Budget Resolutions and Economic Situation

Jerome Mayhew Excerpts

Tuesday 21st March 2023 Commons Chamber

[Jerome Mayhew (Broadland) (Con)]

Thank you, Mr Deputy Speaker.

Although there are plenty of measures to help with the cost of living, which I welcome, the Budget’s real impact is much more profound. It seeks to tackle some of the structural weaknesses that have bedevilled our economy for decades, holding back growth. Page 7 of the OBR’s accompanying economic and fiscal outlook sets out a number of those factors: reduced business investment, reduced labour market participation and the conundrum of low productivity. It is through that prism that we should address this Budget.

I do not have time to address all those factors, so I will focus on business investment. Budgets do not come in isolation. They are part of a Government’s raft of sensible economic management. If we look at the reasons behind the lack of business investment, according to the OBR, one is obviously the pandemic—we hope we have put that behind us. The second is the energy crisis, and we are dealing with that, including through the continuing measures for businesses with high energy use. The third is uncertainty on EU relations, which is an area that the Government have been addressing week in, week out. Whether it is the Windsor framework, the very positive French summit a couple of weeks ago, the restarting of talks on our involvement in Horizon or increased co-operation with the French on stopping the small boats and hosting migrant detention centres in mainland France, each is slowly increasing business confidence in the future of UK trade, even as global exports expand through the Australia and New Zealand free trade agreements and, hopefully, soon the CPTPP.

Although I accept and regret that corporation tax is going up to 25% for the biggest 10% of corporations, this is more than offset by the 100% capital allowance—full expensing—within the first 12 months, which provides an incentive for businesses to invest rather than pay dividends. A host of other tech sector improvements were set out in pages 94 and 95 of the Red Book: innovation accelerators in Glasgow, Manchester and the west midlands; £900 million for the exascale supercomputer to assist with artificial intelligence research; £2.5 billion for the quantum strategy; the implementation in full of the Patrick Vallance digital tech regulations, to improve the speed at which that sector can develop; and faster approval processes for new medicines. This is the Government being on the side of fast growth and the new economy.

This is not just about tackling business investment, as we are also addressing labour market participation. We are dealing with the unexpected reduction of the workforce by some 520,000 after the pandemic. I do not have time to deal with that, but I can say that the Budget builds on what is increasingly being described to me on doorsteps in my constituency as the “Sunak effect”. It is not flashy and there are no eye-catching initiatives so beloved of the Labour party, but instead we are getting competent, serious tackling of the big issues, one after another. It is no surprise that the economics of this country are improving, as shown in the composite PMI— purchasing managers’ index—for February 2023 of 53.1; more than 50 means economic growth. This Budget was detailed, considered and responsible and it speaks to what is behind this Government; they are not flashy and they let the work do the talking.