As Rachel Reeves’s Budget approaches – and speculation heightens – former Lord Chancellor and secretary of state Brandon Lewis sets out his growth-boosting wish list for the Chancellor
As the new government’s Budget looms, I’m using my first column for City AM to consider what assurances we need to see from the Chancellor that will indicate a real commitment to our financial services industry.
Keeping our economy on track is the Chancellor’s primary job which is why I find the timing of this Budget indicative of the gap between Labour messaging and the reality of our economy. When the Conservatives came to power in 2010 the country was in a difficult economic situation globally and domestically. To remedy this George Osborne held an emergency summer budget allowing things to move quickly.
Despite claiming that she has inherited an economic problem of gigantic proportions – it has been puzzling to watch Rachel Reeves wait months to share her economic blueprint with the rest of us.
Meanwhile speculation is rife. Concerns are focused on how tangible growth, not just capital, can be generated, and allowing such a long period of uncertainty does little to calm nerves.
In the City itself, the very heartbeat of our finances, the Chancellor should be looking to outline changes that deliver real incentive to invest in the UK, bringing more cash in and boosting our books through output and job creation.
Historically a cut in corporation tax has led to more investment and an increase in the tax take for the government. Though a reversal of the recent rise seems unlikely, we can all play a part in making the case for budget moves that stimulate investors and risk takes. We must offer a regulatory framework that encourages innovation at home and makes the UK ‘the only place’ for those looking to develop or grow a business.
My wish list
As we see AI develop, we know that innovation is the route to an exciting future with investment opportunities and job creation, but innovators need the space to test things and over-regulation can threaten that. I have heard from top tech companies who worry about whether the UK is the right place to invest for fear of regulation stifling their innovative work. We cannot afford for them to decide to take their research overseas and give our international competitors a huge advantage.
The UK needs to leverage its competitive strengths on the global stage and use the very things that set us apart, like rule of law, to drive trade and investment. As blockchain and AI continue to develop and grow we can be at the forefront of legal services to the sector (already worth around £60bn to our domestic economy) as well as research growing from our universities and tech companies.
Singapore and the US are challenging our world class legal services sector. So much of the world’s business transactions use English contract law and our courts. We need the Treasury to support and ensure the environment remains nimble, competitive, clear of red tape and with a targeted shift towards the innovative technologies that can lift barriers to success.
We also need to see a structure that supports and encourages the very risk-takers that ultimately drive our economic growth, including in sectors like construction which are so integral to our economy.
Housebuilding is a key factor in this and we need to see both delivery of the promised supply-side reforms to speed up the system as well as some demand-side support to help first-time buyers get back into the housing market, something I accept our last government should have got to grips with earlier.
Simultaneously, the Chancellor must keep a keen eye further afield. The US presidential election next month could have just as much impact on our economy as anything that is announced in the budget. Whoever becomes President will become a key player in our domestic economic growth so it is vital the government plans for any outcome by ensuring our domestic competitiveness.
As we wait with bated breath, I urge the Chancellor to make these changes for our country and allow us to become a place where investors know they can deliver real growth and bolster our economy.
Brandon Lewis is a former minister and Conservative party chairman