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Iain Anderson: Johnson vs Hunt on personal finance policy

By the end of this month, either Boris Johnson or Jeremy Hunt will take up residence behind the world’s most famous black door. The race to succeed Theresa May gets more interesting by the day. And if it were supposed to be a virtual coronation for Boris, then someone should have told Jeremy Hunt, who has run a highly energetic and often punchy campaign.

Let’s look at both candidates’ take on some crucial personal finance areas.

Taxation

Both men are advocating tax cuts but Johnson is focusing on personal taxes while Hunt is concentrating on business taxes. Boris wants to increase the higher rate threshold for income tax from £50,000 to £80,000 and to raise the point at which people start paying National Insurance Contributions. Jeremy wants to “turbo-charge” the economy by slashing corporation tax from 19 per cent to 12.5 per cent, and also seeks to exempt hundreds of thousands of small firms.

These are all costly pledges and both candidates – when asked where the money will come from – are drawing liberally on the fiscal headroom that has been built up in preparation for a no-deal Brexit. With neither man prepared to take no deal off the table, it is certainly interesting that they are so willing to assign that money to fund their tax pledges.

Pensions

This is not an area of policy either prospective prime minister has had much to say about over the years. Mr Johnson has much of the free-marketeer wing of the Conservative Party behind him, and is likely to support the pension freedoms agenda.

In 2014, in a rare foray into the pensions policy sphere, the then Mayor of London mooted the idea of consolidating public sector pension funds and encouraging them to invest in housing and infrastructure, following the example seen in places such as Canada, the Netherlands and Singapore.

Malcolm McLean: What would Boris Johnson PM do for pensions?

Boris could well revisit his 2014 idea of consolidating public sector pension funds and encouraging them to invest in housing and infrastructure as a means of finding the funds for the grand infrastructure projects he so loves.

Hunt counts the current work and pensions secretary Amber Rudd among his most important backers, and therefore many of the pension reforms currently pursued by her department would likely remain on track under a Hunt administration.

He has also mooted the idea of following the successful model of pensions auto-enrolment in the social care space. People would automatically set aside a portion of their salaries to fund later-life care needs.

The current front-runner to be the next chancellor is Sajid Javid, regardless of who becomes PM. Javid is staunchly pro-business and has often advocated reducing the burden of regulation on firms – even going so far as to have reportedly suggested scrapping auto-enrolment in a cabinet meeting last year.

The suggestion is Boris is mooting folding the DWP into the Treasury. That would be a major change in the savings policy landscape, though it remains far from certain that a new Prime Minister would make such big machinery of government changes at a time when political capital is limited.

Whoever triumphs in the Johnson-Hunt showdown, it is clear that there is a wide agenda for reform in taxation, pensions and social care funding. There’s just the small matter of resolving the Brexit deadlock first.

Iain Anderson is executive chairman at Cicero

Follow him on Twitter @iain_w_anderson

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