LONDON — It was supposed to be Boris Johnsons big post-Brexit budget, the moment when manifesto promises of an infrastructure revolution and the “leveling up” of the U.K.s regions were underpinned by cold, hard cash.
Instead, when Johnsons freshly minted chancellor, Rishi Sunak, stands up in the House of Commons on Wednesday, only one word will dominate the headlines: coronavirus.
With stock markets sliding amid fears of a serious slowdown in global economic growth, Johnson and Sunaks grand plans have been buffeted by events beyond their control.
But despite the uncertainty and the delays for some of the bigger tax-and-spend decisions, there are still things Sunak can do now to “provide immunity” for the economy (as former Chancellor George Osborne put it) from the worst impacts of coronavirus — and to lay the groundwork for the governments long-term plans.
“There are two things he needs to do,” said Tim Pitt, who worked as a special adviser to the previous two chancellors and is now a partner at business advisory firm Flint.
“Hell want to show [hes got a] grip on the coronavirus issues immediately. But hell also want to show some progress on the wider leveling-up agenda: more infrastructure spending, more research and development spending — albeit much of that will now come later in the year with the spending review and the second budget.”
Sunak, determined to ensure the budget isnt just remembered for coronavirus, said on Tuesday it would invest “historic amounts in British innovation and world-class infrastructure.” The Treasury said public investment overall would be at its highest level since 1955.
The detail may have to wait, but for now, here are five key areas where the chancellor can deliver this week.
Shore up the NHS and care system
Sunak has said the National Health Service “absolutely, categorically” will get “whatever it needs” to cope with coronavirus.
But what does that look like?
The health services biggest problem is the workforce — and the Conservatives 2019 manifesto promised 50,000 more nurses. But with coronavirus expected to peak within months, extra cash for hospitals will have to focus on shorter-term priorities, rather than the long-term project of training up more staff.
That said, cash will be needed if retired doctors and nurses are to be brought back onto the wage bill, as the government has indicated could happen.
“I think well see more money for the NHS to be spent on things like urgent care equipment, hiring retired doctors and nurses and possibly shoring up supplies of key medicines,” said Pitt.
The Nuffield Trust think tank warned last week that the NHSs long-standing hospital bed shortage — the U.K. has around half the beds per 1,000 people that some other comparably wealthy countries can call on — could leave “less room for maneuver in an emergency,” so this may also be a focus for short-term funding.
But its not just about the NHS. Local councils that partly fund care services for the elderly — and which are also in charge of public health spending — will also be hoping for an emergency injection of cash.
Small business rescue
The U.K. businesses most at risk from a coronavirus slowdown are small and medium-sized enterprises.
Already promised a lot in the Conservatives 2019 manifesto, the SME sector is now calling for help from government with far greater urgency.
“Its all about cash flow this year,” said Craig Beaumont, external affairs and advocacy director at the Federation of Small Businesses (FSB). “How do you protect a small business from coronavirus? How to do you keep people from being let go? How do you support the self-employed?”
The federations chief ask is to increase Employment Allowance — a tax relief for businesses — from £3,000 to £4,000. The Sun reported that the chancellor will indeed deliver on this front.
“The two areas they seem to be focusing on quite rightly is making sure businesses … have got the financing and the cash in the short term they need to survive,” said Pitt. “They will be looking at what they can do in terms of providing guarantees for loans given by commercial banks, for example. The other one is extending the time HMRC [the tax office] gives businesses to pay their tax bills.”
Relief on business rates — a tax on properties used for business purposes — is another way the government could give small firms a helping hand to cope with the outbreak. The FSB wants to see the current 33 percent “retail discount” for small shops, cafés, bars, restaurants and pubs increased to 50 percent.
Get started on infrastructure
While the £100 billion National Infrastructure Plan scheduled for release alongside Wednesdays budget has been delayed (in part to allow Sunak, who has only been in the job a few weeks, time to get to grips with it), around £20 billion worth of manifesto commitments are still likely to be allocated, Pitt said.
These include pre-announced plans for additional flood defenses and improvements to the electric car charging network to help deliver the governments goal of net-zero carbon emissions by 2050.
Pitt said budget-watchers should also look out for spending on a British version of the United States Defense Advanced Research Projects Agency (DARPA), a plan spearheaded by Johnsons chief adviser, Dominic Cummings.
Level up (a bit)
While this budget could be more about firefighting than grand strategy, Sunak may lay the groundwork for reforms aimed at delivering the governments “leveling-up agenda.”
Sunak has already said he will announce a reviewRead More – Source