SAJID Javid has promised Sun readers will benefit from a host of tax cuts to be unveiled in the Tory manifesto this month as he tears up his party’s spending rulebook.
Launching the Conservatives’ economic plan, the Chancellor announced new rules that will allow them to spend an extra £100billion on infrastructure projects over the next five years.
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He said the investment would create more jobs and higher wages, as well as creating improvements in the NHS, schools, environment, roads, rail and the UK’s digital infrastructure. And Mr Javid added: “It means that we can afford some tax cuts.
“We have worked out the numbers and — within these rules — have tax cuts, investment in infrastructure and balance the day-to-day funding of the economy.”
A top aide added: “These tax cuts will make a real difference in the pockets of Sun readers.”
‘HIGHEST CASH INJECTION IN 40 YEARS’
The investment would be the highest cash injection in 40 years, the Institute for Fiscal Studies says.
Mr Javid has already dropped a major hint he would abolish death duties — currently charged at 40 per cent on estates worth more than the tax-free level of £325,000 or £650,000 for a couple.
And during his leadership campaign, Boris Johnson pledged to increase the threshold to pay National Insurance from £8,632 to £12,500 and bump the higher rate of income tax from £50,000 to £80,000.
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The Tories have also come under pressure to reform stamp duty and maintain the freeze on fuel levies.
Aides yesterday said that the tax cuts would be funded from an expected growth in the UK economy following the PM’s Brexit deal.
Speaking under the wing of a Concorde at Manchester Airport, the Chancellor said his three new financial rules would allow the Government to splash £20billion a year on infrastructure projects.
His rules are to not spend more than is brought in, to only invest up to three per cent of GDP, and to keep an eye on borrowing costs.
‘A NEW ECONOMIC ERA’
He declared them the “new rules for a new economic era” and said: “If we stick to my rules and live within our means on day-to-day spending, we can afford the infrastructure revolution I’ve talked of and which is really levelling up across the country — investing more but keeping an eye on debt.”
And he added: “Conservatives believe that you ultimately raise more by taxing less and that if you work hard and get that promotion and you get that pay rise, you shouldn’t be worse off.”
But Ben Zaranko, a research economist at IFS, warned the challenge faced in delivering such huge investment in a short timescale could be finding “worthwhile and viable projects”.
He added: “Shortages in the number of suitably skilled construction workers, a dearth of ‘shovel-ready’ projects, and practical issues relating to delivery will be challenges the next government will need to think carefully about how to overcome.”
Other financial experts also took a cautious approach to Mr Javid’s spending announcement.
Syed Kamall, of the Institute of Economic Affairs, added: “Mr Javid has chosen to revise his fiscal rules in favour of hikes to public spending funded through more borrowing.
“While it is positive that the Chancellor stressed the importance of keeping debt in check, turning on the spending taps risks undermining the work of recent years to get the budget deficit under control after years of over-spending.”
James Smith, of the Resolution Foundation, said the plans mark “a dramatic shift” from current policy.
But Mr Javid defended his plan, saying his approach is “night and day” compared to that of Labour.
He said: “What I set out today is sensible stewardship of the economy, realising this is a good time to borrow, especially at these historically low interest rates — as long as you turn that borrowing into productive investment.”
