Rishi Sunak defends budget amid claim it will plunge 500,000 more people into poverty – politics live

• A government proposal for NHS staff in England to get a pay rise of 1% in 2021-22 has been branded “pitiful and bitterly disappointing” by the Royal College of Nursing. (See 5.38pm.)

• The Institute for Fiscal Studies, a leading economic thinktank, has criticised Rishi Sunak’s plans for an abrupt end to the £20 a week increase in universal credit, calling the decision not to phase out the uplift “remarkable”. It also said Sunak’s long-term plans involved spending cuts that were so harsh as to be unrealistic. (See 12.02pm.)

• Sixteen cases of a new Covid variant have been identified by Public Health England after being first detected on February 15 through genomic horizon scanning, PA Media reports. PA says:
  

All individuals who tested positive and their contacts have been traced and advised to isolate, and the variant was designated a variant under investigation (VUI) on February 24, PHE said on Thursday.

The variant is understood to have originated in the UK, and it contains the E484K mutation, which is also found in two existing VUIs present in the UK, but does not feature the N501Y mutation, present in all variants of concern (VOCs).

The addition of this variant as a VUI means there are now a total of four VUIs and four VOCs currently being tracked in the UK.

The N501Y mutation, which is present in the Kent variant of coronavirus (B117 - now the dominant version in the UK), is thought to be a factor in making variants more transmissible. The E484K mutation, present in the South African and Brazilian variants (B1351 and P1) is thought to make them more resistant to vaccines.

• The government has been accused of pulling emergency funding from the NHS via a £30.1bn cut in day-to-day spending on health in the budget from April this year, as Labour said extra funds were still needed with waiting lists at record levels.
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• Priti Patel has reached a six-figure settlement with a senior civil servant following claims that he was forced out of his job for intervening in her alleged bullying of fellow staff, it has emerged.

• The European parliament has postponed setting a date for ratifying the trade and security deal with Britain after Boris Johnson was accused of breaking international law for a second time over Northern Ireland.

• Nicola Sturgeon has said she will “get on with the job” of steering Scotland out of the coronavirus pandemic, as she accused opposition parties of prejudging the outcome of inquiries into her and her government’s conduct in relation to the investigation into sexual harassment allegations against Alex Salmond.

• One in five UK schools have set up a food bank since the start of the coronavirus pandemic to support struggling local families, according to a survey that highlights how deeply the Covid crisis has hit living standards for many, especially in deprived areas.

That’s all from me for today. But our coverage continues on our global coronavirus live blog. It’s here.

The government has published its submission (pdf) to the NHS pay review body and it shows that for NHS staff in England it is proposing a pay rise in 2021-22 of just 1%.

In the spending review announced last autumn Rishi Sunak, the chancellor, said many public sectors workers would have their pay frozen. But health staff, and low-paid workers, would get a rise, he said.

Today’s document says NHS staff are in line for a 1% increase. It says:

The government announced a pause in public sector pay rises for all workforces, with an exception for employees with basic full-time equivalent salaries of £24,000 or under and for the NHS. In settling the DHSC and NHS budget, the government assumed a headline pay award of 1% for NHS staff. Anything higher would require re-prioritisation ...

The NHS budget is set for 2019/20 to 2023/24 and this budget includes money for planned workforce growth. This is why, as set out in our remit, there are trade-offs if money above affordability assumptions is spent on pay. Covid-19 has created unavoidable direct and indirect financial impacts in the 2020-21 financial year and contributed to a challenging wider economic context.

As the Times’s Chris Smyth reports, the Royal College of Nursing has dismissed this as “pitiful and bitterly disappointing”.

Sadiq Khan, the Labour mayor of London, has launched his re-election campaign by promising £5m to bring jobs and tourists back to the pandemic-struck West End and calling for a postwar-style recovery package of investment in the capital, my colleague Jessica Elgot reports.

Sir Philip Rutnam, who launched a case of constructive dismissal against the government after resigning as permanent secretary at the Home Office last year, has reached a settlement with the government.

In his resignation statement in February last year he said that he had been the target of a “vicious and orchestrated briefing campaign” and that he did not believe Priti Patel, the home secretary, when she said she was not involved in it.

Today he issued a statement through the FDA union saying:

I am pleased to say that the government has today settled the claims that I brought against them and which were due to be heard in an employment tribunal in September.

The government also issued its own statement on the gov.uk website saying that Rutnam was “a distinguished public servant” and acknowledging his “devoted public service and excellent contribution”. The statement also says:

The government regrets the circumstances surrounding Sir Philip’s resignation. The government and Sir Philip are now pleased that a settlement has been reached to these proceedings.

The settlement means Patel no longer faces the prospect of being questioned about her conduct in relation to Rutnam at an employment tribunal hearing. In his resignation statement Rutnam said that part of his job was to protect staff, and that he had heard allegations about Patel “shouting and swearing, belittling people, [and] making unreasonable and repeated demands”.

In November last year, after the findings of an inquiry into her behaviour were published, Patel said she was sorry she had upset people.

Here are some further lines from the interviews Boris Johnson has been giving in Teesport this morning.

• Johnson said that he hoped that with “goodwill and common sense” the post-Brexit problems at the Northern Ireland border could be solved. Asked about the announcement that loyalist paramilitaries are withdrawing support of the Good Friday agreement because of their opposition to the border arrangements, he told reporters:

I haven’t seen which groups you’re talking about.

But what I can say is we are taking some temporary and technical measures to ensure that there are no barriers in the Irish Sea, to make sure things flow freely between GB and NI and that’s what you would expect.

Obviously these are matters for continuing intensive discussions with our friends.

I’m sure with a bit of goodwill and common sense all these technical problems are eminently solvable.

• Johnson defended the government’s record on health spending, saying “huge” sums were being spent in this area. He said:

We have invested already in the health and social care sector in huge quantities throughout the pandemic. And I think the whole country is massively grateful to healthcare workers and social care workers for what they have done.

About £52bn went into the NHS just to help cope with the pandemic, £1.5bn into social care, and £35bn to support local councils in all sorts of ways.

• He defended the decision not to announced a pay rise for health and social care workers in the budget, saying that many care workers were in the private sector, and that the living wage was rising.

• He said that having the Treasury open a campus in Darlington would be “fantastic” and that some of his own ancestors were bakers in the town.
  
  

Boris Johnson has also been speaking to reporters on his visit to Teesport in the north-east of England, and he rejected claims that levelling up spending was unfairly benefiting Conservative areas.

In the budget it was announced that more than £1bn was being spent on 45 new towns fund deals. Forty of the towns are represented by Tory MPs.

Johnson claimed this was just because has party had done well in winning these sorts of seats. He said:

I think if you look at the map, one of the functions of the election is clearly that there are a lot of Conservative-represented towns.

I’ve asked about this and I’m told that the criteria was entirely objective - it takes in data on poverty, employment and so on.

We want to unite and level up across the whole country and want to do it in a completely impartial way, so that’s what we are doing.

The towns fund operates alongside a complementary levelling up fund (pdf), and the budget also involved a decision that some local authorities will get priority one status for the levelling up fund, which means they will get money to help them to submit a bid for support. These decisions were also seen as politically biased because apparently wealthy areas represented by Conservatives, including Richmondshire, represented by Rishi Sunak, were included, while poorer areas were left out. Sunak has claimed that the list was based on an index of economic need.

Sir Keir Starmer has also accused the government of “pork barrel politics” in the way it plans to allocate funding though the towns fund. Speaking to reporters on his hospital visit, he said:

If we look at the towns fund there are 45 areas and 40 of those areas are where there is a Conservative MP.

I think lots of people would scratch their heads and say ‘what is going on here?’

This should be going where it is really needed and the government needs to publish the criteria for this because 40 of the 45 going to Conservative areas, this feels like pork barrel politics.

On the Today programme this morning Richard Hughes, chairman of the Office for Budget Responsibility (OBR), also criticised the government over its plans for health spending. He said that dealing with the legacy of Covid would require ongoing extra spending and that the government had not made provision for this. He said:

[The government has] provided basically no explicit additional resources beyond the coming financial year for the legacy of the pandemic for public services.

So if we think we’re going to need an annual re-vaccination programme, an ongoing test and trace capacity, to catch up on all the operations which the NHS hasn’t been able to do over the past year ... at the moment the government hasn’t set aside any additional resources for that activity, and in fact what it’s done is cut about £15bn of non-Covid spending beyond next year.

So it’s actually set itself up for more difficult spending rounds coming up this autumn, because it’s put aside even fewer resources to deal with those those legacy issues coming out of the pandemic.

On a visit to the Royal Derby hospital Sir Keir Starmer said people would be “astonished” to learn that day-to-day funding for the NHS was being cut in the plans set out in yesterday’s budget. He said:

I think a lot of people will be pretty astonished to know that the day-to-day funding for the NHS is being cut in yesterday’s budget, hidden in that budget was that cut ...

What’s coming next is the backlog of cases - 4.5 million people on waiting lists, understandably not been dealt with in the last year, so the NHS is going to have a really hard year and I think most people will be pretty astonished that the funding is being cut.

As PA Media reports, the budget documents revealed that there is a planned cut of £30bn in day-to-day spending at the Department for Health and Social Care from April of this year, falling from £199.2bn to £169.1bn. NHS England will see funding fall from £147.7bn to £139.1bn from next year, unless ministers commit to more funding for the health service.

Starmer said:

If you don’t fund the NHS day-to-day you are heading for trouble and if we have a health crisis we are going to have an economic crisis and so the two are linked.

Here are some more lines from the Institute for Fiscal Studies’s
budget analysis.

• The IFS suggested that Rishi Sunak’s long-term plans involved spending cuts that were so harsh as to be unrealistic. Paul Johnson, the IFS’s director, said the “spending plans in particular don’t look deliverable, at least not without considerable pain”. The budget involved cuts worth around £4bn a year in spending after next year, he said. He said that in theory this meant that departments with unprotected budgets, like justice and local government, faced real-terms cuts in 2022-23. But he said in practice he thought the government would have to spend more. He explained:

Are we really going to spend £16bn less on public services than we were planning pre-pandemic? Is the NHS really going to revert to its pre-Covid spending plans after April 2022?

In reality, there will be pressures from all sorts of directions. The NHS is perhaps the most obvious. Further top-ups seem near-inevitable. Catching up on lost learning in schools, dealing with the backlog in our courts system, supporting public transport providers, and fixing our system for social care funding would all require additional spending. The chancellor’s medium-term spending plans simply look implausibly low.

• Johnson said that freezing the higher rate tax allowance could create almost one million more higher-rate tax payers by the middle of the decade.

By 2025 we could have over 5 million higher rate taxpayers compared with the 4.1 million we currently have and far higher than the 3 million there were in 2010.

• He said that Rishi Sunak had opted for the “least progressive way of raising income tax”.

• Johnson said the Covid support measures were “erring on the side of generosity”.

• He said that, on income tax and corporation tax, Sunak had performed “screeching U-turns on Conservative policy over the last decade”. (See 10.17am for more on the corporation tax one.)

• Johnson expressed doubts about the plan for “super deduction” tax relief for investment. He said:

The big rabbit out of the hat was the super deduction for investment. Effectively this is a temporary subsidy for investment in plant and machinery. It has been welcomed as a great boost for investment, but is it a good idea? As a short term fiscal stimulus it might have something going for it. As a tax policy I worry. It will favour investment in physical assets rather than intangibles in ways which will distort behaviour. It will subsidise investments that would not be economically viable without the subsidy. And, to quote the OBR again, by bringing investment forward its positive effects will “go into reverse” in subsequent years.

The Irish foreign minister, Simon Coveney, has launched a scathing attack on the British government, saying it cannot be trusted to stick to a deal.

Coveney said Downing Street’s move yesterday to unilaterally change the administration of the Northern Ireland protocol broke that part of the Brexit deal and broke the UK government’s commitments. He told RTE’s Morning Ireland programme:

The EU are negotiating with a partner they simply can’t trust.

That is why the EU is now looking at legal options and legal action which means a much more formalised and rigid negotiation process as opposed to a process of partnership where you try to solve the problems together.

The comments indicated Dublin’s support for a strongly worded European commission statement that accused the British government of breaking international law for a second time.

The Institute for Fiscal Studies has criticised Rishi Sunak’s plans for an abrupt end to the £20 a week increase in universal credit, calling the decision not to phase out the uplift “remarkable”, my colleague Larry Elliott reports.

In his morning interviews Rishi Sunak also defended his decision to freeze the personal allowance and high rate income tax thresholds. These moves were “very progressive”, he told Sky News. He said:

Freezing personal tax thresholds is a progressive way to raise money.

I think crucially what people need to understand is that no one’s take-home pay that they have today is affected or lowered by this policy.

What it does do is remove the incremental benefit that they might have experienced in future as inflation fed through to their wages.

Also crucially, those on higher incomes are affected more by this policy - it is a very progressive policy and that is something that has been noted by independent think tanks that are respected, like the Institute for Fiscal Studies and others who have made the point that the richest 20% of households, for example, will end up contributing I think 15 times more than those on the lowest incomes.

That is why this is a fair way to help solve the problems that we need to.

The biggest tax rise in the budget yesterday was the planned increase in corporation tax. Rishi Sunak claimed that, even at 25% (the rate coming in from April 2023 for companies with profits of more than £250,000), this rate would still be competitive. He told LBC:

Even after the increase in corporation tax, which remember is not going to happen for a couple of years from now, so after we’ve got through this and started recovering, we will still have a lower corporation tax rate than all of our large G7 economy countries ...

The OECD numbers that compare countries on a comparable basis show that we would have the lowest effective corporation tax rate out of the G7, the fifth lowest in the G20 and, with the ‘super deduction’, we shoot up from 30th to first over the next two years in terms of this being an attractive place to invest.

So I feel very confident that this will continue to be an internationally competitive country with initiatives like free ports, for example, our investment in R&D and innovation - we are a fantastic economy, you are seeing that today.

But perhaps more interesting is what Sunak’s move says about traditional Conservative thinking on tax. This morning Simon Jack, the BBC’s business editor, posted this on Twitter.

An hour or so later his colleague Mishal Husain asked Sunak if he now rejected the idea that lower tax rates led to higher tax receipts. Twice Sunak dodged the question. When Husain pressed him on this a third time, Sunak said that countries did need “an internationally competitive tax environment” to support businesses. But then he made two arguments that effectively implied cutting corporation tax over the last decade - one of George Osborne’s main priorities - was a mistake.

He said that, although the cuts had coincided with revenue from corporation tax going up, that was because of the economic recovery, and not because of the cuts themselves. He said:

If you look at the record over the past several years, corporation tax receipts have risen, as the corporation tax rate has come down, but the vast majority, if not all, of that increase in corporate tax receipts is probably more likely due to the cyclical recovery in corporate profits, which took a real hammering in the last crisis and have taken quite a long time to recover.

Sunak also said the corporation tax cuts were intended to encourage business investment. But that was not the case either, he said.

There was an idea that they could help spur business investment. And what we’ve seen over the past few years is that we haven’t seen a step change in the level of capital investment that businesses are doing as a result of those corporation tax decreases. That’s similar to research that has shown something similar in the US as well.

Sunak said that was why he was trying the “super deduction” plan instead to encourage investment.

This is an important concession. These are from HuffPost’s Paul Waugh.

And this is from the New Statesman’s George Eaton.

Rishi Sunak, the chancellor, has given a series of interviews this morning although, as usual, much of them covered similar ground.

Rather than wrap them all up together in one post, I will write them up topic by topic.

Asked to defend his decision to go ahead with the cut to the £20-per-week universal credit uplift - albeit six months later than originally planned - Sunak made two arguments. He suggested that this was more generous than phasing it out gradually over the next six months; and he said other measures on pay and training would help people likely to be affected.

Asked on the Today programme why he was creating a “cliff edge” with the withdrawal of the uplift at the end of September, he said:

Because we are taking a more generous approach and keeping it in full without phasing it out.

It is in full all the way through to the end of September because I think that is a more generous approach.

And it is right to also focus on all the other things that we are doing to help families in that situation and those things don’t phase out.

The national living wage increase is something that will benefit families over the whole year, the local housing allowance uplift of £1bn - that’s a million-and-a-half families who will get up to £600 help with their rent payments next year, 3.5 million families getting £150 for their council tax bills.

Our lifetime skills guarantee is here to stay, it is permanent, the kickstart scheme is going to help a quarter-of-a-million young people - many of those people will be on universal credit and will be able to benefit from all of these initiatives, and helping people into good-quality work is absolutely our focus.

And, as the economy reopens, it is right that that is our focus because that is the best way to help people over time to create a better life for themselves, and that is why we are throwing absolutely everything we have at protecting, supporting and creating as many jobs as possible.

Good morning. We live in an age of instant news, but budgets are political events that take time to analyse in full and the day after is often the point when their full implications start to become a lot clear. Today is no exception. Rishi Sunak, the chancellor, has been doing the morning broadcast interview round, but as he’s been on air thinktanks have been out with new reports saying his measures will increase poverty.

The Joseph Rowntree Foundation, a thinktank focusing on poverty, says Sunak’s decision to go ahead with the reversal of the £20 per week universal credit uplift, albeit delayed for six months, will plunge 500,000 people into poverty. It says:

The government’s decision to cut universal credit and working tax credit in six months – just as the furlough scheme ends and unemployment peaks – will pull 500,000 people including 200,000 children into poverty as we head into winter.

The OBR’s latest forecasts show that unemployment is expected to increase by a further 500,000 people between now and the peak towards the end of the year. Despite that, the government has chosen to cut the main rate of unemployment support to its lowest level since 1990.

And the Resolution Foundation, a thinktank focusing on living standards, especially for the low paid, says the poorest households will see their incomes fall by 7%. It says:

The poorest households will face a 7 per cent fall in income in the second half of 2021-22 due to the removal of the £20 a week universal credit uplift, which will take the basic level of benefits back to levels not seen since the early 1990s at the same time as unemployment is due to peak.

I will be summarising what Sunak has been saying in all his interviews shortly.

Here is the agenda for the day.

9am: Richard Hughes, head of the Office for Budget Responsibility, speaks at a Resolution Foundation budget analysis event.

9.30am: The ONS publishes reports on Covid and the economy, and attitudes to vaccines among the over-80s.

10am: The Institute for Fiscal Studies publishes its full budget analysis.

11am: NHS test and trace publishes its weekly performance figures.

12pm: Downing Street is due to hold its lobby briefing.

12.30pm: Nicola Sturgeon, Scotland’s first minister, takes questions in the Scottish parliament.

2.30pm: The Commons women and equalities committee takes evidence from various experts on vaccine take-up among BAME communities and women.

Politics Live is now doubling up as the UK coronavirus live blog and, given the way the Covid crisis eclipses everything, this will continue for the foreseeable future. But we will be covering non-Covid political stories too, like the budget reaction, and when they seem more important or more interesting, they will take precedence.

Here is our global coronavirus live blog.

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