Sunak hints at extension to furlough beyond end of April

CHANCELLOR Rishi Sunak has indicated he will extend emergency support packages as the coronavirus lockdown is unwound, and did not rule out first raising taxes before cutting them ahead of the next election.

Mr Sunak insisted ahead of Wednesday’s Budget that he is in favour of low taxes, but said he needs to repair the public finances from the “enormous shock” of the pandemic with an “honest and fair” plan.

He said he does not “recognise” suggestions he told MPs in private that he would raise taxes now before cutting them in a pre-election Budget and said it would be “brave” to predict the situation in three years’ time.

But he declined to rule out the possible plan, leading to Labour accusing him of “playing politics with the recovery”.

Mr Sunak said he must “level with people”, with Covid-19 having had an “enormous hold on our economy” that will cause debt to “rise indefinitely” if borrowing continues after the recovery.

But he suggested current support packages for jobs and businesses, such as the furlough scheme due to expire at the end of April, would continue as England comes out of the national lockdown in the coming months.

He said he wants to “support people and businesses along that path” to ending restrictions steadily until June 21, as set out by Prime Minister Boris Johnson.

The Chancellor was pressed on whether he had told Conservative MPs in private that he would seek to raise taxes now and then cut them before the election.

“I think in the short term what we need to do is protect the economy and keep supporting the economy through the road map, and over time what we need to do is make sure our public finances are sustainable,” Mr Sunak told Sky’s

“That isn’t going to happen overnight, that’s going to be work that takes time given the scale of the shock that we’ve experienced but if you’re asking do I want to deliver low taxes for people, of course I do.”

Shadow Chief Secretary to the Treasury Bridget Phillipson accused him of “playing politics with the recovery, threatening hard-hit businesses and families with immediate tax rises so he can cut them before the election”.

But, after a break, Mr Sunak altered his response to the BBC when asked again about the remarks he was reported to have said by The Sunday Times.

“I think anyone given the shock that we’ve had over the last year and the economic uncertainty we face, it would be brave for people to know exactly what was going to happen in three years,” he told The Andrew Marr Show.

Treasury sources did not deny a report in the newspaper suggesting the Chancellor plans to raise £6bn 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 £43bn a year.

In the short term what we need to do is protect the economy. Chancellor Rishi Sunak speaking on Sky’s Sophy Ridge on Sunday.