Chancellor Jeremy Hunt said his back-to-work budget will end reliance on migration to fill vacancies by helping Britons into jobs. Aid with childcare costs and measures targeted at the over 50s and long-term sick will be confirmed in Wednesday’s financial statement. He is also expected to announce funding to allow some energy support to continue after April to help people struggling to pay fuel bills.
Mr Hunt said: “I’m a Conservative who believes in the virtue of work, and we have more than a million vacancies and the Brexit decision was a choice not to fill those vacancies with unlimited migration which I think is the right choice.
“So on Wednesday you will hear me put together a very comprehensive package of measures to break down the barriers to work.
“Childcare is one and I particularly want to look at the barriers facing these 700,000 parents on low pay, on Universal Credit, who aren’t able to work, even though they have a young child.”
The budget will have two key themes – the cost of living crisis and economic growth.
Mr Hunt believes tackling the worker shortage is key to boosting the economy.
Support will include helping people with disabilities and long-term health conditions into work.
Funding will also go to parents on Universal Credit to help them pay childcare costs up front.
Mr Hunt is under pressure to cut taxes from Conservative backbenchers frustrated the country is under the biggest taxation burden for 70 years.
Tory MPs have warned that allowing a planned rise in corporation tax from 19 per cent to 25 per cent will harm businesses.
The Chancellor, who campaigned to reduce it to 15 per cent last year, insisted he wants a “low tax economy” but indicated the hike will remain.
He said: “Conservatives cut taxes when they can, but we also have to be responsible with public finances. It’s very important we remember businesses need stability and that means they need to know we are being careful with the public finances.
“But within the bounds of what is responsible, we will always look to reduce the tax burden.”
Mr Hunt said last autumn “despite all the challenges we faced” the government reduced business rates by an average of 10 per cent.
He added: “So a Conservative government will always cut taxes when we can. But we won’t run out of money. We will be responsible.”
Former Tory chancellor Philip Hammond said increasing corporation tax is the “right decision for now” and all businesses need is a signal that the elevated rate is not “some new normal”. But Lord Bilimoria, former president of the CBI, said it is the “wrong time” for a corporation tax increase.
He said: “This is the first increase in corporation tax we’ve had in decades. I said to Rishi Sunak when he was chancellor, two years ago, Rishi don’t increase taxes. Because when this pandemic is over we will need to recover. You increase taxes it will stifle growth, it will stifle the recovery.
“And not only do we have the pandemic, we also had the Ukraine war. And what has happened, we’ve had taxes just going up one after the other so that now we have the highest tax burden. This is absolutely the wrong time to have the highest tax burden, let alone this rise in corporation tax.”
The Institute for Fiscal Studies welcomed the upfront childcare support and the rise in the cap parents on Universal Credit can claim.
But it warned this will not “move the dial on childcare expenses for most low-income families” and benefit only tens of thousands of families – compared with more than 800,000 who are eligible.
Senior Tory Simon Clarke said: “I would love to see tax cuts. I think reducing our corporation tax rate rather than raising it would be the right thing.
“If you look at the results of lower corporation tax in the 2010s we got more revenue in, we got more investment in.
“We have literally seen AstraZeneca chose the Republic of Ireland over us. Their corporation tax rate is 12.5 per cent, ours is set to be 25 per cent. I don’t want to see that.” But PM Rishi Sunak said: “There are a lot of different things that go into making us one of the most dynamic and attractive economies in the world. The headline corporation tax rate that we have is the lowest in the G7.
“And alongside that there’s a whole range of other things or regulatory frameworks or investment in research and development, the quality of the talent in the UK, all of those things going to make this a fantastic place to invest, to grow a business. And that will always be the case.”
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