As Boris Johnson tries to save his failing government, Nadhim Zahawi, the new chancellor of the exchequer in the UK, has stated he will reconsider government proposals to hike company tax from 19p to 25p.
After the shocking resignations of Rishi Sunak, Sajid Javid, the health secretary, and 10 junior members of the administration on Tuesday evening, Zahawi was appointed.
Downing Street wants the next chancellor to lower taxes and halt scheduled tax increases in an effort to win back voters as Johnson fights for his position as prime minister, despite the potential repercussions for Britain’s precarious public finances.
Johnson was getting ready for a challenging round of prime minister’s questions at noon on Wednesday morning as the resignations kept coming.
Before the summer recess, rebellious MPs plan to organise a second vote of no-confidence in him by altering the party rules for the Conservatives.
On Wednesday morning, Zahawi said on Times Radio that he might be able to stop the corporation tax increase that is set to take effect in April. He stated that when boards and businesses invest, they do so for the long term and take corporation tax rates into consideration. I’ll examine everything, then.
After the UK government borrowed hundreds of billions of pounds to get the nation through the Covid-19 pandemic, the tax increase in April is meant to raise £17 billion annually to assist rebuild the national finances. A new “super-deduction,” intended to encourage businesses to increase their capital investment, has somewhat offset it.
Sunak was concerned that tax reductions may accelerate the already skyrocketing inflation rate, which is now approaching double digits. He said in his letter of resignation that their methods were “fundamentally too divergent,” making it impossible for him and Johnson, who is well known for disliking the impending tax increase on businesses, to come on an economic strategy.
For the next stage, we need a plan for growth and not just balancing the books, according to one senior government official, who also suggested that the new chancellor will be following a different economic policy than Sunak.
Markets will be keeping an eye on whether a more lax fiscal policy could push the Bank of England to increase interest rates more quickly.
Following a slew of controversies that have dogged Johnson, Sunak and Javid resigned. The most recent occurred last week when deputy chief whip Chris Pincher resigned following claims that he touched two men at a private members’ club while intoxicated.
For days, Downing Street stated that Johnson was unaware of “particular claims” of Pincher’s misbehaviour. Johnson acknowledged on Tuesday that he had been informed about the claims in 2019 but had since forgotten about them.
The Tuesday ministerial rebellion, in the opinion of many Tory MPs, marks the beginning of Johnson’s demise.
The children’s minister, Will Quince, resigned on Wednesday morning when Zahawi was defending the administration and calling out “inaccurate” claims made by Downing Street.
A few minutes earlier, Laura Trott, a parliamentary private secretary, resigned with the following statement: “Sadly, in recent months, this has been lost. Trust in politics is, and always must be, of the utmost importance.”
However, a number of key players have said they will remain in Johnson’s cabinet, including deputy prime minister Dominic Raab, foreign secretary Liz Truss, defence secretary Ben Wallace, and leveling-up secretary Michael Gove.
In a vote on Johnson’s support last month, more than 40% of MPs dissented. Such a vote is only permitted per year under the present Conservative party regulations.
But after the party chooses a new executive of the backbench 1922 committee, which establishes the guidelines for leadership elections, that may alter the following week.
An anti-Johnson slate of candidates is anticipated to call for a rule modification to permit a second vote, possibly before the parliament adjourns for the summer holiday in late July.