John Stevenson: The backdrop to the debate is very much one of a serious crisis with huge implications for us individually and collectively, for our country and for our economy. Before I touch upon the Budget itself and the subject of today’s debate, I want to make one observation. The overwhelming majority of the people of this country are employed by small and medium-sized businesses; people’s mortgage, lifestyle and standard of living depend on them. Indeed, the wealth of this country very much depends on small and medium-sized businesses. Therefore, looking at this crisis, I hope that when the Chancellor makes his statement this evening he concentrates on the lifeblood and the success of those businesses. Otherwise, the crisis will be detrimental to the long-term health and success of this country.
Specifically on the Budget, I want to make three comments. The first is one of support and encouragement to the Government. The second is one of hope. The third is a word of caution from somebody who is a strong supporter of the Government.
I very much support and congratulate the Government on the serious amount of capital investment that they propose for the regions, and not just for the north. It is widely recognised that that is badly needed, and indeed, many people would suggest that it is long overdue. The important thing is that this must not be a splurge. We must not see a surge of money going into investment and then a famine in a few years’ time. We need consistent and maintained investment for many years—indeed, beyond this Parliament. We should almost be suggesting that this is a cross-party initiative, because it might well go beyond the Conservative Government. If we are to see real change in our regions and in the north, in our roads, rail and airports, and in digital and skills we need a sustained period of investment.
Through that investment, what we ultimately want to do is create an environment for business to thrive. In many respects, the success of this investment will not be the new roads, new rail and so on. It will be whether there is private sector investment following Government and taxpayer investment. We want to see private sector jobs and wealth creation in the north. Indeed, I want people wanting not to come to London for their career, but to go to other parts of the country. I also give a word of warning: we should always remember that Governments do not create wealth; it is business and the private sector that do so.
I also support the Government’s review of the Green Book, which again is long overdue and extremely welcome. That will create a real opportunity to see investment going to places that have wrongly missed out in the past.
My second point is about hope—a hope that the Government’s is a real ambition to change our public services and our complicated tax system; a hope that we have the ambition to reform social care and to look at how we can reform other public services, improve their performance and develop them for the future; a hope that we have true reform of local government and real devolution to the regions, so that they can make their own decisions and investments, and have some self-governance in a way that we have not seen in our regions for many years; and a hope that we see some reform of the taxation system to make it efficient and fair, and making a real contribution to the economy—less tinkering, more simplicity.
To give one specific example, I suggest looking at reform of inheritance tax—a tax that is disliked by many people, by those who are going to pay it and those who are not, and indeed by future generations, who think their parents might pay it or that they themselves might have to pay it. It is not a tax that raises a huge amount of income for the Treasury, but, through some simplicity and with some changes, it could be fairer and at the same time generate more money.
Thirdly, I have a word of caution. I appreciate that we have a serious crisis going on, and I recognise that the Government will be looking to supply a great deal of funding and support for businesses, individuals and organisations up and down the country, but I am a fiscal conservative and I do, in the long run, believe that we must live within our means and that we must have balanced budgets. We cannot borrow forever. Looking around the world at other economies, we see that those that are debt laden do not function as well. Looking back to the 2008 crisis, the borrowing was £40 billion a year. That was after 16 years of economic growth, yet the Government at that time were still borrowing instead of repaying debt.
We have had 10 years of growth, yet we still have a substantial budget deficit. The danger for us is that if at some point in the future there is a rise in interest payments, that will have a very detrimental effect on the state of our nation’s finances. Rates might well rise at some point, and unexpectedly, in the way that other things can hit an economy out of the blue.
I therefore suggest to Government that while they plan for future annual growth in the economy, we must always remember that recessions will happen. Indeed, given the present crisis, a recession might already be under way, so we must be prudent in the long run to ensure that the nation’s finances stack up and that we have the firepower to deal with downturns when they come. A final point: prudence is a virtue, and it is one that I believe the Government should follow.