The UK will be able to fund a 2 percentage-point income tax cut if the government can lure hundreds of thousands of people who left the workforce during the Covid-19 pandemic to return, a key lieutenant of Prime Minister Rishi Sunak said.
Work and Pensions Secretary Mel Stride — whose remit includes tackling worker shortages and inactivity holding back the UK economy — said on Thursday that he’s attempting to persuade some 650,000 people, including early retirees, to return to work. The prize, he said, is a possible cut to the basic rate of income tax, which currently stands at 20 pence per pound.
Work Just Doesn’t Pay for Thousands of People in Sunak’s Britain
“If we get all those back into work, it would increase the size of the economy by about 0.2%,” Stride told reporters. That would “reduce the borrowing requirement by £11 billion ($14 billion), which would be enough to take 2p off the basic rate of tax.”
Stride ran Sunak’s leadership campaign to replace Liz Truss in October, and was previously chair of Parliament’s Treasury Select Committee, scrutinizing the policies of the UK’s finance ministry.
He also told reporters on Thursday that the state pension age is unlikely to be raised to 68 years until the 2040s, but that it will not be a decision for him. Earlier this year, Stride delayed making the decision, instead opting to commission a fresh review into when it should rise.
