Mel Stride, Secretary of Labor and Pensions, says he's in the business of «getting people back to work.» Credit: Geoff Pugh for The Telegraph
The Treasury will be able to reduce the base income tax rate by 2p if Britons who have left their jobs during the pandemic return to work, said cabinet minister.
Mel Stride, The Minister for Labor and Pensions, who is responsible for overseeing the government's push to boost jobs, said there are still 400,000 fewer jobs than before Covid.
The 2p cut in the base income tax rate will mean a drop from 20% to 18%.
The decision is ultimately in the hands of the Treasury and Number 10.
The UK tax burden is still approaching its highest level since World War II, despite 13 years of Conservative rule since 2010.
p> Tax Burden
Mr Stride told reporters on Thursday: “If we can get all these people back to work, it will increase the size of the economy by about 0.2 per cent, which will reduce the need for borrowing by £11bn, which will be enough to lower the base rate. 2 pence tax. .
«So what I'm doing is getting people back to work because the work is good for people, and also giving the chancellor as much flexibility as possible when it comes to setting up his stall this fall and spring for follow.”
Mr Stride said progress was made after 650,000 people left their jobs during Covid.
However, he said the workforce is still short by about 400,000 to pre-pandemic levels.
He added that more than a third of the group had already found work since the end of Covid restrictions, saying that » remains at 400,000.»
2,101 Number of workers over 50
His comments point to the Cabinet's desire to reduce the tax burden when economic conditions and Treasury finances allow.
On Thursday, the Bank of England raised interest rates from 4.25% to 4.5%, which was the 12th increase in a row.
This means that borrowing costs are currently at their highest level since 2008 and the Bank has warned that it will take another two years to bring inflation under control.
>Andrew Bailey, governor of the Bank of England, was forced to retract his previous gloomy forecast of a full-year recession as he presides over the biggest growth forecast update ever.
He acknowledged: “The economy has turned out to be more resilient than we expected.”
Rishi Sunak, the prime minister, and Jeremy Hunt, the chancellor, both insist they are low-tax supporters at heart. However, they argue that they must control inflation before taking such steps.
Conservative MPs have again called for bolder measures to reverse the long-term blow to the working population. Allies Boris Johnson and Liz Truss are expected to push for tax cuts in a fall statement later this year.
Mr. Sunak made convincing people to return to work a priority when he ranked 10th in October, instructing Mr. The Stride Division to help develop a policy focused on early retirees.
Based on the first Hunt's budget earlier this year had a package of measures to achieve this goal, including steps to encourage people over 50 to stay in work longer.
These include removing limits on the amount that can be accumulated in the pension basket without paying taxes.
Other return-to-work measures included expanding the provision of childcare services – in the hope that more parents will take up employment – and a £925m universal support scheme to help 50,000 people with disabilities and long-term illness find jobs each year .
Conservative MPs welcomed Mr. Stride's comments but insisted that bolder policies were now needed if ambitions were to be achieved.
Don't leave it too late' on the tax cut
Nigel Mills, a Conservative supporter who sits on the House of Commons Committee on Works and Pensions, said: “The inactivity plan was kind of presented in the budget, but there was nothing special about it. It's not immediately clear to me if there's a great plan for this.
“My biggest concern is that people who choose not to return to work may regret it years later, when it's too late. But how to get people to understand this is quite difficult.
«It's the right idea, the right ambition, but there has to be some way to do it.»
Sir John Redwood, a former Cabinet minister, urged the government to «not leave too late» the tax cut.
He said, «Any tax cut is better than no tax cut, but delayed tax cuts. Wrong sorting is not as good as right cut.
«No time to mess around. These people don't get it, they're going to do a lot of damage if they don't understand that we need to push investment, expand capacity and do better business in the UK now — it's urgent.»
Meanwhile, Mr Stride suggested, that the state retirement age will not be raised to 68 until 2037, after ministers delayed a planned increase earlier this year.
While the state retirement age is scheduled to be raised from 66 to 67 . Mr Stride said that between 2026 and 2028 there is «no reason» to decide now for a further increase.
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