Budget 2020: Statement
As it happened: Sunak’s Commons announcement
12.35: Chancellor opens his speech
Coronavirus means there is likely to be a temporary disruption to our economy….for a period it is going to be tough but life will return to normal. There will also be an impact on the demand side of the economy, through a reduction in consumer spending.
Our response will be temporary, timely and targeted.
Sick pay response
Whatever extra resources our NHS needs it will get. If people cannot work we will support them. Sick pay will be paid from day one rather than day four.
There are millions of people working hard, who are self-employed or in the gig economy. They will need our help too. So to support them, during this period, we’ll make it quicker and easier to get benefits.
Statutory sick pay will be available to anyone advised to self-isolate. They will be able to get a sick note through 111.
Coronavirus loan scheme to be introduced
A coronavirus loan scheme will be introduced to cover the cost of salaries and bills and will offer loans of up to £1.2m to support small and medium sized businesses.
The government will offer a generous guarantee on those loans, covering up to 80% of losses, with no fees, so that banks can lend with confidence.
This will unlock up to £1bn of attractive working capital loans to support small businesses, with more as needed.
There will be a £500 million hardship fund for local authorities.
The cost of a business with fewer than 250 employees having to have someone off work for up to 14 days will be refunded.
In total, £2bn will be allocated to firms that lose out because staff are off sick. This will apply to firms that employ fewer than 250 staff.
Our manifesto promised that for shops, cinemas, restaurants and music venues with a rateable value of less than £51,000 we would increase their business rates retail discount to 50%.
Today I can go further, and take the exceptional step, for this coming year, of abolishing their business rates altogether.
Investment worth £170bn over the next five years will see growth 0.5% higher than it otherwise would have been.
The total value of his fiscal stimulus is £30bn.
Tories the ‘workers party’
Sunak says the Conservatives are “the real workers’ party”. The government will increase the national living wage to two thirds of median earnings by 2024. That means £10.50 an hour
Whisky support and duty
£1m to help promote Scottish food and drink overseas and £10m to help distilleries go green. A planned increase in spirits duty has been cancelled along with a freeze on duties on beer and fuel.
The UK will continue to lobby the US government to remove a “harmful tariff” imposed last year.
The National Insurance threshold will be raised from £8,632 to £9,500 next month. That’s a tax cut for 31 million people, saving a typical employee £104.
It is expensive, costing over £2bn a year and is ineffective and unfair, with just 5,000 people getting most of the benefit.
Will not fully abolish entrepreneurs’ relief, but accepts FSB proposal as we need more risk-taking. Instead he will reduce the lifetime limit from £10m, to £1m. That will save £6bn over five years. This money will be used to cut other business taxes.
Increasing investment in R&D to a record £22bn a year. As a percentage of GDP, it will be the highest in nearly 40 years and higher than the US, China, France and Japan.
There will be a new plastic packaging tax
Spending on carbon capture and storage (CCS) will hit £800m to establish two or more CCS clusters by 2030
Treasury offices will open in Scotland, Wales and Northern Ireland and 22,000 civil servants will be moved out of London. More than 750 staff from the Treasury and other departments will move to a campus in the north.
There is provision of an extra £640m for Scotland, £360m for Wales, and £210m for Northern Ireland.
Roads and electric cars
The Chancellor unveils a £27bn commitment to investing in roads: a new pothole fund, worth £500m a year. There will be a further £500m to support the rollout of rapid charging hubs so that drivers are never more than 30 miles away from being able to charge up their car.
The FTSE 100 index fell into the red immediately after Rishi Sunak delivered his Budget.
The index closed 83.71 points or 1.4% lower at 5876.52
Budget small print: what the Chancellor didn’t state in his speech
Digital sales tax
Confirmation that the government intends to impose a “digital sales tax”, a 2% levy on the UK revenues of search engines, social media services and online marketplaces, from 1 April.
The move, first announced in the 2018 budget, is an attempt to onshore some of the economic value created by technology companies such as Google and Facebook.
The net tax rise announced reduces borrowing by an average of £5.5bn a year, according to the Office for Budget Responsibility.
This is mainly due to cancelling next month’s cut in corporation tax, from 19% to 17% and will bring in £6.4bn per year on average.
The OBR confirms that the government is breaking free from the chains of austerity — with the “largest sustained fiscal loosening” since the pre-election Budget in 1992.
Paul Johnson of the Institute for Fiscal Studies says: “Perhaps most remarkable announcement is 2.8% p.a. real growth in current public service spending. As Chancellor says this is much faster than economic growth.”