Liam Fox is a former Defence Secretary and is MP for North Somerset.

At the last General Election, fought against the backdrop of Labour’s deep recession, it would have been difficult to imagine the transformation that has taken place in the last five years.  We have been spectacularly successful in getting people out of welfare dependency and into the world of work. The 1.8 million jobs created in this country during this Government’s term is the envy of most Western economies and something that our European partners can only dream of.  It is an achievement of truly historic proportions, unprecedented in its scale since World War Two.

Following in the wake of our strong economic growth, our low inflation rate and low mortgage rates, wages are now rising above inflation and generating real increases in the standard of living.  At the same time, Treasury receipts are beginning to recover, with the prospect of seeing deficit reduction occurring at a faster rate in future.

There are, I believe, four main risks for the economy. The first two, the global slowdown (particularly China) and the chronic instability caused by the euro, we can do little about.  The third is that Britain’s personal sector debt will replace government debt as the major economic impediment to recovery as interest rates begin to rise. The fourth is the potential catastrophic election of a Labour Party which has not only failed to learn the lessons of the previous mistakes, but is committed to repeating and exacerbating them.

This is the one risk where the Chancellor really can help, and this week’s Budget offers an opportunity not only to consolidate and build upon our economic achievements, but to change the terms of the political debate. The Chancellor will be inundated with policy prescriptions for his Budget, but here are a few themes that would be welcome.

Continue to eliminate the deficit and start repaying debt.  There are those who say that all the markets expect is a continuing downward pressure on the deficit, so there is no advantage in going through the potential pain associated with its elimination. They are wrong. Debt interest will be close to £60 billion this year – the third biggest element of Government spending. Every pound we spend on debt interest is one we cannot spend (on health, education or security), or one which we cannot use for tax reduction. Eventually, this should be part of changing the terms of the economic debate. At the 2020 election, we must be able to force Labour into a position where they feel unable to increase the national debt again because the public would not tolerate it. If we can find a way to show each taxpayer how much they are paying each year for debt interest, this would help. In any case, we need to stop borrowing from the future for today’s discretionary spending – it is both dishonourable and immoral.

Back to “sharing the proceeds of growth”. Now that we have sustained growth, it is time to return, with a variation on a theme, to the Chancellor’s previous policy of sharing the proceeds of growth. This time, however, the proceeds should be shared between deficit reduction and tax reduction. Only non-discretionary expenditure should be allowed to continue to rise and, by this I mean national security and the costs of providing care for the elderly, in line with our changing demographics. We must be careful to ensure that, in shrinking the state, it is the right state that we are shrinking. Further reductions in our bloated welfare system are essential for our long-term economic health and the Chancellor should signal the next moves in this direction.

Stop the multiple taxing of the same money. We are taxed when we earn money and we are taxed when we save the money that is left over. If we invest in property, we might find ourselves hit by capital gains tax, and if we have the audacity to die will be hit again by inheritance tax. This is both economically counter-productive and iniquitous. We need to go further in easing the burden on those who save for a rainy day.

Don’t shrink the tax base too much. It is a very noble aspiration to take more and more people out of tax at the bottom end by continually raising thresholds. However, there are potential democratic implications for this, if it goes too far. If the tax base shrinks too much, there becomes an incentive for more people to vote for higher rates, knowing that they will never have to pay them. Increasingly, we should be thinking about cutting rates of tax to reduce the burden more widely. We need to take the tentacles of the welfare state out of the middle classes – we don’t need an expensive redistribution programme. Too many middle-class owners have found themselves in the higher rates by stealth. This needs to be reversed.

Change our terminology. Austerity has increasingly negative connotations with the electorate. We should call our approach by the virtuous term which resonates with most voters. It is “living within our means”.

Simplify the tax system. Gordon Brown’s economic OCD, the constant need to increase the complexity of the tax system, is of benefit only to the accountants. Radical simplification of the tax code is a long overdue reform and fits well with the Chancellor’s narrative.

Set out our longer term tax plans. We can fundamentally change the terms of trade of our economic debate by turning the tables on Labour over taxation. For years, Labour set out their spending plans and challenged the Conservatives to match them. For too long we did so. We should now set out our projected tax take over the next five years, as a percentage of GDP, and challenge Labour to match our plans. If they do not, we need to pose difficult questions about which tax rises, they will impose compared to our planned programme. Politically, this could turn out to be the most important budgetary change.

We have much to be proud of in our economic achievements of the past five years, yet we must be realistic about the scale of the challenges ahead, especially on public spending. Our immediate political task, however, is to prevent the economic mayhem and social damage that the election of a socialist government would bring. This week’s budget needs to be a showcase of our successes, an explanation of our direction of travel and provide yet more ammunition to help win on May 7. All are well within the Chancellor’s reach.