Sajid Javid’s resignation earlier this year ensured that he became only the second Chancellor in modern times not to deliver a Budget. So he has taken the next best course and, the Treasury being unavailable, he has issued one instead from the Centre for Policy Studies.
This is good news for at least three reasons. First, it helps British politics when former senior Ministers, instead of just going off to make money, keep thinking, going and contributing.
Second, because the thrust of the CPS proposals is sensible. Like this site though in more detail, he wants the Government as we enter “the new normal” to go for growth.
Third, Javid will have been shaped by his Treasury experience while writing. Don’t be surprised to see his successor, Rishi Sunak, take bits of this Javid Budget into his Sunak Budget, whenever it comes.
On this site today, James Heywood of the CPS sets out some of the report’s main ideas. It contains some 60 recommendations, but the thrust of its macro and micro thinking seems clear enough.
On the macro side, Javid and company want to ease up on the fiscal rules until the economy returns to pre-Coronavirus levels of GDP, and for the Bank of England to target nominal GDP rather than just inflation.
This would go hand in hand with tax cuts rather than tax rises – such as a reduction in VAT, and aligning the threshold for Employer’s National Insurance with the £12,500 personal allowance for Income Tax.
Essentially, the CPS is suggesting that borrowing takes the strain in the short-term, because growth will hopefully bring in the tax receipts to reduce it in the medium-term, bringing the Budget back into balance.
On the micro side, the measures the report suggests include a time-limited labour market programme focused on young people living in unemployment hotspots, a car scrappage scheme, and a broader “skills levy”.
Those who remember Stephen Crabb’s leadership bid in 2017 may recall Javid’s enthusiasm then for infrastructure spending. The report wants more of it, including a major road improvement programme.
Where we suspect that the CPS especially anticipates Treasury thinking is in its support for “shifting the burden of taxation away from income and investment in favour of fairer property taxes and tightening reliefs for high earners”.
The former Chancellor has always seemed to us, for all his real interest in social justice, to be a bit of a Thatcherite at heart, so it’s interesting to see this shift in thinking.
Our sympathies were with him when he left government, and Boris Johnson doesn’t seem to have wanted him to go. If Penny Mordaunt can be rehabilitated, we don’t see why others can’t too, including Javid.
The Prime Minister doubtless wouldn’t want the former Chancellor too near his successor, so the latter may have to see others pick up his ideas.
But “the Saj” could do a job at Work and Pensions, or at Transport if Grant Shapps moves up, and still has a lot to offer, as this report suggests.