Boris Johnson has ordered the Treasury to embrace a new philosophy of ‘Boosterism’ as it prepares for an emergency Budget this autumn.
Senior Tories said the new Prime Minister had made it clear he wants ‘rocket boosters’ placed under the economy in the run up to Brexit, with a huge investment in infrastructure and an end to the tight austerity spending rules that have characterised the last decade.
Senior City sources say that Mr Johnson’s economic credo combines a Blairite enthusiasm for infrastructure spending, coupled with a Thatcherite belief in the power of tax cuts to stimulate the economy.
Prime Minister Boris Johnson is pictured on HMS Victorious as he visits HM Naval Base Clyde in Faslane, Scotland. He is also said to be considering proposals from Chancellor Sajid Javid for a £100billion to help bridge the North/South divide
One said: ‘He was asked to explain his economic philosophy and said, in a word: Boosterism.’
The new mantra is set to get its first outing in an emergency Budget pencilled in for the first week of October – less than a month before Britain is due to leave the EU.
Johnson is being guided by his controversial adviser Dominic Cummings, pictured arriving at No 10
A Government source last night said: ‘He believes in the power of infrastructure to boost economic growth.
He saw it during his time as London Mayor and he wants to take that effect nationwide.
‘You have already heard him talk about accelerating the roll-out of super-fast broadband and commissioning new rail lines and you are going to hear a lot more.’
Mr Johnson has already announced plans for a new generation of intercity rail routes, starting with a high-speed trans-Pennine line from Manchester to Leeds.
He is also said to be considering proposals from Chancellor Sajid Javid for a £100billion to help bridge the North/South divide.
The idea would see an arms-length body established with five years’ funding to support investment outside London and improve the UK’s infrastructure, which he described as being ‘creaking and in desperate need of upgrading.’
Prime Minister Johnson and Defence Secretary Ben Wallace MP are pictured being shown around HM Naval Base Clyde in Faslane, Scotland. Mr Johnson’s upbeat phrase reflects his belief that he can change the political and economic landscape through sheer force of will and self-belief
Chancellor Sajid Javid is pictured leaving a Cabinet meeting in Downing Street last week. Johnson has ordered the Treasury to embrace a new philosophy of ‘Boosterism’ as it prepares for an emergency Budget this autumn
Mr Johnson, who is being guided by his controversial adviser Dominic Cummings, has also commissioned work on plans to raise the starting threshold for paying National Insurance to £12,500, at a cost of £11billion a year.
This is on top of a campaign pledge to raise the starting threshold for paying 40p tax from £50,000 to £80,000, at an annual cost to the Exchequer of £9billion – although this is unlikely to take place until after the next election.
And he has ordered a review of stamp duty to prevent it ‘choking’ the property market.
This could result in the tax being axed on properties worth less than £500,000.
And in a major shift of emphasis, he has also authorised Mr Javid to tear up Philip Hammond’s tight spending rules which were designed to finally eradicate the huge budget deficit left behind by the last Labour government.
The new approach was welcomed by Tory MPs last night.
Robert Halfon, chairman of the education committee, said: ‘Boosterism is a great phrase for putting rocket boosters under the economy which is what we have got to do.
‘We have to relax the spending rules in order to boost funding for infrastructure, affordable housing and so on because our infrastructure is crumbling. Put that together with tax cuts for the lower paid and you have got a winning formula.’
Mr Johnson is pictured aboard Vanguard-class submarine HMS Vengeance. The new approach was welcomed by Tory MPs last night
Vicky Ford, chairman of the all-party infrastructure group, said: ‘Boris is a great believer in the power of infrastructure spending and he is right that, when done well, it drives economic growth.’
Mr Johnson has already irritated the former chancellor by pledging to spend the £26billion ‘fiscal headroom’ that Mr Hammond set aside to cope with the economic fallout of a possible No Deal Brexit.
A source close to Mr Hammond pointed out the headroom was simply additional borrowing the government could take out without breaching its spending rules. ‘It’s not free money,’ they said.
Mr Johnson’s upbeat phrase reflects his belief that he can change the political and economic landscape through sheer force of will and self-belief.
But he has yet to explain how he will fund a massive increase in spending if the economy takes a downturn – leading some to fear it may be little more than wishful thinking.
Johnson is pictured meeting Scottish First Minister Nicola Sturgeon at Bute House in Edinburgh. The new mantra is set to get its first outing in an emergency Budget pencilled in for the first week of October – less than a month before Britain is due to leave the EU
The Institute for Fiscal Studies has described Mr Johnson’s long list of costly spending pledges as ‘extraordinary’. While former Tory chairman Lord Patten warned he was in danger of making Labour ‘look like fiscal moderates’.
Mr Johnson’s apparent willingness to hike borrowing is likely to raise eyebrows on financial markets at a time when the UK’s national debt is standing at a record £1.8trillion, equal to 87.4 per cent of GDP.
The Institute for Government also pointed to figures published last year suggesting that leaving the EU without a deal would increase government borrowing by more than £50billion a year, squeezing the scope for investment in other areas.