Greg Smith MP: ‘Budget was a careful balancing act’

Last week’s budget very much fired the starting gun on our economic recovery following what can only be described as the worst possible twelve months imaginable.

The Covid pandemic, and the restrictions that accompanied it, have hit our economy, people’s jobs, business viability hard.

In levelling with us all in his Budget Statement, the Chancellor set out the sheer level of government spending that has been required to support lives and livelihoods: an incredible £407 billion over this year and next.

To put that in context, that’s 19 per cent of our GDP. And that money hasn’t come from a Treasury savings pot or from down the back of the No 10 sofa.

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It is predominantly borrowed. This year the government have borrowed £355 billion, or 17 per cent of GDP, and next year are forecast to borrow a further £234 billion, or over 10 per cent of GDP.

I shudder to think the position we would be in had successive Conservative governments since 2010 not been able to reduce the Brown/Blair governments deficit by over 80 per cent. Indeed, between 2010 and 2019 the economy in fact grew by 19 per cent – faster than France, Italy and Japan.

And during this period, 3.4 million more people were helped into work.

Those stark figures, the sheer scale of what it has taken and continues to take to support people through the crisis, is why this simply could not have been a ‘splash the cash’ budget.

But a careful balancing act to get our economy growing again, whilst starting to restore the public finances.

Greg Smith

For me, the economic restart is about financial stimulus. I was delighted with the up to £18,000 restart grants for retail, hospitality and personal care businesses.

The extension of the five per cent VAT rate for hospitality and tourism. Two further grants for the self-employed and furlough extended for those who need it until September.

The stamp duty holiday extension and new mortgage guarantee scheme for first time buyers both keeping the housing market buoyant and making the dream of home ownership closer for many.

Likewise, continuing to freeze fuel duty was an essential step to keep costs low for families and businesses alike.

Even when it came to the painful bit, the increase of Corporation Tax for the largest, most successful companies, that was coupled with the ‘super deduction’ to encourage those businesses with cash reserves to unlock them and invest. investment drives innovation, productivity and growth.

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That is why, for the next two years, when businesses invest, they can reduce their tax bill by 130 per cent of the cost of that investment.

The OBR have said this will lift business investment by 9 per cent, and lift the UK from 30th in the OECD’s world rankings for business investment to 1st.

And for the two-year period this is in place, this will be the biggest business tax cut in modern British history – worth £25 billion.

So this was a difficult budget, in extremely trying circumstances for any Chancellor. But Rishi Sunak pulled it off.

The balancing act masterfully executed. And now, we can move forward with confidence as a nation.