Sajid Javid MPs contribution to the Budget Debate, as delivered on 3rd March 2021.
Thank you Madam Deputy Speaker.
Over the course of the past year,
in countries not too dissimilar to our own,
people have been asked to choose between protecting their livelihoods and protecting their lives.
That has not been the case in our country,
and for that we have my Rt Hon friend to thank.
He said, right at the very start of this pandemic, that he would do whatever it takes:
to protect jobs
to protect businesses
to protect public health.
He has delivered on every count, and this nation has rightly given him its gratitude.
Despite his success, the Chancellor will be in no mood for a victory lap.
Comprehensive support, as he has said today, has come at unprecedented pressure to our public finances.
To date, as we heard, the government has already spent more than £300bn: every penny of that borrowed.
Whilst low interest rates have certainly helped,
we cannot expect such a benign lending environment to last forever.
With national debt already close to national output as we heard, just a 1 percent rise in gilts would mean an additional yearly cost in debt servicing of £25bn by 2024.
That's more than half of the annual defence budget.
And indeed, we're already seeing rising pressure, especially because of rising global inflation expectations, so we cannot allow the inflation tiger to prowl unchecked.
Madam Deputy Speaker, the faster our economy can bounce back the easier it will be to manage our debt in the future.
Thankfully, I believe that our prospects for a sharp, strong recovery look very promising.
Thanks to government support, the vast majority of businesses are ready for the shutters of the economy to be lifted.
The Bank of England has shored up confidence with monetary easing.
Households are sitting on some £100bn of excess savings,
and unlike wartime recessions there has been no physical destruction of capital.
Above all, the government is delivering on its vaccination programme –
a programme that is the envy of Europe, and that will lead the continent out of lockdown.
For these reasons, I'm very optimistic about the recovery and I think it will happen rapidly.
Madam Deputy Speaker, in the medium term we will put our country back onto a firm financial footing by tackling systemic issues that were around long before this pandemic hit us such as low productivity and regional inequality.
That's why I'd like to welcome also the Chancellor's emphasis on infrastructure investment.
Not only will this provide an immediate increase in economic activity,
it will also drive long term productivity improvements and make sure that growth is even better distributed across the entire United Kingdom.
But I would urge him not to take his eye off delivery.
Successive governments have had a poor history of the delivery of infrastructure projects, both on time and on budget.
So I hope that my Rt Hon friend will consider complimenting his very welcome changes to the Green Book and the new National Infrastructure Investment Bank with a comprehensive cross-government delivery strategy.
Now, Madam Deputy Speaker,
While grants and support schemes have been consumed by our generation, they will be paid for by the next.
That's why the Chancellor was absolutely right to level with the British people, and to set out so candidly the pressure on the nation's finances.
While slamming the brakes on spending now would be self-defeating, the government should be drawing up plans for medium to long-term plans to manage debt.
That's why I welcome many of the initiatives the Chancellor has set out today, including his commitment to try to avoid borrowing for day to day spending.
But this commitment, I think, starts with new fiscal rules.
The Chancellor should ensure that these rules are in place by year end, ideally alongside the next Budget and the Comprehensive Spending Review.
Having run four spending Departments and the Treasury,
I'm left in no doubt that a fiscal anchor is essential to control spending and to control debt.
And lastly, Madam Deputy Speaker,
In the long term, putting the country back on a firm financial footing means that we need to build resilience against future disasters, as the Chancellor recognised in his budget speech.
Now, of course, not every disaster is a black swan,
and it would be foolish to prepare for crises that we cannot foresee whilst we are ignoring those that we can.
In terms of their potential impact on the future economy, few crises are more existential than climate change and declining biodiversity.
That's why I as Chancellor I set Professor Dasgupta very ambitious terms for the Independent Review that he did on the Economics of Biodiversity.
It makes clear that biodiversity is declining faster than at any other time in human history.
If we continue to undermine the resilience of the natural world, we will introduce new sources of serious financial uncertainty - not least of which is the increased spread of infectious diseases.
Now, whilst of course it will take time for the Treasury to digest Professor Dasgupta's Review,
the Treasury should make a start on one of his most central recommendations: the need to recognise the value of the natural world in our national accounts.
I would urge the Chancellor to formally ask the UK Statistics Authority to review how this might be done.
The ONS is one of the most widely respected economic institutions in the world.
If it can lead by example, it can make such a difference in trying to persuade other countries and financial institutions to do the same.
We can lead on this, not least because of our chairmanship of the G7 and the COP26 Conference this year.
Madam Deputy Speaker, this has been a long, hard winter, and we have all been hibernating for many months.
But as case rates fall, and the vaccination programme continues at pace, the frost has begun to thaw and we are beginning to see the first signs of spring.
The government has been given a precious opportunity: not just to resurrect our economy, but to reinvigorate our entire country.
I'm in no doubt that the Chancellor will rise to the occasion with the energy that this moment requires, and the sense of purpose that history demands.
I'm pleased to say that his budget is the first step to doing just that.