Chancellor Rishi Sunak is set to unveil an emergency Covid-19 rescue plan that aims to protect jobs.
Following warnings from MPs and unions, the chancellor has ruled out the autumn budget and will instead launch a ‘Winter Economy Plan’, Sky News reports.
To help the economy cope with the latest restrictions, including 10pm curfews on pubs and restaurants and office staff told to work from home, the scheme will be centred around a multi-billion-pound package.
Modelled on a similar scheme in Germany, the scheme will subsidise wages of workers who are returning to work part-time after being furloughed.
It is also expected that the VAT cut to 5% will be extended until the end of March rather than January.
Those hard-hit businesses are also likely to see the extension of four loan schemes until the end of November, which include terms increased from six to 10 years to reduce monthly repayments.
Mr Sunak spoke of the unusual step to not announce a November Budget because ‘now is not the right time to outline long-term plans and people want to see us focused on the here and now’.
A source told Sky News: “No-one wanted to be in this situation but we need to respond to it. The chancellor has shown he has been creative in the past and we hope that people will trust us to continue in that vein.
“Giving people reassurance and businesses the help they need to get through this is uppermost in his mind.”
They added: “It is not about health versus the economy, but about the balance between keeping people in jobs and finding them new ones, and that ‘what remains true is that our priority is one word: jobs’.”
The Treasury explained that the chancellor is promising a ‘flexible and adaptable approach to economic support, because people have needed the help and they’ve needed it quickly and at the right time’.
Adding that he will be ‘very honest with people’ about the trade-offs the government faces as it deals with rising infection rates and an economic slump.
Shadow chancellor Anneliese Dodds told Sky News that Labour has been: “saying for a very long time that it’s critical we have a targeted system of wage support in place”.
Dodds added: “I’ve called for that 40 times and 20 times the government has said they’re not willing to put that into place.
“Obviously, if the government has shifted, I’m pleased. It’s come very late, however. We’ve already seen a number of redundancies because of the one-size-fits-all withdrawal of the furlough scheme.”
The Prime Minister told MPs: “What we will do is continue to put our arms around the people of this country going through a very tough time and come up with the appropriate creative and imaginative schemes to keep them in work and keep the economy moving.”
Labour MP Grahame Morris demanded an expansion of the Covid Job Retention Scheme, saying: “Make no mistake: a tsunami of job losses is in the pipeline within 38 days.”
Labour leader Sir Keir Starmer warned of a ‘wave of job losses in the winter’ because ‘it makes no sense to bring in new restrictions at the same time as phasing out support for jobs and businesses’.
The shop workers union also warned of ‘a tsunami of job losses’.
General secretary Paddy Lillis added: “If we are going to save the high street, there needs to be radical and bold action to level the playing field between online retail and ‘bricks and mortar’ shops.
“The time is long overdue for the government to look seriously at introducing some form of online sales tax.
“As a society we have a choice, do we want to see the high street go to the wall or do we want to save it.
“Retail is the cornerstone of our towns, cities and communities. It employs around three million people and needs urgent assistance to get the industry back on its feet.”
People on working tax credits will get a £500 one-off payment, Rishi Sunak confirms
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Brits on tax credits get a one-off benefits payment of £500, Rishi Sunak reveals in budget.
Outlined in the budget, Sunak explained that a £20 weekly increase in universal credit will extend for a further six months.
The chancellor explains that by the way Working Tax Credits system works people will not be able to receive the extra £20 weekly.
Instead, people will benefit from a £500 one-off payment.
Mr Sunak said: “To support low-income households, the Universal Credit uplift of £20 a week will continue for a further six months, well beyond the end of this national lockdown
“We’ll provide Working Tax Credit claimants with equivalent support for the next six months.
“Because of the way that system works operationally, we’ll need to do so with a one-off payment of £500.”
The £500 tax credit boost will run in the same way that the Universal Credit is paid – automatically.
Lots of people have switched from the old ‘Tax Credit’ to the new ‘Universal Credit’ system. Anyone who hasn’t yet been transferred across will now be eligible for this new one-off payment.
The number of people claiming universal credit in the UK has doubled since the start of the pandemic, reaching 6 million people at the start of this year.
The extra benefit support is welcomed but many are raising concerns that six months is not long enough.
Sunak also revealed in today’s budget that furlough will be extended until September but employers will have to pay 10% of the employee’s wages in July and 20% in August and September.
You can see a round-up of all the key points from the budget here.
What Rishi Sunak’s new budget means for people in Greater Manchester
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Rishi Sunak has said he wants to be honest about the government’s plans for fixing the public finances.
The chancellor says there has been ‘acute damage’ to the economy, with more than 700,000 people losing jobs and the economy shrinking by 10% – the largest fall in 300 years.
Borrowing has also been as high as during wartime.
He said: “It’s going to take this country, and the whole world, a long time to recover from this extraordinary situation.”
Here are the key points from his 2021 budget announcement….
- Sunak explains that 1.8 million fewer people are expected to be out of work than previously thought, with the peak at 6.5% down from the forecasted peak of 11.9%.
- Furlough is set to be extended until the end of September this year, however, firms will be asked to contribute 10% of employee’s wages in July and 20% in August and September as the scheme is gradually phased out.
- A fourth grant worth 80% of average trading profits up to £7,500 covering February to April that will help self-employed people.
- The £20 increase in universal credit will extend for six months
- Total cash support to businesses has reached £25bn. A further £5bn restart grant has now been confirmed to help companies get going after lockdown.
- Hospitality and leisure businesses will pay no business rates for three months, then discounted for the remaining nine months of the year by two-thirds.
- The 5% VAT cut will be extended to the end of September and gradually increased at 12.5% for six months before returning to the normal rate in April 2022.
- The stamp duty holiday will be extended on properties up to £500,000 to the end of June. It will return to normal levels from October 1st.
- Mortgage guarantees were also confirmed to help first-time buyers access 95% mortgages, with just 5% deposits.
- The government will take a ‘fair’ approach to ‘fixing the public finances’ the chancellor confirms.
- There will be no increase in national insurance, income tax or VAT.
- The personal allowance will remain at £12,750 until 2026 and the higher rate will increase to £50,270 next year.
- Inheritance tax threshold, pensions lifetime allowance, annual exempt allowance from capital gains tax and VAT exemption thresholds will all be frozen.
- New minimum wage rates come into force in England on April 1st. Basic rate workers will see a 2.2% increase, with the National Living Wage rising to £8.91 an hour.
- The budget deficit will reach £355billion this year (17% of GDP) – the highest level in peacetime.
- Sunak said: “It’s going to be the work of many governments over many decades to pay it back, just as it would be irresponsible to withdraw support too soon, it would also be irresponsible to allow our future borrowing and debt to rise unchecked.”
- The chancellor explains that the economy will recover more quickly than previously thought.
- GDP will grow by 4% this year and 7.3% next year according to official forecasts.
Contactless payment limit set to increase to £100
It’s hoped this will provide a much-needed boost to the retail sector
Rishi Sunak is set to announce in the budget today an increase in contactless payment limit up to £100.
At the start of the Covid-19 pandemic in 2020, the contactless limit was increased from £30 to £45 and it is hoped this second increase will provide a much-needed boost to the retail sector.
Some industry sources have expressed alarm at the new threshold, warning of the potential increase in fraud, according to Sky News.
The increase in the limit was made possible due to Brexit. The European Commission set the limit to €50.
Sunak is expected to highlight the important of ‘pinging’ payments as shoppers continue to rely less on cash.
Speaking to the Evening Standard, he said: “London’s retail sector is famous across the world, with Oxford Street, Covent Garden and Westfield seen as global destinations for shopping.
“As we begin to open the UK economy and people return to the high street, the contactless limit increase will make it easier than ever before for people to pay for their shopping, providing a welcome boost to retail that will protect jobs and drive growth across the capital.”
The chancellor is set to unveil the budget at 12:30pm today. He is expected to offer more information on the mortgage scheme that will offer 5% deposit as well as extending the stamp duty holiday and increase corporation tax from 19% to 23%.
Sunak is also set to announce the extension of furlough until September and information on a £5bn scheme to help firms such as shops, clubs and gyms.