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Budget: £5bn business grants for firms hit hardest by Covid

The Government is braced for the possibility of a rebellion from Tory MPs over any tax rises.

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Rishi Sunak will deliver the Budget on Wednesday (PA)

Rishi Sunak will deliver the Budget on Wednesday (PA)

Rishi Sunak will deliver the Budget on Wednesday (PA)

Pubs, restaurants, shops and other businesses hit hardest by the coronavirus pandemic will be boosted by a £5 billion grant scheme to help them reopen as the lockdown is eased.

Chancellor Rishi Sunak will detail the “restart grants” worth up to £6,000 per premises to help non-essential retailers reopen and trade safely at his Budget on Wednesday.

Hospitality, hotels, gyms, as well as personal care and leisure firms, will be eligible for up to £18,000 per premises as they are due to open later under the plans for easing lockdown.

The Treasury estimates 230,000 firms will be eligible for the higher band, which will be awarded based on their rateable value, and 450,000 shops will also be able to apply.

Mr Sunak told the Mail on Sunday the scheme would provide at-risk businesses with “the support they need to get them through, get them back on their feet and get the tills ringing once again”.

But Mr Sunak issued a warning about the scale of the damage caused by the pandemic, suggesting he could use the Budget to begin making less palatable decisions to tackle the deficit.

He told the Financial Times he plans to “level with people” during his Commons speech, as he spoke of the “enormous strains” on the UK’s public finances are facing.

Treasury sources did not deny a report suggesting the Chancellor plans to raise £6 billion by freezing income tax thresholds for at least three years.

The Sunday Times said he would freeze 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 extra funds without breaking the manifesto pledge that guaranteed the Conservatives would not raise the “rate” of income tax.

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Chancellor Rishi Sunak will deliver the Budget on Wednesday (Yui Mok/PA)

Chancellor Rishi Sunak will deliver the Budget on Wednesday (Yui Mok/PA)

PA

Chancellor Rishi Sunak will deliver the Budget on Wednesday (Yui Mok/PA)

But the newspaper estimated the move would push an extra 1.6 million people into a higher tax bracket before the next general election is due in 2024.

The Government is braced for the possibility of a rebellion from Tory MPs over any tax rises, with backbenchers being warned they could be kicked out of the parliamentary party if they vote against the Budget.

Labour leader Sir Keir Starmer has said that “now is not the time” for tax increases, as have some Tory MPs who want the Chancellor to focus in growing the economy as it reopens from lockdown.

In a series of announcements ahead of his set-piece speech, Mr Sunak said the UK will launch a sovereign green savings bond for retail investors to help cut greenhouse emissions to net zero by 2050.

The £5 billion for restart grants is targeted at England, but the devolved nations in Scotland, Wales and Northern Ireland will receive an extra £794 million in funding through the Barnett formula.

Local authorities will be tasked with distributing the grants and will receive the funding in April.

The UKHospitality trade body welcomed the plan, saying many firms are “struggling to see how they could survive through” Boris Johnson’s road map for reopening, with laws on social distancing set to continue until at least June 21 – the earliest date when nightclubs will be considered for reopening.

Businesses are crying out for the cash now so there can be no further delays which might make it too late for someKate Nicholls, UKHospitality

Chief executive Kate Nicholls said: “Cash reserves have been severely depleted after a year of closure and restrictions and these grants are a very welcome boost, putting the sector in a better place to restart.

“Businesses are crying out for the cash now so there can be no further delays which might make it too late for some.”

But she said the grants must form part of a wider package that includes an extension to the reduced VAT rate and a business rates holiday.

“Without these measures, and full furlough while we reopen, the hospitality sector’s recovery will be stunted along with our ability to start tackling unemployment by creating jobs,” she added.

The British Retail Consortium (BRC) joined UKHospitality in calling for clarity on whether the grants will be subject to state aid caps mirroring the EU’s, but welcomed the funding as “a vital injection of funding during this extremely challenging period”.

BRC chief executive Helen Dickinson did, however, warn that the grants “will only provide temporary relief” and called for an extension to the moratorium on aggressive rent enforcement and to the business rates relief in the Budget.

Federation of Small Businesses national chair Mike Cherry said the grants will “provide a much-needed lifeline”, but called for the Chancellor to set out more funding “for those that have been excluded from income support throughout this crisis”.

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