Speaking against the Chancellor’s budget this afternoon, we first have Mr Rishi Sunak, in 2015:
No more irresponsible borrowing. No more spiralling debt at the taxpayer’s expense. No more passing the debt to the next generation. I was delighted to hear the Chancellor’s plans for this nation finally to run a budget surplus.
I have spent my career in business. Every company I have been involved in sets a budget, as indeed does every household in this nation, and when they do they operate with these basic principles: first, “How much is coming in?” and only then, “How much can I spend?” For too long, Governments have got that back to front, spending first, ignoring how much is coming in, then letting borrowing endlessly make up the difference.
Coming from a financial background, I decided to spend some time analysing our nation’s fiscal history. I wanted to know, when it comes to our Government’s revenue, how much does in fact come in. I can tell the House that, since 1955, tax receipts, with limited variation and remarkable consistency, have averaged 36% to 38% of GDP. In spite of the vast differences between Labour and Conservative Members in our approach to setting tax rates, the average tax take has been remarkably similar under Governments of both parties. There appears to be a natural ceiling to what any Government can extract from the pockets of its hard-working taxpayers.
That to me suggests a simple conclusion: in normal times, public spending should not exceed 37% of GDP. That is the best estimate of our income as a Government and therefore the best guide to what we can afford to spend. So the Government’s plans to get public spending to that level are not, as some Opposition Members have suggested, an ideological crusade or clever politics; rather, tackling excessive public spending is simply the sensible, logical and responsible course of action. That action, taken to make sure that we live within our means, is the same course of action that any business or household would take when presented with the facts. We all know what happens when those facts are ignored: more borrowing, more debt.
All debts need to be repaid, with interest. For the next generation, that means higher taxes or less money to spend on public services. As the hon. Member for Streatham said, we already spend more money on debt interest than we do on the police, transport or housing. That simply cannot go on.
Whether one is a Thatcherite or a Trotskyite, the rules of budgeting are the same: one cannot sustainably spend more than one earns. I commend the Chancellor for acting on that principle and ensuring that Britain’s finances will once again be back in the black.
He then added, in 2017:
Fiscal responsibility is not just an ideological pursuit. Without a prudent approach to borrowing and debt, ordinary people pay the price. They pay it through slower growth, less fiscal resilience and interest rates that begin to climb. Let me start with growth.
As Government borrowing grows, it crowds out the lending available to British businesses to expand and invest. The results of these things around the world are clear. On average, economies with debt exceeding 90% of GDP grow 1 percentage point slower than those where it is between 30% and 90%, and 2 percentage points slower than those where it is below 30%. If it were not for the actions of this Government, our nation’s debt would already have spiralled well beyond 90%. Although a 1 percentage point hit to growth does not sound like a lot, it would be £100 billion in GDP, and £40 billion less to the Treasury’s coffers.
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