NEED FOR FRANKNESS ...AND CAUTION IN THE BUDGET
The pandemic will haunt Chancellors for many years to come. We simply cannot go on piling up debt. We must reduce it as soon and as quickly as we reasonably can.
THIS IS the introductory scene which Chancellor Rishi Sunak should paint, but I fear won’t in view of all the gossip and leaks, in his Budget speech today:
“Mr Speaker,
My job today is to try to square the iron circle left by the Covid-19 pandemic.
It is, of course, impossible to do so in one Budget. All I can do today is to put us steadily on the road to recovery.
We need as quickly and effectively as we can to get the economy growing again and providing the cash “to build Britain better” while, at the same time, progressively bringing our national finances into balance.
My aim today is therefore to regenerate the economy, bring unemployment down, keep control of inflation and minimise borrowing.
We cannot level up the economy across the nation without a steady improvement in our overall economic condition.
No responsible Chancellor can ignore our enormous Covid-19-induced budget deficit this year of around £400bn any more than he can disregard our rising national debt, now exceeding £2 trillion (thousand billion), or 2.5 per cent of GDP, even if borrowing is historically cheap.
It may sound Micawberish to say that a nation deeply in debt is a nation at the mercy of events.
But debt does limit the room for manoeuvre and sap our strength at a point in our history when the enemies of freedom are flexing their muscles.
It follows there is no such thing as a free lunch, even though I cut the price last year to help the hard-hit hospitality sector.
It has all got to be paid for and no Government has any money other than that provided by the people.
It will, of course, be said tomorrow that, in advocating prudence, I am a prisoner of my department, the Treasury.
It is a curious criticism in view of all the expensive efforts made over the past year to ease the pain of the pandemic.
All I am trying to do is to face reality. This reality used to be disparaged as housewifely economics, but every housewife knows in her heart of hearts that true happiness and stability come from solvency, not debt.
In short, I am laying down a marker for the future.
The pandemic will haunt Chancellors for many years to come. We simply cannot go on piling up debt.
We must reduce it as soon and as quickly as we reasonably can.
But the priority this year, with the help of our successful vaccination programme, is to resume creating the wealth that is needed to close our yawning financial gap.
I therefore want to do nothing that gets in the way of hard work, enterprise, innovation, technological vision and levelling up the economy across the regions.
For this reason, I am not proposing any major changes in taxation this year – except one.
It is unfair and damaging that major international companies do not pay their whack towards the upkeep of the country.
I have therefore asked the Treasury to work urgently on a scheme to eliminate unfair advantage and achieve equal treatment.
Competition will help to lift us out of the economic doldrums we have experienced. But it has to be fair competition.
This thought has implications for all managers, shareholders and unions.
If we are to get back into business, we need a major national effort for the overall good and not sectional interests.
That effort must include tighter control of public spending. We cannot expect maximum effort if the public see continuing waste of the money they provide through taxes, inferior service or just plain red tape.
I am, therefore, charging the Treasury with achieving economy and more value for money in all Government spending from travel expenses to procurement.
I have asked for a report every six months on progress and achievements.
Nothing would please me more than to reward all those who have performed so magnificently in keeping the country and public services going through the pandemic. But the money is simply not available this year.
I believe people will recognise that the best way I can at present help, especially the unemployed, is to get the economy weaving again and people back at work.
That is particularly important for the older industrial areas and the first step along the road to an improvement in their condition.
I hope and believe that everyone will recognise the need for frankness and caution at this stage. It is the only responsible way forward.
I now turn to the details of the Budget…”