Johnson and Sunak draw up plans for post-Covid recovery

Boris Johnson and chancellor Rishi Sunak are working on a pre-Budget “recovery plan” outlining medium term proposals to boost investment and skills as the UK emerges from the coronavirus crisis.

The plan will be published in the week starting February 22, said government officials, as the prime minister releases a “road map” out of the current Covid-19 lockdown in England and starts to set out proposals to rebuild the economy.

Mr Sunak will use his March 3 Budget to provide more details of his medium term strategy and what he hopes will be the final phase of the emergency government support for the economy that has so far cost £280bn.

State support programmes for companies and households are currently due to expire at the end of March or — in the case of the furlough scheme the end of April — and Mr Sunak is expected to use his Budget to extend them until the economy is able to reopen.

“Rishi is expecting this to be the last time he talks about the immediate term support package,” said one of the chancellor’s allies.

Mr Johnson has also hinted that Mr Sunak could extend the £20-a-week uplift to universal credit — due to end on March 31 — until the full effects of the pandemic have receded.

The rule of thumb must be that business support remains in parallel to restrictions and that those measures do not come to a sudden stop, but tail off over time

The prime minister said last week the government would “look after people throughout the pandemic” and would “make sure people don’t suffer” as lockdown restrictions persist.

Although Mr Sunak would like to scale back the emergency government support at the earliest opportunity, his allies said he and Mr Johnson agreed that “caution” was needed in easing the lockdown restrictions to avoid any risk of a third wave of coronavirus infections.

Mr Johnson said last week that schools in England could reopen on March 8 at the earliest, but Conservative MPs fear that a return to normality for industries including hospitality and aviation could take considerably longer.

Mr Sunak’s key Budget judgments — including the expected extension of state support schemes — will be taken in mid-February after ministers and scientists have examined the progress of the Covid-19 vaccine programme and the evolution of coronavirus.

But it is a sign of growing confidence inside the government that the battle against Covid-19 is being won that Mr Johnson is prepared to publish a recovery plan for the economy in the last week of February.

However, business is anxious that emergency government support is not withdrawn too soon.

Tony Danker, director-general of the CBI, the employers’ group, said this month: “The rule of thumb must be that business support remains in parallel to restrictions and that those measures do not come to a sudden stop, but tail off over time.

“Just as the lifting of restrictions will be gradual, so must changes to the government’s sterling support to businesses.”

The CBI, in a Budget submission, called for the extension of the furlough scheme to the end of June, and the continuance of value added tax and business rates relief.