I welcome this Budget, particularly the fiscal stance adopted by the Chancellor and the Treasury. It is a well-targeted fiscal stimulus for productive capacity in the British economy and for dealing with the demand and supply difficulties we have with coronavirus, and I welcome it. In particular, as I said in intervening during the shadow Chancellor’s speech, I welcome the careful co-ordination between the Bank of England and the Treasury. That should be happening across the world and other countries should follow this Government’s lead.
There has been significantly increased investment in this Budget. Many people are saying, “Gosh, we’re spending all this money—where has it come from?” It is a very clever Budget, in my judgment, because it is less profligate than it appears. Yes, borrowing has increased, but if we look at where the money comes from and at the debt interest payments that the Government will make over the next few years in servicing the debt, we see that the debt interest to revenue ratio is dropping from 4:1 to 3:1. We are leaving corporation tax at 19%, and that will also give the Government more money in the years to come. More importantly than any of that, our growth is holding up—it is one of the highest in the OECD—because of the careful management of the economy under this Government over the last few years. This is a prudent Budget, with prudent investment for the future.
This Budget deals with three big challenges: it starts to deal with our historical challenges, it deals with our present challenge of coronavirus and it starts to deal with our future challenges. On our historical challenges, I was reading—it is not common, always, in this House—Lord Hennessy’s book “Winds of Change”. In that book on the early 1960s, which I urge all Members to read, he quotes a Cabinet paper written by Harold Macmillan in December 1962. In it, the former Prime Minister said that the two biggest challenges for the British economy were productivity and the regional imbalance between north and south. I mention that because these are very difficult, long-term problems that this Government are determined to tackle, and I welcome the measures in this Budget to do so.
Those measures include, in the modern day—the Government did not do this in quite the same way in the ’60s—our investment in R&D, with the fastest growth that this country has ever seen, and our investment in infrastructure, which has already been well trailed by many Members. In particular—this has not been much talked about—there is our skills fund. Investing in human capital is just as important, if not more important, than investing in physical capital, and that is what this Budget does.
Those are our historical challenges—now on to the present challenges. Our most immediate present challenge is obviously the coronavirus pandemic. The Government have stood entirely behind this country, and they are leading the country through what is obviously a very difficult time. It is important for the House to appreciate how significant economically the coronavirus really could be. It means everything from reduced goods imports from China and reduced spending by Chinese visitors to other countries to damage to supply chains outside China and disruption to demand not just in the United Kingdom but in our other trading partners—whether Europe, the west, Asia, Africa and across the world. The impact of coronavirus economically could be quite significant, and this Government, with the big bold bazooka that the Treasury has wielded—I am sure I read that somewhere—have shown their absolute determination to make sure that this country is in the best possible position.
We also have future challenges that this Budget starts to deal with, particularly on business rates. The measures we have taken on business rates are partly temporary to deal with the immediate difficulties for small and medium-sized businesses in the retail sector. However, the review that we are going to have to complete by the end of this year is really the best opportunity this House and this country have had for a very long time finally to reform what I believe to be one of the worst taxes in our tax system. We have a chance to do that now, and we should grasp this nettle. If we can achieve that, I think that retailers, and indeed businesses all across this country, will thank us for generations.
An American psychologist called Joseph Luft invented the phrase that was popularised by Donald Rumsfeld during the Iraq war, when he spoke of “known knowns”, “known unknowns”, and “unknown unknowns”. In politics we often deal with known knowns, and known unknowns, but at the moment, with coronavirus and the difficulties across the globe, we are dealing with unknown unknowns. I am confident that the Budget sets us in the right place to deal with those as best we can.