Yesterday’s budget had some important and useful measures. I welcome the cut in National Insurance contributions, the (limited) rise in the VAT threshold, the extension of the Household Support Fund for vulnerable families, the new incentives to save and invest, and the plans to boost productivity in the public sector.
Inflation is down, wages are up, mortgage rates are falling and the economy is coming out of recession. All good.
In my speech in the budget debate today I praised the new measures while also expressing my deeper concern about the economic model of the UK, which began under Labour but continued since 2010. This century we have built an economy on cheap money (low interest rates and money printing, which has radically exacerbated asset inequality), cheap labour (low wage migration, depressing wages and putting unsustainable pressure on housing and public services) and cheap imports (imposing costs on our producers while we import products made with lower standards and more carbon emissions from abroad).
We need profound reform, which will take years. But in my speech I set out four things I think we need immediately:
1. Tax cuts for small businesses
2. More housing where it’s needed
3. Welfare reform to get some of the millions of economically inactive people into work
4. Defence spending to make us safe and boost the domestic supply chain.
