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Tue, 4 August 2020

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Tory ex-advisers urge Rishi Sunak to scrap fiscal rule and focus on ‘jobs, jobs, jobs’

Tory ex-advisers urge Rishi Sunak to scrap fiscal rule and focus on ‘jobs, jobs, jobs’

The Chancellor will set out an economic update on Wednesday. (PA)

3 min read

A host of Conservative former Number 10 and Treasury advisers are urging Rishi Sunak to prioritise saving jobs over “economic orthodoxy” when he unveils extra coronavirus help on Wednesday.

In a new report for the centre-right think tank Onward, former aides to Theresa May, David Cameron, George Osborne, Philip Hammond and Sajid Javid say the Chancellor must avoid long-term “labour market scarring” with a focus on “jobs, jobs, jobs”.

And they say he should be prepared to delay a key Conservative manifesto borrowing pledge in order to do so.

Mr Sunak will give an economic update on Wednesday against the backdrop of a sharp downturn following months of the coronavirus lockdown.

In the report, the former advisers call on the Chancellor to bring in new fiscal rules, delaying the Conservative manifesto promise to get debt falling as a share of GDP to 2024.

They argue that Mr Sunak should, however, stick to the Tory vow to keep debt interest below six percent of GDP in a bid to show that the Government is serious about containing borrowing costs over the longer-term.

Mats Persson, a former special adviser to David Cameron and Sajid Javid, said: “The scale of the current crisis must be matched in kind by the response, that allows the kitchen sink to be thrown at the recovery now but sees debt beginning to fall by the end of this Parliament. 

“This is not a time for chasing short-term headlines or tinkering with micro changes that will achieve little."

The group of former aides is also calling for a “sweeping” package of tax reforms to ensure that borrowing is brought under control “equitably”, with a wide-ranging review of existing reliefs, a revaluation of council tax and a crackdown on “distortions” that benefit technology giants.

“Any immediate tax cuts should be focused on cutting the cost of employment through reducing the burden of employer NICs [National Insurance Contributions], rather than a VAT cut aimed at boosting consumption,” they say.

The Government is also urged to set up a new debt restructuring agency to manage an estimated £30bn in government-backed loans handed out during the crisis that are expected to go bad. 

Such a move will, Onward argues, ensure that high levels of debt stemming from the pandemic “do not become a drag on investment and the economic recovery”.

'RIGHT TO RETRAIN'

Elsewhere the think tank is calling for “rapid action to prevent labour market scarring”, including a boost to the Government’s army of Universal Credit work coaches, a guarantee that every young person will have the chance to “earn, train or serve their community”, and a new ‘Right To Retrain’ for adults backed up with a £50,000 repayable loan to help them study or train.

The team of advisers say the government should also double further education funding in a bid to give colleges “five years of funding certainty” to help them equip people with education and skills. 

Launching the report, Onward director Will Tanner, a former special adviser to Theresa May, said: “The Chancellor must focus his immediate attention on creating jobs, jobs, jobs. That means prioritising any tax cutting measures at relieving pressure on employers.”

Raoul Ruparel, former SpAd to David Davis and Mrs May added: “For any economic recovery to be sustained the policy package must address both jobs and skills to ensure we do not see irreparable long term scarring from this crisis and to improve the UK’s competitiveness going forward. 

“Furthermore, it must make sure that near record high levels of corporate debt do not undermine investment and therefore the recovery." 

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