The Government’s immediate focus must be “jobs, jobs jobs” but debt must also be falling by 2024, former advisers to five Tory prime ministers and chancellors have warned.
Economic advisers to George Osborne, David Cameron, Theresa May, Philip Hammond and Sajid Javid have set out a plan for the UK’s recovery from coronavirus which includes a national debt restructuring agency and an unprecedented skills and jobs package.
Chancellor Rishi Sunak must be prepared to focus his full efforts on jobs as the extraordinary nature of the pandemic demands an urgent response, the former No 10 and Treasury advisers write in a report for think tank Onward published on Monday.
They also call for £30 billion to be invested in struggling firms across the country and for new fiscal rules to be brought in to create short-term flexibility, but which taper as the recovery continues.
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 ParliamentMats Persson
The report, entitled Bounce Back and written by Mats Persson, Adam Memon, Raoul Ruparel, Tim Pitt, Will Tanner and Neil O’Brien, comes as Mr Sunak prepares to make a statement announcing his plans for the next stage of the UK’s economic recovery in the Commons on Wednesday.
The recommendations proposed in the report include introducing new fiscal rules that delay the Conservative’s manifesto pledge to have debt falling as a share of GDP to 2024, but which maintain the Government’s commitment to keep debt interest below 6% of GDP.
Also highlighted is a potential sweeping tax reform to ensure borrowing is brought under control without harming growth – including reviewing the 1,100 existing tax reliefs.
The former advisers suggest that £30 billion should be invested directly into high-growth companies such as the British Business Bank, British Growth Fund and British Patient Capital to ensure firms can access capital to invest, and that a new restructuring agency should be established to ensure that loans which go bad do not become a drag on the economy.
In addition, the Government is advised to hire 13,000 Universal Credit work coaches to prevent labour market scarring, to allow adults without a degree to receive a £50,000 repayable loan funded by the National Skills Fund and to double further education funding and launch a radical wave of reform of the sector.
Mr Tanner, former special adviser to Theresa May and now director of Onward, 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.”
Mr Persson, former special adviser to David Cameron and Sajid Javid added: “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.”
And Mr Ruparel, former special adviser to Theresa May and David Davis said: “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.”