Boris Johnson refused to rule out raising taxes to meet the costs of tackling the Covid-19 crisis on Tuesday, 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.”
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.”
Johnson claimed the proposals in the speech amounted to a “new deal”, apparently drawing a comparison with the 1930s presidency of Franklin D Roosevelt in the US. But the Labour leader, Keir Starmer, dismissed that idea, saying: “There’s not much that’s new and it’s not much of a deal.”
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.
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 green belt.
Some types of property, such as community pubs and libraries, would be exempt from the new regime.
The backdrop to Johnson’s speech, with trainees in hi-vis 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, 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 the 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 Wednesday by an economic statement from the chancellor, Rishi Sunak, which is expected to focus on jobs and training in an attempt to prevent unemployment surging when the furlough scheme ends 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 added: “It’s time now not just for a new deal, but for a fair deal for the British people.”
The Scottish first minister, Nicola Sturgeon, said she was “to put it mildly, extremely underwhelmed” at Johnson’s plans.
She said she expected Johnson’s “new deal” to bring no additional consequentials (the formula used to calculate the devolved block grant) for Scotland. “That tells its own story. What that says is that this is not new money, simply shuffling around money in the system,” she said. She added it was “certainly not on the scale that is required”.