As published by the Mail on Sunday:
The mutterings that keep emerging from the Treasury about increasing taxes to balance the books are economically incomprehensible. Such action would not only be wrong, it would be completely counter-productive.
We Tories must be honest with ourselves and with the public: There is no way we can balance the costs of the crisis in the short term.
Last November, the Office for Budget Responsibility estimated that Government borrowing for this financial year would be a colossal £394 billion. And in December, public sector debt passed the £2 trillion mark.
These are figures normally associated with wartime and we should treat them as such.
In 1945, Britain did not try to pay for the costs of the war straight away. Quite properly, it took 50 to 100 years to pay off those war loans.
The situation we face today is no different.
Of course, this will only be temporary and in due course we must return to the time-honoured Conservative principle of balancing the books.
Now is not the time to stifle productivity with damaging tax increases. I certainly would not vote to approve a Budget that increased the tax burden above its already high level.
If Chancellor Rishi Sunak increases tax now, I fear all he would achieve would be to undo much of the good work of his first year at the Treasury.
He must act on the fact that Conservatives are on the side of small business. We support shopkeepers, plumbers and restaurant owners who are the beating heart of our economy.
Small and medium-sized businesses make up 99.9 per cent of all UK firms, employ 60 per cent of all workers, and produce more than half of our private sector. We must not let them down.
The UK’s tax burden is already at a 50-year high. To raise it further, when millions of people and businesses are teetering on the financial edge, would be to forget our party’s roots.
Once we are past this immediate crisis, Rishi Sunak will be under enormous pressure from his Treasury officials to find ways to repay the enormous amounts borrowed during the pandemic. He must resist, as his greatest modern predecessor, Nigel Lawson, would have done in a similar situation.
He should take his lead from President Ronald Reagan, who revitalised the American economy. He cut the top rate of income tax from 70 per cent to 28 per cent across his eight years in the White House.
Reaganomics was heavily criticised by conventional economists, but it led to a growth in America’s GDP, a resurgence of business confidence and a fall in unemployment rates.
We, in Britain, need to repeat that feat today. We need a tax system that encourages growth. Two days ago, the Office for National Statistics announced that GDP fell in 2020 by 9.9 per cent. That is a record drop and more than twice the size of any previous annual figure.
The economic threat facing this country is, perhaps, the most serious of our lifetimes.
Tax levels should be set to encourage the start-up of new businesses and accelerate inward investment in a fiercely competitive world. Growth must be the clear aim of our economic strategy for the next two years, not spreadsheet conservatism.
In 2019, I and all Conservative MPs signed up to our manifesto that promised ‘not to raise the rates of income tax, National Insurance or VAT’. I will not break the spirit or the letter of that promise and neither should the Chancellor.
The truth is that any tax increase at such a precarious moment is a gamble we cannot afford.
No sensible person would take the risk of starting a business today if they knew taxes were going up tomorrow. The Chancellor must help light the spark of British industry, not dampen the flames of invention.
It is not just about taxes, however. Like Reagan, the Government needs a clear overall strategy on deregulation, for example.
Now that we are out of the EU, we should revamp regulations to help create products and processes that are just as safe as before but delivered with a lighter, simpler and faster touch.
The Covid vaccine regulatory strategy is a brilliant demonstration of what is possible. Indeed, the Bank of England has said our vaccine rollout has already ‘improved the economic outlook’. We should copy this much more effective light-touch system a thousand times across all of Government and industry. Alongside low taxes and deregulation, there is a third tool that will benefit Britain in our new global role – targeted Government investment.
History tells us – a lesson from the Great Depression, for example – that used properly, Government money spent today brightens the outlook for tomorrow.
We should take inspiration from Roosevelt’s New Deal, when billions were spent on thousands of small infrastructure projects –78,000 bridges were built, there were 11,428 road projects and 7,488 school building programmes.
We should have our own New Deal and invest tens of billions on infrastructure up and down the country for long-term economic benefits.
Not vanity projects such as HS2, but carefully thought-out smaller projects such as local fibre-optic delivery, improvement of existing rail infrastructure and local road networks.
Nowhere is investment more important to our long-term economic prospects than in technology. We must set ourselves up to succeed in a technology- dominated future.
That means a vast range of initiatives – from re-engineering school classrooms with artificial intelligence-assisted teaching, through upgrading the science learning in universities to innovations such as creating an ‘MIT of the North’ (based on the cutting-edge Massachusetts Institute of Technology) and expanding our Advanced Manufacturing Research Centre.
Soon this pandemic will pass. As every shopkeeper reopens their store and each chef reopens their restaurant, they will be placing trust in themselves to succeed. Crucially, too, they are also placing trust in the Government not to make their lives any more difficult.
The British people will succeed if we give them the opportunity.
The Conservative Government must extend a helping hand to the self-employed and small business owners by ensuring that we don’t destroy jobs by increasing the tax burden.
The Bank of England enthusiastically predicts that the economy will recover in one year. Not on its own it won’t.
A significant number of businesses have shut their doors for ever. In order to recover to our previous economic size, we will need to replace them with new businesses. That requires active encouragement from the Government.
As we look forward to our post-Covid lives, few people are better equipped than Boris Johnson to lead the country into an optimistic and upbeat future.
But to achieve that future – and not just talk about it – we need to engineer it, and we need to start doing it now.