17 Mar Government needs to cut spending to boost growth, says Jacob Rees-Mogg
CUTS to public spending need to be looked at by the Government to boost economic growth, according to former business minister Jacob Rees-Mogg.
He told GB News: “One of the things that Boris Johnson was trying to do was to reduce civil service by 91,000.
“That’s a pretty good start, because if you reduce civil service you reduce the machine that churns out the regulations and you reduce, therefore, the ability to churn out costs on to businesses.
“So there are places that you can start but ultimately, you’ve got to look at the costs. We have welfare and the efficiency of the NHS.
“I don’t think we need to cut NHS spending but we have been seeing increasingly that the NHS needs reforms.”
In a discussion with Eamonn Holmes and Isabel Webster during Breakfast on GB News, he said: “I’ve always been very sceptical of the foreign aid budget and I was in favour of its reduction when that was brought through.
“I think we should look at our foreign aid more as investment rather than money that we give away so that we should expect a long term return from it, except of course for emergencies.”
On the Government’s claim to have the lowest corporation tax rate in the G7, he said: “What governments should do is set the lowest tax rates they can and then allow businesses to make their decisions as to where they invest or where they pay dividends or whether they pay more to their staff, rather than saying that we want this tax avoidance scheme, because that’s what allowances are, they’re means of perfectly legitimate tax avoidance.
“One should always remember, avoidance is legitimate evasion is not, but if you set simple low tax rates, businesses decide for themselves and paying it out to their staff isn’t necessarily a bad thing.
“The staff with a bonus may decide if there’s extra money that they spend that on economic activity or they invest it likewise with dividends.
“If it goes to the shareholders, they may invest it in businesses that have greater chances of growth, and it’s about allowing the free market to operate rather than thinking that the Government knows best what business should do. It doesn’t.”
Asked about forecasts from the Office of Budget Responsibility, he said: “In the 12 years it’s existed, there have been six fiscal frameworks that the government has set out and the OBR then bases its forecasts around the fiscal framework, whether they will be achieved.
“But the OBR’s forecasts are always wrong, so you’ve got wrong forecasts on a framework that will change.
“I don’t think that’s a good way for policymaking. What you need is to bake a bigger cake.
“That was Margaret Thatcher’s argument, that you need economic growth to make sure that there is more for everybody, rather than dividing up what currently exists.”
Mr Rees-Mogg added: “He’s [Jeremy Hunt] is starting from a very difficult point because so much money, £400 billion was spent on Covid and therefore the public finances are stretched and you have to live within your means.
“I think we need to get spending under control. The problem is the state is spending too much money.
“It’s doing too much for people’s lives, rather letting people do things for themselves.”
