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Sajid Javid planned to slash income tax in Budget before shock resignation as chancellor

Resolution Foundation brands policy ‘rubbish for country’ and lowest earners

Ashley Cowburn
Political Correspondent
Saturday 29 February 2020 13:23 GMT
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The former chancellor resigned when he was told to sack his advisers
The former chancellor resigned when he was told to sack his advisers

Chancellor Rishi Sunak is under pressure to cut 2p from the basic rate of income tax, after his predecessor Sajid Javid unveiled key measures that would have been included in his own Budget.

The proposals – now providing a benchmark for the Budget in under a fortnight – Mr Javid was preparing to announce also included reductions in stamp duty and a network of quick-charging points for electric vehicles.

It comes after he dramatically quit as chancellor during Boris Johnson’s reshuffle, refusing to accept the condition of sacking his own advisers as part of an attempt by No 10 to reign in the power of the Treasury.

Mr Sunak, formerly the chief secretary at No 11, was rapidly promoted by the prime minister and will now be responsible for delivering the Budget in the House of Commons on 11 March.

With manifesto commitments and major infrastructure projects, Mr Javid told The Times there would be £200bn of extra spending over the course of this parliament, which would “be the biggest fiscal expansion in peacetime”.

He said the centrepiece of his Budget would have been a 2p cut in the basic rate of income tax, telling the newspaper: “The one I worked up was a cut in the basic rate of income tax, the biggest cut in basic rate of income tax in decades.

“I planned it to go to 18p – 2p off – with an ambition to get 15p in the pound by the end of the parliament.”

He added: “I passionately believe that where you can afford it tax cuts are a good thing and now that we have a majority, we should be much more aggressive not tax cuts for the long term – and go much further than our manifesto.”

According to The Times, a 2p reduction from the basic rate of income tax would cost around £10bn a year, affecting almost 26 million UK taxpayers, but with those in the higher tax brackets benefiting the most.

Torsten Bell, the chief executive of the Resolution Foundation, said it was a “rubbish policy for the country”, adding: “£11bn lower revenues is a cost of 2p basic rate cut. Lowest earners = zero benefit.”

Earlier this week, Mr Javid used his resignation speech in the commons to warn that the “critical” rules he drew up – to balance the budget and reduce debt – must not be abandoned, or taxes raised.

“It would not be right to pass the bill for our day-to-day consumption to our children and grandchildren,” Mr Javid said.

New chancellor Rishi Sunak has a big task ahead of him

He insisted he still supported the prime minister but joked about the “Cummings and goings” that triggered his departure two weeks ago – a clear reference to the role of the controversial chief aide.

And he issued a warning if the Treasury was no longer part of “checks and balances” on No 10, after Johnson imposed a joint unit of advisers on his successor, Mr Sunak.

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