Budget Resolutions and Economic Situation

Mark Harper Excerpts

Wednesday 3rd March 2021 Commons Chamber

[Mr Mark Harper (Forest of Dean) (Con)]

The first thing I want to say, reflecting on the Chancellor’s excellent Budget speech, is that in an emergency—that is what we have faced over the past year—it is right for the state to use its fiscal firepower to support the people of our country and protect jobs and livelihoods. That will be welcomed across the country, but particularly in my constituency. Listening to the Chancellor set out the more than £400 billion-worth of spending that has been put in place to support jobs and livelihoods, we can see the pay-off. The independent Office for Budget Responsibility now thinks that the level of unemployment we will reach at the peak is considerably lower than it was forecasting just last November. That reduction in the level of unemployment and the jobs that have been protected will be welcomed in my constituency and across the United Kingdom.

I also welcome the specific help in the Budget for my constituency. I particularly welcome the £150,000 to help my local authority put in place the capacity to bid for money from the levelling-up fund. As Members of Parliament are integrally involved, I look forward to working with it to put in place an ambitious plan to help improve economic conditions in my constituency. I also welcome the continued reduction in VAT for hospitality and tourism businesses, and the extension of the business rates holiday. I know that that will be incredibly welcome to those businesses in my constituency that are raring to go to get back into business but are not yet enabled to do so.

We have had a big, one-off amount of borrowing to get us through this crisis, so we need to get the public finances back in shape. The Chancellor set out very clearly why that is essential. First, if debt continues to rise, we are very vulnerable to a rise in interest rates. A 1% rise in interest rates, modest by historical standards, would mean our having to find £25 billion a year in debt interest. That would mean making very significant savings elsewhere from important public services. Secondly, we have to get the public finances in good shape to prepare us for the inevitable future crisis. As the Chancellor set out, it was only the difficult decisions that we took on tax and spending from 2010 onwards that allowed him to have the fiscal firepower and borrowing capacity to get us through this crisis. It is right that he wants to leave the public finances in shape, either for himself in the future or for a potential successor, to deal with any crises to come. It is important that that cannot happen immediately, but over time.

I am pleased to see in the independent forecast that we will get the Budget back into balance by 2025-26, by three mechanisms. The first is growing the economy faster, and I welcome the mechanisms that the Chancellor set out today to increase investment, to get businesses firing on all cylinders. However, secondly, it also requires controlling the growth in spending, and I am pleased to see controlled growth in public spending in the numbers. That will mean some difficult decisions in the spending review, and I say to Members on both sides of the House, especially my colleagues, that it will mean making choices, setting priorities and deciding what we think is important. We cannot spend money on absolutely everything we want; as Conservatives, we have to live within our means and make those difficult decisions. I hope that, as those decisions are made by ministerial colleagues and our Treasury colleagues later this year, we can all support them.

Finally, it also means an increase in taxes, which is uncomfortable for someone like me who wants to see lower taxes. I do not think we are undertaxed, because the tax rises in this Budget will leave us with the highest tax burden in my lifetime. However, I hope that they will be temporary and that, once we have got the public finances back into shape, the Chancellor—as he says, he is a low-tax Conservative—will be able to look to continue increasing public spending in line with the growth of the economy, but also to reduce taxes so that people can keep more of their hard-earned income, which is central to being a Conservative.

This is a very well-judged Budget that gets the public finances back into shape, deals with the crisis—the emergency —we have faced, prepares us for growth in the years to come and leaves us in better shape than the Chancellor found the Treasury. I commend it to the House.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I understand that the hon. Member for Brent North (Barry Gardiner) is having some technical problems, so we will go to David Mundell.