Sir Iain Duncan Smith

It is worth reflecting on three things. As we have very little time, I make just one comment about welfare. It is necessary for the Government to reduce welfare spending, because we can see what the Government’s own forecast says will happen if they do not do so: debt and borrowing will be higher in every single year. That is hugely down to the fact that the growth in welfare spending is running out of control. I was astonished that the point was avoided during the Budget, and then we had confusion when the Chancellor went on the radio the following morning and said that welfare would be reduced during the course of this Government. He was overridden by the Treasury, which said, “No, it won’t, and he didn’t say that,” but he did. That is the confusion. I do not doubt that the Chancellor wants to reduce welfare spending, but it appears that he will not be able to. The main thing I want to say is that this Budget has not been good for working families, middle-income earners, and those who bother to save. It is really hard on them. Tax is at the highest level on record; the tax burden will hit a historic high next year of 37% of GDP, nearly 38%, and will surge to over 38.6% by 2031. Growth next year has been cut from 1.6% to 1%, and as a result of this Budget, real household disposable income per person is forecast to fall by 0.8% this year. Those are stark figures, figures that economists have produced in their forecasts. The effect of that is to give Government fewer choices. I want to talk about defence, which is important because the threat we face now—from China and North Korea, from Iran and Russia, all linked together along an axis of totalitarian states—is astonishing. That means that our defence spending needs to rise. Every other Government in Europe is raising defence spending. We used to be the leader on this; they would all look to us, but not any more, because we have avoided raising our defence spending. Even the defence review will not take place until well into next year, and who knows what will happen next. This is a failure of the Government—an opportunity that has been missed. To quote Helen Miller, the economist at the Institute for Fiscal Studies, the Budget “feels like lots of fiddling, short-term things, new complications—a ‘new entrepreneurs allowance’, ‘starter ISA’…etc. I don’t hear a clear, coherent vision or a simplification of tax system”, which is necessary. The reality is that this Budget was an opportunity missed, and future generations will look back at this moment and say, “Where were you? Why didn’t you take the decisions that were necessary?”.