Bim Afolami is Economic Secretary to the Treasury, and the Member of Parliament for Hitchin and Harpenden.
Budgets aren’t just about policy interventions – they are the major economic set piece of the year. They enable the Chancellor to paint a picture of what our economy looks like now, and how we’re going to improve it in the years to come.
As a Conservative, I am proud to have worked alongside Jeremy Hunt and our excellent Treasury team to produce last week’s Budget. The picture that the Chancellor painted of a more dynamic economy, which rewards hard work and enables innovation, reflected both the success of our long-term economic plan and this Government’s commitment to sound Conservative principles.
For one, this was a tax-cutting budget for those in work. The Chancellor knows which side he is on, and it is on the side of those who work hard. That’s why we reduced National Insurance from ten per cent to eight per cent, allowing working people to keep more of the money that they earn. Alongside the cut of two percentage points in the autumn, in total we have cut National Insurance by a third.
A person earning an average salary will now be about £900 better off in the coming year; for a household with two working people, that’s £1,800. This is a significant amount of money to most people, which will help working people to save for the future, put down roots, and cover their day-to-day costs.
We can also be proud of the support that we’re giving to families, through our reform of the Child Benefit system. Recognising the unfairness in the current model, we announced our plan to move Child Benefit eligibility to a system of household income.
In the meantime, we’re raising the eligibility threshold from £50,000 to £60,000 a year, and extending the taper, so that parents earning up to £80,000 will still get some support with their childcare costs. As a result of the higher taper and threshold, almost half a million families will save an average of £1,260 next year.
Taken together, these changes signal our commitment to delivering greater economic certainty for working people and young families, making clear that their hard work is recognised and rewarded by this Government.
For example, a family with one earner on £60,000 and another on average earnings of £35,400 with two school age children will be £4,600 better off when you combine the child benefit changes with our tax cuts. This money will really make a difference to so many people.
Of course, budgets aren’t just about where we are now – they are also about where our economy is going. As Hunt explained, long-term growth is only possible in a dynamic economic environment which rewards hard work and supports innovation. That’s one of the reasons that we’ve cut National Insurance: recognising the relationship between prudent tax cuts and higher growth.
It’s also why we’ve delivered on our promise to invest an additional £100 million into the Alan Turing Institute over the next five years, giving even more money to our world-leading research institutions, which will play a central role in the future of our economy.
However, we shouldn’t neglect the role of public services and the state in creating that enabling environment. We shouldn’t just be asking whether the state should be bigger or smaller. Instead, as Conservatives, we know that we should be focused on making the state better and more effective.
More efficient public services require less spending from government, while a more effective state can serve as a help, rather than a hindrance, to growth across our economy. That’s why we’re investing in the productivity of government, rather than just focusing on efficiency savings alone, as a shift to improving the quality of the British state.
What does that look like in practice? For a start, we’re committing £3.4 billion to NHS digitalisation, which will allow our health service to roll out universal electronic patient records, while harnessing new technologies to help doctors spend less time on paperwork and more time on patients.
Across government, we’ve invested £800 million into expanding the use of AI, harnessing the potential of new technology to cut paperwork and red tape in the public sector.
The net result of these changes is a state which is more effective at delivering on our priorities, and which provides better value for money to hard-working taxpayers. By 2029, these changes are expected to result in up to £1.8 billion worth of benefits, saving up to 55,000 hours a year in administrative time in the justice system, making it easier for HMRC to catch fraudsters, and cutting the time it takes for planning officers to process applications by 30 per cent through our new AI pilot.
These productivity improvements will allow government to achieve more in less time and with less public money, freeing up resources for investment and producing a more enabling environment for individuals and businesses.
To those who say that election year budgets should offer short-term giveaways, I say this: history tells us that the British public is much too smart and much too sceptical to be bribed. Instead, we must demonstrate our long-term commitment to a positive direction of travel.
From National Insurance cuts that allow working people to keep more of their money to long-term investment in our public services, this is a Budget that we can all be proud of. Not only did it signal positive prospects for our economy in the years to come, but it showcased this Government’s commitment to Conservative principles like tax reduction and sound money.
Though we know that these principles serve as a healthy foundation for building prosperity and delivering growth, not everybody in politics recognises the same realities. The Budget put clear blue water between this Government, with its plan to move our economy forward, and those who have no plan at all.
Bim Afolami is Economic Secretary to the Treasury, and the Member of Parliament for Hitchin and Harpenden.
Budgets aren’t just about policy interventions – they are the major economic set piece of the year. They enable the Chancellor to paint a picture of what our economy looks like now, and how we’re going to improve it in the years to come.
As a Conservative, I am proud to have worked alongside Jeremy Hunt and our excellent Treasury team to produce last week’s Budget. The picture that the Chancellor painted of a more dynamic economy, which rewards hard work and enables innovation, reflected both the success of our long-term economic plan and this Government’s commitment to sound Conservative principles.
For one, this was a tax-cutting budget for those in work. The Chancellor knows which side he is on, and it is on the side of those who work hard. That’s why we reduced National Insurance from ten per cent to eight per cent, allowing working people to keep more of the money that they earn. Alongside the cut of two percentage points in the autumn, in total we have cut National Insurance by a third.
A person earning an average salary will now be about £900 better off in the coming year; for a household with two working people, that’s £1,800. This is a significant amount of money to most people, which will help working people to save for the future, put down roots, and cover their day-to-day costs.
We can also be proud of the support that we’re giving to families, through our reform of the Child Benefit system. Recognising the unfairness in the current model, we announced our plan to move Child Benefit eligibility to a system of household income.
In the meantime, we’re raising the eligibility threshold from £50,000 to £60,000 a year, and extending the taper, so that parents earning up to £80,000 will still get some support with their childcare costs. As a result of the higher taper and threshold, almost half a million families will save an average of £1,260 next year.
Taken together, these changes signal our commitment to delivering greater economic certainty for working people and young families, making clear that their hard work is recognised and rewarded by this Government.
For example, a family with one earner on £60,000 and another on average earnings of £35,400 with two school age children will be £4,600 better off when you combine the child benefit changes with our tax cuts. This money will really make a difference to so many people.
Of course, budgets aren’t just about where we are now – they are also about where our economy is going. As Hunt explained, long-term growth is only possible in a dynamic economic environment which rewards hard work and supports innovation. That’s one of the reasons that we’ve cut National Insurance: recognising the relationship between prudent tax cuts and higher growth.
It’s also why we’ve delivered on our promise to invest an additional £100 million into the Alan Turing Institute over the next five years, giving even more money to our world-leading research institutions, which will play a central role in the future of our economy.
However, we shouldn’t neglect the role of public services and the state in creating that enabling environment. We shouldn’t just be asking whether the state should be bigger or smaller. Instead, as Conservatives, we know that we should be focused on making the state better and more effective.
More efficient public services require less spending from government, while a more effective state can serve as a help, rather than a hindrance, to growth across our economy. That’s why we’re investing in the productivity of government, rather than just focusing on efficiency savings alone, as a shift to improving the quality of the British state.
What does that look like in practice? For a start, we’re committing £3.4 billion to NHS digitalisation, which will allow our health service to roll out universal electronic patient records, while harnessing new technologies to help doctors spend less time on paperwork and more time on patients.
Across government, we’ve invested £800 million into expanding the use of AI, harnessing the potential of new technology to cut paperwork and red tape in the public sector.
The net result of these changes is a state which is more effective at delivering on our priorities, and which provides better value for money to hard-working taxpayers. By 2029, these changes are expected to result in up to £1.8 billion worth of benefits, saving up to 55,000 hours a year in administrative time in the justice system, making it easier for HMRC to catch fraudsters, and cutting the time it takes for planning officers to process applications by 30 per cent through our new AI pilot.
These productivity improvements will allow government to achieve more in less time and with less public money, freeing up resources for investment and producing a more enabling environment for individuals and businesses.
To those who say that election year budgets should offer short-term giveaways, I say this: history tells us that the British public is much too smart and much too sceptical to be bribed. Instead, we must demonstrate our long-term commitment to a positive direction of travel.
From National Insurance cuts that allow working people to keep more of their money to long-term investment in our public services, this is a Budget that we can all be proud of. Not only did it signal positive prospects for our economy in the years to come, but it showcased this Government’s commitment to Conservative principles like tax reduction and sound money.
Though we know that these principles serve as a healthy foundation for building prosperity and delivering growth, not everybody in politics recognises the same realities. The Budget put clear blue water between this Government, with its plan to move our economy forward, and those who have no plan at all.