Sir Jeremy Hunt: “A Budget Must Do More than Balance the Books.”

Sir Jeremy Hunt

Preparing a Budget involves the most extraordinary spreadsheet you will ever see. It is a double-sided sheet of A3 called the scorecard. One side sets out spending; the other lists the taxes that pay for it. Your eyes soon learn to go straight to the red number showing how far you are missing your fiscal rules. You then spend two months trying to turn it black.

That exercise matters enormously. But it can also become consuming. After the turmoil that preceded my appointment as chancellor, I understand why anyone approaching a Budget wants to reassure the bond markets. Stability is essential. Yet a Budget confined to demonstrating a steady hand risks wasting an opportunity to change the country’s prospects.

The Treasury is the most powerful department in government. A chancellor, backed by the prime minister, can bring departments together behind decisions that would otherwise remain stuck. That power should be used to tackle the problems holding Britain back: welfare dependency, high energy costs, inadequate infrastructure and inefficient public services. Getting the scorecard right must support that larger purpose.

Above all, this Budget needs to give young people hope. They are worried about finding work as artificial intelligence changes the jobs market, repaying student debt and affording somewhere to live. Those anxieties reflect something deeper than a difficult economic year. Too many young people are wondering whether they will ever enjoy the opportunities their parents took for granted.

When I was growing up, economic growth carried an expectation that living standards would improve substantially between generations. That expectation has weakened. If people cease to believe that hard work and education can produce a better life, the consequences extend beyond economics. Capitalism cannot retain public confidence unless people feel they have a stake in its success.

The answer begins with growth. Governments do not create it themselves: businesses do. The government’s responsibility is to establish conditions in which investment, enterprise and employment can flourish. That means addressing planning rules that prevent homes being built where they are needed, electricity costs that deter investment and the skills employers cannot find. These are practical problems, and other democracies offer examples of how to solve them.

Britain also has strengths that our national pessimism too often overlooks. Universities have been expanding science parks and helping create businesses. We have a technology sector capable of competing internationally. The challenge is to help promising companies grow here, with access to finance, rather than leaving entrepreneurs convinced that their next stage of development requires a move elsewhere.

Artificial intelligence makes this task urgent. Earlier technological revolutions created opportunities that were difficult to imagine at their outset. But AI is moving exceptionally quickly, while political institutions adapt slowly. Young people need education that enables them to retrain throughout their lives, through excellent apprenticeships as well as degrees. Those with an entrepreneurial instinct should also consider building a business themselves.

We also need welfare reform that helps people return to work. Young people should receive support to build working lives rather than find themselves entering long periods outside employment before careers begin.

We must be equally serious about how government spends. Treasury controls introduced when the public finances were in crisis have become an obstacle to decisions. Departments receive budgets but must return for approval before spending above certain limits. Greater responsibility within firm spending ceilings, with the ability to carry forward savings, could encourage
better decisions and a longer view.

Tax and debt must come down over time. Higher taxes leave less money available for private investment and weaken the incentives to work and take risks. We should be wary of a cycle in which disappointing growth prompts further tax rises, making the growth we need harder to achieve. Spending promises must be accompanied by an honest account of how they will be funded.

I remain optimistic. Our difficulties are serious, but they are solvable. The chancellor should approach this Budget with the ambition to improve Britain’s capacity to grow, alongside the discipline to protect financial stability. Every payslip, pension and business will be affected by the decisions announced. The greatest achievement would be to help a generation believe again that its future can be better than its past.