Reducing the deficit still central to UK's recovery
Conservative MP for Camborne and Redruth, says George Osborne's Budget next week must renew the case for Plan A
We are now entering that final period of pre-Budget speculation, with George Osborne set to outline his plans a week on Wednesday. The fact that all the major good news stories were known before George Osborne even got to his feet last year was blamed for the fact that the media then alighted on all the bad news in the days and weeks afterwards, so they will be hoping for fewer leaks this time.
In the wake of the long running "pasty tax" row last year, we can also expect George Osborne to be very much on his guard against Treasury officials who come to him with small proposals to tidy up what they call "anomalies". I wouldn't mind betting that even the mention of the word "anomaly" would be the quickest way to get a proposal struck down this year. It was also clear from David Cameron's speech last week that there is no intention of abandoning the current programme to get the country living within its means again.
So what does all this tell us about what we can we expect? The truth is that the pressures on the public finances means that George Osborne has very little room for manoeuvre and his experience last year will make him very wary of schemes that are too clever by half, but the budget must still achieve four key things in my view.
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Firstly, it needs to underline why the plan to reduce the deficit is essential to our recovery. Some people say that the government is cutting things too fast but, even with the spending cuts, the government is still spending far more each year than it is receiving in tax revenue. We haven't yet eliminated the losses, we have just started to turn things around and reduced them. Unless the deficit is tackled, mortgage rates would jump and businesses would find themselves unable to borrow to invest for the future. The general sluggishness in the eurozone and world economy means that growth remains elusive, but abandoning a credible plan for the public finances would make things worse not better.
Secondly, the lesson from past recessions is that government should do all it can to protect spending on infrastructure even in difficult times. In the short term, such investment provides a boost to the construction industry and creates employment and, in the longer term, it improves competitiveness and makes the eventual bounce back into growth more vigourous. This ranges from national schemes such as high speed rail and broadband to more local projects such as dualling the A30 in Cornwall and the £25 million road scheme about to start in Camborne in my own constituency.
Thirdly, it's not all about big projects led by government. A major part of the answer lies in helping thousands of small businesses grow and flourish and that means dismantling regulation and stripping away some of the other barriers to their success. Those who put their own money on the line and take big risks to try to achieve something deserve the utmost respect. One silver lining from the necessary redundancies in the public sector is that many of those people have what it takes to set up on their own and are doing so. They often have good people skills and the ability to plan and manage large projects and this makes them ideal converts to private sector enterprise when the need presents itself.
Finally, the budget needs to recognise and address the pressures on household budgets. We have been through a sustained period where wages have been frozen but where costs keep rising and this has affected the standard of living. The government has already introduced many policies to try help. This year sees every household in the Westcountry get a £50 rebate on their water bills. Fuel taxes have been frozen. Council tax has been capped. Electricity companies will be forced to offer their best tariff. We need more such policies to help people through these difficult times.