To watch my video on how we make the case for low taxes and free markets, click here.
Since 2010, our economy has made considerable progress, with nearly 8 years of consistent economic growth, real wages continuing to rise faster than prices, youth unemployment halved and the overall unemployment rate at its lowest since 1975.
By contrast, Labour left behind rising unemployment and a Ministerial note saying “I’m afraid there is no money”. Labour mismanagement has ensured that every Labour government has left office with unemployment higher than they found it.
This meant that when the global financial crisis came to the UK’s door, we were ill-equipped to deal with it.
Over the last eight years, we have reduced the significant budget deficit we inherited by 80%. That’s been achieved by a combination of controlling spending and modest tax rises, with the burden of tax rises falling on those with the broadest shoulders.
Over recent months, there has been much discussion about the right amount of spending on public services. There has been rather less discussion about the tax burden. What many people may not realise is that the tax burden – the proportion of tax taken by the state – is heading towards a 50 year high.
I don’t know whether other MPs have a different experience, but I certainly don’t have lots of people coming to my surgeries saying “please put up my taxes!”
In my experience as a constituency MP, the cost of living is near the top of many peoples’ concerns. We don’t help people with their cost of living by putting their taxes up. That’s why I welcome the recent announcement by the Government that it will be freezing fuel duty for the ninth year in a row.
Given that it is important that we properly fund public services, but we don’t want to raise an already high tax burden, how should we raise the necessary revenue?
First, by increasing the growth rate of the economy by increasing productivity and improving the skill base of our workforce. Second, by reducing tax rates and simplifying the system, you can raise more revenue.
Some may be sceptical on that second point, but the facts are clear.
Let’s take one example, over the last eight years, the rate of Corporation Tax has been reduced from 28% in 2010 to 19% and the system has also been simplified. As a result, the revenue raised from Corporation Tax has gone up significantly - from £36.6bn in 2010 to £56.1bn last year. That means we have more revenue for our public services like the NHS, not less.
However, even with more revenue to spend, we still have to decide which areas of spending are our priorities.
To govern is to choose, and these choices must be made, not ducked.
The Government has made a choice to spend money on the NHS, and I support that – as do the public.
As Conservatives, as well as talking about how much money we are spending, we should also focus on what really matters to the public, which are the outcomes delivered by the public services paid for by their hard earned taxes.
Over the coming months, we should look at better value for money and higher productivity in delivering our public services. For example, the better use of technology in improving outcomes in the NHS.
As he puts the finishing touches to next week’s Budget, the Chancellor has to balance everything I have mentioned. No one said being Chancellor was easy!