Sat in the Commons Chamber last week listening to the Chancellor’s Budget Day speech, it was clear to me that, on balance, the measures being announced were pragmatic; a Budget needed in the circumstances we find ourselves in following a devastating pandemic.
We all know that the pandemic has hit the UK’s economy and public finances hard; we have spent a huge sum of taxpayers’ hard-earned cash on the furlough scheme, business grants, and reduced business rates to name but a few of the fiscal measures taken to protect the economy, businesses, and jobs. We have also spent extra money on our NHS and other public services to pay for the costs of managing and fighting Covid-19. The Government has had to borrow a significant sum of money – the notion of which is rather alien to a Conservative Government – because two lockdowns reduced the amount of money the Government could raise in taxes. For example, from April 2020-21 the Government had to borrow £299 billion, and the total so far spent on protecting jobs and the economy is more than £400 billion.
We can, however, take some comfort from the fact that, due to the successful vaccine programme and the opening-up of our economy, as well as the careful management of the UK’s finances, the economy is in a much better place than expected, allowing the Chancellor in his Budget to invest tens of billions of pounds into public services. This is alongside setting crucial new fiscal rules that commit him to future spending discipline. The New Office for Budget Responsibility forecasts show predicted growth in the economy to be faster than previously predicted, which means that the Chancellor is able to make some much-needed investments, including measures aimed at helping the most disadvantaged in society.
I strongly welcome the Chancellor’s focus in the Budget on helping working people to meet the cost of living and help support more vulnerable families. Freezing fuel duty for the twelfth consecutive year will help millions of people and raising the National Living Wage by 6.6% to £9.50 effectively gives a £1,000 pay rise to two million families.
I am very pleased that the Chancellor showed that he had listened to MPs like myself who were concerned about the increase in cost of living, coupled with the removal of the Universal Credit uplift, by reducing the Universal Credit tapering relief by a significant 8%. Reducing poverty comes through well-paid jobs, but more money for Universal Credit – an in-work benefit – is essential in enabling people to work and get the financial support they need. The point of Universal Credit is to ensure that when a claimant finds work, benefits are removed gradually in order to guarantee that going to work and earning money leaves them better off than not going to work and being dependent on welfare – impacting on individuals’ self-esteem and feelings of being in control of providing for their families. By reducing the taper rate from 63% to 55%, millions more people keep more of their income, an average of £1,000 per year. This 8% drop is effectively a tax cut for the lowest paid. I agree with Sir Iain Duncan Smith, who pioneered Universal Credit, that ‘more money for Universal Credit is vital to support the Conservative ideals of hard work and determination, showing Britain is a country where the State does right by those who do the right thing.’
Investment in people, in families, in education and skills, and in jobs is all vital to combat poverty and to level up. Hastings and Rye has so much potential to unleash if it is given the opportunity to do so, and I know that individuals and businesses across our beautiful constituency will relish the additional support announced by the Chancellor and this Government last week.