Budget Resolutions

Priti Patel Excerpts

Wednesday 6th March 2024 Commons Chamber

[Priti Patel (Witham) (Con)]

As a former Treasury Minister, I want to thank the Chancellor, but also other Treasury Ministers and Government Departments, because I know how hard it is to put a Budget together and the number of representations that are made. I must thank the Chancellor for the due consideration—that is a polite way to put it—that he has given to the representations that I have consistently made about supply-side reforms and lower taxes. He knows exactly what case I make on fiscal drag, in particular. I also thank him for delivering greater efficiencies in Government.

The Chancellor has put forward a clear plan for the economy, made targeted tax cuts, which I will come to in a moment, and provided support for businesses, and for efficiencies across the board, including in the public sector. On days like today, we never get the benefit of a discussion of the ins and outs of the Red Book and the OBR—I give the assurance that we would all love that, if we had much more time—but we must all recognise that our economy faces fundamental challenges that the Budget has sought to address.

The Chancellor understands that he is walking a tightrope, and that we should also tackle some of the big issues to do with the size of the state and public spending. When we look at the rate of public spending growth, we see that it has constantly exceeded the rate of inflation and economic growth. Public spending is now in excess of £1.2 trillion per year, which is approximately 44% of GDP. I am old enough to remember that back in 1997, public spending was around 35% to 36% of GDP. What a contrast that is. There are consequences to sustaining high levels of public spending.

Tax receipts have risen to over £1.1 trillion, and we know what that means for delivering a balance on taxation. I maintain that the situation is very burdensome. We have to get tax rates down. However, I very much pay tribute to the Chancellor for listening to comments about efficiencies. He spoke today about a public sector productivity plan. The details will be fundamental, and really important to hear.

I was really pleased to hear that the Chancellor is looking at cash savings in public spending across the economy, but will also grow aspects of Government spending—for example, there will be an expansion in violence reduction units. Pilots across certain Government Departments have worked well, and we now have to look at how we get better delivery from public spending, and how that can drive real outcomes in Government. I have spoken to the Chief Secretary to the Treasury about that in recent months, and I am pleased there are concrete proposals that will take us in the right direction, but of course we have a long way to go.

I come to the subject of people keeping more of what they earn, which is clearly a fundamental Conservative principle. This is where national insurance contributions come back into play. I have seen the numbers, and clearly we could move in the direction of lower rates of national insurance. Yet again, we have seen those rates go down, and the debate when the Bill comes forward will be very interesting. Back in the autumn, I was here when only about three people spoke in favour of national insurance coming down and in support of the legislation on that; we want much more support for this measure next week.

It is important that we get the balance right when it comes to incentivising work. Getting national insurance down is fundamental, but we must tackle fiscal drag, and the number of people who get caught up in higher rates of taxation. The figures given last autumn would bring 4 million more people into higher rates of tax by 2029. We will go through the OBR and see what the measures mean this time round, but the issue is still significant, and we know that more work is required in this area. It will be interesting to see whether the Government will bring national insurance down again in successive future autumn statements.

I welcome the decision to maintain the 5p reduction in fuel duty, and we have already heard what that means for working households. I have made representations on that issue, and will continue to do so. Fiscal events are huge for business taxation, and I welcome today’s announcements on increasing the registration threshold, freezing alcohol duty, tourism and lowering corporation tax, which I have spoken about many times. We are now tied into OECD rates of minimum corporation tax, and my views on that are known. I want greater changes, so that businesses can benefit from our Brexit freedoms.

I would like to speak about many issues today, but broadly speaking, the direction of travel is important. I heard Opposition Members speaking about local government finance; I welcome the announcement of £5 million that will be made available, through the levelling up fund, for cultural projects, as that will come to my area and to Maldon. Important measures have been announced today. It is a tough time, but the Chancellor has announced a plan. We must stick with that plan and make sure that it delivers for working families.