Rishi Sunak has indicated he will extend emergency job and benefit support packages at Wednesday’s Budget.
The Chancellor said he wanted to “support people and businesses along the path” out of lockdown, but warned there would need to be work to repair the public finances from the “enormous shock” of the pandemic with an “honest and fair” plan.
Treasury sources have suggested the Chancellor is hoping to claw back cash by freezing income tax thresholds for at least three years.
Mr Sunak was said to be considering a freeze on the £12,500 point at which people start paying the basic rate of income tax and the £50,000 threshold where they begin paying the higher 40p rate, as he aims to raise £43 billion a year.
The move would allow Mr Sunak to raise £6billion without breaking the manifesto pledge that guaranteed the Conservatives would not raise the “rate” of income tax.
The Treasury has also not denied reports that corporation tax could be increased from 19% to 25% in a bid to further boost UK Government coffers.
Despite worries over national debt, Mr Sunak has suggested support packages for jobs and businesses would continue.
He said: “I think it’s right that the support aligns with the roadmap.
“I said at the beginning of this crisis that I would do whatever it took to protect people, families and businesses through this crisis and I remain completely committed to that, the prime minister in the road map set out a path for us to recover and reopen and I want to support people and businesses along that path.
“I’m not going to comment on specific policies but I want to make sure people realise that we are going to be there to support them and if you look at our track record we went big, we went early and there’s more to come next week.”
The Chancellor also appeared to suggest he understood the arguments for keeping the Universal Credit uplift.
Asked if the £20 per week uplift would be removed, he said: “Budget on Wednesday, there’s a place where we’ll set out all of our next stages of our response, but I know that that uplift has made a difference to people over the past 12 months.
Speaking to @SophyRidgeSky this morning, Chancellor @RishiSunak set out how our new £5bn Restart Grants scheme will help support businesses in the hospitality, leisure, accommodation & retail sector as we follow the roadmap out of the pandemic. #PlanForJobs. pic.twitter.com/lXDMfQtAbZ
— HM Treasury (@hmtreasury) February 28, 2021
“It’s one part of a comprehensive plan that we’ve put in place to protect people, particularly those on low incomes, and looking forward we can point to the fact that we’re increasing the national living wage next year by above inflation, which will mean almost a £350 pay rise for someone working full time on the national living wage.”
It has been reported the boost will be extended for six months to October, going in the face of requests from charities who insist it must be made permanent.
The comments came after Mr Sunak confirmed that pubs, restaurants, shops and other businesses hit hardest by the pandemic would have access to a £5 billion grant scheme to help them reopen as the lockdown is eased.
The “restart grants” will be worth up to £6,000 per premises to help non-essential retailers reopen and trade safely, with 450,000 shops expected to be eligible.
Around 230,000 hospitality companies, hotels, gyms, as well as personal care and leisure firms, are estimated to be eligible for up to £18,000 per premises as they are due to open later under the plans for easing lockdown.