My speech to the Marshall Society for Economics

Ladies and Gentlemen,

It is with great pleasure that I address you this evening as the Chairman of the Cambridge Conservatives to talk about the budget and Conservative policies.

I am not an economist although I have been a non executive director of a bank and I have lived through the effects of different economic policies.

I have successfully grown and sold companies.

I have been the Leader of a Conservative led County Council dealing with the most significant reduction in funding in a life time.

Brought up in a household, in Cornwall, by parents who were not able to afford to send me to the public school I had won a scholarship to, it would have been easy to have given up, not to have been inspired, to settle for second best. I had all the excuses available. I left school at 16 and joined the RAF.

But Margaret Thatcher caught my attention.

I was inspired to better myself, to achieve and more importantly to stand on my own two feet and be proud.

And that is the strength of politics.

It can inspire. It can liberate, encourage, reward. It can also smother, control and demotivate if not careful.

Political parties set out general directions for policy, high level principles, signals that guide us in our decision making as individuals and as organisations.

Budgets are key tools to reinforce these principles. The recent budget is no exception.

But whilst preparing for this evening my thinking strayed way past the obvious budget line by line examination leading me to the fundamentals of the differences between Conservatives and Labour.

I will ignore Lib Dems as they don’t really have any serious policies on much, certainly as far as the economy is concerned.

I think the philosophical differences boil down to these:

1. Conservatives seek to create wealth, to promote success whereas Labour are much more concerned with wealth distribution, sharing out wealth created by someone else. Sharing wealth seems to be more important than creating it.

2. Conservatives believe in individual responsibility, trusting in people to manage their own lives whereas Labour seek to behave as a nanny, with endless rules, regulations and control over our lives.

3. Conservatives believe that many institutions are better run in the private sector rather than by the state.

4. Conservatives believe that low taxation rates are good and stimulate the economy. Small government is good. Labour seek higher taxes and big government.

5. Conservatives believe that welfare is a last resort rather than a lifestyle choice.

I must start by saying this country is a very wealthy country but it has no god given right to be so. We must work hard to keep our standard of living whilst competing on the world stage.

We hear much about poverty often spoken by people who have very little understanding about real poverty but a clear understanding of the power of poverty as an effective political slogan.

Absolute poverty is where families survive on very little. Just enough to meet basic needs. Absolute poverty eradication is, arguably, an achievable objective and with the odd exception it is rare to see absolute poverty in the UK.

Relative poverty, however, defines income or resources in relation to the average. Clearly by definition relative poverty can never be eradicated unless we live in a socialist state where everyone earns the same.

And yet compared to the 85% of the worlds population who make less than $200 a month we are all rich.

Wealthy people who get richer should be roll models, people to look up to and to aspire to.

The wealthy have money to spend, to put back into the economy. The money does not go away just because it is in the hands of an individual or company.

We must remember we operate in a world economy and must attract the best to live here if we are to maintain our high standard of living.

Ridiculing and showing little respect is not the best way to attract anyone to live here.

And yet we are developing a culture of bashing the wealthy.

In the good years we seemed content to see bonuses paid to individuals who helped our pension funds grow.

Now, everyone who gets a bonus is seen as the devil.

This is the policy of envy and is destructive.

What will be said if our financial institutions relocate overseas? Who in this country will benefit from that?

Conservatives seek to promote business in order to generate wealth that can be used to support the infirm, elderly and sick.

This typically means making it easier for business to succeed by reducing taxation, reducing barriers to employing staff including employment regulations and reducing costs.

This budget helps us to create personal wealth by seeking to lower personal taxation, by raising the 40p income tax threshold modestly to £42,285 next year, reducing air duty on flights to the US and increasing personal allowance to £10,500. Corporation tax will be the lowest business tax of any major economy by 2015.

Raising the limit on premium bonds, increasing the lump sum that can be taken as a lump sum from pension pots to £30k, removing the requirement to buy a pension annuity and taxation reduced to normal rates on cash taken all help us to retain our wealth. Stopping the fuel duty rise planned for September will help us all.

But in truth this was a modest budget signaling the direction of travel rather than any dramatic changes.

And this is right given that the state of the public finances left by the Labour government.

Gordon Brown told us all, in every year between 1997 and 2007 that his prudence as Chancellor would ensure there would never be a return to boom and bust economics.

Institutions believed him, individuals believed him.

They borrowed more and more on the expectation that houses and assets would continue to rise in value. Confidence was stoked almost irrationally by a chancellor caught in his own headlights.

Until, like all financial cycles, even ones delayed by extremes of borrowing, it bust and boy did it hurt.

Assets borrowed against had little value, balance sheets had holes torn in them. Value had been spent by individuals, organisations and government that no longer existed. Confidence disappeared overnight.

Wealth generated in the good times should have been put away for the rainy day. Debt should be paid down.

Instead our gold reserves were sold off at the bottom of the market, pension funds were raided and government borrowing took off like crazy. PFI deals were all the rage with claims somehow they didn’t sit on the balance sheet.

This is all money our kids will have to pay back.

Labours former chief secretary to the Treasury, Liam Byrne, left a note saying “Dear Chief Secretary, I’m afraid there is no money. Kind regards and good luck.

In this budget we continue to see a pressing down on the public finances in order to reduce the deficit between what we spend and what we raise in taxes. Local authorities, public services are all getting less finance than ever before.

This is painful but ultimately right. Interestingly, having taken out around £450m of spend over 5 years from the county council most people have not noticed.

Things became more efficient, a greater use of the private sector, more shared services, less non jobs and greater support for individuals families.

We believe in people supporting themselves, wherever possible. Regulation always has unintended consequences and acts as a wet blanket.

Since 2015 at least 3000 regulations have been removed or reduced. New regulation cannot be introduced unless it is offset by de-regulation of at least twice the equivalent value.

Zero hour contracts are in the news. Labour wish to ban them.

The consequences are those that want to want work flexibly, often women with school aged children, youngsters trying to gain experience in the first job will no longer have opportunities available to them. A flexible work force does not mean an exploited one. Of course the companies will also suffer, putting them at risk.

Conservatives compare and contrast the utility companies we take for granted with the same publically owned organisations of pre Thatcher time.

BT, when you had to wait months for a new line, cars being manufactured which were a national joke, a post office that required massive subsidy and a rail service that was inefficient, dirty and strike bound. Poor products, poor customer service at a huge cost to the public purse. Not so anymore.

It is only a matter of time before remaining institutions, like the NHS, are brought screaming and kicking into a modernization program. It simply costs too much to continue as we are.

We need to continue to pursue low income taxation rates, which will raise the tax take and let more people retain more money in their pocket.

This tax must be directed to investment in infrastructure to help retain our competitive advantage.

We must simplify the tax regime. NI is simply another tax on employing people. We must continue to make this country open for business by reducing red tape on business and keeping corporation tax as low as possible.

We must disrupt and break up the reliance on welfare which so blights parts of our country. There are families where three generations have never worked. This cannot be right.

That cannot be fair on those who are contributing nor on those who seem to have given up.

Welfare must be seen as the safety net of last resort not a lifestyle choice, which it is to many.

Conservatives believe in hope, aspiration and success. We believe in opportunity for our young people and a full and satisfying life for everyone where ever possible.

Thank you very much

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