The Conservative Party will continue to champion fiscal responsibility

Nothing encompasses that more than the £400 billion in support to protect millions of businesses and jobs throughout the pandemic, and £94 billion of financial help during Putin’s energy crisis. Thanks to our interventions, we have kept unemployment low and grown our economy. 

That latter fact was revealed by the ONS on Friday when they issued revised figures showing the British economy had the third fastest recovery in the G7, behind only the US and Canada. I have said before that the declinists in the Labour Party are wrong, and this week the ONS proved it. 

That growth record comes on top of our progress since 2010 including getting four million more people into work; 1 million new businesses created; and the lowest corporation tax and most generous investment allowances of any major advanced economy. Since then we have grown faster than Germany, France and Japan. 

But this wasn’t simply achieved through additional spending, borrowing or ducking economic challenges. For the past decade, we Conservatives have been straight with people. 

As I saw when sitting around the Cabinet table in 2010, we had to address the problems with the British economy head on. It was clear that the deficit was too high and that we needed to take action to get the economy on a sustainable footing. 

And that’s what we did. Cutting wasteful spending and reforming our public services – delivering the necessary conditions for economic growth. And since Rishi Sunak became Prime Minister he has never once ducked a challenge. Halving inflation, growing the economy, reducing debt – while they are tough targets, they are essential for delivering the strong, productive economy that the British people need. 

We’ve shown we are willing to take tough action again to meet these pledges. In my first Autumn Statement we took difficult decisions on tax and spending, with a considerable fiscal consolidation, to deliver stability and sound money. We achieved that. Our debt is projected to be £54 billion less in 2027-28 because of the difficult but necessary decisions we have made. 

Despite the siren calls of recession, the UK economy has now outperformed growth expectations, leading to the OECD and the IMF revising up their growth forecasts. And at the Spring Budget, I was able to announce a comprehensive jobs and business tax cut package and a huge increase in free childcare provision to remove barriers to work. 

I know household budgets are still feeling stretched. Falling inflation is not the same as falling prices after all. But getting inflation down will, in the end, help everyone’s money go further. Our plan to halve inflation this year is working, with the Bank of England forecasting inflation to be around 5% despite expecting a slight rise in the figures we’ll see this month. 

But we must stay the course – that’s why when announcing pay deals for public sector workers we were clear that we will not fund them by borrowing more or increasing your taxes. While that may mean tough decisions for departments, we must prioritise halving inflation. That’s also why I announced the Public Sector Productivity Programme. 

The cost of our public services is on the rise, with public spending set to grow by 2% a year according to OBR forecasts. This means tax revenues would need to increase by £200 billion by 2071 in today’s money – double the basic rate of income tax. But if we can make our public services more productive, we can ease pressure on the public purse and help keep taxes down for working families.

And there are improvements we can make. Frontline staff across our public services work incredibly hard – they’re dedicated to serving the public. And yet, they face spending hours of their working week on administration – tied up in bureaucracy. We can put an end to this waste. It does mean work for departments to track the admin burden and find ways to alleviate it. But it also means getting our frontline heroes back to the work they want to be doing. 

In politics there is always a choice. The Conservative Party under Rishi Sunak will always take the right one, however difficult. The same cannot be said for Keir Starmer’s Labour Party. 

By saying they will cancel new North Sea gas licences, Labour are committing to more imported gas and probably higher bills; by refusing to condemn doctors striking for a 35% pay rise, they are rejecting a responsible approach to public finances. But these pale into insignificance compared to the biggest Labour commitment of all: to ramp up spending on green projects by £28 billion a year over the next Parliament. 

Because as ever, Labour have been crystal clear on how much they would spend without a squeak as to how they will pay for it. In order to appear fiscally responsible, Sir Keir Starmer says he will reduce debt as a proportion of GDP over the Parliament. That could only mean funding it through tax rises – the equivalent of a 4 percentage point rise on the basic rate of income tax or £819 a year for someone on the average full-time salary. 

Unless there is another plan: to stick to Conservative fiscal rules ahead of the election and then quietly change them afterwards. They might then make the argument that investing in green energy was so important it should not really be counted as ‘borrowing.’ Remember Gordon Brown describing day to day spending as ‘investment’?

But let’s be clear: debt is debt and whatever you call it, whatever fiscal rules you follow, taxpayers still have to foot the bill. And recent external evidence suggests that for every extra £25 billion of borrowing, we would be pushing up interest rates by as much as half a per cent or £924 a year for a mortgage of £250,000. If that is Labour’s plan then let’s have a debate about it but let’s do so openly.

At present Labour are refusing to come clean with the British public on a matter as fundamental as tax and borrowing. That’s not an honest or responsible approach to government. 

Conservatives believe in fiscal responsibility because we don’t believe you can borrow your way to prosperity. Instead we need supply side reforms that make us more dynamic rather than demand boosts that fuel inflation, borrowing and taxes. On such a profound choice, the British people deserve some honesty from Labour.

The Rt Hon Jeremy Hunt MP is Chancellor of the Exchequer 

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