“We went big, we went early but there is more to come.”

Words Sarah Adama

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This year’s budget may be the most important for a generation. As the Chancellor is braved with the task of dealing with the economic fallout from the pandemic, all eyes are on one man. As we await the budget to be delivered on March 3, Rishi Sunak has expressed that he will use the budget to “level with people” over big strains in the public finances. In his view, the Covid-19 crisis is far from over and the statement will not include any new targets for government borrowing or debt. Warning that a bill with have to be paid for the country’s exposed finances, alongside the increased obligation to protect jobs, he seeks to address the challenge in the public finances and the budget will align with the Prime Minister’s roadmap for lifting coronavirus restrictions on June 21.

The budget is a financial statement delivered by the Chancellor to the House of Commons; the statement sets out how the government will spend the country’s money, proposals for changes to taxation and an overview of the state of the country’s economy. The Treasury is required by law to deliver two economic updates each financial year, usually in a budget or a spring or autumn statement. 

At the same time, the Office of budget responsibility publishes an independent forecast on what it thinks will happen to the economy over the next five years. The Chancellor’s budget is delivered yearly, partly because income and corporation tax are annual taxes and are subject by yearly review by legislation. 

On March 3, the Chancellor will leave 11 Downing street, carrying the famous ‘red box’, here he carries the speech and travels to parliament to deliver the statement. The speech is then debated by the house and the peers then vote on whether to approve a Finance bill. Once a bill is approved, the proposals are passed into law. 

Here’s what we already know: 

The Chancellor remains committed to the promise he made at the beginning of the crisis – to do whatever It takes to protect people, families and businesses. 

“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 this week.”

Previously, Rishi Sunak has insisted that the country must return back to “sustainable” levels of spending as he considered a six-week extension to the stamp study holiday but is said to have rejected a longer extension as he looks to recover tax revenues lost due to number of emergency measures during the pandemic. It is predicted that the government will extend Help to Buy Equity loan scheme to the end of May.

In reiterating his determination to “level” with people over exposed public finances, he has also indicated an increase to corporation tax – one of the most contested taxes in the U.K - as the first step to repairing the public finances and is prepared for criticism from the Conservative party on tax rises. Of course, this would be subject to major Conservative criticism which he is braced for, urging Tory colleagues to support his message on public finances, as the Tories are “now the party of public services.” However, Tory MPs have been warned they will be thrown out of the party if they vote against budget measures. 

On Friday evening, Rishi Sunak announced an early package in his plans for jobs to reduce the rise in unemployment, introducing measures to strengthen training and apprenticeships. Businesses taking on an apprentice will receive an increased temporary cash bonus of £3000 and the scheme will be extended to the end of September. The plan breaks the restriction of the 16 to 24 age limit and will cover all hires. Other support schemes for businesses and individuals will be extended until the end of June. 

He is also to announce a £5bn “restart” grant scheme to aid the recovery of the British High Street and there is “more to come”. The grants will be aimed at shops, pubs, hotels and other businesses most affected by the crisis, worth up to £18,000 each. Government spending on these measures will total £25bn, according to Financial Times. 

The Chancellor’s plan is to spend big in the short-term before raising taxes later, in an attempt to cushion the country’s economy.