Javid: Tax cuts would help UK to cope with a no-deal Brexit
BRITAIN should respond to a no-deal Brexit with tax cuts, increased spending on infrastructure and policies that will draw “global talent” to the country, Sajid Javid has suggested.
The Home Secretary told a specially convened Cabinet meeting last week that the Government should introduce new “tax incentives”, thought to include targeted cuts, to help the economy withstand the effects of leaving the EU without an agreement.
The intervention, seen as a rebuke of Philip Hammond’s insistence the Treasury could not afford tax cuts, will be welcomed by senior Brexiteers who have urged the Chancellor to prepare radical reforms of the economy to take advantage of the “opportunities” of Brexit. It is likely to be seized on by EU leaders, who fear the UK will use Brexit to transform into a low-tax economy that could draw business away from the Continent.
Today, Priti Patel, the former cabinet minister, and Steve Baker, who resigned as Brexit minister in July, accuse Theresa May’s officials of selectively leaking sections of a separate presentation by Mark Carney, the Bank of England governor, in order to create fear over the consequences of voting down Mrs May’s Chequers plan.
Hours after the meeting it was reported that Mr Carney had warned ministers house prices would fall by 35per cent after a no-deal Brexit.
The Sunday Telegraph has learnt that Mr Carney also briefed the Cabinet on the implications of a Canada-style trade deal with Brussels, of the kind
advocated by David Davis and Boris Johnson.
Despite Downing Street’s insistence that there is “no alternative” to the Chequers plan apart from a no-deal exit, Mr Carney included a Canada-style trade arrangement within a “harmonious” exit scenario that contrasted with the “severe” possibilities that could arise from leaving without a deal. Such a deal would allow the economy to grow, albeit at a slower rate than under the Chequers plan, he said.
The Home Secretary’s intervention will be seized on by Tory MPs who claim Mr Carney failed to take into account radical measures a government could introduce to mitigate the effects of a no-deal exit. It echoes a set of pro- posals he made around the time of a failed leadership bid by Stephen Crabb, which saw the two ministers run on a joint ticket under which Mr Javid would have become chancellor.
Speaking in July 2016, Mr Javid called for emergency corporate and personal tax cuts to avert a Brexit slump. The then business secretary also suggested tax breaks for compa- nies to boost investment and proposed a doubling in tax credits for research.
Mr Javid is separately leading a push to deny EU citizens preferential rights to live and work in the UK after Brexit.
Meanwhile, senior Tories are calling for Mrs May to use the party’s annual conference to announce a timetable for her departure. One said: “There’s been a lot of chatter about this in the parlia- mentary party. It’s long overdue.” But in tomorrow’s BBC Panorama, Mrs May attempts to bolster her credentials as a tough negotiator.
Asked what had become of her reputation as a “bloody difficult woman”, she said the characteristic was “still there” but “you’re bloody difficult when the time is right – and when it really matters”. Writing in The Sunday Telegraph, Ms Patel accuses No10 officials of “issuing selective ‘observations’” of Thursday’s meeting, “gloating at Carney’s ‘spicy’ assessment of impending doom if we refuse to cave in”.
A Downing Street spokesman said: “This is wholly untrue. No10 did not brief out that 35per cent figure.” Mr Carney has said the figures were worstcase scenarios.