Sunak to hail ‘age of optimism’ despite rising costs
The Chancellor will speak of a new economy
Rishi Sunak is expected to promise a “new age of optimism” when he delivers his tax and spending plans on Wednesday despite calls for more help with soaring costs from businesses and households.
The Chancellor will use his Budget statement to assert that he is preparing an “economy of the future,” with higher wages, higher productivity and more green jobs.
Official forecasts, set to be updated today, are expected to show the economy rebounding faster than predicted – allowing the Chancellor to splash the cash.
Growth forecasts for this year will be revised from 4% to as high as 7.5% – giving Mr Sunak more scope to pump money into public services.
He will confirm billions of pounds of extra spending for the NHS and a hike in the living wage wage for millions of workers.
However, he is facing an onslaught of criticism that the Treasury is not prepared to go far enough in tackling growing poverty, labour and supply chain shortages or meeting climate change challenges.
With the cost of living rising, critics say his pledges on wages and other support measures are already being eroded, leaving many people worse off.
In his speech to MPs, Mr Sunak is expected to say: “Today’s Budget begins the work of preparing for a new economy post-Covid.
“An economy of higher wages, higher skills, and rising productivity of strong public services, vibrant communities and safer streets.
“An economy fit for a new age of optimism. That is the stronger economy of the future.”
But with inflation expected to rise, there are questions over just how much his Budget will help workers, with National Insurance also rising, by 1.25%, and the cut to Universal Credit hitting the more vulnerable in society.
Mr Sunak will confirm a further £5.9 billion in capital funding to help the NHS clear the backlog created by Covid-19.
The Treasury has pledged green investment and policies to take advantage of post-Brexit freedoms and has touted nearly £7 billion of new funding to overhaul local transport.
Just how far the Chancellor goes in delivering support for the regions will be seen as a key test of how serious the Government is about its pledge to “level up” the nation.
Mr Sunak is expected to peg fuel duty at its current rate, but he is not thought to be considering a cut in VAT to help households or businesses cope with rising energy bills.
The shadow chancellor, Rachel Reeves, urged Mr Sunak to use the Budget to “create a more resilient economy and take the pressure off working people”.
“With costs growing and inflation rising, Labour would ease the burden on households, cutting VAT on domestic energy bills immediately for six months,” the MP said.
“And we would not raise taxes on working people and British businesses, while online giants get away without paying their fair share.”
Scotland’s Finance Secretary Kate Forbes has written to the Chancellor calling for additional spending to support households and businesses “who are facing a perfect storm of rising prices, reduced support and increasing shortages.”
She urged the Chancellor to “at least match” the Scottish Government’s £500 million Just Transition Fund for the North East and Moray and increase the Scottish Government’s borrowing powers to enable greater investment in decarbonisation schemes.
She called for an extension of the reduced 12.5% VAT rate for the hospitality sector, which is due to end on 31 March 2022, for a further year.
Ms Forbes echoed calls by Scottish business leaders for a reversal of the decision to put the Scottish carbon capture, utilisation and storage project on a reserve list.