Boris Johnson refuses to rule out tax rises to fund recovery plans

·10-min read

Boris Johnson has refused to rule out raising taxes to meet the costs of tackling the Covid-19 crisis, as he promised to use infrastructure spending and planning reforms to “build, build, build” his way out of a looming recession.

Delivering a major speech in Dudley College of Technology, the prime minister claimed his government would tackle the long-term problems in the UK economy revealed by the “lightning flash” of the pandemic.

Acknowledging the scale of the oncoming downturn, he said: “We must work fast, because we’ve already seen the vertiginous drop in GDP, and we know that people are worried about their jobs and their businesses.

“And we’re waiting as if between the flash of lightning and the thunderclap, with our hearts in our mouths, for the full economic reverberations to appear.”

The coronavirus lockdown has prompted some of the UK’s most prominent companies to announce large-scale job losses. The aviation, automotive and retail sectors have been among the worst hit, as businesses adjust to dramatically reduced revenue projections.

While the government’s job retention scheme has so far protected millions of jobs, fears are mounting that unemployment will rise as the scheme begins to be phased out from August.

Since lockdown began on 23 March, some of the UK’s largest companies have announced plans to cut a total of 60,000 jobs globally, many of which will fall in the UK.

Rolls-Royce - 9,000 jobs
The jet-engine manufacturer has confirmed that 3,000 job cuts, of a planned 9,000 worldwide, will be made in the UK. In May Rolls-Royce said it would make the first round of redundancies through a voluntary programme, with about 1,500 posts being lost at its headquarters in Derby, as well as 700 redundancies in Inchinnan, near Glasgow, another 200 at its Barnoldswick site in Lancashire, and 175 in Solihull, Warwickshire.

BP- 10,000 jobs
The oil company said in June it plans to make 10,000 people redundant worldwide, including an estimated 2,000 in the UK, by the end of the year. The BP chief executive, Bernard Looney, said that the majority of people affected would be those in office-based jobs, including at the most senior levels. BP said it would reduce the number of group leaders by a third, and protect the “frontline” of the company, in its operations.

Centrica- 5,000 jobs
The owner of British Gas announced in June that it intends to cut 5,000 jobs, mostly senior roles, and remove three layers of management, in a bid to simplify the structure of its business. The energy firm has a total workforce of 27,000, of whom 20,000 are in the UK.

Bentley- 1,000 jobs
The luxury carmaker intends to shrink its workforce by almost a quarter, slashing 1,000 roles through a voluntary redundancy scheme. The majority of Bentley’s 4,200 workers are based in Crewe in Cheshire.

Aston Martin Lagonda – 500 jobs
The Warwickshire-based luxury car manufacturer has announced 500 redundancies.

British Airways - 12,000 jobs
The UK flag carrier is holding consultations to make up to 12,000 of its staff redundant, a reduction of one in four jobs at the airline. BA intends to cut roles among its cabin crew, pilots and ground staff, while significantly reducing its operations at Gatwick airport.

Virgin Atlantic - 3,000-plus jobs
Richard Branson’s airline is to cut more than 3,000 jobs, more than a third of its workforce, and will shut its operations at Gatwick.

EasyJet – 4,500 jobs
The airline has announced plans to cut 4,500 employees, or 30% of its workforce.

Ryanair – 3,000 jobs
The Irish airline intends to slash 3,000 roles and reduce staff pay by up to a fifth.

Aer Lingus – 900 jobs
The Irish airline, part of International Airlines Group (IAG) plans to cut 900 jobs.

P&O Ferries – 1,100 jobs
The shipping firm intends to cut more than a quarter of its workforce, a loss of 1,100 jobs. The company, which operates passenger ferries between Dover and Calais, and across the Irish Sea, as well as Hull to Rotterdam and Zeebrugge, will initially offer employees voluntary redundancy.

JCB – 950 jobs
Digger maker JCB said in May up to 950 jobs are at risk after demand for its machines halved due to the coronavirus shutdown.

Ovo Energy – 2,600 jobs
Britain’s second biggest energy supplier announced in May it planned to cut 2,600 jobs and close offices after the lockdown saw more of its customer service move online.

Johnson Matthey – 2,500 jobs
The chemicals company said in June it is planning to make 2,500 redundancies worldwide over the next three years. The move will affect 17% of the workforce at the firm, which is a major supplier of material for catalytic converters.

Bombardier – 600 jobs
The Canadian plane maker will cut 600 jobs in Northern Ireland, as part of 2,500 redundancies announced in June.

The Restaurant Group – 1,500 jobs
The owner of Tex-Mex dining chain Chiquito, and other brands including Wagamama and Frankie & Benny’s, said in March that most branches of Chiquito and all 11 of its Food & Fuel pubs would not reopen after the lockdown, leading to the loss of 1,500 jobs.

Monsoon Accessorize – 345 jobs
The fashion brands were bought out of administration by their founder, Peter Simon, in June, in a deal which saw 35 stores close permanently and led to the loss of 545 jobs.

Clarks – 900 jobs
Clarks plans to cut 900 office jobs worldwide as part of a wider turnaround strategy

Oasis and Warehouse – 1,800 jobs
The fashion brands were bought out of administration by restructuring firm Hilco in April, in a deal which led to the permanently closure of all of their stores and the loss of more than 1,800 jobs.

Debenhams – 4,000 jobs
At least 4,000 jobs will be lost at Debenhams as a result of restructuring, following its collapse into administration in April, for the second time in a year.

Mulberry – 470 jobs
The luxury fashion and accessories brand said in June it is to cut 25% of its global workforce and has started a consultation with the 470 staff at risk.

Jaguar Land Rover – 1,100 jobs
The car firm is to cut 1,100 contract workers at manufacturing plants the UK, potentially affecting factories at Halewood on Merseyside and Solihull and Castle Bromwich in the West Midlands.

Travis Perkins – 2,500 jobs
The builders’ merchant is cutting 2,500 jobs in the UK, accounting for almost a 10th of its 30,000-strong workforce. The company, which is behind DIY retailer Wickes and Toolstation, said the job losses will affect staff in areas including distribution, administrative roles and sales. The move will also affect staff across 165 stores that are now earmarked for closure.

Johnson drew a contrast with the policy of David Cameron and George Osborne’s 2010 government in the wake of the global financial crisis, insisting his administration would not impose spending cuts while the economy was weak.

“We’re not going to cheese-pare our way out of trouble, because the world has moved on since 2008,” he said, warning that, “too many parts of our country have felt left behind, neglected, unloved”.

But when asked whether he would stick by his manifesto promise not to raise the rates of income tax, VAT or national insurance, he said: “You should wait to see what the chancellor has to say in the course of the next few weeks and months. I remain absolutely determined to ensure that the tax burden, insofar as we possibly can, is reasonable.”

As well as infrastructure projects – many of them relatively small-scale – the prime minister unveiled what he called “the most radical reforms of our planning system since the end of the second world war,” which he said would make projects faster.

Related: Environmental experts dismayed by details of Johnson's 'New Deal'

He said planning rules would be changed by September, to allow:

• Developers to “demolish and rebuild” vacant and redundant residential and commercial buildings if they are rebuilt as homes.

• A wider range of commercial buildings to be switched to housing without a planning application.

• Property owners to build “additional space above their properties”, via a “fast track approval process”.

The government said the changes would allow defunct buildings on high streets to be repurposed to create homes more easily, helping to reduce pressure on the greenbelt.

Boris Johnson giving a speech during a visit to Dudley College of Technology.
Boris Johnson giving a speech during a visit to Dudley College of Technology. Photograph: Paul Ellis/PA

Some types of property, such as community pubs and libraries, would be exempt from the new regime.

Johnson also promised to spend £12bn on affordable housing over eight years – but the budget earlier this year pledged the same sun over five years.

Challenged about the discrepancy afterwards, the prime minister’s spokesman said he would need to check the figures.

On the commitments in the speech in general, he said: “It’s just part of the government’s wider commitment to invest more than £600bn in our future prosperity over the next five years. Today’s announcement is about accelerating investment and projects this year, to support jobs and recovery as soon as possible.”

Related: 'Absolutely fanciful': Boris Johnson's new deal not Rooseveltian, say critics

The backdrop to Johnson’s speech, with trainees in hi-viz jackets, was reminiscent of his bullish general election campaign, before the pandemic threw his programme for government off course.

But critics pointed out that his £5bn infrastructure boost, which he compared to Roosevelt’s New Deal in the US, was relatively modest – particularly when measured against the likely severity of the downturn.

Official figures published on Tuesday showed the economy contracting by 2.2% in the first three months of 2020 – the fastest rate for more than 40 years.

The TUC general secretary, Frances O’Grady, said: “Today we face the biggest economic crisis in a generation. Without big fast action, millions face the misery of unemployment. Today’s announcements from the prime minister fall far short of what is needed.

Sarah Longlands, director of the IPPR North thinktank, described it as, “deeply disappointing for anyone who hoped that it might set out an ambitious programme of change to tackle our regional inequalities.

“In the face of the biggest challenge ever to face these islands, it merely reheats existing announcements and does little to ‘level up’ power and resources across the UK. The north deserves better,” she said.

The planning changes appeared less sweeping than some of those previously under consideration in Whitehall, including the creation of “development corporations”, like the one that oversaw the transformation of London’s Docklands.

Labour had warned against any changes that would put more power in the hands of the housing secretary, Robert Jenrick, who has been under pressure over “cash for favours” allegations involving billionaire developer Richard Desmond.

Johnson’s speech is part of a concerted attempt by the government to switch the focus back to its manifesto priorities, and offer something tangible to voters in former-Labour seats the Tories won in December.

It will be followed up next week by an economic statement from the chancellor, Rishi Sunak, which is expected to focus on jobs and training, in a bid to prevent unemployment surging when the furlough scheme is would up in October.

An extraordinary 9.3 million workers are being supported by Sunak’s unprecedented “job retention scheme”, and many industries are warning that physical distancing guidelines will still make their businesses uneconomic, even as lockdown is lifted.

Johnson said young people would be offered an “opportunity guarantee” to prevent them falling into long-term unemployment. He conceded that his plans would involve significant government intervention – but said he still believed in the free market.

“I am not a communist,” he said; but “it’s time now not just for a new deal, but for a fair deal for the British people.”

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