Former Chancellor says tax cut key for recovery — but outlook far bleaker than thought
FORMER CHANCELLOR Sajid Javid has laid out his post-coronavirus recommendations for the economy, calling for low taxation and a shake up of infrastructure decisions.
Sajid Javid reveals UK’s plan for economic recovery
Rishi Sunak’s predecessor has said a quick economic bounce back is not likely, and that the furlough scheme, along with other emergency spending measures, should be wrapped up by April 2021. The report, published with the conservative think tank Centre for Policy Studies, warns against a return to austerity, despute the fact the UK is looking at what "would be the largest annual fall in output on record, exceeding both World Wars".
The Centre for Policy studies was founded by Margaret Thatcher, and pushes for the principles of: free markets, small state, low tax, national independence, self determination and responsibility.
The report recommends reducing the cost of hiring new employees by cutting National Insurance costs.
Mr Javid said: "The Government needs to make jobs its core focus - not just to protect as many as possible, but to make it as easy as possible for them to be created and for people to move into them.”
"Tax employment less, and all other things being equal you will end up with more of it,” he said.
The report also recommends enhancing and fast tracking plans for major investment in infrastructure and regions that have been left behind to increase economic activity and give a long-term productivity boost.
A tax review, the report says, would deliver a moderate increase in revenue through improved incentives and higher growth.
As for immigration, the report recommends a visa scheme to “allow recent graduates from the top 50 academic institutions globally” to “attract elite talent and skills”.
The report doesn’t say how that should be measured though, as top university rankings can change from year to year.
Javid has also suggested pushing ahead with free trade agreements and reviewing the position of the Bank of England.
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One other recommendation made is the move to switch away from pension tax relief based on marginal rates to a flat bonus paid on contributions, regardless of your tax code.
The Conservatives have been flip-flopping on the subject of pensions, as the “triple-lock” stipulation in their election manifesto has become difficult to fulfil due to potential wage growth as furlough schemes wrap up.
Mr Sunak has been inundated with recommendations of how to improve the UK’s economic prospects.
Previous suggestions from other Tory MPs have included calls for a £15billion “recovery fund” by MP Bim Afolami and the Social Market Foundation.
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This would see the government pump money into ailing businesses and sell shares in those businesses when they have made a significant enough recovery.
The Labour Party has also made recommendations in a report in March, where it criticised the government for acting too slowly. It said it should underwrite a bigger proportion of wages for those who lose their jobs.
