Mishal Husain Slams Tories’ ‘Economic Competence’ In Spat With Jeremy Hunt

Posted on 10/05/2024 by Boris Clair

Mishal Husain did not let Jeremy Hunt boast about the UK’s economic growth today and reminded him of the disasters the country has faced under the Tories.

While the chancellor was celebrating the news from the ONS that the UK is officially out of recession, the Today programme host kicked off the interview by saying: “It’s not a strong recovery is it?

“Some people would call it anaemic. You’re not calling it strong are you?

“That’s not what it is. The economy has barely grown over the last two years.”

Hunt claimed over the last quarter, the UK had the joint-highest growth in the G7– and then blamed slow growth on the Bank of England’s high interest rates.

Husain hit back: “You’re portraying yourself as the people in whose hands the economy is safe, and yet many voters, particularly those who are perhaps finding themselves re-mortgaging this month on higher rates and seeing the facts that fixed rate mortgage deals have been edging up – and others – will be remembering what happened under Liz Truss and that mini-budget.

“And they’ll say: ‘How can you possibly, after the events of the last two and half years, portray yourself as the party of economy competence?’”

Sunak’s predecessor unveiled £45bn of unfunded tax cuts in her mini-budget in 2022, causing the pound to plummet.

“Well, there were some mistakes that were made in that mini-budget and we corrected them within weeks,” the chancellor said.

He also pointed to the energy shock triggered by the Ukraine war and said it was “just wrong” to attribute all price rises to the mini-budget.

“But, it wasn’t economically competent, was it, to do that?” Husain pushed. “And do you accept that it’s fair for voters to go into the next election, remembering that happened under the Conservatives?”

Hunt said the “overall picture” shows that the UK has grown faster than France, Germany, Italy and Japan since the Conservatives took over in 2010.

He also pointed to the IMF’s predictions that the UK would continue to grow faster over the next six years.

He failed to mention that the think tank OECD predicted last week the UK would be the second slowest-growing economy in 2024, and the slowest in 2025.

Hunt maintained that voters support the Conservative Party because “they trust us to take tough and difficult decisions in the long-term interest of the economy”.

“You’re asking us to ignore Liz Truss, aren’t you? To say Liz Truss never happened,” Husain said – which Hunt denied.

Jeremy Hunt’s Claim Tories Always Aim To Lower Taxes Leaves People Pointing Out The Obvious

Posted on 03/03/2024 by Boris Clair

Jeremy Hunt told broadcasters this morning that it is an “eternal truth” that Conservative governments “try to bring the tax burden down” – but not many people agree.

The chancellor was speaking to journalists on Sunday ahead of the unveiling of his Spring Budget later this week, an annual event where the government outlines its plans for taxes and spending.

The pressure is on for Hunt and PM Rishi Sunak as Tories have been calling for more popular policies to soften the general public ahead of the general election later this year.

Hunt refused to reveal any particular policies he has lined up before his announcement on Wednesday – but he did repeatedly suggest that the public can trust the Tories with the economy.

He told Sky News: “I do want to show people in an election year that eternal truth that Labour governments spend more and tax more, Conservative governments spend more wisely and try to bring the tax burden down.”

He echoed this claim on the BBC.

“We’ve been very consistent, that we would only cut taxes in a way that was responsible and prudent,” he said, adding that he would not be announcing any “gimmicks” this week.

But, in the last four years, five different Tory chancellors have pledged to bring taxes down – only for them to rise to a historic level.

In fact, the current tax burden in the UK is the highest since World War 2.

As Labour’s shadow chief secretary to the Treasury, Darren Jones, pointed out: “It is the Tories who have raised taxes to their highest level in 70 years.

“No matter what the chancellor does in the Budget this week, working people will be worse off thanks to 14 years of Tory failure.”

Many on X (formerly Twitter), seemed to agree.

And several users pointed out that the last few years in government have hardly improved the economy – especially after former Tory PM Liz Truss’s disastrous mini-budget sent the markets into a complete spin and as the UK is currently in the middle of a recession…

Jeremy Hunt’s problem is this. Tory rule supposed to be about financial prudence. All they’ve done is rack up debt, spaffed billions on Brexit and their mates, and the Tories who voted for them on the basis of tax cuts have never been taxed so much. The party has lost its USP.

— Tim Walker (@ThatTimWalker) March 3, 2024

Jeremy Hunt, who is on course to raise taxes in the UK to their highest level since the Second World War, tells Sky News that it is an “eternal truth” that Conservative governments “bring the tax burden down.” pic.twitter.com/DxXPgcbWmt

— Adam Bienkov (@AdamBienkov) March 3, 2024

Left: Jeremy Hunt, “Labour govs spend more and tax more, Conservative govs spend more wisely and bring tax burden down”

Right: Sky News, “In the last four years, five chancellors says they want to cut taxes. In reality the opposite has happened. Taxes have been rising to near… pic.twitter.com/bpJOtjhV4W

— Farrukh (@implausibleblog) March 3, 2024

So is @Jeremy_Hunt telling us that we should be greatful that the recession they have thrown us into isn’t as bad as it could be? #bbclaurak

— Harry Eccles (@Heccles94) March 3, 2024

So, Why Exactly Is Inflation Higher In Britain Than In The US And Europe?

Posted on 21/06/2023 by Boris Clair

The UK has an inflation problem. Officials had hoped the rising cost of goods and services would have been brought to heel by now, as soaring energy costs fuelled by the war in Ukraine have cooled.

But, on Wednesday, its downward trajectory stalled and alarm bells started ringing.

The Office for National Statistics said inflation, as measured by the consumer price index, held steady at 8.7 per cent in the year to May. Expectations were that the rate would fall a to 8.4 per cent.

And there was more. Britain’s measure of underlying inflation that excludes volatile items, such as energy and food, took investors by surprise by accelerating for a second month in a row in May, hitting 7.1 per cent, up from 6.8 per cent in April. Higher core inflation is seen as a sign that price growth is more likely to remain persistently high.

UK inflation remains unchanged at 8.7% in May.

Anadolu Agency via Getty Images

It looks certain that the independent Bank of England will raise the cost of borrowing again on Thursday for the 13th month in a row – the only question is whether it’s by 0.25 percentage points, or a symbolic half percentage point to 5%.

Don’t other countries have inflation under control?

Britain’s inflation rate has stayed far above price growth in the US and elsewhere in Europe. Although 8.7% is down from a peak of 11.1% last October, it leaves the UK with the highest inflation rate among the G7 advanced economies. By comparison, inflation stood at 4% in the US and 6.1% across the 20 EU countries that use the euro currency.

Last week, the Federal Reserve – America’s equivalent of the Bank of England – ended a 15-month streak of hiking interest rates, a pause that currently seems highly unlikely in the UK.

The surging cost of food

Britain has had western Europe’s highest rate of inflation for food, with prices up more than 18 per cent over the past year, down only slightly from a recent peak of more than 19 per cent, the highest since 1977.

Freak weather has affected crops around the world, pushing up prices for many countries. But Britain is the world’s third largest net importer of food and drink, according to the Food and Agriculture Organisation of the United Nations – behind only China and Japan – leaving it particularly exposed.

Industry data published on Tuesday showed British grocery inflation eased slightly for the third month in a row in June.

Bank of England governor Andrew Bailey said last month that British food producers may have locked in higher costs than the central bank had anticipated, explaining some of its underestimate of inflation.

Heavy reliance on natural gas

Britain is highly reliant on imported gas to generate electricity, exposing it to the full force of the surge in gas prices last year after Russia’s invasion of Ukraine.

The way Britain regulates energy prices for domestic and business users – it announces changes to maximum tariffs on a quarterly basis – means that international price rises are slower to push up inflation than in many other countries but falls are also slower to feed through into bills for users.

Brexit

Exiting the European Union and its single market at the start of 2021 has started to have an impact. Although an agreement between the UK and the bloc allows largely tariff-free trade in goods, there are barriers to exports and imports in the form of paperwork which have caused delays and higher costs.

Meanwhile, the end of free movement of workers from EU countries has contributed to an acute shortage of staff for many employers, pushing up wages and ultimately prices for consumers.

Bank of England decision-making

Some economists think the Bank, which is tasked with keeping inflation at around 2%, was too slow in starting to raise interest rates and is now playing catch-up.

Its own monetary policy committee rate-setter member, Chaterine Mann, said in February that the Bank should have started raising interest rates earlier (“a greater degree of front-loading” was needed) and is now paying the price.

Why Your Council Tax May Go Up – And What It Means For Your Bills

Posted on 14/02/2023 by Boris Clair

Millions of homes will face a hike in their council tax bills from April onwards as the UK economy continues to falter.

According to the County Councils Network (CCN), three-quarters of English councils with social care duties are going to increase council tax by 5%.

That’s the most each council can increase it by without taking a local vote from residents.

Out of the 114 councils who offer social care and have published their 2023/24 budget proposals, 84 are planning to go with the maximum hike – that’s almost three in every four.

Only Central Bedfordshire council plans to keep tax at its current rate.

The remaining councils are still yet to reveal their plans, although Croydon, Thurrock and Slough have permission to go above the 5% threshold because they are particularly low on funds.

Here’s what you need to know.

What is council tax?

It’s a compulsory charge on all properties in England, Scotland and Wales, which is the main source of income for most councils.

Local authorities decide how much residents need to pay based on how much they want to spend on the services in their area.

These services include rubbish collection, libraries, police and fire services, snd libraries.

It also fluctuates according to each home’s value. They are all graded into different bands at a certain time, with more expensive properties being higher grades. Find out what your property’s is here, on the government website.

The average property in England – which will have been valued on April 1, 1991 – is and D. The yearly council tax for that is £1,966.

Scottish councils can set their own rates with complete independence, while in Wales, the government can cap the council tax rises if they are seen to be “excessive”.

Councils also receive some funding from business rates, and central government grants.

Who pays council tax?

Almost everyone over 18 who owns or rents a home has to pay council tax – that means tenants, not the landlords, are responsible for footing this bill.

If you live alone you can get a 25% discount, and student homes are exempt, as are those living in halls or residence or care home.

If you work away from home and your property is empty you can get it half price.

Why is the bill going up?

The UK already has the highest tax burden in 70 years.

The government has also agreed to let local authorities spend an extra £5.1 billion next year (that’s a 9% rise for local authorities), with the most deprived areas of England set to receive 17% more per household this year than the least deprived.

But, council leaders say they have “little choice” but to raise the tax to protect the services offered to residents.

Labour vice-chair of CCN, leader of Cheshire East Council, Sam Corcoran, said: “With inflation reaching levels not seen for over 40 years and with demand-led pressures for care services showing no sign of abating, local authority leaders are setting their budgets in the most difficult circumstances in decades.”

He said that while the cost of living crisis is affecting every household, particularly those on low incomes, many local authorities are “reluctantly opting for maximum rises”.

“With councils facing multi-million funding deficits next year, the alternative to council tax rises would be drastic cuts to frontline services at a time when people at the sharp end of the cost of living crisis need us to be there for them.

“With the financial situation for councils looking extremely tough for the next few years, we will be calling on the chancellor for further help in the March budget.”

The Office for Budget Responsibility (OBR) says this will raise £3.3billion in 2026/27, and will increase to £4.8billion in 2027/28.

What does this mean for your bills, in real terms?

It would add £98 a year to bills for the average Band D properties.

Band D properties in England already pay £1,966 per year – so from April, this will probably be around £2,064.30.

The council tax amount varies from property to property. To find out how yours might change, calculate 5% of your annual rate (find it here) and then add it on to your current bill.

What does the government say?

The government made it possible to increase the council tax levy by 5% without a vote last autumn.

Before that decision from chancellor Jeremy Hunt, local authorities needed to hold a referendum to raise the levy by more than 3%.

The government also seems to have encouraged councils to apply this money pressure to residents.

A Levelling Up department spokesperson said: “Our approach to council tax balances the need to deliver vital services while protecting residents from excessive increases.

“We expect local authorities to take into consideration the challenges many households are facing.”

Levelling up minister Lee Rowley is also reviewing the council tax system, after complaints about different amounts being raised in different parts of the country.

Tory Splits Have Erupted Over Tax Cuts Ahead Of Next Month’s Budget

Posted on 12/02/2023 by Boris Clair

Deep Tory splits have burst into the open as pressure mounts on Jeremy Hunt to cut taxes in next month’s budget.

Right-wing backbencher John Redwood today urged the government to “get on with it” and said the majority of Conservative backbenchers agree.

But development minister Andrew Mitchell said immediate tax cuts were “extremely hard to justify” and backed the chancellor and Rishi Sunak, who have said tax cuts are unaffordable at the moment.

The clash came in the wake of official figures which confirmed the UK economy flatlined in the final three months of 2022.

Hunt will deliver his Budget on March 15, but has repeatedly insisted that inflation must come down before taxes can be cut.

Supporters of former prime minister Liz Truss have formed the Conservative Growth Group to put pressure on the chancellor and PM to change course.

Redwood, who is a member of the group, said the government should start by cancelling the planned rise in corporation tax – which companies pay on their profits – from 19p to 25p in the pound.

He said: “We want to see sensible, targeted tax cuts that will boost self-employment, boost investment and help solve the problem of recruiting and retaining doctors and other skilled staff, and will add to the idea of growth.

“All the evidence is in the past, when Conservative governments have had the courage to cut corporation tax rates, it raises more money.”

The Wokingham MP also called for VAT to be removed from domestic fuel bills.

He added: “The growth group is gathering strength as we speak. There are dozens of Conservative MPs who take the view that the growth strategy the government has headlined needs some more positive measures behind it.

“I think you’ll find a majority of Conservative backbenchers agree with what I’m saying today – that they want targeted tax cuts and there will be a range of views on which are the best targeted tax cuts to choose.

“The majority believes that you don’t get growth without more realistic tax levels.

“Many are very worried that Britain is in danger of becoming uncompetitive because of the higher taxes the government is wishing to impose.”

But Andrew Mitchell rejected Redwood’s ideas and said taxes could only come down when the government can afford them.

He said: “In the end, if we make tax cuts which are not properly funded, it’s borrowing and it’s taxation deferred for the next generation. Many of us are very concerned about inter-generational fairness in Britain – the position of our children and our grandchildren.

“So I think tax cuts are very important, but they’ve got to be done at the right time and I think that the philosophy and argument that the Chancellor of the Exchequer has set out is absolutely right.

“We will get them when we can, but I think at the moment it’s extremely difficult to justify them.”

The UK Economy Has Flatlined. So What Does That Mean For Your Finances?

Posted on 10/02/2023 by Boris Clair

The UK just managed to avoid falling into recession towards the end of last year.

After shrinking for one quarter, it (ever so slightly) jumped back between October and December by just…not growing at all.

Chancellor Jeremy Hunt said this was a sign “our economy is more resilient than many feared” – but warned that we’re still not “out of the woods yet”.

It’s also worth noting that Friday’s data – which has helped experts decide if we’re in recession – is only the first estimate. These numbers are often revised later.

But what does all this mean?

What has just happened to our economy?

Data from the Office for National Statistics (ONS) said the economy recorded zero growth between October and December.

According to the ONS’s director of economic statistics Darren Morgan, it comes down to a few different factors – including strikes.

“Public services were hit by fewer operations and GP visits, partly due to the impact of strikes, as well as notably lower school attendance,” he said.

“The break in Premier League football for the World Cup and postal strikes also caused a slowdown.

“However, these falls were partially offset by a strong month for lawyers, growth in car sales and the cold snap increasing energy generation.”

Across the whole of 2022, the economy did grow by 4%, despite the cost of living crisis squeezing household incomes.

What is a recession?

A recession is defined as two consecutive quarters (so six months in total) where the economy shrinks. This is also known as a decrease in the value of goods and services we produce, Gross Domestic Product, or GDP.

If GDP declines in value people’s income tend to fall.

In the third quarter of 2022, July to September, the economy did shrink by 0.2%. But because it didn’t shrink again the next quarter, we’ve just missed out on meeting the criteria for a recession.

The last recession was in 2020 at the height on the pandemic, but it only lasted for six months, although it did see a 20.4% reduction in the UK economy between April and June in 2020 though – the largest on record.

Before that, the 2008 global financial crash went on for five quarters.

Why is 2023 still expected to feel like we’re in recession?

Even if we don’t meet the technical definition for being in a recession right now, experts believe that it will very much feel like the country is in a period of negative growth already.

After all, the UK is still the only G7 country which now has a smaller economy than it did prior to the pandemic.

And experts at the International Monetary Fund (IMF) still expect the UK to be the only G7 country to fall into recession this year, and set to perform even worse than Russia.

And 2023 is still set to feel like a recession for many, according to an economist at National Institute of Economic and Social Research (NEISR).

“A focus on the economic crisis faced by most of the British population, rather than technicalities, offers a more insightful perspective,” NEISR’s Paula Bejarano Carbo told POLITICO.

One in four UK households (potentially seven million families) will not be able to fully pay off their food and energy bills in 2023 – that’s an increase from one in five last year, according to NEISR.

So how would a recession affect you?

The job market

Recessions usually trigger companies to let more people go, as consumers spend less and businesses have to adjust their margins.

This pushes unemployment levels up.

Employers may also reduce workers’ hours, cut wages, pull back on bonuses and financial incentives or introduce a hiring freeze to an effort to reduce their outgoings.

The stock market will probably struggle too. As people tend to send less, companies report lower earnings, investors consider liquidating their stocks.

Consumer buying habits

Everything becomes more expensive in a recession – and inflation is already at a 40-year-high of 10.5%.

The Bank of England has been increasing interest rates in recent months in an effort to decrease the double-digit inflation. That means the price of borrowing increases.

So your credit card balance will also come with higher payments, and anyone looking to secure a mortgage will likely only be offered more expensive deals.

Only if you have a fixed rate mortgage will your monthly payback stay the same.

So lenders may want to think twice before letting people take out loans, which could affect people’s ability to go after large purchases.

Government spending

More economic growth means the government usually gets more money in taxes.

It can then spend more on benefits, public services, government workers wages or reduce taxes – but this can equally all be negatively affected if the economy shrinks too.

How can you prepare for a possible recession?

The Office for Budget Responsibility (OBR) still expects the economy to shrink by 1.4% in 2023, with the recession causing an overall drop of 2% in GDP.

Although it is expected to grow again by 2025, it’s still best to prepare now.

Pay off your debt sooner rather than later – interest rates are expected to continue rising this yer
Save, if you can, in the event of sudden redundancy
Try to secure multiple sources of income
Look for a recession-proof career, if possible.

Treasury Minister Dunked On For Premature Celebration Of Rising Pound

Posted on 23/09/2022 by Boris Clair

The chief secretary to the Treasury has faced online ridicule after celebrating the rise in the pound – just before it repeatedly dropped to a 37-year low.

Chris Philp, second in command to chancellor Kwasi Kwarteng, seemed thrilled as sterling rose against the US dollar briefly as his boss unveiled his mini-budget.

He tweeted: “Great to see sterling strengthening on the back of the new UK Growth Plan.”

But once the markets digested what amounted to tax cuts costing up to £45 billion annually, the currency went in reverse.

At its lowest point on Friday afternoon £1 could buy just 1.0896 US dollars – the worst exchange rate for Britons since 1985.

It was a drop of over 3%, and means the pound has lost more than 7% of its value against the dollar in just a month.

Twitter was in unforgiving mood.

Appearing on the BBC later, Philp said the markets will see that the government has a “credible and responsible” economic plan

He told BBC Radio 4’s PM programme: “I think when the chancellor sets out his medium-term fiscal plan, which includes getting debt to GDP falling, then I think markets and others will see that we have a credible and responsible plan.”.

He also insisted the government has a “plan” to drive up GDP by 1% on current forecasts every year.

“I have every confidence that the objective we set out, the extra 1%, will be delivered. We’re not hoping, we’ve got a plan to do it.”

Philp rejected the idea that the government has abandoned the cautious approach to the public finances taken by previous Tory administrations.

Using more than £70 billion of increased borrowing, Kwarteng on Friday set out a package which included abolishing the top rate of income tax for the highest earners.

He cut stamp duty for homebuyers, and brought forward a cut to the basic rate of income tax, to 19p in the pound, a year early, to April, as part of tax cuts costing up to £45 billion annually.

Kwarteng told the Commons tax cuts are “central to solving the riddle of growth” as he confirmed plans to axe the cap on bankers’ bonuses while adding restrictions to the welfare system.

‘Low Taxation’ Rishi Sunak Derided As Tories And Labour Square Off Over The Economy

Posted on 23/02/2022 by Boris Clair

Labour has questioned Rishi Sunak’s attempt to portray himself as a low taxation Conservative as both parties stake their claims to being the most trusted on the economy.

The chancellor and Labour leader Keir Starmer will on Tuesday both deliver speeches that make their cases to be the next prime minister.

Sunak, seen as the most likely Tory to succeed Boris Johnson if the PM is brought down by the partygate scandal, will insist he wants to create a “lower tax economy” in an appeal to traditional Conservatives.

Meanwhile, Starmer will evoke the spirit of former Labour prime minister Harold Wilson by promising the “white heat” of a new technological revolution will deliver prosperity for all.

But in an attempt to thwart Sunak’s ambitions, Labour will claim the chancellor has slapped 15 tax rises on households and businesses in the last two years – and that he has raised the most tax on average per budget than any chancellor in the last 50 years.

Amid the cost of living crisis, the chancellor and the prime minister have been refusing to back down on the 1.25 percentage point hike to National Insurance for April despite pressure from numerous Tory MPs.

Delivering a lecture to the Bayes Business School in London, Sunak is to insist he will make “difficult and often unpopular arguments” on spending, hinting at his determination to resist calls from cabinet colleagues for fresh money.

He will argue that cutting taxation in the future needs to be done in a “responsible way”, following a row with health secretary Sajid Javid over funding the “living with Covid” plan.

Sunak is expected to say: “I firmly believe in lower taxes.

“The marginal pound our country produces is far better spent by individuals and businesses than government.

“I am going to deliver a lower tax economy but I am going to do so in a responsible way, and in a way that tackles our long term challenges,” he is due to add.

But in comments that will be seen as a challenge to ministers demanding increased spending, he is expected to say: “Cutting tax sustainably requires hard work, prioritisation, and the willingness to make difficult and often unpopular arguments elsewhere.”

He will also say that he is “disheartened” when he hears the “flippant claim” that tax cuts always pay for themselves, adding: “They do not.”

In response, shadow chancellor Rachel Reeves used the speech to brand the Conservatives the party of “high tax” as a result of being “the party of low growth”.

“Over a decade of Tory government, the economy has grown far slower than when Labour was in power, and it is set to go even slower in the coming years,” she said, citing research suggesting the £27.3bn raised by Sunak per year is higher than that brought in by 12 Tory and Labour predecessors at the Treasury since 1970.

Elsewhere, Starmer will promise to build a “new economy of security” as he borrows from Wilson’s 1963 pledge to harness “the white heat of technological change”. At the time, Wilson was seeking to become the first Labour prime minister for more than a decade.

Speaking in Wilson’s home town of Huddersfield in West Yorkshire, Starmer will say that after 12 years of a Conservative government, it will fall to Labour to deal with the next generation of change.

“Our country and our economy are entirely different now, but we too are going through the white heat,” he is expected to say.

“We face our own revolutions in technology and industry, and it will fall to the next Labour government to shape that change so it works for all.”

It marks the latest stage of his effort to restore the party’s economic credibility in the eyes of voters following the controversy over Jeremy Corbyn’s plans.

Starmer will declare his determination to end the “economic fatalism” of the Tories, who he will accuse of lacking a clear plan for business.

“Britain cannot rise to the great challenges of the day without the innovation of business,” he will say.

“A political party without a clear plan for making sure businesses are successful and growing … which doesn’t want them to do well and make a profit … has no hope of being a successful government.”

He will argue that if the Tories had matched Labour’s record on growth, people would have enjoyed higher incomes while an additional £30 billion a year would have been available for public services without raising taxes.

“We will build a new economy of security, where stable employment will be the bedrock of a better future for the next generation,” he will say.

“We will build an economy of prosperity, in which the places that once powered Britain flourish again. We will build a new economy of respect, where the contribution of every worker and employee is given its due.”

Rishi Sunak’s Budget Explained In Two Minutes

Posted on 03/03/2021 by Boris Clair

Chancellor Rishi Sunak has delivered his budget in the House of Commons as the UK plots a course out of the Covid crisis.

Here are the key points.

Furlough extended until September

The emergency wages scheme was due to close at the end of March, but Sunak has extended the UK-wide scheme until September. However, he will taper the Treasury’s 80% contribution from July.

Universal Credit uplift to stay… for 6 months

The £20-a-week uplift to Universal Credit will be extended for a further six months. But it is likely the government will continue to face pressure to make the uplift permanent.

Stealth income tax rise

Sunak introduced a four-year freeze on income tax thresholds.

The move does not hike taxes as such, but will be viewed as a stealth tax in that it will drag employees into higher tax bands as their salaries rise.

It has been suggested the freeze will bring an extra £6bn into the Treasury coffers.

The pensions lifetime allowance, and the annual exempt amount in capital gains tax, will also be maintained at current levels until April 2026, he said.

Hike in tax on big business

Sunak announced he will raise corporation tax, which is paid on company profits, from the current 19% to 25% in April 2023.

Small businesses with profits of £50,000 or less will continue to be taxed at 19%.

The measure will be controversial among some low tax-backing Tory MPs.

Sunak stressed the UK would till have lowest rate is the lowest in the G7, with France firms paying 33% and Germany’s 30%.

Joe Biden’s new US administration is reportedly preparing to raise its corporation tax level from 21% to 28%.

95% mortgages and stamp duty holiday

Sunak said help for home-buyers is on its way with the return of 5% deposits. As part of a mortgage guarantee scheme on properties worth up to £600,000, the government will underwrite the remaining 95% of the loan.

He said it was a “policy that gives people who can’t afford a big deposit the chance to buy their own home”, adding: “As the prime minister has said, we want to turn generation rent into generation buy.”

In a separate move to bolster the property market, Sunak extended the stamp duty holiday on homes worth up to £500,000 until the end of June.

Total cost of Covid hits £325bn

Sunak has pumped extra £1.65bn into the rollout of the Covid vaccination programme.

He told MPs the total Covid-19 support package amounted to a staggering £352bn, or £407bn once other fiscal support is included.

He said: “Coronavirus has caused one of the largest, most comprehensive and sustained economic shocks this country has ever faced and, by any objective analysis, this government has delivered one of the largest, most comprehensive and sustained responses this country has ever seen.”

Covid-hit firms to share £5bn grant fund

Businesses hammered by Covid, such as shops, pubs, clubs, gyms and hair salons, can apply for grants of up to £18,000 as part of a £5bn scheme.

He added that the 5% reduced rate of VAT for the tourism and hospitality sector will be extended for six months to the end of September, with an interim rate of 12.5% for another six months after that.

Super deduction

The chancellor announced a new “super deduction” for companies investing after the Covid pandemic. He said the new measure for investing firms can see them reduce their tax bill by 130% of the cost.

Alcohol and fuel

All alcohol duties will be frozen for the second year in a row and the planned increase in fuel duty has also been cancelled, the chancellor said.

Contactless payment limit

The contactless payment limit is to more than double to £100 from £45. While legally in force from Wednesday, the increase will not happen immediately as firms will need to make systems changes.

Money for the Union

Sunak announced an increase in funding for the devolved administrations by £1.2bn for the Scottish government, amid growing demands for a second independence referendum.

He also announced £740m for the Welsh government and £410m for the Northern Ireland Executive.

Arts funding boost

Sunak allocated £400m to help museums, galleries and especially theatres in England to reopen.

This is in addition to the £1.57bn Culture Recovery Fund, established by Sunak and culture secretary Oliver Dowden.

There will also be a £300m package for sports – much of it targeted at cricket.

Treasury jobs moved north

Hundreds of jobs will be relocated from London to Darlington under the chancellor’s Treasury North project.

Sunak said that after “a lot of thought and energy”, the new economic campus would be in the north-east market town.

Civic leaders across the north had made overtures in recent weeks for the Chancellor to send Treasury jobs their way.

A new £12bn UK infrastructure bank will be established in Leeds, with £10bn of government guarantees, Sunak added.

Freeports announced

Sunak announced the establishment of a new set of freeports, something he claims was only possible post-Brexit.

They are: East Midlands Airport, Felixstowe and Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames and Teesside.

The policy will give tax breaks, cheaper customs and make planning regulations simpler for firms.

Domestic violence cash boost

Sunak announced an extra £18m for domestic violence programmes.

It comes after the Covid lockdown saw a rise in attacks and domestic violence killings.

Budget 2021: Rishi Sunak Unveils Tax ‘Super Deduction’ For Firms Investing After Covid

Posted on 03/03/2021 by Boris Clair

Chancellor Rishi Sunak has unveiled a new “super deduction” for companies investing after the Covid pandemic.

Announcing his budget in the Commons, Sunak said when firms invest, his new policy would see them reduce their tax bill by 130% of the cost.

Sunak also revealed that the government will separately hike corporation tax on the profits of big business from 19% to 25% in April 2023, something which will make him unpopular with some low-tax Tory backbenchers.

But insisting that the UK will have a “pro-business tax regime” after Covid, he told MPs the new super deduction will unlock investment and specifically reward firms with bold expansion plans in the wake of the pandemic.

Though little detail is yet clear about the new policy, Sunak said in the Commons: “While many businesses are struggling, others have been able to build up significant cash reserves. We need to unlock that investment, we need an investment-led recovery.

Press Association

Chancellor Rishi Sunak will unveil his budget on Wednesday

“So today I can announce the ‘super deduction’. For the next two years, when companies invest they can reduce their tax bill, not just by a proportion of the cost of that investment, as they do now, or even by 100% of the cost, the so-called full expensing some have called for – with the super deduction they can now reduce their tax bill by 130% of the cost.”

It is forecast to boost business investment by 10%, or around £20 billion extra per year, Sunak said.

Sunak said the corporation tax rise will come in from April 2023 and only apply to 10% of companies.

Smaller businesses with profits of £50,000 or less will be protected from the hike and will continue paying corporation tax at the current level of 19%, he said.

Sunak said it meant 1.4m business – around 70% of companies – “will be completely unaffected”.

The rise puts the UK above the EU average of 21.7% but remains below the US corporation tax level of 27%, though president Joe Biden has said he is looking to increase.

France’s rate is 26.5%, Germany has a rate at 30%, Canada at 26.5%, Japan at 30.62% and Italy at 24%, according to data from KPMG.

The chancellor also said a new UK Infrastructure Bank will be located in Leeds.

He told MPs: “The bank will invest across the UK in public and private projects to finance the green industrial revolution.”.