today and prosperity tomorrow’.
Mr Sunak insisted the NHS would be given ‘whatever it needs’ as he admitted Britain would face a ‘significant impact’ and ‘disruption to our economy’, while also promising to boost sick pay support for workers, including the self-employed and businesses.
‘Whatever extra resources our NHS needs to cope with coronavirus it will get — whether it’s millions of pounds or billions of pounds, whatever it needs, whatever it costs, we stand behind our NHS,’ he told the Commons.
The chancellor indicated there would be support for employees who become too ill to work, with new measures including the ability to obtain a sick note by contacting 111 rather than having to visit a GP. He said self-employed or gig economy employees could get swifter and simpler access to benefits.
A £5billion emergency response fund will be set aside to support the NHS and other public services, with Mr Sunak adding he would ‘go further if necessary’.
He also pledged billions of pounds of extra spending, including pay boosts for 31million working people, while prompting concerns about where the money might be coming from.
In one of his most eye-catching announcements, Mr Sunak promised workers a bonus by raising the National Insurance threshold from £8,632 from £9,500, which he said would be worth £100 a year to 31million people.
Mr Sunak’s fiscal boost was described as the Conservatives’ most lavish since the pre-election package announced by Norman Lamont in 1992.
But with just one tax increase mentioned in his Budget, critics accused the chancellor of extravagance while the OBR suggested he had cancelled out all ‘austerity’ cuts since David Cameron became prime minister in 2010.
Other popular policies included a further year’s freeze on fuel duty and no increase in duties on alcohol.
The entrepreneurs’ relief tax break will be scaled back, Mr Sunak said, saving £6billion across the next five years. He suggested ‘most of that money’ would go back to firms through a series of other measures including increasing the tax break for research and development expenditure, the structures and building allowance and increasing the employment allowance by a third to £4,000.
The chancellor also confirmed plans to abolish the so-called ‘red diesel’ tax relief for most sectors which allowed companies to benefit from lower priced fuel although farmers will continue to benefit.
Mr Sunak’s announcement came hours after the Bank of England slashed interest rates from 0.75 to 0.25 per cent.
But neither the rate cut nor the Budget impressed the City, where the FTSE 100 fell to a four-year low — down 83 points on the day to 5,876.52.
Budget 2020: At a glance
■ OUTLINING the government’s economic response to the Covid-19 outbreak, Rishi Sunak unveiled an additional ‘fiscal loosening’ of £18billion to support the economy this year, taking the total fiscal stimulus to £30billion.
■ THE NHS will receive ‘any extra resources it needs’, whether that is ‘millions or billions of pounds’ to deal with Covid-19 on top of £6billion of new funding to support the NHS over this parliament.
■ STATUTORY sick pay (SSP) will be extended to all of those eligible and asked to self-isolate, even if they are not showing symptoms, and the government will meet the cost for businesses with fewer than 250 employees of providing SSP for 14 days.
■ A TEMPORARY coronavirus business interruption loan scheme will be introduced for banks to offer loans of up to £1.2million to support small and medium-sized businesses with their cash flow.
■ BUSINESS rates cancelled for 12 months for firms with a rateable value below £51,000.
■ BORROWING will increase from 2.1 per cent of GDP in 2019/20 to 2.4 per cent in 2020/21 and 2.8 per cent in 2021/22 and will then fall to 2.5, 2.4 and 2.2 per cent in the following years.
■ THE National Insurance threshold will increase from £8,632 to £9,500 and the National Living Wage will rise to £10.50 per hour by 2024, if economic conditions allow.
■ FUEL duty will be frozen for another year, £26billion will be invested in roads, and the government will abolish £2.4billion annual tax relief on red diesel in two years’ time, but agriculture, rail, domestic heating and fishing will be exempt.
■ DUTIES will be frozen on beer, cider, wine and spirits, and the government will provide £1million to support Scottish food and drink overseas and £10million to help distilleries ‘go green’.
■ THE lifetime limit for entrepreneurs’ relief will be reduced from £10million to £1million, saving £6billion a year, and research and development investment will be increased to £22billion a year.
■ A ‘PLASTICS packaging tax’, charging manufactures and importers £200 per tonne on packaging made of less than 30 per cent of recycled plastic, will be introduced in April 2022.
■ THE Treasury will make £120million available immediately to repair defences damaged in the winter floods and will double investment to £5.2billion for flood defences over six years.
■ MORE than £600billion will be spent investing in future prosperity over the next five years, taking net public investment to the highest levels in real terms since 1955.
■ THE so-called tampon tax will be abolished, and VAT on digital books, newspapers, magazines and academic journals will be scrapped from December 1.
■ A £1BILLION building safety fund will be set up to ensure all unsafe combustible cladding is removed from buildings above 59ft tall.