Economic growth can only be built on a foundation of economic stability
It is an honor of a lifetime to have been invited by the Prime Minister to return to public office, as Chancellor of the Exchequer.
We fundamentally agree on the great task facing the country. If we are to invest in brilliant public services like the NHS and keep taxes low, we need to find a way to stimulate growth.
At the same time, I understand that families across the country are finding life extremely difficult right now. Worries about rising mortgage costs and energy bills have left people with an overwhelming desire for stability.
This is what the country wants and deserves. And that is our priority: economic growth based on stability.
I want to pay tribute to my predecessor, Kwasi Kwarteng. He is an exceptional person. And he played a leading role in crafting the bulk of the government’s growth plan last month – the power price guarantee.
It’s easy to forget that just a few months ago analysts were expecting energy bills to hit £6,500. Thanks to the energy support we have put in place, the average household energy bill will now be around £2,500 for the next two years.
But as the Prime Minister said on Friday, it is clear that parts of the mini-budget have gone further and faster than markets expected.
It was a mistake to cut the tax paid by the wealthiest, and we should have allowed the Independent Office for Budget Responsibility to assess whether the numbers add up.
Both of these things are being fixed.
We are changing course to show the markets, the people of this country and our friends and allies around the world that the UK Government will always properly account for every penny of tax and spending.
This is how we will restore trust. And this is how we will ensure that as interest rates rise globally, they rise by the absolute minimum needed here at home.
We are taking three steps to ensure economic growth based on stability.
First, we have decided to maintain the increase in corporation tax planned by the previous government.
The move will bring in around £18 billion a year. And that will still leave us with the lowest corporate tax rate in the G7.
Secondly, this is only a progress report on our medium-term budgetary plan, which I will publish at the end of the month.
This will indicate how we are going to lower the debt as a proportion of GDP over the medium term. And it will be accompanied by a full forecast from the Independent Office for Budget Accountability.
I want to be honest with people that it’s not going to be easy. Bringing down debt and restoring market confidence will require some very tough decisions.
Spending will not increase as much as we would have liked. We will not be able to reduce taxes as quickly as we would like. Some taxes may even have to increase. That’s not what we wanted to see.
But if we are to keep interest rate hikes as low as possible – and avoid simply passing the burden of paying off the debts we have accumulated today onto our children – then we need to give the markets certainty that we can really fund every penny of our plans.
But to those living on the subsistence line and finding life difficult right now, I want them to know that this is a compassionate Conservative government.
I promise that when I make decisions as Chancellor, I will protect and support struggling families and businesses. This is the prism through which we will approach our task.
And third, we will pursue the Prime Minister’s central mission: to build a low-tax, high-wage, high-growth economy. An economy that creates prosperity for every person in our society.
I have fundamental confidence in the long-term future of this country. We have four of the best universities in the world, more tech unicorns than any other European country, record unemployment, and global strengths in financial services, life sciences, and science and technology.
There is absolutely no reason to doubt that when we overcome our current challenges, our country has a bright future ahead of it.
But our success as a country has always come from a willingness to make tough decisions. And that is what the Prime Minister and I are determined to do. Because growth can only be built on the basis of stability.
Jeremy Hunt MP is the Chancellor of the Exchequer