UK's 'plan B' includes emergency tax cuts

If the country's economic recovery stalls next year, the government has emergency tax cut plans in place, it has emerged.

Head of the Civil Service, Sir Gus O’Donnell, has compiled a 'blueprint for boosting the economy' which could see people benefit from a range of tax cuts.

Options drawn up by O'Donnell are thought to include reversing the VAT rise to 20 per cent, which will come into force as of January next year. The plans could also include doing away with the increase in employee National Insurance contributions, due to come into force in April 2011. Quantitative easing is also thought to be a possibility.

However, Treasury officials have said that Chancellor George Osborne has rejected the 'unsolicited action plan.'

The existence of the document, which has been given the name 'Plan B' suggests that there is an alternative policy to the public spending cuts and tax rises currently being implemented.

A spokesman for the Prime Minister’s said, “Ministers haven’t asked for advice on ‘Plan B’ because they are very clear the plan we have is the right plan.

“It is quite normal for Government officials to be thinking about alternative scenarios and doing some thinking around that,” he added.