Rishi Sunak discusses the Spring Budget
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In his Budget on Wednesday afternoon, the Chancellor will extend his furlough scheme to fund most of the wages of millions of employees shut out of work by the Covid crisis for another three months. The longer-than-expected extension – which could cost taxpayers another £7billion – will last until the end of September to give firms extra time to rebuild as the lockdown is eased. He will also announce further support for the self-employed, with more than 600,000 people – many of whom became self-employed last year – are now eligible for cash grants.
His latest measures will be at the heart of a three-point three-point plan focused on support for jobs and livelihoods, honesty about the state of the public finances following the £280billion cost of responding to the pandemic and the need to build the UK’s economy of the future.
Ahead of his keynote financial statement, the Chancellor said on Tuesday night: “Our Covid support schemes have been a lifeline to millions, protecting jobs and incomes across the UK.
“There’s now light at the end of the tunnel with a roadmap for reopening, so it’s only right that we continue to help business and individuals through the challenging months ahead – and beyond.”
Mr Sunak’s move will extend the furlough scheme for more than two months beyond the June 21 date set for ending most Covid restrictions in Boris Johnson’s roadmap out of lockdown.
Employees on furlough will continue to receive 80 percent of current salary until the scheme ends.
In the final months, firms will be expected to contribute more to their salaries. Firms will be asked to fund 10 percent of pay in July and 20 percent during August and September.
More than 11million employees have been put on furlough since the Coronavirus Job Retention Scheme was launched when the pandemic struck a year ago.
So far, the scheme has cost an eye-watering £52.8billion and is set to rise to £60billion in total. Around 4.7million workers are still furloughed.
But Mr Sunak will on Wednesday repeat his promise that the Government will do “whatever it takes” to support jobs and livelihoods affected by the pandemic.
In his Budget speech to MPs, the Chancellor is expected to say: “We’re using the full measure of our fiscal firepower to protect the jobs and livelihoods of the British people.”
He will add: “First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis.
“Second, once we are on the way to recovery, we will need to begin fixing the public finances – and I want to be honest today about our plans to do that.
“And, third, in today’s Budget we begin the work of building our future economy.”
Mr Sunak took time out from his Budget preparations on Tuesday to hold a virtual call with around 50 people who have been helped by government support schemes during the pandemic including furlough, the Self Employment Income Support Scheme, business loan schemes, and the Kickstart and apprenticeship schemes for young people.
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To help the self-employed, the Chancellor will announce that a fourth Self-Employment Income Support Scheme grant will be available to claim from next month worth 80 percent of three months’ average trading profits up to £7,500 in total.
When the grant was first launched, payments were based on tax returns for 2018-2019 leaving many newly self-employed workers unable to qualify for cash.
New data means hundreds of thousands more people will be eligible.
Mr Sunak will outline further details on Wednesday – and promise a fifth grant to build on the measure.
Business leaders welcomed the latest Budget measures to support firms last night.
Rain Newton-Smith, chief economist and the Confederation of British Industry (CBI), said: “Quite simply, extending the scheme will keep millions more in work and give businesses the chance to catch their breath as we carefully exit lockdown.
“The furlough scheme has been a stand-out success throughout the crisis. It’s common sense to keep the scheme going while business resilience remains fragile for some months yet.
“As we make progress into the summer, it’s right that businesses start contributing a little more as revenues start to recover.
“Meanwhile it’s great to see more support for the newly self-employed, who have missed out over the last year.”
Mike Cherry, national chairman of the Federation of Small Businesses, said: “This will help millions of people who work in a small business, and provide assurance for them to plan.”
He added: These elements build towards making this a pro-business Budget, one that sets small firms on course to help their local communities bounce back from a torrid year.”
Adam Marshall, director general, of the British Chambers of Commerce, said: “The extension of the furlough scheme shows that the Chancellor has listened to our business communities.
“Many firms will be breathing a huge sigh of relief, particularly those businesses that are still closed or facing reduced demand due to COVID-19 restrictions.
“The furlough scheme has been a lifeline for companies all across the UK.
“This extension gives firms much more clarity on the way ahead, and will allow many to plan with greater optimism and confidence as they look to restart and rebuild over the coming months.”
Kate Nicholls, chief executive of UKHospitality, said: “Extending the full furlough support for businesses up to and beyond the full reopening date for hospitality is a very positive move.”
Emma McClarkin, of the British Beer & Pub Association, said: “The extension of furlough and flexible furlough will be much welcomed by the beer and pub sector as we rebuild our trade over time.”
But Bridget Phillipson, Labour’s shadow chief Treasury secretary, said: “These changes to support schemes could have been made months ago. Businesses and workers have been pleading with the Chancellor to give them certainty – but they have had to wait because he said it wouldn’t be appropriate until the Budget.
“Announcing it the night before shows the focus is on Rishi Sunak getting his moment in the sun rather than protecting jobs and livelihoods.
“We need a Budget that secures Britain’s recovery and rebuilds the economic foundations the Conservatives weakened before the crisis.
“That means a plan to support jobs and businesses, protect family finances and set Britain on the path to a better, more secure future.”
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