Budget Resolutions

Felicity Buchan Excerpts

Wednesday 27th October 2021 Commons Chamber

[Felicity Buchan (Kensington) (Con)]

I warmly welcome this positive, optimistic Budget, which puts post-pandemic economic recovery at the heart of what we do. We currently have the fastest-growing economy in the G7. The OBR has predicted 6.5% growth, although looking at recent statistics, I think it could be higher. Next year, we are looking at 6% growth. That is very strong. We are also looking at employment getting back to pre-pandemic levels, and at wages going up.

But more important than my welcoming the Budget is the fact that the markets have welcomed it. Gilts have rallied substantially this afternoon. Ten-year gilt yields have gone down 10 basis points, or 0.1%. This is relevant to all of us because, as the Chancellor said in his Budget, 100 basis points, or 1%, means either a cost of £23 billion or a reduction of £23 billion, depending on which way yields go. That is a real endorsement by the gilt markets of what we have done today. It is telling that the Debt Management Office has said today that our anticipated sale of gilts will be down £57.8 billion, relative to what we thought we had to do at the beginning of the year. That is huge—we have almost £60 billion less debt that we have to go into the markets to sell.

I also welcome the Chancellor’s statement at the end of his speech that the direction of travel was to lower taxes. I feel very strongly that, while we have had to do some things because of the exceptional circumstances of coronavirus, in the long term we need to be a low-tax economy. It is with lower taxes that we encourage growth and get more investment, which leads to greater productivity, which is key.

As many colleagues have said, we are clearly investing an awful lot in public services at the moment, and it is good that we are providing that investment. However, I say to my colleagues on the Front Bench that we must ensure that we get value for money from that expenditure. Let us account for every pound of it, because the numbers are substantial. Many people have alluded to inflation, and inflation is forecast to go up, peaking at 4.4% according to the OBR forecasts. As far as that concerns wages, of course we want people to be well paid. We want a well-paid economy and well-paid workers, but let us ensure that we also get the skills and the productivity improvements in place.

This is a great Budget. I am conscious of the time, but I would like to talk briefly about a few issues in my constituency. First, I warmly welcome the tapering for universal credit, a strong development which goes to the Conservative ethos of ensuring that work pays. I am also glad to see that we have made progress on the residential property development tax. Grenfell Tower is in my constituency, so I am glad to see there has been progress, but I am conscious that we are still awaiting further details on 11 to 18 metres.

Although bank corporation tax rates will go up, we have reduced the surcharge, which I am glad to see. I object to the attitude of some Opposition Members who are so negative to financial services. I remind everyone that financial services are critical to our economy.

[The Chief Secretary to the Treasury (Mr Simon Clarke)]

They are worth £76 billion.

[Felicity Buchan]

I believe that is 11% of our total tax take. This is an issue not just for London but for Edinburgh, Glasgow, Newcastle, Leeds, Bristol and Chelmsford. Financial services are critical, so let us not talk them down, as that would be equivalent to California talking down the film industry. Financial services are a huge source of our exports.

Finally, I welcome the £7 billion-worth of measures on business rates. These are short-term measures. I welcome them but, as my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) has just said, we need a longer-term solution. I would like to work with my Front-Bench colleagues on finding that solution.

One small technicality: the 50% discount for hospitality will be capped at £110,000. I represent a central London constituency with a lot of retail and hospitality. Central London has suffered about the most in the country, but many of my businesses will get very little help on a percentage basis. I would appreciate a conversation on that point.

This is a very strong Budget. The economy is faring well. We have alluded to some risks, but we can all get behind this Budget, which is good for the country and good for Kensington.