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6 Jul 2016 04:30pm

Sajid Javid sets out five-point plan for Britain in wake of EU exit vote

Business secretary Sajid Javid has set out a five-point economic strategy for Britain following the result of last month’s EU referendum

Writing in The Telegraph, Javid said his “ambitious” plan aims to make the most of the opportunities arising from the UK’s decision to leave the EU as well as mitigating the risks of leaving, ensuring short term volatility doesn’t turn into long term decline.

The business secretary’s first point is immediate action in order to ease uncertainty.

This includes ensuring EU migrant workers who were in the UK on the date of the referendum be guaranteed the right to remain in the UK as well as guaranteeing all EU economic grants already awarded to UK firms and regions until 2020.

“If someone came here legally, worked hard, paid their taxes and built a life for themselves, we shouldn’t tell them to pack their bags or use them as a bargaining chip. Nor should we leave employers in any doubt about the rights of their workers,” he said.

We would aim for zero tariffs on all products and, where possible, regulatory equivalence for services

Sajid Javid

He added, “We also need to start work right away on replacing the trade deals the EU has with other countries, and negotiating new ones of our own. In the weeks ahead I’ll visit some of our most important markets – including the US, Canada, Japan, China and India – to kick this process off.”

Second on Javid’s list of suggestions is a call for the new chancellor to bring forward the Autumn Statement to October and use it to focus on supply-side reforms.

The business secretary also suggested that we should commit to reducing the headline rate of corporation tax from 20% to 15%.

He recommended that new plant and machinery should be excluded from business rates and suggested that tax credits should be doubled for research and development and the annual investment allowance returned to £500,000 until 2020.

He said, “These measures would provide a powerful incentive for long-term investment, creating jobs and boosting revenues.”

Javid said he wants to help hardworking people.

He suggested bringing forward planned increases in the income tax allowance and argued for an immediate £1,000 increase, a move he said would lift half a million people out of the tax.

“We should begin the process of further reforming income tax – rates and bands – to make it fairer, more efficient and provide greater incentives for success.”

He added that this would mean “stepping back from the targets set in the last budget and taking a little longer to achieve a budget surplus".

“No serious leader sticks to outdated plans once the underlying facts change,” Javid said.

The third stage of Javid’s economic strategy involves government investment in Britain’s future.

“With negative long-term real UK gilt yields, borrowing has never been cheaper, so we should create a Growing Britain Fund worth up to £100bn to fund business-friendly infrastructure programmes alongside the private sector,” he suggested.

Deregulation is fourth on Javid’s list.

We could cut £10bn of domestic regulation before 2020

Sajid Javid

According to the business secretary, excessive red tape was one of the biggest headaches created by the UK’s EU membership.

“We could cut £10bn of domestic regulation before 2020; now we should start identifying unnecessary EU red tape that can be shredded. We should also consider a moritorium on new business regulation – the last thing employers need now is more bureaucracy,” he said.

The fifth point in Javid’s economic strategy, and the “single biggest challenge facing the next government”, is the UK’s exit package from the EU, according to Javid.

“The next administration should draw two very clear red lines,” he said.

“UK law must be supreme, and the UK government must have full control of our immigration policy. Between those lines, we should seek the most comprehensive free-trade deal possible. We would aim for zero tariffs on all products and, where possible, regulatory equivalence for services.”

Labour's shadow chancellor John McDonnell also set out five principles for the forthcoming exit negotiations in a speech on the economic consequences of the EU referendum last week.

McDonnell said “protecting jobs and rights at work” should be the starting point of exit negotiations.

He highlighted that Labour will fight for full access to the European single market, for finance companies to retain their rights to trade in Europe, for Britain to remain inside the European Investment Banks, for all existing EU employment rights to remain the same and for the right of all current EU migrants to stay in the UK, with no change to their rights.

McDonnell added, “Labour is prepared, in the national interest, to work with whoever necessary to ensure that the best interests of British working people are secured.”

Sinead Moore

 

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