Former UK chancellor Sajid Javid has called for a cut in national insurance to aid in economic recovery from the coronavirus pandemic.
In a joint report entitled 'After the Virus: A plan for restoring growth' with the Centre for Policy Studies (CPS), a conservative-oriented think tank, Mr Javid said that a "significant temporary" reduction in national insurance would lower labour costs for employers.
He said that "some long-term damage to the economy" was "unavoidable" but the government could make employment easier for businesses.
"If we want to support and stimulate employment, then axiomatically the best option is to cut the payroll tax - employer's National Insurance", the report said.
"Tax employment less, and all other things being equal you will end up with more of it".
Other policy suggestions outlined in the report include temporarily cutting VAT, encouraging businesses to "invest in their premises and social distancing measures", and introducing "shovel ready" infrastructure projects, arguing that the "only way out of this crisis is growth".
"This is a vision for growth driven by a private sector with the incentives and flexibility to invest and create jobs, empowered by an infrastructure revolution", said Robert Colvile, director of CPS director.
Mr Javid's demands echoed calls by former Labour chancellor Alistair Darling yesterday in urging the government to introduce an emergency VAT cut to increase consumer spending.
The report comes as the United Kingdom is facing significant economic damage from the lockdown which was introduced in March to prevent the spread of the coronavirus.
18 years of GDP growth lost in two months. UK will suffer the largest contraction this year, with economic output falling 11.5% followed by a 9% rise in 2021. #SMMTSummit pic.twitter.com/ZI4Aknt1vr
— @Statsman (@DossaAnand) June 23, 2020
According to the Office for National Statistics, GDP collapsed by more than 20% in April following the tight restrictions imposed on business, which saw all "non-essential" work stopped.
