Budget Statement

Lord O'Neill of Gatley Excerpts

Friday 12th March 2021 Lords Chamber

[Lord O’Neill of Gatley (CB) [V]]

My Lords, I give my own congratulations to the noble Lord, Lord Khan of Burnley. I particularly welcome his passion and plea for more for the northern powerhouse. In view of the short time, I will make five specific points.

First, yet again this was not a normal Budget, as it was understandably geared towards Covid-related support. This makes it hard to assess the true economic priorities for this Government, especially as we are yet to see a multi-year spending review.

Secondly, however, I applaud the Chancellor’s general resistance to introducing too much fiscal restraint too early, and I commend his broad macro stance.

Thirdly, in contrast to some others, I also admire the decision to plan for an increase in corporate taxes. It has been obvious to me for years that the general Anglo-Saxon obsession with ever-lower corporate taxes, while it has boosted profits, has had no positive impact on investments. Also, given the political change in Washington, this move was savvy.

Fourthly, in the hope and on the assumption that the Autumn Statement will allow for thinking beyond Covid, I hope that the Government will again resist early fiscal restraint and give a much deeper and broader strategy around their intentions, especially on infrastructure, levelling-up and the northern powerhouse.

Fifthly and finally, in these extraordinary times with so much change happening, I also encourage the Chancellor to be even bolder in his general fiscal and monetary approach. He must seriously consider a truly transformational shift in accounting differently for investment and consumption spending, which would allow for much more genuinely ambitious investments. On monetary policy, in contrast to the noble Lord, Lord King, I believe that, given the volatility now appearing in the bond markets, the time has come for the Government to give the Bank of England a completely new approach and to formally adopt nominal GDP targeting to replace the de facto one that has emerged—not only to maintain but even to enhance its credibility.