Budget 2021: Rishi Sunak saves jobs with furlough & business loans in £65bn Covid bailout – but sets out tax rises ahead

OPTIMISTIC Rishi Sunak today saved thousands of jobs with extensions of furlough, VAT and grants in a bumper £65billion budget – but stressed the Covid cash MUST be paid back.

The Chancellor today revealed huge chunks more spending to MPs in the House of Commons, ahead of a press conference at 5pm, where he promised to look after the nation through the rest of the crisis.

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Mr Sunak, delivering only his second Budget since becoming Chancellor last year, confirmed he would extend a range of support measures including the VAT help, furlough, stamp duty cuts and more to get the nation through the worst of the pandemic.

And he vowed to plough more money into investment to take advantage of low interest rates and start the work of “building our future economy”.

He promised to help struggling Brits with “more support to get people through to the other side of the crisis”.

He told the nation today: “Much has changed. But one thing has stayed the same. I said I would do whatever it takes; I have done; and I will do.”

Financial experts predicted a bumper 7 per cent growth in GDP next year – which would be the strongest set of figures since World War II.

And the UK economy would completely recover from the pandemic by the middle of next year, they claim.

But coming down the track he revealed billions of pounds worth of stealth tax rises would come in over the next five years – including corporation tax, capital gains and freezing several other perks.

The Chancellor said he had to begin the “painstaking” process of rebuilding the public finances and admitted they “might not be popular but they are honest”.

The nation’s financial experts at the OBR warned today it would increase the tax burden to 35 per cent – rates not seen since the 1960s.

He confirmed today:

Earlier today the Chancellor addressed Cabinet alongside the PM, saying that “the coronavirus pandemic has hit our economy hard”.

But he admitted that he was “optimistic about our recovery” and promised that the Budget today would “begin the work of building our future economy”.

Yet he stressed the nation must not forget how much cash has been borrowed “on an extraordinary scale – equivalent only to wartime levels”.

He insisted: “As a Conservative Government, we know that we cannot ignore this problem and it wouldn’t be right or responsible to do so.

“We will rise to that challenge”.

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PERSONAL FINANCES

The Chancellor Rishi Sunak announced a freeze to income tax thresholds, meaning Brits will no longer benefit from planned increases to the amount that can be earned tax-free.

Mr Sunak said the tax-free personal allowance will remain at £12,500.

He announced the tax freeze as part of his Budget along with plans for supporting workers and businesses during the coronavirus pandemic.

Most people can earn this amount before being taxed at the basic rate of 20% on any earnings over that.

The threshold for paying higher rate tax of 40% will also be frozen at £50,000.

But he vowed he would stick to his promises not to raise VAT, income tax of national insurance.

Universal Credit will keep the £20 a month uplift for another six months.

And it will even be extended too – so people claiming working tax credits can expect a £500 one off payment to help them through the Covid crisis.

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FURLOUGH FOR MONTHS

The Chancellor confirmed he will extend furlough until the end of September.

It means 80 per cent of people’s wages will continue to be paid for months to come, to help firms get back on their feet again.

From July, though, they will be asked to chip in, as the Chancellor weans them off the cash help they will have been getting for 17 months.

In July, employers will be expected to contribute 10 per cent of the cost, increasing to 20p per cent in August and September, as the economy reopens.

The Coronavirus Job Retention Scheme has protected more than 11 million jobs since its creation last March, with Mr Sunak promising further help in the “challenging months ahead – and beyond”.

The IFS’s Paul Johnson said the furlough would help give them a “grace” period to help them get back up and running – and would make sure jobs are kept.

But he added: “The key thing now is that this really does end in September because we really do move back to normal.”

MORE GRANTS AND SELF EMPLOYED HELP

Mr Sunak revealed extra help for 600,000 self employed Brits who have been shut out of Government support during the pandemic.

The Chancellor confirmed that hundreds of thousands of people, many of whom became self-employed in 2019-20, will now be able to claim direct cash grants under the Self-Employment Income Support Scheme.

Previously they could only claim if they had filled in a recent tax return, which meant millions were shut out.

The Treasury has also confirmed it will give a fourth grant of up to £7,500 to the self-employed.

And a fifth one will come over the summer – in line with the furlough extension.

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BRITAIN’S BOUNCE BACK

The PM and Chancellor are under huge pressure to help sectors of the economy which have struggled over the last year of the pandemic.

The public will get up to £1million to rescue their local pub or footie club from closure, The Sun revealed earlier this week.

The Chancellor will use the Budget to pledge a whopping £150 million to help neighbourhoods take over assets loved by the community.

He will also increase the contactless spending limit to £100 to try and encourage more spending, and boost the nation’s shops, the Treasury said this morning.

But he batted away calls for a ‘Shop Out to Help Out’ voucher scheme.

And the Chancellor announced a ‘super deduction’ tax break for businesses – where firms will get 30% tax back.

It means that when companies invest they will be able to claim the cost of the goods and an extra third on top of that – in a hope it will encourage businesses to go greener.

The Business rates holiday will also be extended until July.

TAX RISES

Corporation tax will be hiked to 25%, Mr Sunak announced today in a sting for big businesses.

The Chancellor said the rate will be raised from 19% from April 2023 as he looks to plug the huge black hole in the country’s pandemic-ravaged finances.

It marks a screeching reversal of the UK’s decade-long drive to cut corporation tax, which was slashed from 28% in 2010 by then-Conservative chancellor George Osborne.

He also revealed hikes to Capital Gains Tax, which will tax people on their extra profits.

HARD TIMES

With the nation’s coffers reeling from the Covid crisis, Mr Sunak is staring at £400billion blackhole.

The chief bean counter today set out his “a three-point plan to protect jobs” – but also gave the nation a reality check over the dire economic situation left in the wake of the pandemic.

He said the OBR money chiefs predicted a bumper growth year – growing by 4 per cent this year, followed by a huge 7.3 per cent next year.

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That would be the strongest set of figures since World War II.

The UK economy would completely recover by the middle of next year, they say.

Mr Sunak said: “The Office for Budget Responsibility are now forecasting, in their words: ‘A swifter and more sustained recovery’ than they expected in November.

“The OBR now expect the economy to return to its pre-Covid level by the middle of next year – six months earlier than they previously thought.

“That means growth is faster, unemployment lower, wages higher, investment higher, household incomes higher.”

He added however, that “repairing long term damage will take time”.

He also warned today that the time to get the nation’s books in order is rapidly approaching.

Only once the economy is on a better footing will he start his plans to fix the public finances in earnest.

This post first appeared on thesun.co.uk