Chancellor Rishi Sunak is to announce a £5bn “restart” grant scheme in his Budget to help the British high street recover from the Covid-19 crisis, promising on Sunday that there was “more to come”.
The grants, worth up to £18,000 each and aimed at shops, pubs, hotels and other businesses most affected by the crisis, will take total spending on such measures to £25bn over the past year.
The chancellor said on Sunday that his Budget would “align” economic support with Prime Minister Boris Johnson’s road map for lifting all coronavirus restrictions on June 21.
“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,” Sunak told Sky’s Sophy Ridge.
“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 is more to come next week.”
Sunak is also expected to announce in his Budget that other support schemes for businesses and individuals — including the furlough scheme — will be extended until the end of June.
But the chancellor repeated his determination to “level” with people over the need to shore up public finances after the crisis. Government officials expect a rise in corporation tax from 19 per cent to perhaps 25 per cent.
Sunak is also expected to freeze income tax thresholds — the £12,500 level at which people start paying the basic 20p rate and the £50,000 starting point for the 40p band. The Sunday Times said this would mean 1.6m people would be pushed into a higher tax bracket by the next election.
The chancellor refused to comment on his tax plans but said it would take “time to fix” high levels of borrowing. He estimated that long-term economic damage caused by Covid-19 would leave a £40bn fiscal hole to be filled in.
Sunak declined to comment on claims by Tory MPs that he wanted to increase taxes now so that he could cut them again before the next election.
The business grant scheme, administered by local councils, will help almost 700,000 companies including shops, pubs, clubs, hotels, restaurants, gyms and hair salons.
Sunak said: “Our local businesses have been hit hard by the pandemic — which is why we went big and went early with a multibillion pound package of support.
“There’s now light at the end of the tunnel, and this £5bn of extra cash grants will ensure businesses on our high street can open their doors with optimism.”
The chancellor hopes this will be the last such intervention, but his allies are careful not to rule out the need for further state support if the virus re-emerges as a threat in the autumn.
Under the scheme, non-essential retail businesses will get up to £6,000 per premises to help them reopen and start trading safely. The government’s road map means shops are set to reopen no earlier than April 12.
More money will be available for hospitality, accommodation, leisure, personal care and gyms, which will reopen later and will be more affected by restrictions when they do open. They can receive up to £18,000.
Separately, Sunak’s Budget will include details of a UK Infrastructure Bank. To be based in the north of England, it will work with the private sector on environmental projects and schemes to “level up” the country.
The bank, which will launch in the spring, will receive an initial £12bn of equity and debt capital and a further £10bn of government guarantees. It will offer a range of products including loans, equity and guarantees.
Sunak wants it to promote projects such as renewable energy, carbon capture and storage and transportation and provide advice on complex infrastructure projects.