What can we expect from the 2021 budget?
The chancellor is set to outline a three-point plan to support people through what the government hopes will be the final months of coronavirus restrictions.
In his statement to the Commons on Wednesday, he will also announce further support for self-employed workers will also be announced, with around 600,000 people – many of whom became self-employed in 2019/20 – now eligible for cash grants.
Paul Johnson, director of the Institute for Fiscal Studies (IFS), said he was not expecting Chancellor Rishi Sunak to announce tax rises. “I expect, some tax rises, but not this year, in the next two or three years,” he told BBC Radio 4’s Today programme.
‘Cliff edge’ when furlough is fully turned off, warns Resolution Foundation
More policies need to “step in” to stop levels of unemployment rising after the furlough scheme ends, an economic think tank has said.
Resolution Foundation’s chief executive Torsten Bell told Times Radio: “The big picture is when it comes to unemployment the more difficult part of this crisis is ahead of us rather than behind us.
“So it is true as the furlough scheme is phased out, however that phasing out is done, whether that’s via employment contributions rising or just via the scheme being brought to an end, some of those jobs won’t be there for people to go back to.
“That should be a big feature of the discussions about the Budget today because the furlough scheme can’t stay forever but other policies do need to step in to make sure we see the smallest rise in unemployment as possible.”
Mr Bell added: “There is always going to be a cliff edge when the scheme is fully turned off but I think it’s right that he [chancellor] has taken a slower approach.”
Tom Batchelor3 March 2021 08:52
The Chancellor is ‘out on a limb’ on tax policy, says Labour
The shadow chief secretary to the Treasury has said “building up confidence” in the economy should be prioritised over tax rises.
Labour’s Bridget Phillipson told Sky News: “We don’t think that now is the right time for tax rises, the economy is in such a fragile position that hitting people in their pockets when we need to be building up confidence in our economy is absolutely essential.
“The chancellor is out on a limb on this, mainstream opinion is very clear that securing the recovery must be an absolute priority of the government.
“That should mean we don’t see tax rises immediately but action to protect family finance.”
Tom Batchelor3 March 2021 08:44
Sunak’s furlough scheme ‘relatively generous’
Commenting on the furlough scheme, the IFS’s Paul Johnson said Rishi Sunak was offering badly affected businesses a “grace” period to help them get up and running once coronavirus restrictions are fully lifted in the summer.
Calling the extension “relatively generous”, Mr Johnson noted that the scheme does “reduce its generosity”, with employers having to contribute to salaries of staff unable to work from July.
“I think the thinking behind that is that there will be some businesses that are still struggling with demand, struggling to get back on their feet so giving them two or three months of grace will help to ensure that jobs are maintained,” he told the Today programme.
“Remember the Chancellor tried to do this last summer – he was intending to phase out furlough over the summer and early autumn and of course that couldn’t happen because of the return of the virus.
“The key thing now is that this really does end in September because we really do move back to normal.”
Tom Batchelor3 March 2021 08:38
‘Tax rises, but not this year’ – IFS’ Paul Johnson
Paul Johnson, director of the Institute for Fiscal Studies (IFS), said he was not expecting Rishi Sunak to announce tax rises in the Budget. He told BBC Radio 4’s Today programme: “The bigger picture is that we’ve had the most awful, very deep recession with a huge amount of Government support, so in some senses it hasn’t felt like that.
“There are some suggestions and reports that the OBR’s (Office for Budget Responsibility) forecasts over the next few years are going to be rather more optimistic than they were back in November and if they are, if it looks like the economy has a good chance of bouncing back well, that will make some of his decisions a bit easier.
“Because remember what the chancellor is not really thinking about is ‘how can I pay back the debt that I’ve incurred over this couple of years?’.
“It is much more, ‘if the deficit remains big in the coming years, what do I need to do to plug that hole?’. And if the economy is bouncing back then there is less of a hole to plug.
“But there will still be something of a hole and that will mean, I expect, some tax rises, but not this year – in the next two or three years.”
Tom Batchelor3 March 2021 08:29
Rishi Sunak pours billions more into Covid support
Some of the main elements of the chancellor’s statement to the Commons this afternoon were trailed last night, including extension to the furlough and changes to mortgage deposits.
As our political editor writes, Rishi Sunak will say he is ready to do “whatever it takes” to help businesses and people through this “moment of crisis”, promising to use “the full measure of our fiscal firepower” through tax and spending decisions in the Budget to protect jobs and livelihoods.
But the chancellor left no doubt that tax rises are also on the way to rebalance the UK’s public finances, which have plunged more than £2 trillion into the red after he pumped £280bn of borrowed cash into schemes like furlough, business rates relief, support grants and VAT breaks – and much of this spending is expected to be extended in Wednesday’s Budget.
Tom Batchelor3 March 2021 08:19
Good morning and welcome to The Independent’s coverage of today’s Budget.
Tom Batchelor3 March 2021 08:16