Former chancellor Sajid Javid urges Rishi Sunak to focus on growth not austerity after pandemic

Former chancellor Sajid Javid is urging his successor Rishi Sunak to focus on growth not austerity when the UK comes out of the coronavirus pandemic.

He has written a blueprint for how the country could bounce back from the current crisis – a recovery which he said would be derailed by tax rises or spending cuts.

The report, written with the Centre for Policy Studies think tank, suggests it is increasingly unlikely the UK will see a 'V-shaped' recovery. 

This is the idea that the steep decline in GDP can be reversed just as sharply once the country comes out of lockdown.

But Javid says the need to maintain social distancing and the depth of the hit to consumer and business confidence over the past few months will make that virtually impossible.

The former cabinet minister argues that the country will need a dynamic private sector and low taxes, as well heavy investment in infrastructure to drive growth and prevent stagnant productivity.

He is warning the crisis will exacerbate regional disparities, saying the UK Government’s commitment to “levelling up” is now more critical than ever, and is calling for a review of the tax system and a rewriting of the fiscal rules to make that happen.

Javid’s recommendations include significant temporary cuts to National Insurance and VAT, warning tax increases at this time would be “self-defeating”.

That comes after reports suggest Sunak is drawing up plans for deferred tax rises and cuts to public spending in his autumn budget, after delivering further short-term fiscal relief next month.

The man he replaced in the Treasury is also calling for major reforms to planning rules such as fast-tracking reclassification of the Green Belt in England, a council tax band revaluation in England, the establishment of a British infrastructure bank, more city deals and increasing the powers of devolved authorities.

The MP for Bromsgrove, who served in five cabinet roles for three different prime ministers, 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.”