U.K.’s Sunak Faces Call From Tories, Business to Boost Virus Aid

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Chancellor of the Exchequer Rishi Sunak came under pressure from a powerful bloc of Conservative lawmakers and one of the U.K.’s biggest business groups to step up coronavirus assistance, with the U.K. mired in its third lockdown.

Sunak should extend tax breaks and a temporary uplift in benefits, as well as borrow money to help fund an “infrastructure revolution,” 50 Tory lawmakers in the Northern Research Group said late Thursday in a letter to the chancellor. The group warned of a series of “cliff edges” faced by families and businesses, with various support programs due to close.

“Households and businesses face a series of challenges over the coming months as existing support programs come to an end,” Jake Berry, the former minister who leads the group, said in a statement. “To relinquish support now would cause long-term damage to large parts of the North and weaken our recovery. Now is the time for the Treasury to provide stability -- not uncertainty.”

U.K.’s Sunak Faces Call From Tories, Business to Boost Virus Aid

The letter illustrates the pressures faced by the chancellor as the third national lockdown, which began last week and could last until the end of March, increasingly takes its toll on businesses and workers.

Sunak has repeatedly warned that the current level of expenditure isn’t sustainable in the longer term. The government has spent more than 280 billion pounds ($383 billion) fighting Covid-19 and supporting workers and businesses, pushing the national debt above 2 trillion pounds for the first time.

Adding to the pressure on Sunak, the British Chambers of Commerce, one of the U.K.’s main business lobby groups, warned that many businesses are “on their knees” and need more assistance to ensure they survive the latest lockdown.

The Northern Research Group includes Members of Parliament from northern England, Wales and Scotland. Many of the English MPs in particular represent seats in the former so-called red wall that the Tories took from Labour in last year’s general election. They called for:

  • Prioritisation of infrastructure that improves cross-border connectivity with Scotland and Wales
  • Delivery of small infrastructure projects as well as large ones
  • An acceleration of the relocation of civil servants to non-metropolitan towns
  • Business rate holidays -- the one currently in place applies to the retail, hospitality and leisure industry and expires in April
  • An extension of the 20-pound-a-week uplift in Universal Credit benefit payments, which is currently due to end in April
  • A sales tax cut to 5% for businesses in the leisure and tourism sector to add to an existing one for the hospitality industry
  • The abolition of the Stamp Duty property tax on homes valued under 500,000 pounds. There’s currently a holiday on the tax until March 31
  • An extension of mortgage holidays for furloughed workers

“The drip-feed approach to business support measures has meant many firms simply cannot plan for the future,” BCC Director General Adam Marshall said in a statement. “We are urging the government to urgently adopt a package of measures that covers the whole of 2021, and that takes away the cliff-edges firms face in a few weeks’ time when reliefs, forbearance and furlough are set to end.”

The BCC said companies need more time to pay their Value Added Tax bills, greater relief from business rates and a further round of grants of at least 25,000 pounds to tide them over. It also called for the furlough program -- which pays workers 80% of their wages and is due to end in April -- to be kept in place until there’s a full reopening of the economy.

©2021 Bloomberg L.P.

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