PM refuses to rule out tax rises to pay for coronavirus recovery plan

The prime minister has not ruled out raising taxes to pay for his multibillion-pound coronavirus recovery plan.

Boris Johnson has promised to “build, build, build” to help the UK through the effects of the COVID-19 outbreak, including £5bn to accelerate projects across the country as part of an “infrastructure revolution”.

This will include spending on schools, roads, railways and hospitals in a bid to create jobs and kickstart economic growth amid the coronavirus pandemic.

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Asked by Sky’s political editor Beth Rigby whether taxes will have to be increased to pay for it, the PM did not rule out the prospect.

“I remain absolutely determined to ensure that the tax burden, insofar as we possibly can, is reasonable and that we continue to be a dynamic, competitive, open market economy,” he said.

“I think that’s what people will want to see.”

The party’s manifesto for the 2019 general election promised: “We will not raise the rate of income tax, VAT or National Insurance.”

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In his speech, the PM acknowledged “it may seem a bit premature to make a speech now about Britain after COVID”, given a local lockdown has been imposed in Leicester following a spike in cases.

But Mr Johnson said “we cannot continue to be prisoners” of the outbreak and the country “needs to be ready for what may be coming”.

Having already said it would be a “mistake” to go back to austerity because of the pandemic, the PM indicated he would borrow to fund the UK’s recovery.

“We will not be responding to this crisis with what people called austerity, we are not going to try to cheese-pare our way out of trouble, because the world has moved on since 2008,” he said.

Mr Johnson said he wanted to emulate former US president Franklin D Roosevelt, who led his nation out of the Great Depression in the 1930s with an ambitious programme of government action.

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“It sounds like a ‘new deal’ – and all I can say is that if so, then that is how it is meant to sound and to be,” the PM said.

“That is what the times demand, a government that is powerful and determined and that puts its arms around people at a time of crisis, that tackles homelessness, the inequalities that drive people to food banks.

“It is time now not just for a new deal, but a fair deal for the British people.”

The PM said the government not only wants to defeat COVID-19, but use the pandemic to “tackle this country’s great unresolved challenges of the last three decades”.

He continued: “To build the homes, to fix the NHS, to solve social care, to tackle the skills crisis, to mend the indefensible gap in opportunity and productivity and connectivity between the regions of the UK to unite and level up.

“To that end we will build, build, build. Build back better, build back greener, build back faster, and to do that at the pace that this moment requires.”

Announcements from the PM included:

  • £1.5bn being allocated for hospital maintenance this year
  • More than £1bn for a 10-year schools rebuilding programme
  • £100m for road projects
  • £900m for “shovel-ready” local growth projects in England for 2020/21

Mr Johnson also promised the “most radical reforms” of planning since the Second World War to help more people to get onto the housing ladder.

A study of all future road, rail, air and cross-sea links between the four nations of the UK will also be undertaken.

Opponents have accused the PM of failing to offer new ideas and rehashing promises from the Conservative election manifesto.

Labour leader Sir Keir Starmer said: “The prime minister promised a ‘new deal’. But there’s not much that’s new and it’s not much of a deal.

“We’re facing an economic crisis, the biggest we’ve seen in a generation, and the recovery needs to match that.

“What’s been announced amounts to less than £100 per person. It’s the re-announcement of many manifesto pledges and commitments.”

Sir Ed Davey, acting leader of the Liberal Democrats, said “all we saw was a lot of Boris bluster” and the PM’s promise of a green recovery was “meaningless”.

The PM said the plan was a “speeded up, intensified and increased” version of manifesto pledges.

Ministers are also facing scrutiny over an apparent cut in the affordable homes programme.

A total of £12.2bn of funding over five years had been promised at the budget in March, but is now being stretched over eight years.

The Ministry of Housing, Communities and Local Government said the cash included “additional funding to support long-term partnerships with the sector over eight years”.

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