Mark Field is the Member of Parliament for the Cities of London and Westminster and currently serves as a member of the Intelligence and Security Committee. Follow Mark on Twitter
There is no
doubt that the Chancellor’s room to manoeuvre is incredibly limited. Much of
this, of course, can be attributed to global events – we only need to look at
the weekend’s dramatic news from Cyprus to know that the Eurozone crisis is far
from over. However, it has also become ever clearer that, in the Coalition’s
first Budget in June 2010, the government was complacent about growth.
pre-election boom following 2009’s VAT reduction and the large, early rounds of
quantitative easing lulled the Coalition on assuming office into believing
that the growth baked into the system would somehow do the heavy lifting when
it came to deficit reduction. The coalition’s plan to eliminate the structural
deficit required the gap between revenue and expenditure to be narrowed by £159
billion in 2014/15. Tax rises were expected to contribute £31 billion and
spending cuts £44 billion to this total.
however, the Coalition ended up with the worst of all worlds. It has received
relentless criticism for harsh austerity measures when in reality, too often it
has lacked the political will and necessary competence to execute the levels of
savings required. The fact is, for all the rhetoric, we are still overspending
by some £300 million each and every day and thus needing to borrow to the tune
of £120 billion year-on-year. In 2010, we should have looked the electorate in the eye
and been quite clear about the magnitude of the task that lay ahead to rectify
the public finances. Early u-turns on school sports, forestry and book reading
schemes augured ill for the government’s ability to push through some of the
more important and wide-ranging savings.
But we are
where we are.
take the view that talk of radical tax cuts as the vital shot in the arm following
this Budget is unrealistic. As a former businessman myself, of course I want to
see taxes down as low as possible. However, I fear confidence is so low at the
moment that until it is restored, almost any tax giveaways are more likely to
be squirreled away as savings either for businesses or individuals than pumped
back into the economy. We would also run the serious risk of the markets losing
faith in the event that we played faster and looser with public borrowing than
we are already doing. In spite of the recent loss of our triple A rating from
Moody’s, the Chancellor’s great achievement – and this really should not be
underestimated – is that we are still able to borrow at such low interest
rates. The lesson of both 1931 and 1976 is that once the markets turn, all is
probably have to get real about the likelihood of the Coalition being able to
enact further, significant public spending cuts in advance of the 2015 election
in addition to those already planned in years four and five of this parliament.
That is not to say that in an ideal world we should not try. We are, after all,
continuing to live well beyond our means. But the notion that anything we do
now, with only two years to go until the General Election, will have a
sufficiently significant impact on the economy is probably unrealistic.
a bland Budget.
Since it is hard
to see in the short term how we can bridge the sizeable gap in the national
finances, my main hope for this Budget is that the coalition takes some of the
long term decisions that the British economy requires. I think there will be
some targeted additional borrowing for some of the shovel-ready projects like
housebuilding, science parks and in areas like the technology sector. Ideally,
we would also try to give businesses certainty on the some of the key long-term
issues facing the British economy, particularly over aviation and energy. We
cannot let these political footballs be kicked into the next parliament once
I should also
like to see the Chancellor put some light at the end of the long tunnel the
British economy is currently travelling through. The magnitude of Britain’s
difficulties is intimidating and I am not implying that the Government has an easy
job – the legacy it inherited was a grisly one, and a crucial part of building
an environment favourable to enterprise involves unravelling that legacy.
Nevertheless, for our nation to be successful and for our Party to enjoy
popular electoral support, it must first level properly with the public when it comes to just how serious our
finances are (no juvenile name calling, no blaming the ‘last government’, no partisan
political dividing lines).
however, it must tell a positive story, recognising that in today’s global
race, successful countries will be those in which ideas and dynamism are
captured and retained. That translates as an immigration system open to the
highly skilled from across the globe so that innovative and creative people can
gather to exchange and develop ideas. It means governments creating certain and
stable environments that breed confidence when it comes to borrowing and
lending. Targeting infrastructure, so that hubs like the Silicon
Roundabout growing around Old Street are linked into transport, supply and
high-speed broadband networks. Creating regulatory environments in which the taking on
staff is not perceived as too costly or high risk. Having universities
and schools which provide the market with employees who are well-equipped and eager, and have an appreciation of what they need to do rather than what they are owed. Where
governments are much more consumer-focused and able to adapt to change themselves.
Is our Government currently providing such an environment? Well, usually, it is getting
the rhetoric right. I very much support, for instance, the high profile
business delegations to India and the focus on high speed visa processing for
business people looking to come to the UK. But there are two things that worry
me: first, the gap between the government’s rhetoric and its success at
following through and, second, the anti-success narrative that seems to be
developing in our nation.
enterprise, of which we need more so desperately, has always required a degree
of risk-taking. But nowadays the risks seem greater because in spite of what
the Government says, there are still hefty taxes to pay, the cost of living is
stubbornly high, banks remain reluctant to lend and it is still too costly to
take people on. Furthermore, tax law seems much less certain and the general
population far more receptive to the bashing of the wealthy, wealth-creators
and capitalism than has until recently been the case. I speak to people in
businesses large and small in my constituency and I talk to leaders in the City
– not, I hasten to add, exclusively in the banking profession. Suddenly, for
the first time ever, global
corporations are beginning to consider the almost unthinkable prospect of
political risk being attached to the UK. Small wonder few will expand so
rapidly anytime soon. Politicians of all colours cannot keep stoking up the hue
and cry towards big corporations.
If there is
one thing the Chancellor can do, it is to forget about pressure for quick fixes
and transient boosts and focus relentlessly on delivery as well as longer term measures to make our nation a more
tempting prospect. If we are not to get breathtaking growth before the 2015
election, let’s at least get some credibility for doing the right thing for Britain
in the long term and give people some sense of hope for the future.