Sunak hints he will extend furlough in Budget to align with reopening roadmap
Dodds urges Chancellor to put Britain on the path to a ‘more secure future’
Rishi Sunak has suggested furlough and self-employment support will be extended in Wednesday’s Budget.
The Chancellor indicated coronavirus support for firms and workers will be extended from 30 April until June, by saying in a TV interview yesterday that the support will be “aligned” with Boris Johnson's roadmap.
Under the Prime Minister’s roadmap, England’s legal lockdown restrictions will only end on 21 June at the earliest.
Asked if the furlough scheme supporting businesses during the pandemic would be extended, Mr Sunak suggested it was here to stay.
He told Sky News: “I think it’s right that the support aligns with the roadmap. I said at the beginning of this crisis that I would do whatever it took to protect people, families and businesses through this crisis and I remain completely committed to that. The PM in the road map set out a path for us to recover and reopen and I want to support people and businesses along that path.
“I’m not going to comment on specific policies but I want to make sure people realise that we are going to be there to support them … we went big, we went early and there’s more to come next week.”
The Chancellor also appeared to suggest he understood the arguments for keeping the Universal Credit uplift.
Asked if the £20 per week uplift would be removed, he said: “I know that that uplift has made a difference to people over the past 12 months.
“It’s one part of a comprehensive plan that we’ve put in place to protect people, particularly those on low incomes, and looking forward we can point to the fact that we’re increasing the national living wage next year by above inflation, which will mean almost a £350 pay rise for someone working full time on the national living wage.”
It has been reported the boost will be extended for six months to October, flying in the face of requests from charities which have called for it be made permanent.
Mr Sunak also defended the “Eat Out to Help Out” scheme amid claims that it helped
increase coronavirus infection rates.
He said: “Areas where ‘Eat Out to Help Out’ was used the most, for example in the southwest, were the slowest to see any rise and in fact had very low infection rates.
“And almost all other major countries have had rises over the autumn and winter and they didn’t have ‘Eat Out to Help Out’, so I think it’s a bit odd to ascribe causality in that way.”
He also refused to rule out increasing taxes soon before slashing them in time for an election.
Asked if he told Conservative MPS in private that he would seek to raise tax now and then cut them before the election, he told Sky’s Sophy Ridge On Sunday programme: “I would like to be able to keep taxes low for people in general, I’m a Conservative and I believe in that.
“But I want to deliver our promises that we made to the British people that we would be responsible with their money, that we would look after the nation’s finances and we would deliver strong public services."
Treasury sources did not deny a report suggesting the Chancellor plans to raise £6 billion by freezing income tax thresholds for at least three years.
Mr Sunak was said to be considering a freeze on the £12,500 point at which people start paying the basic rate of income tax and the £50,000 threshold where they begin paying the higher 40p rate, as he aims to raise £43 billion a year.
The move would allow Mr Sunak to raise extra funds without breaking the manifesto pledge that guaranteed the Conservatives would not raise the “rate” of income tax.
But it was estimated the move would push an extra 1.6 million people into a higher tax bracket before the next general election is due in 2024.
Mr Sunak said he could not talk about tax outside the Budget and declined to say whether he would stick by the manifesto pledge not to increase the rate of income tax, VAT or National Insurance.
Some Conservatives are opposed to a rise in taxes, warning such a move now would jeopardise the recovery, but others such as former chancellor Lord Ken Clarke have called for hikes to help repair the public finances.
Mr Sunak did not deny reports he may gradually increase corporation tax from 19 per cent to 25 per cent. The move would allow the government to continue boasting that the UK has the lowest rate in the G7 group of industrialised nations, with the US preparing to raise its rate.
The government is braced for the possibility of a rebellion from Tory MPS, with backbenchers being warned they could be kicked out of the parliamentary party if they vote against the Budget.
After Labour leader Sir Keir Starmer said “now is not the time” for tax increases, shadow chancellor Anneliese Dodds said the party would consider backing an increase on corporation tax “if we see a long-term plan”.
Speaking to Sky’s Sophie Ridge, she said: “What the Conservatives are doing now though isn’t setting out that long-term plan to rebalance our tax system, in fact they’re kicking the can down the road when it comes to business rates reform.”
She said the Chancellor “is trying to get any tax changes out of the way quickly, get them out of the way, so that they can then have a general election when they can cut taxes”.
The shadow chancellor will today urge Rishi Sunak to set out a “responsible plan” that puts Britain on the path to a “better, more secure future”, while condemning “12 months of irresponsible decision-making” during the pandemic.
Anneliese Dodds will call on the Chancellor to “rebuild the foundations of our economy” in his Budget on Wednesday, framing it as a “test of character” for Mr Sunak after a decade of “Conservative mismanagement of the economy”.
In a speech to Bloomberg in London, Ms Dodds will describe the Covid crisis as a “wake-up call” after a year of “last-minute scrambles, of U-turns, waste and mismanagement”.
She will demand a plan to protect jobs and businesses, give families certainty and secure the recovery, not
a “triple hammer blow of council tax rises, social security cuts and pay freezes”.
She is to say: “The Chancellor’s message to our key workers, our teachers, our police officers, our armed forces personnel, at the end of one of the hardest years in living memory, is to say, ‘You deserve a real-terms pay cut’. That is spectacularly unjust.
“It’s also economically illiterate. From the IMF and the World Bank to the OECD, every major international economic organisation is in agreement: now is not the time for tax rises on struggling businesses or families.”
She will add: “Coronavirus may have closed large parts of our economy. But this government crashed it.”
Ms Dodds will warn the Chancellor is making “exactly the same mistakes again” in allowing the clock to run down on his business support and wage schemes.
She will add: “In the runup to the Chancellor’s summer statement, as the costs to business of the furlough scheme were about to ratchet up, planned redundancies doubled.
“In September, as he proposed the ill-fated Job Support Scheme, redundancies jumped again, by another 40 per cent.
“In the three months from September to November, when the Chancellor was announcing a new version of his Winter Economic Plan every other week, before we finally got a screeching U-turn just hours before the furlough scheme was due to end, redundancies hit almost 40,000, an all-time record.
“Unemployment kept increasing in the UK, while in other countries it was finally stabilising.
“That is the Sunak effect.
While he dithers and delays, people right across the country lose their jobs.”
Ms Dodds will call for a “smart extension” of the furlough scheme for as long as health restrictions are in place, alongside a training offer for furloughed staff; clarity on the future of the Self-employed Income Support Scheme with action to close the gaps; a minimum six-month extension of business rates relief and the reduced rate of VAT, plus an extension of the £500 Test and Trace support payment to those without an occupational sick pay scheme.
Ms Dodds will also take aim at a government she claims has “wasted and mismanaged billions over the course of this last year”.
She will say: “We’ll take no lectures from this government on how to manage public money.”