Sunak: I will not let the virus cripple economy

Chancellor pledges help for businesses and workers in Budget that will protect Britain

RISHI SUNAK today promises “targeted” measures to help businesses and workers “get through to the other side” of an economic downturn as he warns of the shock that could be caused by a coronavirus epidemic.

In his first interview as Chancellor, Mr Sunak told The Sunday Telegraph that this week’s Budget would include plans to give firms additional time to pay tax if staff were unable to work and shoppers stopped “spending money in the normal way”.

The comments suggested a possible expansion of the Time to Pay initiative, which allows firms to spread payments over months or years.

Mr Sunak pledged to prevent an epidemic from having a “permanent impact” on firms that were otherwise financially sound, as he warned that the economy would suffer a “supply shock” if “lots of people” were ill and unable to go to work. The Budget will now focus on the “economic security” of the country in the face of an epidemic, alongside delivering on the Conservative manifesto, which pledged to raise the threshold at which National Insurance is paid, increase the discount small retail businesses received on business rates, and invest in gigabit broadband.

The Chancellor also:

Insisted he was “not daunted” by the challenge of protecting the economy in the event of a major outbreak, stating the UK was “well prepared” and would “emerge on the other side stronger.”

Revealed plans to double funding for flood defences to £5.2billion, in a move to better protect 336,000 properties in England over the next six years.

Announced an investment package to help get rough sleepers off the streets, in what he described as a “statement of intent” of the “mission” to solve the problem altogether.

Declared that he wanted “lower rates of tax” during his time in office, as a way to increase economic growth.

Said he was “looking at” objections to transaction taxes such as stamp duty, suggesting the levy could be changed in a future budget.

Declined to confirm he would stick to his predecessor’s fiscal rules, but said he was examining “with interest” proposals to reclassify some spending as “investment” to allow himself greater room for manoeuvre.

Likened his role under Boris Johnson to a finance director working alongside a chief executive, but insisted a new team of economic advisers were “all my team”.

Revealing his intention to help businesses in the event of major disruption to manufacturers and retailers, Mr Sunak said: “You have to look at the

nature of what the economic impact might be, so that we can design an appropriate response.

“The main issue is lots of people might be ill, and therefore not be able to be at work. And that impacts the productive capacity of your economy if you’ve got a manufacturing plant and they can’t make their widgets.”

He added: “We need to look at what are the interventions that we need to help bridge a difficult period. That’s where we might look at some targeted options to help ease the strain on cash flows for a certain period to help them get through to the other side.

“Obviously, alongside the supply shock there will likely be an impact on demand if people are at home.”

Mr Sunak said rolling medical advice on “the spread and the timing of the virus” will “impact the timing for what we might want to do” – suggesting he could hold back some measures for if and when the outbreak peaked.

He said increased spending on flood defences would put the Government on track to meet the investment level recommended by the National Infrastructure Commission, and billed the increase as part of the Prime Minister’s “levelling up” agenda. It would enable the Government to improve protections for 336,000 properties in England over the next six years and cut the national flood risk by 11 per cent by 2027, following the devastating floods.

A separate funding package will help to take up to 6,000 rough sleepers “off the streets”, Mr Sunak said. The package included £144million for support services, including access to training and £262million for substance misuse recovery services.

Today, Lord Leigh of Hurley, a Conservative Party treasurer, warns against separate proposals to expand the scope of inheritance tax, saying: “If a partowner of a family business dies and there’s no business relief, effectively the family have to do a forced sale of that family business to pay for the tax, because at a rate of 40 per cent there is no alternative other than to sell up. That would be very bad news for SMEs and British business.

“Family businesses are the lifeblood of the economy. It would be tragic if businesses are forced to sell.

“There are loopholes that should be tightened up in respect of firms which are not genuine trading businesses but businesses should be able to be run by successive family members.”