Rishi Sunak discusses the Spring Budget
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Treasury officials said British businesses will benefit from a massive boost when the Chancellor unveils an initial £12 billion capital investment fund and a further £10 billion in Government guarantees. They said this would help the UK Infrastructure Bank, which will launch in the Spring and operate UK-wide, unlock billions more in private finance to support £40 billion of infrastructure investment that will fire up the economy and help achieve the UK’s commitments on net zero and levelling up.
This shows how serious we are about levelling up the country
It will also play a key part in efforts to build back better after the economy was battered by the coronavirus pandemic.
Officials said the new bank will offer a range of products, including equity, loans and guarantees, which can be tailored to support the needs of private sector infrastructure projects, in sectors such as renewable energy, carbon capture and storage and transportation.
It will also offer infrastructure loans to mayors and local authorities at low rates to help fund high-quality projects in every region and nation.
Speaking ahead of the Budget, Mr Sunak said: “We are backing this Bank with the finance it needs to deliver modern infrastructure fit for the 21st century and create jobs.
“This shows how serious we are about levelling up the country so that everybody can benefit from our future prosperity.
“Britain’s businesses and the Great British public deserve world-class infrastructure and that is exactly what this new Bank will help us deliver for them.”
The Chancellor is also expected to commit a further £375 million to co-invest alongside the private sector in high-growth, innovative UK firms.
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His proposed “Future Fund: Breakthrough” scheme will ensure the Government continues to support highly innovative companies, such as those working in life sciences, quantum computing, or clean tech, that are aiming to raise at least £20 million of funding.
It follows in the footsteps of the successful Future Fund which was introduced by the Chancellor last year to ensure that the pandemic did not impact negatively on high-growth firms.
The scheme provided 1,140 loans worth £1.1 billion to innovative firms.
Earlier, Conservative former Chancellor Lord Ken Clarke urged Mr Sunak to consider hiking taxes to repair the public finances ravaged by the coronavirus pandemic.
The Tory grandee told the current Chancellor he “must look at” raising VAT, national insurance and income tax. But increasing any of them would tear up a key manifesto pledge.
Mr Sunak is under increasing pressure to continue the emergency support packages to prevent waves of job losses and business closures, but has said he plans to “level with people” during his Commons speech on Wednesday.
The Government is bracing 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.
Mr Sunak issued a warning about the scale of the damage caused by the pandemic, suggesting he could use the Budget to begin making hard decisions to repair public finances.
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He told the Financial Times there are “enormous strains” and the UK is “exposed” to changes in the currently low interest rates, with a rise of one percent worth £25 billion a year to servicing the debt in the wake of vast spending to sure up the economy.
Lord Clarke, who led the Treasury under Sir John Major, said tax rises must be considered with “more debt piling up” in the face of a “financial crisis” if interest rates rise.
“Sensible people know in their bones that all this emergency Government spending is going to have to be paid for and is going to be a burden on them,” Lord Clarke told BBC Radio 4’s Today programme.
“The manifesto you refer to was written by a couple of apparatchiks in the office halfway through the campaign.”
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