Throwing away fiscal responsibility will betray our economic strategy and people’s hard work

As the leadership contest gathers pace, I want to make sure that we do not lose sight of one of the greatest achievements of the Conservative-led Government over the last nine years. And I want to make doubly sure that the Conservative Party does not throw away its reputation for fiscal responsibility.

A combination of clear economic strategy and nearly a decade of sheer hard work by the people means our economy is in robust shape, forecast to grow faster than Germany, Italy and Japan this year. And our public finances have turned the corner, with the annual deficit down from 9.9 per cent of our GDP in 2009, to just 1.1 per cent last year – lower than it was

before the crisis. But the years of high annual deficits have added dramatically to the National Debt – up from 41.7 per cent of our GDP in 2007 to 87.9 per cent of GDP in 2016.

The good news is that, with the annual deficit added to the debt each year now at historic lows, and our GDP growing, our debt as a percentage of GDP is now, at last, falling sustainably.

The independent OBR forecasts that we will have about £26billion of “headroom” in 2020-21, before public borrowing hits the ceiling imposed by our fiscal rules. In normal times, that would mean we have the luxury of choosing to spend that money on public services, or on capital investment in Britain’s future, or on tax cuts for families and businesses – or indeed on reducing our debt faster. But these are not normal times. So long as the prospect of a no-deal Brexit remains a possibility, we must preserve that “headroom” as a war chest to help businesses and families to manage the economic shock of such an outcome. That is why I have promised a “deal dividend”: as soon as we know a no-deal outcome is no longer a possibility, that war chest will no longer be needed, and our nation will have genuine and sustainable choices once again.

Lots of spending and tax-cutting promises have been made by candidates – many of them eyecatching; few of them funded.

A Conservative think tank even suggested that maybe we should abandon our commitment to reducing the National Debt back down to a safer and more sustainable level and instead borrow still more to splurge on more spending and lower taxes – racking up billions more in interest charges and leaving the debt for our grandchildren to worry about. I warn my fellow Conservatives that if we are tempted down this route, we abandon one of our party’s most enduring hallmarks: fiscal responsibility.

Philip Hammond is Chancellor of the Exchequer