Thursday 23 January 2020 3:52 pm

Chancellor pledges shift on capitalism but promises not to ‘abandon ship’

Chancellor Sajid Javid has said a new “balance” between capitalism and people is needed in the UK, but promised that the government is not “abandoning ship”.

Speaking at the CBI lunch in Davos today, Javid told business leaders there was a “new chapter” opening under Boris Johnson’s majority government, which yesterday finally passed the key Brexit legislation known as the Withdrawal Agreement Bill.

Javid noted the UK’s productivity gap has led to regional inequality which is “a national disgrace”.

“There’s been a failure of economic policy in recent decades that started even before the financial crisis,” Javid said.

“We’ve been too focused simply on growing the pie without making sure that everyone got their fair share. We’ve allowed our environment and our society to come too far down our list of priorities. We didn’t focus enough on people and places.”

In order to “level up” Javid said the government would have to invest to create “the high tech, high wage, low carbon jobs of the future”. He hinted at a new plan to boost skills diversity in the north, which will be revealed as part of the Budget on 11 March, and urged businesses to play their part.

At the same time the government will publish its national infrastructure strategy, which will seek to address climate change as well as regional connectivity.

The Budget will also introduce new fiscal rules, which Javid stressed would remain “sensible”.

He told the audience: “Make no mistake, I’m an unapologetic fiscal conservative. It’s taken a decade of hard work by the British people to turn our public finances round and we aren’t going to throw that away.

“We were elected on a platform to manage the public finances responsibly, so it’s a matter of trust as well as economic credibility that we deliver on that promise to the British people.”

Javid added: “This isn’t about abandoning ship. Good economics is good politics. No one will forgive us if we sink the economy by forgetting the core principles of economic management.”

A free market economy with a low tax model was “the only way to create wealth and fund our public services”, he added.

“The British people were presented with a completely different model at last month’s election and decisively rejected it,” Javid said. “But we do need to strike more of a balance between the sound economics of capitalism and supporting our people.”