The recent discussions of tax and spending, debt and deficits has shown how, now we are through the worst of the covid storm, the focus is turning to how to mend the damage.
When the pandemic struck, the only course of action was to batten down the hatches. To save lives we shut our doors, closed our businesses, and did what was necessary to protect essential services like our NHS.
I have spoken to many residents and local businesses regarding the impact of covid on their livelihoods, and the picture is mixed. Few have been unaffected, and while some have adapted and flourished, many are only standing today due to Government intervention which has been staggering in its scale and scope: In Runnymede and Weybridge around 20,000 people have been supported by furlough or the self-employment support scheme, £110 million has been allocated in government loans, and that’s before we count grants and other support packages.
The unprecedented action taken by the Government has protected our residents’ lives and jobs, but it has come at a cost. UK debt is over £2 trillion. UK deficit at over 100% of GDP. And with the furlough scheme ending, and summer peak trading for some sectors coming to an end, we know the storm is not yet over.
These are truly concerning figures to a fiscal conservative such as myself. And the extent of the economic impact will undoubtedly be felt for many years to come. Before this crisis we had worked hard to address the UK deficit and fix our economy, to ensure future generations faced record employment levels rather than the burden of our debt. This laid the foundation for the support we have now been able to provide in response to covid. The cost of covid means we must now face that challenge again. If we do not address the deficit, current generations will have benefitted to the detriment of the next, and we will be in a weaker position if future challenges arrive. Yet, if we rush to reduce the deficit in the coming months we also risk further economic damage in the longer term.
The way to ensure recovery it to not to merely repair but rebuild, to ensure that both the benefits and burden are shared equally across each generation, and ensure we uphold the ‘social contract’.
Our businesses are the engines that power our economy. Placing further burdens on our job and wealth creators risks stalling that engine while the storm is still looming. The only way to really recover from the damage caused is to ensure a strong recovery. To know we have the skills and jobs and infrastructure to not only rebuild, but build better.
The Chancellor is going to have to make some difficult decisions in the coming months, and there is no easy solution lying in wait, whatever he does will involve some form of compromise. Raising corporation tax risks harming SMEs which have already been hard hit, and undermining opportunities for growth and job creation as we prepare to leave the EU. Sharp rises in fuel and other duties risk hurting those who are already struggling through loss of income. And abandoning our commitment to foreign aid risks damaging not only our reputation and influence, but our chance to bring about real positive change in parts of the world who do not have the resources to support their recovery from this pandemic.
Our businesses have struggled through unprecedented closures and restrictions which, while necessary, have seen many face serious hardships and others already fail. The recovery must support growth and private enterprise to flourish.
It is of course not just businesses and the economy which has been affected. Our children face risks through disruption to education. Those starting or in work risk fewer jobs and opportunities available. And those approaching or in receipt of pensions face uncertainty and possible increased risk from the pandemic.
Now is the time to plan the recovery, to achieve balance and put in place the conditions for growth. To create opportunities, and to rebuild our economy to be stronger, greener, and more resilient than before.
To ensure a fair tax code rather than creating more complexity. To build in environmental protections to ensure a sustainable future. And provide confidence and stability as the harbour for growth and investment.
It is through a strong economy we gain the wealth to invest in our public services. It is through growth we improve our schools and hospitals. And it is through prosperity we are able to improve standards for all.
The Government has provided unparalleled support to see us through the eye of the storm. Now is the time for the same bold and decisive approach, not to repair what we had, but to look to the horizon and rebuild for the future.