Budget 2021 live: Sunak to freeze income tax thresholds and raise corporation tax to pay for Covid recovery
Latest updates: chancellor extends furlough, universal credit uplift and stamp duty holiday
- Budget 2021: key points at a glance
- Full report: Sunak flags tax rises in budget
- Analysis: Sunak digs in for battle against financial cost of Covid
- Darlington named as site of planned Treasury northern campus
3.47pm GMT
Unsurprisingly, the government has not achieved its fiscal targets (to keep the structural deficit low, lower the national debt as a share of the economy, or balance the budget in the five-years time.)
And the OBR has confirmed as much:
We are still legally obliged to assess the Government against its fiscal targets. Based on our central forecast, they are all missed.#Budget2021 pic.twitter.com/liH67937ox
There wasn't a legal obligation to tweet that fact though! https://t.co/TfUazkSzo6
He has calibrated his Budget decisions to deliver a current budget that is very close to balance and underlying public sector net debt (i.e. excluding the uneven effects of the Bank of England) that is very close to stable in the medium term.
In doing so he has returned to two key metrics that formed the basis for the two most durable sets of fiscal rules that have guided Chancellors over the past 24 years: Gordon Brown's golden rule' and sustainable investment rule' that were in place from 1997 to 2008; and George Osborne's fiscal mandate' and supplementary debt target' that were in place from 2010 to 2015.
No new fiscal rules, Sunak says, just some "principles":
1) in normal times government shouldn't be borrowing to pay for day-to-day spending
2) we can't allow debt to keep rising in medium term
3) we should take advantage of low interest rates to invest
[all a bit Gordon Brown?]
If the OBR forecasts come to pass (BIG IF) then the chancellor may not need to do much more to keep his promise to balance the books".
OBR judges that tax rises and spending cuts announced are sufficient to eliminate all but a 0.9 billion current budget deficit in 2025/26". pic.twitter.com/8s4sf2tOOU
3.28pm GMT
Our economics editor, Larry Elliott, suspects that some of the tax hikes announced today might be reversed before the next election.
Here's his early analysis of the budget.
Over the past 12 months Sunak has appeared 15 times on the Covid-19 battlefield and each engagement has involved him spending more money. In truth, he has had no choice. Failure to increase spending on the NHS would have led to even more deaths. The alternative to wage subsidies, business support and the patching up of an inadequate welfare safety net would have been economic Armageddon. Unsurprisingly, he has the highest approval ratings of any chancellor in recent decades and is comfortably the most popular member of the cabinet with the public. He has made mistakes but gone unpunished for them.
Throughout the crisis Sunak has talked tough about the eventual need to get to grips with the deficit. Up until now, though, the only similarity between him and Sir Stafford Cripps - the original austerity chancellor - has been their teetotalism.
Related: Rishi Sunak digs in for battle against financial cost of Covid
3.16pm GMT
According to the Institute for Fiscal Studies, the figures in the budget red book for government spending imply that, outside health, education, defence and international aid, where budgets are protected, other departments face real-terms spending cuts
The Chancellor's spending plans imply that going into this year's Spending Review, unprotected departments (outside of health, schools, defence and aid) are facing real-terms cuts to their budget. #Budget2021 pic.twitter.com/rFAqkhR9Km
3.09pm GMT
From Gavin Kelly, the chairman of the Resolution Foundation thinktank
Budget detail that will get overlooked....
Goal of minimum wage hitting 2/3rds of typical pay by 2024 is re-affirmed. Early on in pandemic many questioned if this be paused. Politics of low pay have truly changed.
3.07pm GMT
The Office for Budget Responsibility fears that some of the people who have been on furlough the longest will suffer permanent damage to their employment and earning prospects.
It's a timely warning, given the Coronavirus Job Retention Scheme is now being extended to the end of September (and was supporting 4.7 million people at the end of January).
The ultimate rise in unemployment reflects the residual constraints on activity in some sectors such as accommodation and transport, as well as firms' adoption of less labour-intensive modes of operation in sector like retail and hospitality.
It also reflects the scarring effect of the long spells away from employment experienced by some CJRS beneficiaries, 475,000 of whom have been away from work for more than six months over the past year.
3.06pm GMT
In his Commons response to the budget Ian Blackford, the SNP leader at Westminster, said the budget completely fails to recognise the sheer scale of the other pandemic our communities are suffering, the poverty pandemic". He went on:
After a decade of under-investment and Tory cuts, the last year has deepened the UK's poverty crisis and widened the gaps in inequality.
Six million people are now claiming universal credit, a 98% increase since the pandemic began.
2.59pm GMT
Jeremy Hunt, the Conservative former health secretary who now chairs the Commons health committee, has criticised the budget for not addressing social care.
Impressive & reassuring budget from a v.impressive Chancellor. No other Govt has offered a safety net so comprehensive during covid crisis. BUT...
Little hope for social care sector bruised and demoralised after most devastating year in its history. Understand money is difficult to commit at this stage, but they desperately need to know a plan is coming.
2.54pm GMT
From Angela Rayner, the deputy Labour leader
Last year @MattHancock said he couldn't live on Statutory Sick Pay.
Today @RishiSunak announces an increase of 50p so he is cutting Sick Pay in real terms.
1 year into this crisis and people are still not being supported to do the right thing and isolate and control infections.
2.51pm GMT
The Office for Budget Responsibility has always argued that Brexit would be damaging to the economy, but this is the first budget report it has published since the government negotiated its Trade and Cooperation Agreement with the EU and the OBR says it expects the TCA to reduce long-term productivity by around 4%.
At a press conference on the day the deal was announced, Boris Johnson claimed it involved no non-tariff barriers". That was not true, and that point has been made again by the OBR today. On page 35of the report it says:
Overall, the TCA goes beyond a typical FTA [free trade agreement] with regards to tariffs on goods, by not introducing tariffs on the agriculture sector, but that has a relatively small aggregate economic impact ... The introduction of non-tariff barriers in services, which accounted for 42 per cent of the UK's exports to the EU in 2019, is far more significant. It is this channel that accounts for much of the long-term reduction in productivity, in line with the findings of some of the studies that informed our previous assessment.
2.38pm GMT
From ITV's political editor, Robert Peston
Nutshelled budget. Costliest initiatives were extension and scope-widening of self-employment income support (12.8bn) & "super" capital allowance for biz investment (12.3bn). Biggest money raisers 16.3bn from corp tax rise & 5.8bn income tax allowance freeze, in 2024-5
.@RishiSunak's two-year 29bn splurge on subsidies for business investment - his super capital allowances - is absolutely central to his hopes (and the OBR's forecast) of a massive econ bounce next year (see attached). PS you will note OBR sees no Brexit dividend from trade pic.twitter.com/YFzGMeTMil
2.36pm GMT
Rishi Sunak is emulating a second Labour predecessor, Denis Healey, through his decision to raise corporation tax from 19% to 25% from April 2023.
The OBR (who may have been swotting up on their history during the lockdown) explains:
After a decade in which successive Conservative Chancellors have cut the rate of corporation tax from 28 to 19 per cent, this one has chosen to raise it back to 25 per cent - the first time the rate has been raised since Dennis Healey did so in his 1974 Budget.
It is expected to raise 17 billion a year by 2025-26 and to take corporation tax receipts as a share of GDP to the highest they have been since the height of the Lawson boom in 1989-90.
It's the first time a chancellor has raised corporation tax since Denis Healey in 1974.
The @OBR_UK forecasts the increase will raise 17bn a year by 2025/26. Corporation tax receipts as a share of GDP will be the highest since 1989/90. pic.twitter.com/g3TFrv64Ox
2.34pm GMT
All the Office for Budget Responsibility documents on the budget are here.
And here is its 222-page Economic and fiscal outlook (pdf) - its main report with its forecasts, and its analysis of the budget measures.
2.28pm GMT
It is common for chancellors to frontload the gain and backload the pain in budgets - using tax changes coming into force in future years to balance the books- but rarely, if ever, has it been done on a scale like this. This chart from the red book explains the big picture: for the 2021-22 financial year, this budget amounts to a giveaway of almost 60bn, but by 2024-25, the last year when the general election can be held, there's a tax grab of almost 25bn.
2.27pm GMT
The Chancellor has done three things in this Budget, the Office for Budget Responsibility explains:
First, he has extended the virus-related rescue support to households, businesses and public services by a further 44.3 billion, taking its total cost to 344 billion.
2.19pm GMT
The Office for Budget Responsibility's verdict is out: the tax rises announced in this budget will lift the tax burden to the highest level since Roy Jenkins was chancellor in the late 1960s.
Over half of this increase is as a result of a 6 percentage point increase in the corporation tax rate to 25 per cent. This brings the headline corporation tax rate back into line with the advanced economy average but still well below its long-run historical average in the UK of around 35 per cent.
However, the widening of the tax base over the past decade means that this relatively modest increase in the headline rate leaves corporation tax raising 3.2 per cent of GDP in revenue by 2025-26, its highest since 1989-90.
Freezes to the income tax personal allowance and higher rate threshold for four years bring 1.3 million people into the tax system and create 1 million higher rate taxpayers by 2025-26.
1.56pm GMT
Rishi Sunak is relying on so-called fiscal drag to help bring in revenues over the next few years.
Freezing the thresholds on personal tax allowances, inheritance tax and the amount you can put into your pension pot tax-free are less politically painful than a full-blown tax rise.
Two measures Sunak says will start tackling debt -
- Freeze personal tax thresholds after next year until 2026. No rise in income tax, NI or VAT, inheritance tax threshold.
- In 2023, corporation tax up to 25% - "fair and necessary to ask them to contribute."
The tax-free Personal Allowance typically increases each year but the Chancellor has announced that it will remain at 12,570 for 2023, 2024, 2025 and 2026 #Budget2021 #tax #fiscaldrag
Right - Chancellor has gone full on fiscal drag machine. Freezing thresholds left, right and centre (e.g inheritance tax and VAT). We agree - set out plans for this https://t.co/qsgCmlTjXa
He's properly gone big on the Corporation Tax rise - up to 25% in 2023. Surprised he's gone that far. That's what planning for a 2024 election does for you (ie reduce tax rise pressure nearer the election/make Tory MPs vote it through now).
New OBR GDP forecast suggests the economy will grow by 3.9% in real terms between 2019 and 2024, compared to 3.7% in the November 2020 forecast. Before the crisis this was expected to be 7.1%. #Budget2021 pic.twitter.com/9kSsCTI6WW
UK growth forecasts from @OBR_UK show return to low, approx. 0.4% a quarter, trend growth after 2022 rebound: 1.7%, 1.6% and 1.7% in 2023, 2024 and 2025. Sugar rush recovery then back to the crawl - secular stagnation debate to rumble on.
1.55pm GMT
All the Treasury budget documents are here.
And here is the key one - the budget red book (pdf).
1.47pm GMT
Starmer says it is right that corporation tax is not going up this year.
But why is Sunak announcing increases now? Starmer refers to multiple reports saying that Sunak has told Tory MPs in private that he wants tax rises now, so that he can cut them before the election. He goes on:
Let me be crystal clear the proper basis for making tax decisions is the economic cycle, not the electoral cycle.
1.42pm GMT
Back in the Commons, Starmer says this was not the bold, long-term plan the nation needed.
And he says that instead of putting his faith in free ports, the chancellor should have focused on making sure the government's Brexit deal actually works.
1.40pm GMT
We've updated some of the earlier posts covering what was said in Rishi Sunak's speech. You may need to refresh the page to get the updates to appear.
1.38pm GMT
Starmer says there was nothing in the speech about social care. The government may have forgotten about it, but Labour hasn't, he says.
He says in September Rishi Sunak announced a plan for winter, and told MPs that people should not live in fear in the future.
1.31pm GMT
Sir Keir Starmer is now responding for Labour.
He starts by saying it is a relief to be finally standing up in the Commons opposite the person who is actually taking the decisions.
1.29pm GMT
Sunak ends by saying this is a budget that will unite and level up".
1.27pm GMT
Sunak turns to free ports. He claims the UK can only implement them because it is out of the EU. (That is not strictly true. They were possible under EU rules.)
He says they will have different rules, making it easier and cheaper to do business. Simpler planning rules will help the construction of infrastructure.
I see old industrial sites being used to capture and store carbon, vaccines being manufactured, offshore wind turbines, creating clean energy for the rest of the country, all located within a free port, with a Treasury just down the road, and the UK infrastructure bank only an hour away.
1.22pm GMT
2.4 biliwn ychwanegol tuag at weinyddiaethau datganoledig yn yr Alban, Cymru a Gogledd Iwerddon drwy fformiwla Barnett, a buddsoddi mewn dyfodol sy'n decach, yn wyrddach ac yn gynaliadwy #Budget2021 #PlanForJobs pic.twitter.com/pe7dv5P2kA
An additional 2.4 billion for the devolved administrations in Scotland, Wales & Northern Ireland through the Barnett formula, and measures to grow a greener, more sustainable future. #Budget2021 #PlanForJobs pic.twitter.com/QVEcWDTz3d
1.22pm GMT
Sunak says there is another 150m fund to help communities take ownership of pubs, theatres or sports clubs.
1.21pm GMT
Sunak says we need a different economic geography.
That means changing the location of economic institutions.
1.19pm GMT
Sunak says the Treasury works for the whole of the UK.
He says three new city deals are being announced for Scotland, and another three in Wales.
1.19pm GMT
Here are the new UK growth forecasts from the Office for Budget Responsibility, compared to last November's forecasts.
Our March 2021 GDP forecast. Full forecast published after the Chancellor's #Budget2021 speech pic.twitter.com/J1CiO1MWWi
Those OBR growth forecasts are:
2021: 4%
2022: 7.3%
2023: 1.7%
2024: 1.6%
2025: 1.7%
This is a relatively cautious outlook - GDP doesn't get back to pre-Covid levels until mid-2022
...and economy remains 3% smaller in five years time, thanks to Covid hit#Budget2021
Genuinely don't believe anyone knows how to solve the productivity problem.and clear no expectation for it to change much if GDP is forecast only growing at 1.7% a year in long run #Budget2021
1.18pm GMT
Sunak says he is launching a programme to help firms with digital skills.
An extra 1.6bn is being allocated for the vaccine rollout, he says.
1.16pm GMT
Sunak says a new infrastructure bank will be set up in Leeds, with capitalisation of 12bn.
The government is launching a world-leading sovereign green bond, he says.
1.13pm GMT
Sunak says alcohol duty will be frozen for the second year in a row, and fuel duty for the 11th year in a row.
1.12pm GMT
Sunak is now announcing a super-deduction" - a tax break for firms that invest.
He says it will allow firms to reduce their tax bill by 130% of what they spend on investment.
1.09pm GMT
Sunak turns to corporation tax.
1.06pm GMT
Sunak says he will announce two measures now to address the borrowing.
The government's response has been fair, he says.
1.00pm GMT
Sunak now turns to how this is all being funded.
The government is borrowing 17% of national income, he says.
12.58pm GMT
Sunak says there will be a tapered extension of the stamp duty holiday until 30 September.
The mortgage guarantee scheme will encourage lenders to lend mortgages of up to 95%.
12.57pm GMT
Here are some of the key points from the budget so far:
The Coronavirus Job Retention Scheme will be extended until the end of September.#PlanForJobs #Budget2021 pic.twitter.com/Zk4g7GkbG6
The Self-Employment Income Support Scheme has been extended.
The 4th grant will cover February to April, worth 80% of average trading profits up to 7,500.
A 5th grant will be available from July.#Budget2021 #PlanForJobs pic.twitter.com/0Y2ses3qTe
3,000 for each new apprentice hired between the 1st April to 30th September 2021.
An additional 126 million for traineeships in England.#PlanForJobs #Budget2021 pic.twitter.com/rVvCel3lL3
300m to extend the Culture Recovery Fund, continuing to support key national and local cultural organisations in England and protecting jobs. #Budget2021 #PlanForJobs pic.twitter.com/tEF9OI176N
Eligible retail, hospitality and leisure businesses pay no business rates for 3 months, with up to 66% relief for the rest of the year worth over 6 billion in 2021-22. #Budget2021 #PlanForJobs pic.twitter.com/sIvt4Osjr4
We are extending the temporary reduced VAT rate for hospitality and tourism.#PlanForJobs #Budget2021 pic.twitter.com/4KWVk7pfKZ
12.55pm GMT
Sunak announced more Covid support measures.
There will be a 300m culture recovery fund.
12.52pm GMT
Sunak says the restart programme will help over one million people get work.
There will be payments to firms to encourage them to take on apprentices.
12.48pm GMT
Sunak says the universal credit 20 per week uplift will be extended for six months.
But he says this will have to be paid as a one-off payment of 500, because of the way the system works.
12.45pm GMT
Sunak is now confirming the extension of the furlough scheme, as briefed overnight.
Related: UK budget to extend furlough until end of September
As the economy reopens over the summer, it is fair to target our support towards those most affected by the pandemic.
So people whose turnover has fallen by 30% or more will continue to receive the full 80% grant. People whose turnover has fallen by the left the 30% will therefore have less need of taxpayer support, and will receive a 30% grant.
12.42pm GMT
Sunak says the economic forecasts out today show the economic response is working.
The Office for Budget Responsibility (OBR) is forecasting a swifter and more sustained recovery" than they were expecting in November.
12.38pm GMT
Sunak says over 700,000 people have lost their jobs.
The economy has shrunk by 10%.
First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis.
Second, once we are on the way to recovery, we will need to begin fixing the public finances - and I want to be honest today about our plans to do that.
12.37pm GMT
Sunak starts by saying in his first budget he announced the inital response to Covid.
What was thought to be a disruption to our life has fundamentally altered it.
12.35pm GMT
Rishi Sunak about to start.
12.32pm GMT
The Commons sitting is now being suspended for three minutes to allow MPs to leave and enter in a safe, socially distanced manner.
12.32pm GMT
Danny Kruger (Con) asks if social investment tax relief will continue beyond April?
Johnson says Kruger will get an update in the budget.
12.31pm GMT
Mike Kane (Lab) asks about HS2. Why can't work on it start in the north now?
Johnson says if you start a project midway through, you multiply the costs.
12.30pm GMT
Carla Lockhart (DUP) says the PM promised that there would be no checks on goods going from Britain to Northern Ireland, or the other way, after Brexit. Will the PM support Northern Irish ministers trying to achieve this?
Johnson says he will support these efforts. He will leave no option off the table. There will be unfettered access, he says.
12.27pm GMT
Speaker Sir Lindsay Hoyle doesn't sound very impressed by the various leaks and announcements that have preceded today's budget.
Told by Boris Johnson that he will shortly hear a budget for recovery", the Speaker responded that I think I already know most of it".
Speaker Lindsay Hoyle with a dig at the countless pre-budget leaks: "I think I already know most of it" #pmqs
Ouch - bit of a dig from the Speaker there on how much of the budget has been briefed in advance: "I think I already know most of it"
12.26pm GMT
Andrea Leadsom (Con) asks if the PM will try to persuade President Biden to deliver justice for the family of Harry Dunn.
Johnson says the government continues to raise this at the highest level.
12.25pm GMT
Amy Callaghan (SNP) asks for an assurance that no young people will lose out a result of the abolition of Erasmus.
Johnson says the Turing scheme, which replaces it, will be better. He says Erasmus tended to favour higher-income students.
12.24pm GMT
Sara Britcliffe (Con) asks if the PM will support a campaign to help town centres.
Johnson says there will be more on this in the budget.
12.23pm GMT
Patrick Grady (SNP) asks why the Tories are distributing leaflets in Scotland saying a vote for them is a vote to stop a referendum. Doesn't that mean a vote for the SNP is a vote to have one?
Johnson says it is extraordinary the SNP want a referendum. He says the people of the country want to see governments working together to address the Covid crisis.
12.22pm GMT
Sir David Amess (Con) asks what the government will do about knife crime.
Johnson says more police officers are being recruited, and serious and violent offenders will stay in jail for longer.
12.19pm GMT
Sir Jeffrey Donaldson, the DUP leader at Westminster, says the end of the three-month grace period for the Northern Ireland protocol is fast approaching. What will the PM do to protect NI in the UK's internal market?
Johnson says the position of NI in the internal market is rock solid". There will be temporary, operational easings", in areas like food supplies, to protect Northern Ireland, pending discussions with the EU.
12.17pm GMT
Ian Blackford, the SNP leader at Westminster, also asks about the 50% cut in international aid to Yemen. He repeats the quote from the UN secretary general calling it a death sentence.
Johnson says anyone listening will have heard him say the government has given 1bn to Yemen over the last five years. The British people are continuing to help, he says.
12.13pm GMT
From my colleague Peter Walker
That was of Keir Starmer's best #PMQs for ages. Many voters might not worry overly about arms sales to Saudi Arabia/aid cuts for Yemen, but this was very much aimed at restive Tory backbenchers. It's a pre-Budget PMQs, so no one else really pays attention anyway.
12.12pm GMT
Starmer cutting aid to Yemen is not consistent with global Britain.
Johnson says the people of the country should be proud of what they are doing.
12.10pm GMT
Starmer says the system is not that robust. The government recently lost a court case on this. What would it take for the UK to suspend arms sales to Saudi Arabia.
Johnson says the government is following the consolidated guidance set up by Labour.
12.07pm GMT
Sir Keir Starmer, who is wearing glasses, asks if the PM agrees with President Biden that the sale of arms for use in Yemen should be suspended.
Johnson says the government is following the guidance.
12.05pm GMT
Kim Johnson (Lab) asks if the government will apologise for the removal of Chinese workers from Liverpool in the 1940s.
Boris Johnson says the Chinese community has made an amazing contribution.
12.03pm GMT
Boris Johnson starts by saying tomorrow it will be three years since the Salisbury nerve agent attack. He pays tribute to the people of the city.
12.01pm GMT
It hasn't taken long for the Institute for Government thinktank to express some caution about the Treasury's plan to relocate hundreds of its officials to Darlington. (See 11.36am and 11.46am.)
Rishi Sunak will reportedly announce in #Budget2021 that the Treasury will set up an office in Darlington.
But as @sarahjnickson recently wrote, ministers should not give the impression that civil service relocation alone will transform decision making https://t.co/X1QGRhI8ui pic.twitter.com/bK2lfl7Rqe
11.58am GMT
PMQs is about to start.
There is a list of MPs down to ask a question here.
11.55am GMT
The government is to more than double the single payment limit on contactless cards to 100 - from 45 today.
The chancellor will announce the move in the budget, as part of the push to support retailers when the lockdown ends.
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."
Revealed: Some of the UK's biggest banks are urging caution over plans to raise the UK's contactless payments limit to 100 amid industry expectations that Rishi Sunak will confirm the move as part of a Brexit dividend' package in his Budget tomorrow. https://t.co/7d57PKlo9b
Thoughts on new higher 100 contactless spending limit: extremely convenient for cardholders, *but* presents a hugely raised incentive for card theft. Still, it's the banks that'll pay, as contactless theft is refunded as standard... or at least it is presently
Some of the things the new 100 contactless limit will allow you to buy without entering a PIN: weekly family food shop fancy pair of trainers premium electronics a meal out for a group a full tank of fuel for a large SUV car
11.53am GMT
Budget day is always a good time to bury" awkward government news, and Tracey Magee from UTV in Northern Ireland has posted two tweets about what might be this sort of story.
BREAKING: @BrandonLewis announces the govt is to take a series of "temporary operational steps" to give more time to implement the NI Protocol. More details will be given in a written ministerial statement later.
So it sounds like the UK govt is planning to extend the grace period for supermarkets due to finish at the end of March. Does the EU know?
11.49am GMT
From PA Media's Sophie Morris in the Commons:
The Commons is much busier than it has been ahead of PMQs and the Budget from midday (although social distancing measures restricting capacity remain in place). Benches above both sides of the chamber are being used as overflow.
11.46am GMT
According to the Financial Times' Sebastian Payne, Teesside will free port status - in a second budget offering to the north-east of England. (Rishi Sunak represents Richmond in Yorkshire.)
SCOOP: The Treasury is going to Darlington. Rishi Sunak will announce in the Budget the northern town be home to the ministry's first office outside of London.
Officials fought hard for Leeds/Newcastle, but Sunak ultimately sided with red wall Tories.https://t.co/ICmHAjhheG
SCOOP part two: Rishi Sunak will also announce that Teesside will be granted free port status, paving the way for some major investments.
Red wall Tories are pretty happy this morning, it's fair to say. https://t.co/ICmHAjhheG
Treasury and Cabinet Office did comprehensive economic modelling and found all locations were viable, but there are some trade offs of choosing Teesside over Leeds/Newcastle.
Plus as @MrHarryCole pointed out, it's a mere 13 minutes drive from Sunak's constituency. pic.twitter.com/h12LV5FAEH
11.43am GMT
Shares in UK travel companies and hospitality firms have rallied today, following the news that the furlough scheme is to be extended to the end of September.
Airline group IAG, which is British Airways' parent company, jumped 5% this morning.
With business lifelines expected to be extended and a dose of extra support expected to be administered to ailing shops, pubs and restaurants, there has been a buoyant start for hospitality and landlords in early trading in London. Airlines, who have relied heavily on the furlough scheme are also higher given the likelihood it will be extended into the autumn.
Expectations that the VAT cut to 5% will linger for longer for the hospitality industry helped boost Whitbread, which is reliant on bookings in its hotels and Thyme restaurants for its Premier Inn chain. It was the top riser on the FTSE 100 in early trading.
11.39am GMT
11.36am GMT
The new Treasury office being opened in the north of England will be located in Darlington, civil servants have been told. These are from Newsnight's Lewis Goodall.
In this vein, have heard that the Chancellor has announced to HMT that the new Treasury economic campus will be in Darlington.
This video has just been sent to Treasury Civil servants announcing Darlington as the site of the new Treasury site (no sound) pic.twitter.com/Ph9xMJnMXF
11.15am GMT
Downing Street has released a read-out from today's cabinet meeting, where Rishi Sunak briefed colleagues on what would be in the budget. A No 10 spokesman said:
The chancellor said we must be honest with ourselves and the country about what that has meant. We are borrowing on an extraordinary scale - equivalent only to wartime levels.
He said that, as a Conservative government, we know that we cannot ignore this problem and it wouldn't be right or responsible to do so.
11.04am GMT
The House of Commons library has produced a 54-page briefing on the issues that will be addressed in the budget. Their papers are always clear, factual, objective and well worth reading if you have the time, and I'm sure this one is too.
10.47am GMT
10.42am GMT
The Commons transport committee has been taking evidence about the impact of Covid on the aviation sector this morning, and Michael O'Leary, the head of Ryanair, has told MPs that the support his industry had had from the Treasury had been lamentable". He said:
We had to refund over 1.5bn [1.3bn] to customers in the last 12 months because our flights were cancelled by government order. There has been no support for that. We have received no support.
Where I will be most critical of the UK government is the one lever they have at their disposal - and that is this ridiculous APD tax per departing passenger - no effort has been made by the government to roll that back, reduce it temporarily, or in fact what we would call for, abandon it altogether, at least until traffic at UK airports recovers to pre-pandemic levels.
Rishi Sunak has done nothing about APD, which is the most egregious tax on air travel, because it is regressive and it hits the poorest people hardest.
10.25am GMT
Here are two photographs from the No 10 Flickr account showing this morning's cabinet meeting (mostly virtual), where Rishi Sunak was briefing colleagues on the budget. (They are taken by official photographers, not press photographers.)
Boris Johnson is looking a bit glum in this one. (Perhaps VAT is going up on luxury home refurbishments.)
10.15am GMT
ITV's business editor Joel Hills also suspects the surprise budget announcement will be a windfall tax. He must have been listening to the Andrew Marr interview too. (See 9.14am.)
It's Budget Day. My prediction: the chancellor will impose a windfall tax on companies that have done rather well during lockdown.
Find out if I'm right on ITV's special programme. Live coverage begins 12.15
Meanwhile, more here: https://t.co/Ai4DZxr21b
10.06am GMT
And there was a third leading economist on the Today programme this morning arguing that the government should not be implementing measures now to bring down the budget deficit. It was Ken Rogoff, the former chief economist at the International Monetary Fund. He told the programme that he had made this point in a conversation with Rishi Sunak, the chancellor. He said:
We've spoken once and, certainly at the time, and I'd say it now, we are in the middle of a war and you should not be worrying excessively about the budget deficit and about debt.
You can worry about that at the other side.
I think it's naive to think we should just keep running budget deficits forever to deal with inequality.
But in this current situation - we're in catastrophe relief here - the downside is so much greater than the longer term, and countries have had high debts before and get their way out of it.
9.40am GMT
Making a similar argument to Paul Johnson (see 9.32am), Sir Robert Chote, the former chairman of the Office for Budget Responsibility, told the Today programme that it would be a mistake to try bringing down the national debt too soon. He said:
The argument that we have borrowed an enormous amount of money - and goodness we have over the last year to 18 months - and that all has to be paid back very quickly, there is no robust case for making that argument.
Most economists would accept that if you have the size of the public debt jump up so you have a temporary increase in borrowing that increases your stock of debt, you don't want to try to reverse that very quickly or very aggressively.
9.32am GMT
Paul Johnson, director of the Institute for Fiscal Studies, the leading public spending thinktank, told the Today programme this morning that although he expected the budget to include tax rises, he did not think they would start to take effect this year. He explained:
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.
9.14am GMT
Good morning. Today Rishi Sunak will deliver his second budget. His first was on Wednesday 11 March 2020 and, although its 30bn spending package sounded significant, within a week it was effectively all in tatters as the first move towards national lockdown started and the Treasury started work on bail-out measures that dwarfed anything in the budget red book.
So today will be the first proper Covid budget. And, in a statement released last night, Sunak summed up his message like this:
We're using the full measure of our fiscal firepower to protect the jobs and livelihoods of the British people.
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