THE UK Government’s furlough scheme is to be extended, Kwasi Kwarteng, the UK Government’s Business Secretary, has confirmed.

And, a day before the Budget, the Cabinet Minister also indicated the reduced 5% rate of VAT to help the hospitality sector would also be extended.

Mr Kwarteng made clear Rishi Sunak’s focus in tomorrow’s set-piece fiscal statement to the House of Commons would not be on balancing the books but, rather, on maintaining help to businesses and households as Britain eased itself free from the effects of the coronavirus.

“For now, what we have to do is support businesses, individuals, families, through what has been an extremely difficult time,” the Secretary of State told BBC Breakfast.

“We have got another three years to run in the parliament and the Chancellor will be looking to reduce the deficit. For now, the real emphasis is on trying to provide critical support.”

Last month, Boris Johnson made clear the UK Government would not “pull the rug” on support for businesses and families and at the weekend the Chancellor said "there is more to come" in relation to Covid support, noting how it was right that this "aligns" with the road-map out of lockdown.

Expectations are high that the Chancellor will extend various Covid aid packages until July, including not only the furlough scheme and the reduced VAT rate but also business rate relief, the stamp duty holiday in England and the extension to £20 weekly rise in Universal Credit.

Asked directly if the Government’s job support scheme would be extended, Mr Kwarteng replied: "The Chancellor has already indicated that we will be extending furlough; that has been part of a public announcement."

He also noted: “It's a fairly good assumption that, while lockdown persists, there will be additional support. It's really important we don't crush the recovery before it's happened and...to keep people's jobs going...to keep companies going, we need to continue providing support."

Mr Kwarteng said there would "perhaps be an extension" of the reduced 5% rate of VAT for the hospitality sector, which is also due to end on March 31.

However, he made clear the country could not “go on spending money forever” as analysts expect tax rises will have to begin this year, most likely in November when another Budget is due.

Lord Hague, the former Foreign Secretary, said: “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.”

He warned those who opposed some form of tax rises in the current climate were buying into “dangerous illusions”.

Such a view is at odds with some Tory MPs who want a low-tax economy and find themselves in alliance with Labour leader Keir Starmer, who has warned that now is not the time to increase levies on businesses and families.

Alongside the Budget, the Government’s independent economic forecaster, the Office for Budget Responsibility, will publish its latest predictions. It is believed that it will suggest the recovery will be boosted by the successful vaccination rollout.

In its November forecast, the OBR indicated the national debt could reach 105% of gross domestic product – a measure of the size of the economy – in 2020/21, with a record peacetime borrowing of £394 billion.

The Prime Minister has said he is now expecting the bounce-back from the pandemic to be “much stronger than many of the pessimists have been saying over the last six months or so”.

Ahead of tomorrow’s Budget:

*it was revealed nearly £410m will be released to support the badly-hit culture sector with around £40m going to the Scottish Government;

*a £300m summer sports recovery package will help cricket, tennis and horse racing;

*£57m for jobs and green energy in Scotland, including £27m for the Aberdeen Energy Transition Zone, which aims to transform north-east Scotland into a globally competitive hub for cleaner energies such as offshore wind and hydrogen;

*a £150m fund will help local communities save struggling pubs, sports clubs, theatres and Post Offices;

*a £520m initiative will be announced to support small UK businesses with training and software.

*£2.8m will help fund a joint UK and Ireland bid to host the 2030 football World Cup.

Meanwhile, the fuel duty freeze is set to continue as Mr Johnson made clear: “I firmly believe the economic recovery is going to be powered by White Van Man amongst others.”

Anneliese Dodds for Labour said businesses had been “calling for weeks and weeks for certainty around things like the business rates holiday extension” and “clarity” over the furlough scheme.

Amid speculation that Mr Sunak could impose tax rises in order to cut them again ahead of the next election in 2024, the Shadow Chancellor said the Tories were “focused potentially on party political issues, how quickly they could get any tax changes through; that’s not what’s needed for our economy right now”.

Ian Blackford for the SNP urged the Chancellor to take inspiration from Joe Biden by boosting his stimulus package rather than repeating the “failures of the past”.

“What the Covid pandemic has shown,” explained the party leader, “is the basic inequalities that exist in the UK and obviously we called right at the start of this to make sure there was enough financial support in place for everybody.”

Mr Blackford said he feared more austerity was in the pipeline, noting: “Everything that we’re seeing today is really on the back of what’s been the wrong choices that have been made over the last 10 years with taking cash out of people’s pockets rather than putting cash into them and we cannot go back to everything we’ve had over the course of the last 10 years.”

The Highland MP argued that the Covid aid measures had to be in place for as long as the economy was facing lockdown measures.

“The key thing really is that we need to make sure that we retain capacity within the economy, that we support businesses, we support individuals, so that they have got the tools that they need at their disposal to emerge from the removal of lockdown when it comes.

“So however long it takes, these support mechanisms have to be in place because if we end up in a situation that people are unemployed, and if we end up with a situation where businesses are having to close, then we deepen the problems,” added Mr Blackford.