The Chancellor will announce an increase in the present £8.91 rate in Wednesday’s Budget
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Rishi Sunak is drawing up plans to push the minimum wage to £10 an hour by the next General Election.
The Chancellor will announce an increase in the present £8.91 rate in Wednesday’s Budget.
And some experts predict he could go as far as £9.50 to make up for the £20 cut in Universal Credit for 3.2 million working families.
Borrowing is £135billion lower than predicted so Mr Sunak has more money for the three year spending review to be unveiled alongside his Budget.
That could put him on course for £10.50 minimum pay by 2024 with the qualifying age lowered from 25 – 21 to overtake Labour ’s pledge of £10 an hour.
Mr Sunak will also pump £560million into training adults to improve their maths in a bid to fill one million job vacancies.
Jane Gratton of the British Chambers of Commerce said: “More needs to be done to close the skills gap and improving numeracy sits at the very heart of that.”
But as the Chancellor seeks to plug the £370billion black hole left by Covid there will be few other sweeteners on offer.
Tax guru Chris Etherington at auditors RSM said: “Anyone expecting tax giveaways is likely to be disappointed.”
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There are unlikely to be any income tax cuts or rises and personal allowances will remain frozen until April 2026.
According to poverty researchers at the Joseph Rowntree Foundation 3.8million low income families are unable to keep up with household bills with 1.4million behind with council tax and 950,000 in rent arrears.
Those figures could encourage the Chancellor to reduce the UC taper rate from 63p to 60p – the amount which claimants lose from every extra pound they earn.
And on Tuesday Tory peer Baroness Stroud will make a bid in the Lords to have the uplift restored.
Home shopping could be dearer if the Chancellor goes ahead with his plan for a two per cent online sales tax to raise £2billion.
David Jinks of home delivery firm ParcelHero said: “Beleaguered retailers will be forced to pass the cost on to their customers.”
Teetotal Mr Sunak may take advantage of Brexit to reform the £12billion worth of complex alcohol taxes to give English wine producers an advantage over EU competitors.
That would see a bottle of English bubbly cost 83p less if it comes into line with still wine.
Wine Drinkers UK is pressing for a duty cut in all wine to close the boozer gender gap as women are twice as likely to drink wine than men.
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Tory MP Nusrat Ghani said: “Women should not be expected to pay 13% more in tax for a round of drinks.”
Taxes on draught beer could also be slashed to boost the Covid-hit pub trade. MPs are calling for a 22p reduction in the price of a pint.
Campaign for Real Ale chief Nik Antona said: “This would help pubs to compete with supermarkets.”
Higher wages to fill 134,000 job vacancies in the hospitality sector are already making a pint cost £6 in some areas.
Mr Sunak will make £1.6billion available to fund extra tuition for 100,000 16 to 19-year-olds studying T levels and create 24,000 traineeships.
Adults will also get intensive training in growth industries such AI, cybersecurity, and nuclear.
The Chancellor said: “Our future economic success depends not just on the education we give children but lifelong learning we offer adults.”
With the inflation rate now at 3.1% pensions will go up next year from £179.60 per week to £185.16. For those on the basic that means a rise from £137.60 per week to £141.86.
And Mr Sunak could cut the annual allowance of pension pots for the better off from £40,000 to £30,000 to reduce the tax relief savers get.
But economist James Smith from financial analysts IMG warned: “This relative stability in the rate of inflation won’t last.”
He predicted a rise to four per cent next month as the 12% increase in the electricity price cap feeds through rising to 4.5% by April 2022 when energy costs go up 30%.
To ease the impact Mr Sunak is being urged to reduce the 5% VAT rate on energy bills with MPs demanding he scraps it entirely.
Shadow Chancellor Rachel Reeves said: “The Chancellor can choose to let online giants dodge tax, and ignore the cost of living crisis – or he can give working people a helping hand by providing an immediate cut to their energy bills.”
Tory Robert Halfon added: “Abolish VAT and cut the cost of living for hard-pressed families across the UK.”
Tax relief employees get for washing uniforms and work clothing or buying small tools could be increased.
Meanwhile Bank of England Governor Andrew Bailey is warning of interest rate hikes making mortgages more expensive.