Rishi Sunak has ruled out any further extension of support to businesses in England, despite the government forcing many to close for an extra four weeks because of rising coronavirus cases.
The chancellor told the Financial Times in an interview that he had taken into account the possibility of a delay to lifting lockdown when he designed support schemes in March.
“What we did was deliberately go big and go long in terms of the support, we erred on the side of generosity,” he said, adding: “We very explicitly said at the time that was to accommodate delays to the road map.”
The decision earlier this week by prime minister Boris Johnson to delay the final stage of ending the lockdown by a month means that many businesses — including nightclubs, music festivals and theatres — will be unable to open before late July. Pubs and restaurants will have to continue to operate with restricted capacity.
Sunak did agree this week to extend a moratorium on evictions of commercial tenants. But he would not bow to pressure to prolong other measures such as the furlough scheme, which starts to taper in July, and business rates relief.
“A typical pub might have received £36,000 direct cash from government this year,” he said. “I know businesses are having a tough time and . . . I sympathise with that.”
He added he had “every hope and expectation” that nightclubs would be able to open and social distancing measures be relaxed on July 19, the new date for full relaxation of restrictions outlined by the government.
Sunak spoke while on a tour of northern England to promote the government’s plan to “level up” prosperity across the UK.
In Darlington, he met the first civil servants recruited to work in the Treasury’s new northern campus that will be based in the County Durham town. He then went to Leeds, to visit the headquarters of the new UK Infrastructure Bank, which will back investment in project in sectors including clean energy, transport, digital, water and waste.
The bank will receive an initial £12bn of capital and £10bn of government guarantees and will help to unlock more than £40bn of private investment, the Treasury said.
“It is really exciting to see levelling up in action,” Sunak said. “I want to change the economic geography of our country.”
He said Leeds had a strong financial centre and its quality of life had attracted experienced City figures to work in the bank. They include chair Chris Griggs, formerly chief executive of British Land, the FTSE 100 property business.
The bank would “turbocharge” economic recovery. “It is going to make an enormous difference to lots of people’s lives all over the country. It will create jobs, drive growth and help meet our climate ambitions.”
However, Sunak refused to commit to bringing the UK’s largest infrastructure project to Leeds, as originally planned. The proposed eastern leg of the HS2 high-speed rail line, which would run from Birmingham to Leeds, is in doubt after the National Infrastructure Commission recommended it be delayed in favour of prioritising links between cities in the north and Midlands.
He said the government was considering “the best plan that we can effectively deliver that will make the most difference to people in the shortest possible time”. But he pledged that “connectivity between Leeds and the south, across the north, across the Midlands is going to improve, that’s for sure.” The final decision on the eastern leg is expected to be made in the autumn.
Asked about the recent rise in inflation, the chancellor said he was confident it could be kept in check. The price of consumer goods rose 2.1 per cent in the year to May, above the Bank of England’s 2 per cent target.
He said that “higher inflation and interest rates are risks I have to protect us from” and that it was important “the public finances are returned to a strong position over time”.