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Chancellor Rishi Sunak will offer 700,000 shops, pubs, restaurants, hotels and other businesses, grants of up to £ 18,000 each as part of a £ 5 billion rescue plan to prevent massive bankruptcies.
The news of the plan, to be announced in Wednesday’s budget, comes as Sunak faces mounting pressure to avoid or postpone significant corporate tax increases, as businesses struggle to weather the latest Covid-19 lockdown in a been strong enough to reopen.
While there were questions last night about the extent to which the grants were extensions to schemes due to end by late March or beefed up new initiatives, the measure reflects a growing panic in the government that many small businesses on main streets and elsewhere they are now on the brink of extinction.
Last week, nearly 400 leaders of small and medium-sized businesses from the “Fighting Back for Business” campaign wrote to the Chancellor calling for debts accumulated through government-backed loans to be canceled in full to prevent many tens of thousands of businesses. become insolvent. .
Under budget plans, non-essential retail businesses will be eligible for direct cash grants of up to £ 6,000 per site to help them start operating again when allowed to do so.
Hospitality, accommodation, leisure, personal care and gym companies in England, which will be closed for longer under the government’s roadmap outside the lockdown, will be able to apply for grants of £ 18,000 per site.
Sunak said last night: “Our local businesses have been hit hard by the pandemic, so we did big and we did it early with a multi-billion pound support package. Now there is light at the end of the tunnel and these additional £ 5 billion in cash grants will ensure that our main streets can open their doors with optimism. “
Local authorities in England will also get an additional £ 425 million to distribute to companies that are not eligible for restart grants but are nevertheless experiencing a severe impact on their business due to public health restrictions. As business grants are a decentralized issue, Scottish, Welsh and Northern Ireland administrations will receive £ 794 million in additional funding to distribute to businesses.
Sunak’s budget is expected to increase the total cost of Covid-related business, employment and other support measures to more than £ 300 billion.
While rumors have circulated that the chancellor has been seeking to order a steep increase in corporate tax to try to recoup money spent during the pandemic, there has been heavy lobbying by Conservative MPs, particularly in the seats of the red wall, to save more pain companies.
The chancellor is also expected to announce measures to support home purchases, including a limited-time extension of the stamp tax holiday on sales, and help for people hoping to climb the property ladder.
But as he faces a series of painful decisions, he is expected to ignore calls from NHS leaders for another £ 10 billion to the health service to help him cope with the huge backlog of operations, the impact a rise in “prolonged Covid” and an increase in people needing mental health support.
According to senior NHS sources, Sunak plans to ignore the demands and provide the service for no more than a few hundred million. “We hope to be disappointed on Wednesday,” said one.
Another NHS insider said he hoped the chancellor would not give the service extra money and postpone any decision on increasing his budget from this Wednesday until the fall statement of this year.
As the budget approaches, there are more signs that the government may be regaining some public support for its handling of Covid-19. In Opinium’s latest survey for the Observer, the Conservatives have extended their lead to 7 points over Labor, the highest since July last year.
Conservatives are also seen as more trustworthy in the economy after a pandemic year, with 39% saying they trust Sunak and Boris Johnson more on economic matters, versus 25% who would trust Labor leader Keir Starmer and the Shadow Chancellor Anneliese Dodds.
Last night, business leaders said that grants of £ 5 billion to help small businesses would be vital in helping businesses that have suffered as a result of circumstances beyond their control. Kate Nicholls, UKHospitality CEO, said: “Closing costs keep rising. This money will go a long way toward covering those costs and preparing companies for a successful restart. “
Craig Beaumont, head of external affairs for the Federation of Small Business, announced the “significant cash injection,” which he said would “help thousands of businesses survive these final restrictions and then help drive the vaccine-enabled recovery.” .
With Sunak struggling to identify ways to recover funds in the treasury, the independent Resolution Foundation said on Sunday that freezing tax thresholds would bring in £ 6 billion a year by 2024-25, a significant contribution to post-tax consolidation. crisis that will be necessary. . He added that a staggered corporate tax increase, from 19% to 22% at the end of parliament, would raise £ 10 billion a year by 2024-25.
Even delaying the start of the freeze until next year would generate similar revenue, as low inflation means that tax thresholds won’t go up much this year anyway.
