UK Chancellor of the Exchequer Rishi Sunak on Wednesday tabled his first Budget since the pandemic hit last year and promised that he would do "whatever it takes" to protect the jobs and livelihoods of the people and support businesses as the country emerges from the coronavirus crisis.
The Indian-origin finance minister told parliamentarians in the House of Commons that while it would not be right to raise rates of income tax or value-added tax (VAT) at this stage, there will have to be rise later and that the rate of Corporation Tax will increase to 25 per cent from the current 19 per cent in 2023 for high-profit companies.
He also confirmed an extension to the furlough scheme until September, which would mean continued government support with salaries for workers on forced leave at pandemic-hit businesses.
"This Budget meets the moment with a three-part plan to protect the jobs and livelihoods of the British people," said Sunak.
"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. And, third, in today's Budget we begin the work of building our future economy," he said.
But Sunak warned that repairing the long-term damage "will take time".
Despite the 280 billion pound of support already committed to protecting the economy the damage done by coronavirus has been "acute," he told MPs.
"Our economy has shrunk by 10% - the largest fall in over 300 years. Our borrowing is the highest it has been outside of wartime," he said.
"It's going to take this country - and the whole world - a long time to recover from this extraordinary economic situation. But we will recover." The UK's first Indian-origin finance minister reiterated that reforms to the immigration system with a post-Brexit points-based system will help ambitious UK businesses attract the brightest and best international talent and a new Help to Grow scheme will offer up to 130,000 companies across the UK a digital and management boost.
With UK Prime Minister Boris Johnson cheering him along, Sunak, 40, told the Commons that his immediate priority continues to be supporting those hardest hit, with extensions to self-employed support, business grants, loans and VAT cuts - bringing the total fiscal support to over 407 billion pounds.
The business rates holiday in England has been extended by an additional three months. Grant funding will be available to businesses through a new 5 billion pounds Restart Grant scheme to help the high street, providing up to 18,000 pounds, bringing the total spent on business grants to 25 billion pounds. A new Recovery Loan Scheme will also be launched to replace the existing government guaranteed schemes.
"We're taking what works to get people into jobs and making it better," said Sunak, admitting that some tough choices lie ahead to make up for the heavy borrowing.
"The amount we've borrowed is only comparable with the amount we borrowed during the two world wars," the minister reflected.
"It is going to be the work of many governments, over many decades, to pay it back. Just as it would be irresponsible to withdraw support too soon, it would also be irresponsible to allow our future borrowing and debt to rise unchecked," he added.
To maintain momentum for the COVID-19 vaccination programme, the Budget will inject an extra 1.65 billion pounds and invest a further 50 million pounds to boost the UK's vaccine testing capability.
As part of the UK Government's Plan for Jobs to support, protect and create jobs, 126 million pounds of new money will enable 40,000 more traineeships. The cash incentive to firms who take on an apprentice will double to a 3,000 pounds payment per hire and the National Living Wage will be increased to 8.91 pounds from April.
A new mortgage guarantee scheme will enable homebuyers to secure a mortgage up to 600,000 pounds with a 5 per cent deposit, and an extension to the temporary cut in Stamp Duty Land Tax to September will support the housing market and protect and create jobs.
The Chancellor also announced 700 million pounds to support the UK's arts, culture and sporting institutions as they reopen, backing the UK and Ireland's joint bid to host the World Cup in 2030. To put more money in the public's pocket, fuel duty will be frozen for the 11th consecutive year and there will be a freeze in duty rates for beer, cider, wine and spirits.
Sunak also unveiled plans for New English Freeports to be based in East Midlands Airport, Felixstowe and Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames and Teesside as special economic zones with different rules to make it easier and cheaper to do business.
Beginning April 2021, a new super-deduction will cut companies' tax bill by 25p for every pound they invest in new equipment meaning they can reduce their taxable profits by 130 per cent of the cost.
And, in support of the government's green industrial revolution plans, the UK will issue at least 15 billion pounds in green bonds to help finance the transition to net zero and the government will launch the world's first sovereign green savings bond for retail investors.