Written by Gavin on 11th March 2020
Chancellor Rishi Sunak has told Britons fearful of the impact of the global coronavirus outbreak: “We will get through this together.”
As he unveiled his budget to MPs in the House of Commons, Mr Sunak – who has only been in the job for 27 days – stressed the government is “doing everything we can” to keep the UK “healthy and financially secure”.
He admitted many would be “worried” about their health, the future of their finances and fate of their businesses as COVID-19 cases continue to increase.
Mr Sunak warned of “temporary disruption” to the UK economy, with predictions that up to 20% of the workforce could be absent at any one time.
In response to the coronavirus outbreak, the chancellor pledged to give the NHS “whatever extra resources” it needs.
He announced the government will refund, in full, any statutory sick pay for people self-isolating for up to 14 days for businesses with fewer than 250 employees.
And business rates for some firms will also be abolished this year in an “exceptional step”, the chancellor said.
The package of government measures to deal with the coronavirus outbreak amounted to a £30bn fiscal stimulus, Mr Sunak added.
But, despite the “fiscal loosening”, Mr Sunak told MPs his budget is within the fiscal rules set out in the Conservatives’ election manifesto and “with room to spare”.
The Office for Budget Responsibility (OBR) forecast government borrowing will increase from 2.1% of GDP in 2019/20 to 2.8% in 2021/22, Mr Sunak said.
Borrowing would then fall to 2.5%, 2.4% and 2.2% in the following years, he added.
Confirming Tory manifesto pledges, Mr Sunak announced the National Insurance threshold will increase from £8,632 to £9,500, while £5bn would be provided to get gigabit-capable broadband into the hardest to reach locations.
Among the chancellor’s other measures:
- The “tampon tax” – the 5% VAT charge on women’s sanitary products – will be abolished
- A planned increase in spirits duty will be cancelled and duties on beer and wine will be frozen
- The lifetime limit for entrepreneurs’ relief will be reduced from £10m to £1m
- Research and development investment will increase to £22bn a year
- A plastics packaging tax will be levied on manufacturers and importers
- The red diesel tax relief scheme will be abolished “for most sectors”
- Treasury offices will be established in Scotland, Wales and Northern Ireland, along with a new “economic campus” in the north of England
- £500m per year will be spend on fixing potholes
- VAT on ebooks will be abolished
The Bank of England earlier cut interest rates and announced help for businesses in an emergency move to provide support amid the coronavirus crisis.
Global stock markets have slumped in recent days on fears of the economic impact of the outbreak.
Concerns for the UK economy grew on Wednesday after the Office for National Statistics revealed figures show there was zero growth in the UK economy in the three months to January 2020, prior to the coronavirus outbreak.
During a cabinet meeting on Wednesday morning, ahead of the budget, Prime Minister Boris Johnson wished health minister Nadine Dorries a “speedy recovery” after she became the first MP to test positive for coronavirus.
Senior cabinet minister Michael Gove, the Chancellor of the Duchy of Lancaster, suggested next week’s planned talks on the future EU-UK post-Brexit economic relationship may be postponed due to COVID-19.
The fate of the next round of negotiations was a “live question”, he told a committee of MPs.
Labour shadow chancellor John McDonnell said: “News of zero growth and falling production, even before the outbreak of coronavirus, show the Tories do not have a grip on the economy.
“For years the Tories have had no plan for the economy – and unfortunately today’s budget announcements look likely to spell more of the same, and more disappointment for the country as a whole.”
Here are the key points:-
£6bn in new money for the NHS over this Parliament
Extra funding for taxman to secure money from tax evaders and avoiders – aimed at securing £4.4bn of extra revenue for the health service.
£1bn building safety fund to remove unsafe cladding from buildings above 18 metres tall following Grenfell fire and affordable homes programme extended.
Funding for up to 19 Maths schools on top of existing spending boost for education.
£5bn to get superfast broadband into rural areas and £510m for shared rural mobile phone network.
£2.5bn pothole fund.”Biggest programme of public investment ever” with £27bn for strategic roads this Parliament.
New economic campus in northern England will include 750 staff from the Treasury and other departments – moving 22,000 civil servants outside central London eventually.
£640m extra for the Scottish Government, £360m for the Welsh Government, and £210m for the Northern Ireland Executive.
New devolution deal in West Yorkshire, with a directly-elected Mayor for the region and “London-style funding settlements” for all eight Metro Mayors worth £4.2bn.
£120m to help with flood clean-up and £5.2bn over six years for flood defences – a doubling of current package
Plastics packaging tax will charge manufactures and importers £200 per tonne on packaging made of less than 30% of recycled plastic.
Red diesel tax relief to be abolished in two years though farmers will keep it
Levy on electricity frozen from April 2022 in favour of rise on gas.
Research and development investment rising to £22bn annually.
Reducing the lifetime limit for Entrepreneurs’ Relief from £10m to £1m.
Fuel, beer, wine and spirit duties all frozen to help a “thriving” private sector
Business rates discount for pubs at £5,000 this year only
National Insurance threshold to rise from £8,632 to £9,500 saving a typical employee £104 annually.
No VAT on tampon products from january one we have left the EU
Budget package delivered within the government’s fiscal rules on spending “with room to spare”.
OBR sees borrowing rising from 2.1% of GDP in 2019/20 to 2.4% in 2020/21 and 2.8% in 2021/22.
Independent Office for Budget Responsibility, without accounting for the impact of coronavirus, has forecast UK growth of 1.1% in 2020 , 1.8% in 2021.
Coronavirus – public services
“Government measures amount to £7bn in support for the self-employed, businesses and vulnerable people.” £5bn emergency response fund for NHS and public services.
Coronavirus – businesses
Loans available to help small and medium-sized businesses. Business rates abolished for retail, leisure or hospitality business with a rateable value below £51,000.
Coronavirus – workers
A £500m hardship fund for vulnerable people.
Statutory sick pay: Available to those advised to self-isolate – even if they haven’t yet presented with symptoms. More help for self-employed or those in gig economy.
The cost of providing Statutory Sick Pay to any employee off work due to coronavirus will, for up to 14 days, be met by the government in full.
Coronavirus – NHS
NHS will get the resources it requires “whatever it needs, whatever it costs”.
Responses designed to be complementary to measures announced by Bank of England. Three point plan
Warns of temporary disruption to economy. Says it will be “tough” and “significant” but insists things will return to normal.
“What everyone needs to know is that we are doing everything we can to keep this country, and our people, healthy and financially secure” amid fight against coronavirus. Aim to bring “stability and security”.