Britain should reduce the National Insurance tax and pour money into infrastructure and the poorest regions of the country to boost the UK’s economic recovery from the coronavirus crisis, according to former chancellor Sajid Javid.
Javid, who left the Treasury as part of Boris Johnson’s February cabinet reshuffle, warned against a return to the austerity measures which the Conservative government turned to in the wake of the 2008 financial crisis.
In a report written by Javid and the Centre for Policy Studies think tank, he said the current crisis was likely to exacerbate the gap between rich and poor, and that the government’s plans to “level up” the economy which formed a major part of Boris Johnson’s election strategy last year were more important than ever.
He 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.”
Next month, Javid’s successor Rishi Sunak will set out a package of measures intended to pave the way for an economic recovery.
Among the recommendations in Javid’s report are cutting both National Insurance for employers and VAT, in a bid to boost employment and growth. It describes attempts to increase taxes as “self defeating”.
The report also suggests increasing infrastructure investment, bringing forward projects which are ready to build, and overhauling the current systems in place for delivery and planning of projects.
Robert Colvile, Director of the CPS added: “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.”
It comes as influential business group the Institute of Directors also recommended pumping money into the economy to boost the economic recovery.
In its own submission to the Treasury, the IoD suggested increasing the range of tax breaks companies can call on for research and development. It also suggested cutting employers’ National Insurance contributions.
Jonathan Geldart, director general of the Institute of Directors, said: “The July statement provides a perfect opportunity to pump-prime the economy for recovery.
“The government may want to hold back some ammunition until the Autumn, but directors have to make hiring and investment plans ahead of time.
“Now is the moment for the Treasury to reduce the cost of employment so companies can retain staff. As the furlough scheme winds down, jobs are at risk, so it will be crucial to soften the blow.”