Budget Resolutions and Economic Situation

Liam Fox Excerpts

Monday 8th March 2021 Commons Chamber

[Dr Liam Fox (North Somerset) (Con)]

I broadly welcome the Budget. It comes at an unprecedentedly difficult time for the public finances as a result of the pandemic and the Chancellor is indeed wise largely to leave the economy alone in the coming year. This is not, as we had in the financial crisis, a fundamental problem with the workings of the economy itself, but an external shock, and the economy will self-right if we allow it to do so.

It is not a surprise that there is a bigger drop in GDP in the United Kingdom than in some other countries. We have a much larger service sector economy, and service sectors require people to move for them to work, therefore it is not a surprise that, if people cannot move, we get a bigger shock than an economy that is largely manufacturing based.

However, I question some of the attitudes to the financial years ahead. We tend to get much of the same old, same old on tax and spend; that the way to balance the books is either to raise taxes or to reduce spending. No one looks at what a business would do, which is to ask how it can earn more money. This country could earn a lot more money.

British exports now count for under 30% of our GDP. That needs to improve—the figure for Germany, for example, is nearly 49%. We have identified 400,000 businesses that we know could be exporters because they have counterparts and peers that already export. Governments need to help companies into markets. The market will do the same.

The Government can also help by setting a wider and better international framework for business. We can liberalise global services post Brexit, with our freedom in world trade policy. We should do so. Britain, the United States and Japan, the world’s three biggest service economies, would benefit enormously from trade liberalisation.

We need more wealth creation in the country. Wealth creation is not the same as growth. Any idiot Government can spend tomorrow’s money today and call the result growth. Labour Governments have made careers of doing that since the first Labour Government. Wealth creation is taking someone’s unique intellectual property and turning it into a good or a service that does not exist today, or a better good or service than exists today. That is why I would like to see more creativity in what we do in the time ahead.

Are we really saying with a £39 billion tax rise that we can find no major efficiency savings in the years ahead? Are we really saying there are no supply-side changes in our economy that could make it work more effectively? Do we really have to be saddled in perpetuity with the balance of spending and the patterns that we see today? I hope not. I hope that, in the Budgets ahead, once we put the covid pandemic behind us, we can return to a Conservative tradition of not just tax reform, but tax simplification, because those are the things that will make a market economy work better. We cannot fund the public services we want to see unless we have an efficient capitalist economy working at its maximum level, and that is the duty of any Conservative Government.