Sajid Javid warns against return to austerity

Former Chancellor Sajid Javid has used a new report to warn against a return to austerity as the UK economy struggles with the effects of the coronavirus crisis.

Setting out a series of recommendations to the government on how to kickstart the economy and minimise the long-term damage from the coronavirus crisis, Javid argues that that it is now increasingly unlikely that we will see a V-shaped recovery. The impact of the crisis, the need to maintain social distancing, and the hit to consumer and business confidence, represent formidable headwinds to renewed economic growth.

The report, After the Virus, has been published by the Centre for Policy Studies and highlights that the government’s immediate priority should be to prioritise growth, rather than derail the recovery with tax rises or spending cuts. Together with Javid, the think tank suggests a new fiscal rule in which the government brings the current budget into balance within three years, but only when a stable recovery has been achieved.

The report contains 63 recommendations, including: significantly reducing the cost of hiring by cutting employer’s National Insurance; bringing forward and enhancing plans for major investment in infrastructure and left-behind regions; encouraging businesses to invest in their premises and social distancing measures by allowing improvements to be disregarded for the purposes of business rates valuation; and a council tax revaluation, with reviews every three years, reforming bands and rates to make them fairer.

Javid said: “If we want to secure the strongest possible recovery, it’s essential that no stone is left unturned. This report sets out more than 50 ideas for maximising growth, supporting businesses and creating new jobs at speed. My colleagues in government have done a fantastic job supporting the economy so far. I hope this report proves helpful for the task that lies ahead.”

Robert Colvile, director of the CPS said: “This report sets out a programme for economic recovery which combines the new drive for levelling up and public investment and with the pro-market, low tax agenda the CPS has always championed. This is a vision for growth driven by a private sector with the incentives and flexibility to invest and create jobs, empowered by an infrastructure revolution.”