Time to be bold to boost Britain’s growth and back workers
With his spring Budget next week, the Chancellor has the opportunity to focus on delivering higher economic growth for Britain.
He can remove long-standing barriers that have held our country back, set our fiscal policy on a path to lower taxes and contain public spending to spur on investment and job creation.
This is a bold, ambitious and Conservative agenda which supports free enterprise to unlock this nation’s economic potential.
To do so will mean addressing a series of challenges. As in most major Western countries, our economic growth has slowed, with productivity lower than we would want and the size of state spending and tax receipts rising to record levels.
Public-sector spending has risen from around £400 billion to £1,200 billion, tax revenues are up to £1,100 billion, and borrowing levels have risen drastically as a result of the financial crisis, the pandemic and global inflationary pressures.
Here is my five-point plan for how we can unleash our economic potential with an ambitious Spring Budget.
First, we must go further in controlling and taming public spending. With an expanding State acting as a weight on our economic freedoms and enterprise, it is clear that the path to stronger growth requires a lightening of these burdens and a loosening of the Treasury’s grip.
The more the State spends, the more is taken from wealth-creating private businesses and households.
Second, we need to ease the tax burden on families. With wages rising at their fastest rate in a generation and tax thresholds now set to be frozen until 2028, four million more people will be dragged into paying income tax and three million more will start paying the higher rate. That will yield about £40 billion more for the Treasury coffers.
I believe this money should stay in the pockets of our nation’s hard-working families, where it will be better spent. I know that the Chancellor recognises this too and hope he will consider raising thresholds and cutting rates.
Third, businesses need lower taxes. Previous welcome announcements to introduce ‘full expensing’ to write off all of the cost of investment and the freezing of business rates for small businesses are making a difference.
But we must go further. Maintaining the 5p cut to fuel duty will help contain inflation and keep costs down.
Reintroducing tax-free shopping for tourists will give our shops, hotels and airports a boost. And reviewing business rates and corporation tax levels over the medium-term will send a positive message to companies and encourage inward investment.
Fourth, we need to unleash a new wave of supply-side reforms. Cutting regulation and making it easier to do business complements tax cuts and boosts productivity.
Meanwhile, a labour market strategy to boost skills and help more people into employment will ease immigration pressures and get workers into better-paid jobs. Fifth, the Government must make the case for an economy and society that embraces the low-tax, free-enterprise capitalist values that Conservatives believe in.
For too long we have allowed the narrative of higher state spending and tax increases to dominate. But the solutions to the economic challenges we face cannot be found in socialism.
In the 1980s we took forward ambitious economic reforms by proudly making the case for a smaller State and greater economic freedoms. We made our country greater and took the British people with us by being clear about the principles and values we believed in.
The Chancellor and Prime Minister know how a Conservative Budget can promote freedom, enterprise and opportunity — and provide the leadership our country needs to be resilient, secure and successful.