John Glen is Economic Secretary to the Treasury, and is MP for Salisbury.
Yesterday’s Budget was an important milestone on our journey to rescue the economy from the mess we inherited in 2010. Having taken some extremely tough decisions over the past eight years, we are now in a position where we can see that the hard work of the Government and the British people is paying off. We are not complacent; there is still more to be done to eliminate the deficit. But the direction of travel is clear. A fiscally responsible Conservative Government is delivering on its promise to improve the public finances at the same time as expanding the economy and improving our public services. As the Chancellor informed the House yesterday, the era of austerity is finally coming to an end.
As Conservatives, we need to be better at selling our achievements to the electorate. Our fiscally responsible approach to the public purse is putting this country on a firm foundation. Getting to grips with the deficit has not been a dry, intellectual exercise in the Treasury. Its purpose was to move to a point where less money was being spent on debt interest so that more funding could be found for our hospitals, schools, the police and armed forces, as well as reducing pressure on hard-working taxpayers. We have managed to reduce the deficit by four-fifths, lowered the unemployment rate to its lowest level since 1975, and wage growth is now also picking up, with the strongest increase for almost decade recorded just this month. Even with the increased spending announced yesterday by the Chancellor, the budget deficit will continue falling, with the Office for Budget Responsibility (OBR) forecasting it will drop to just 0.8 per cent of GDP by 2023-24.
As the Shadow Chancellor’s interview with Andrew Marr showed on Sunday, the Labour Party have not learnt any lessons from the mistakes they made when they were last in government. Their grossly irresponsible and economically illiterate plans include a £1 trillion spending spree, and would add £11 billion more to our debt interest payments every year, saddling future generations with more debt, suppressing economic growth, and reducing investment in public services. Social justice cannot be delivered off the back of a broken economy. Corbyn’s reckless plan to spend £176 billion on mass renationalisation – which John McDonnell claims will ‘not cost them anything’ – is nothing more than fantasy economics.
The difficult decisions we have taken over the past eight years have protected economic growth, helped to create the revenues which now allow us to boost spending where necessary. As MP for Salisbury in what has been an extremely difficult year for the constituency, I particularly welcome the additional £1 billion for the Ministry of Defence, available for the remainder of this year and next. This additional funding will be focussed on our cyber capabilities and the Dreadnought programme, helping to improve our national security architecture.
As Economic Secretary to the Treasury, I was pleased to hear the Chancellor announce that the government will be expanding access to the Financial Ombudsman for larger SMEs. Credit goes to my colleague, Kevin Hollinrake, chair of the All Party Parliamentary Group (APPG) for Fair Business Banking, who has campaigned hard this year to push the issue of the challenges facing small businesses and their finance providers, higher up the political agenda. More work needs to be undertaken to address cases from the past but progress is being made.
On health, as the Prime Minister announced in the summer, this year’s Budget introduces a large increase for our National Health Service. We are now committed to spending £20.5 billion more per annum on the NHS by 2023-24, a total increase over the next five years of £84 billion. A key part of our plan for the NHS will also be a targeted effort to help those experiencing mental health crisis. Mental health funding will rise by more than £2 billion by 2023-24 and we will introduce a new mental health crisis service – with focused plans for young people. Closely related to this, we will also go much further in boosting funding for adult social care. Local authorities have been at the coalface in helping the government show spending restraint over the past eight years. An extra £650 million to English authorities in 2019-20 for social care funding will therefore be welcomed in county halls across the country, especially coming soon after the announcement earlier this month of an extra £240 million to meet social care pressures this winter.
Although the era of austerity is coming to a close, we are emphatically not rejecting the need for ongoing discipline with the public finances. We are boosting spending for parts of our public services where the need is most pressing. But we are not turning on the taps to undo the hard work we have undertaken over the past eight years.
The improved position of the public finances will not just be translated into careful spending increases and a continued focus on bringing down the deficit. The Chancellor left a major highlight of his speech until the very end – announcing transitional relief and enhanced allowances to universal credit, but also bringing forward increases to the tax-free personal allowance and the higher rate income tax threshold by a year. From April 2019, the personal allowance will rise to £12,500 from £11,850, while the higher rate threshold will increase to £50,000. These changes are a tax cut for 32 million people across the UK. One million fewer people will pay higher rate income tax than in 2015-16.
Yesterday’s Budget balanced the application of enduring Conservative economic principles whilst responding to the political imperative to ease spending pressures. We will deliver affordable tax cuts whilst maintaining vigilance on the downward trajectory of the deficit and national debt. By continuing this principled yet pragmatic approach, we enable the electorate to maintain their trust in us, despite a challenging economic environment and the uncertainties around Brexit. As Conservatives we must continue to demonstrate our economic competence and deliver for the British people. The alternative future for our country under Jeremy Corbyn and McDonnell does not bear thinking about.