Budget 2021: Sunak prepares to pump cash into COVID recovery as tax rise debate continues

The chancellor is expected to give £408m to help museums, theatres and galleries to reopen in England as coronavirus restrictions ease.

Rishi Sunak will announce the support for the badly-hit culture sector in his Budget on Wednesday, as many theatres mark a year of forced closure this month.

The Budget will also include a "significant chunk" of a £300m sports recovery package being allocated to cricket, as fans prepare for the sport to resume this summer.

But it comes as debate rages on how to pay for the extra spending, after latest figures showed public sector net debt rose by £316.4bn in the 10 months since the start of April, almost entirely due to the coronavirus pandemic.

The Office for National Statistics said state debt increased to £2.1trn by the end of January - around 97.9% of GDP - the highest debt to GDP ratio since the financial year ending 1963.

Watch: Ken Clarke urges Rishi Sunak to protect 'young and poor' and ditch pension 'triple lock'

Former chancellor Ken Clarke told Sky News that Mr Sunak should ditch the government's triple lock on pensions, lift taxes on older voters, and be wary of raising corporation tax.

The chancellor is said to be considering raising corporation tax to as much as 25% from 19%.

Shadow chancellor Anneliese Dodds wrote in The Guardian: "There is a clear long-term case for rises in the rate of corporation tax - as well as action against loopholes - where the Conservatives have made us an international outlier for a decade.

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"If there were a sensible plan to raise the rate across this parliament, of course Labour would look at that carefully - but now is not the time for immediate tax rises."

Lord Hague, a former leader of the Conservative Party, said taxes would have to rise to pay for what had been spent on things such as the furlough scheme during the pandemic.

He wrote in The Daily Telegraph: "It pains me to say, after spending much of my life arguing for lower taxes, that we have reached the point where at least some business and personal taxes have to go up."

The former foreign secretary added that anyone opposing some form of tax rise in the current climate was buying into "dangerous illusions".

Prime Minister Boris Johnson has dismissed the idea of penalising consumers and motorists, telling The Sun that he wanted to use the UK's ambition for carbon neutral status by 2050 to "generate high quality, high skilled, high wage jobs", rather than hiking taxes on carbon-intensive foods such as meat.

The newspaper also said fuel duty would be frozen for the 10th consecutive year.

Watch: Rishi Sunak plans £520m Help to Grow scheme for small firms

Among the spending promises expected in Wednesday's Budget are:

• An extra £300m to be pumped into the £1.57bn Culture Recovery Fund

• £90m for national museums and cultural bodies to keep them afloat until they can open their doors on 17 May at the earliest and £18.8m for community cultural projects

• £77m for the devolved administrations in Scotland, Wales and Northern Ireland to help cultural groups there

• £150m Community Ownership Fund so community groups can take over struggling pubs or other community assets to keep them going

• A £520m package for small businesses to boost their software and training under the Hope To Grow scheme

• The furlough scheme is expected to be extended beyond its April end date, as official figures place the jobless rate at a five-year high of 5.1%

Regarding the arts sector measures, the chancellor said: "Throughout the crisis we have done everything we can to support our world-renowned arts and cultural industries, and it's only right that we continue to build on our historic package of support for the sector.

"This industry is a significant driver of economic activity, employing more than 700,000 people in jobs across the UK, and I am committed to ensuring the arts are equipped to captivate audiences in the months and years to come."

Watch and follow the Budget live on Wednesday with special coverage and analysis from 12.30pm.

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