Public Policy

September 3, 2020

Covid-19 Recovery Brief: Thursday, September 3

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Each week, our Public Policy team will be reporting on the latest weekly news in the evolving situation. 

Chancellor, Rishi Sunak has signalled to new Tory MPs that taxes will have to rise to restore the public finances

  • Sunak told Tory MPs elected in December that while there would not be a “horror show of tax rises with no end in sight”, the Government was going to have to make “difficult” decisions to recover from the pandemic.
  • He warned that if the party chose to “simply borrow our way out of any hole” voters would see little difference between the Conservatives and Labour. He added that the party “cannot, will not and must not surrender our position as the party of economic competence and sound finance.”
  • Sunak is considering an array of tax rises, including cuts to pensions tax relief for higher earners and increases in corporation tax, capital gains tax and fuel duty. It has led to a backlash from Tory MPs and concern among some ministers.
  • On corporation tax, Sunak is reportedly considering raising this from 19% to 24%, which could bring in an estimated £12 billion.
  • On Capital Gains Tax, Sunak is reportedly considering reforming it so that it is paid at the same rate as income tax. As a result, the tax on profits from selling assets would rise from 10% to 20% for basic-rate taxpayers, and from 18% to 20% for profits on the sale of second homes. For higher-rate and additional-rate taxpayers, the levy could rise from 20% on asset sales and 28% on property sales to 40% respectively.
  • On pensions, Sunak is considering scrapping the triple lock which could save up to £8 billion a year. He is also considering reducing the pension tax relief for higher earners from 40% to 20% which could save up to £10 billion a year.
  • However tax rises at this time risks choking off the economic recovery. While there may be changes to Capital Gains Tax and pensions in the Autumn Budget, Sunak is unlikely to introduce other major tax rises until 2021 or 2022.

Government to pilot a £500 million regular mass testing programme to get country back to normal

  • Regular Covid-19 checks on teacher schoolchildren, shoppers and commuters will form part of preparations for routine checks on millions of people with no symptoms.
  • 20-minute spit tests will be used after preliminary findings suggested that they were just as good as standard tests.
  • While most hopes of a return to normality have been pinned on a vaccine, ministers believe that mass testing with a rapid turnaround in results offers an alternative way to get millions of people back to offices, events and sports fixtures.
  • A nationwide scale-up of any successful techniques is unlikely before next year but ministers are committing half a billion pounds to assess them and be sure that they are ready for mass deployment if the feedback is positive.

Other news

  • A decision on whether travellers will need to quarantine for 14 days when arriving in the UK from Portugal will be made on Friday, Health Secretary Matt Hancock has said. Portugal was moved to the low-risk category just two weeks ago, after five months on the government’s “no-go” list.
  • Reports suggest the Government is not considering placing Greece on the quarantine list for England. It comes after Scotland and Wales imposed measures on holidaymakers returning from Greece.
  • The Government is considering delaying GCSE and A-level exams in England in 2021 to help pupils make up for lost time during lockdown.
  • Cardiff could become the first UK airport to test all passengers for Covid-19 on arrival. It comes after an outbreak of Covid-19 was detected in holidaymakers returning to Cardiff from the Greek island of Zante. Thirty cases of Covid-19 contracted by travellers who have returned to Cardiff from Greece have so far been reported.
  • The Government has changed the law so most renters have a 6 month notice period. Legislation has been introduced that means landlords must provide at least 6 months’ notice period prior to seeking possession through the courts in most cases, until 21 March. The stay on possession proceedings has been extended until 20 September.
  • Restrictions on visiting other households have been reintroduced in Glasgow and two neighbouring areas after a rise in Covid-19 cases. The new rules will affect more than 800,000 people in Glasgow City, West Dunbartonshire and East Renfrewshire. People in these areas who had previously been in the shielding category are being asked to be particularly vigilant. Schools and nurseries will remain open and plans for the opening of colleges and universities remain in place.
  • The Kickstart scheme has opened this week, and it has seen a £2bn investment from the Government which will create thousands of new jobs for young people. The Scheme will see 16-34 year olds who are on Universal Credit offered six month placements, with wages paid for by the Government. Businesses, employers and groups of employers can now submit their applications to work with the Government on the Kickstart scheme.
  • Ofsted will visit 1,200 schools across England during the autumn term with the aim of telling parents, Government and the public about how schools are managing the return to full education of their pupils.
  • The UK has announced a new £119 million aid package to help combat the threat of Covid-19 and famine. The aid will help people in parts of Yemen, South Sudan and Burkina Faso who are already on the brink of famine before Covid-19 spread around the world.
  • Welsh Finance Minister Rebecca Evans has announced an additional £2.8 million to support Council Tax Reduction Scheme.
  • The Scottish Government has announced £2.4m of new funding for free debt advice which will assist projects offering face to face advice using video calls and projects aimed at moving debt solution processes online.
  • The Welsh Government has introduced greater fines to prevent unlicensed music events of more than 30 people taking place in Wales. A breach will be an offence punishable by conviction and an unlimited fine, or by a fixed penalty set at £10,000.
  • The Scottish Government have announced the three core missions for the new Scottish National Investment Bank which will focus on driving economic recovery from Covid-19. The bank is scheduled to launch by the end of the year and the Scottish Government is committed to capitalising it with £2bn over ten years. The proposed missions will be laid in the Scottish Parliament for consultation for 40 days.
  • The Scottish Government has announced a new £59m funding package to support culture and heritage sectors. The package includes a new £15m Culture Organisations and Venues Recovery Fund will support businesses such as art galleries, studio facilities, comedy venues and music venues. Meanwhile £21.3m will go to Historic Environment Scotland, whilst £5.9m will be made available to support heritage organisations through committed grants.
  • The Association of British Insurers have announced that they would extend their Covid-19 customer pledge until the 31 October 2020. These include pledges to support claimants, home working, key workers and car use for community support.
  • The Government has said adverts will begin appearing this weekend reminding employers of how to make their workplaces Covid-secure. However, the Government denied that there was any campaign to encourage employees back to the office after reports the messaging blitz was to be delayed until next week
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