Budget Resolutions
When my grandfather Lieutenant Austin Coghlan, a naval officer, served in the battle of the Atlantic, he did not expect to survive. That he did was in no small part due to the codebreakers at Bletchley Park, who diverted convoys away from U-boats. In the process, the codebreakers invented the world’s first computer, Colossus, which powered the economic development of the post-war world. The spill-over effect from military technology to civilian use is one of the most powerful forces for economic growth, and we can use it now. Many have said that there is not much that is transformative in this Budget, but that overlooks the Chancellor’s decision to invest up to £5 billion in dual-use military technology through the British Business Bank and the National Wealth Fund, and to borrow jointly with our allies through the multilateral defence mechanism. I have called for that for the past two years on the Treasury Committee, so I am grateful that the Government and the Liberal Democrats have embraced that policy. Academics now recognise that the economic dominance of the United States has been powered by public research and development, especially in defence. In my Budget speech last year, I called for £5 billion more on public research and development, so that we spend the same share of GDP on that as the US does. The £5 billion in this Budget, while over four years, is a start.<span id="652" class="column-number" data-column-number="652"></span> Public investment in research in universities and laboratories is powerful because it de-risks the cost of developing new technologies, and enables private investment to take that research forward in start-ups. The London Business School’s Paolo Surico has found that innovation that is funded by the Government, but taken forward by the private sector, generates productivity and growth that is eight times larger than innovation taken forward by the private sector alone. More borrowing is of course a concern in the current fiscal environment, but as the Government have correctly identified, borrowing jointly with allies can remove most of the credit risk. The latest academic research enables us to forecast the returns with confidence. If this programme was scaled in increments of £2 billion a year annually over the next 10 years, it could lead to: growth finally returning to pre-2008 levels, transforming living standards; a debt-to-GDP ratio that is 2 percentage points or £60 billion lower; and meeting our NATO defence spending commitments. British politicians in the 1930s were labelled the guilty men, because they failed to prioritise defence over the deficit. My grandfather’s generation paid the price. As a reservist, an infantry officer and an MP, I want to ensure that our generation does not.