It is that time of year again where the lights at the Treasury burn into the early hours as the Chancellor puts the finishing touches to the Budget. With Budget Day less than a week away, the leaks would usually have begun. Not this year.
This is a reflection of tough times. There is no money for 'media friendly' giveaways, no money to appease and no money to throw in hope at problems. This is not a Brown era Budget, but an Austerity era Budget. It will be modest, reserved and prudent.
With our economy struggling to overcome ongoing problems in the Eurozone, the importance of restoring consumer confidence at home grows. Yet ordinary families watch their disposable income eaten up by rising food, energy and fuel prices. If we are to have confidence, it is these costs that we have to tackle.
Each is a tale of increasing demand and dwindling supply as the world population grows and the economies of the developing world mature. The question for Government is how we insulate ourselves from these global price pressures?
On food, the answer is simple. We must produce more of what we eat in the UK, reducing our dependence on imports. Government must support UK famers, protecting their EU subsidy and cutting stifling regulation. We must help farmers invest in modern technology to increase crop yield and we as consumers must also do our bit. That could be as simple as eating what is in season rather than demanding products all year round.
Energy prices are again a problem of import dependence. We have demand that outstrips our ageing power stations. Rather than invest in new infrastructure, Labour simply signed up to import energy, putting us at the mercy of world prices. It is ordinary families who are paying the price for this lack of foresight. I am pleased that this Government is committed to building the next generation of coal, gas and nuclear power stations as well as accelerating renewable schemes. We need to firm up this capital investment and get building to help keep bills down in the future.
Finally, something we are forced to import, fuel. Here, the solution is simple and direct – fuel duty. The challenge is that every 1p cut is a £0.5bn gamble on world oil prices. Last time the Chancellor cut duty, oil prices rose on the same day, wiping out the cut instantly. We must make it clear to the oil companies that any cut in fuel duty is not an opportunity for them to make more profit. Threaten them with a windfall tax, any duty cut MUST be felt at the pumps.
The Budget must tackle short term challenges, but we must also keep an eye on the long-term and act in good time to protect UK consumers from rising global prices.
