Budget Resolutions and Economic Situation

Stephen Hammond Excerpts

Monday 8th March 2021 Commons Chamber

[Stephen Hammond (Wimbledon) (Con) [V]]

It is a pleasure to speak in the debate this evening. This Budget was produced after a year of extraordinary economic challenges and an extraordinary economic response to give support to families and businesses. No Chancellor would want to raise taxes or increase Government borrowing to the current record levels, but in this Budget the Chancellor has rightly recognised the need to continue to support families and companies in the face of this extraordinary unforeseen economic shock.

Equally, the Chancellor is right to be honest. Modern monetary theory does not mean that a magic money tree has been found, and we cannot expand the Bank of England’s balance sheet forever, so rightly and probably unwelcomely, the plan to restore public finances understandably includes raising taxes.

A key imperative last week, alongside the need to restore the public finances in the medium term, was to encourage investment and enterprise and to embed recovery. So, alongside the planned corporate tax rises was a more generous treatment of tax losses and the announcement of the super deduction, which will inevitably help many companies to invest in exactly the capital formation that they will need for the future.

The Chancellor is also right to focus on infrastructure spending and investment. Infrastructure is not an end in itself; it is the driver of growth and productivity in economies. The policies announced last week will allow growth and investment in both physical and social infrastructure. I welcome the increase in departmental spending limits and the increase in transport spending. I also welcome the increase in skills investment, in kickstart and in the digital skills scheme. The establishment of the UK infrastructure bank is welcome, but it is the private sector that will drive investment. A green gilt is welcome, but I urge the Government to think about an infrastructure bond, which would open up the potential for private capital—individuals and pension funds—to invest in infrastructure. Equally, the announcement of the consultation on changes to the capital cap for pension funds will drive some of that investment.

Financial services are the jewel in the UK’s economic crown, so there is good news for many and I welcome some of the other measures, but I urge the Government to think about a review of the regulation of financial services, to ensure that we have competitiveness and also appropriateness in regard to capital and conduct. Financial services will allow the necessary investment to happen in the infrastructure of the United Kingdom. I welcome this Budget. It was the right Budget at this time, and the Chancellor is to be congratulated on it.