7 March 2024

We must continue to build on Margaret Thatcher’s vision

By Rishi Sunak MP

This is a full transcript of a speech delivered by Prime Minister Rishi Sunak at the 50th anniversary dinner for the Centre for Policy Studies, CapX’s parent think tank, on March 6 at the Guildhall in London.

In no small part, we live in the world created by the Centre for Policy Studies. At your founding 50 years ago, Britain was plagued by rampant inflation, waves of militant strikes, unproductive nationalised industry and, by the end of that decade, marginal tax rates well over 80%. The visionary founders of the CPS saw that the country needed nothing less than the dismantling of the entire framework of failure that had endured since the Second World War.

Keith Joseph and the staff of the CPS brought intellectual vigour and Margaret Thatcher, the extraordinary qualities of vision and leadership that made her one of our greatest Prime Ministers. Together, they changed this country for the better and created a new political paradigm that, to an astonishing degree, persists today. Not bad for an organisation founded in a dimly lit basement in Wilfred Street.

And there has been no lessening of your energies in recent years with your championing of everything from full expensing to synthetic phonics, a policy that as Robert Colvile has said helped make our children the best readers in the western world. Under Robert’s brilliant leadership, I have no doubt your impact will continue. So please join me in thanking Robert, Michael Spencer, Chris Hayward and the City of London, and congratulating everyone involved with the CPS over the last 50 years: Thank you.

What Margaret Thatcher, Keith Joseph, and the Centre for Policy Studies so brilliantly articulated is not just a policy agenda. It’s about values and beliefs. People should be free to pursue our own ideas, in our own interest, in our own way. Individuals, families, and communities matter far more than the state. We should be proud of our country and unapologetic in standing up for our national interest.

These are not the far-fetched imaginings of distant revolutionaries. Ours has been such a successful political project precisely because they are also the values and beliefs of the British people. And they must guide us again now. Because for all that this is the world the CPS built, there was nothing inevitable about that achievement. Change had to be fought for then – and it must be fought for again now. Because our country faces a profound choice.

If the Opposition win this year, they will use the shocks of the last few years or the need to transition to Net Zero to justify permanently bigger government. That means higher spending and higher borrowing leading to higher mortgage rates, and higher taxes. Greater regulation and intervention, stifling people’s energy and initiative. Less trade, meaning less choice and higher prices. And more influence for vested interests and the trade unions.

To give you just one example: Angela Rayner’s plan would impose 75 new burdens on business, showing they have no understanding of the private sector, particularly SMEs. All of this is a recipe for stagnation, not growth. And it would take our country backwards, not forwards. Instead, we must fight for a vision where we back people and businesses. Where the state is there for you in bad times, but gets out of the way during the good. Where the answer to growth is not ever more government intervention, but in creating the conditions for the private sector to innovate and thrive. We all believe in that vision of our future. Now is the time for us to unite around it and fight for it. And our plan is working.

In just a few years, we’ve lived through three supposedly once-in-a-generation crises: Covid, Ukraine and soaring inflation, with all the disruption they caused. Yet I believe we’ve now turned a corner. Inflation is down from 11% to 4%. Wages rising faster than prices for 6 months in a row. Energy prices and mortgage rates starting to ease. That’s why we must stick with the plan that’s starting to deliver change. Or risk going back to square one.

Today’s Budget set out the next stage in our plan. I want to briefly explain how the values and beliefs of Thatcher and the CPS have influenced that economic strategy. To misquote Henry James, we’ve taken ‘what Maggie knew’ and applied it in three ways.

First, for Thatcher, inflation was ‘the biggest destroyer of all’. And managing it requires sound money. Let me quote her 1980 speech to party conference:’ Our prime economic objective [is] the defeat of inflation. [And] no policy which puts at risk the defeat of inflation, however great its short-term attraction, can be right’.

When I came into office, inflation was at its highest rate since Thatcher spoke those words. And like her, my highest priority was to reduce it. The decisions to do so, have been difficult. It would’ve been far easier to give in to strikes with inflationary pay rises, to allow the welfare budget to continue growing, or to agree to calls for higher spending, ultimately giving up on sound money and strong public finances. But that would’ve been taking the easy way out. And that is why our policy has always been: first halve inflation, then cut taxes.

And today’s Budget shows our plan is working. With inflation more than halved, and debt on track to fall, we can – and are – now cutting taxes. Because that’s the second thing Thatcher knew that a fair society is one where hard work is rewarded. That aspiration and ambition should be celebrated, not punished. That any extra pound our country produces is far better spent by individuals and businesses, than government. And in the end, all else equal, lower taxes are better for growth. That’s why, earlier this year, we cut National Insurance by 2p for millions of workers and the self-employed. And today, we’ve gone further, cutting the rate by another 2p to reward work. Taken together, that is a personal tax cut worth £20bn per year. It means the average earner faces the lowest effective personal tax rate since 1975.

And by cutting NICs rather than income tax, it reduces the unfairness that earnings from work are taxed twice through NICs and income tax, whereas other sources are only taxed once. And ultimately it should be our long-term ambition to end that unfairness. But this isn’t just about the level of taxes. It’s about reform, too.

That’s why today we’ve overhauled the child benefit charge, cutting the tax rate for more than half a million families and saving them £1,300. And it’s why we made full expensing permanent, as the CPS called for. That’s a £10bn tax cut for business, something hundreds of business leaders said was the single most transformational thing we could do for investment and growth.

One of Keith Joseph’s most famous lectures was ‘monetarism is not enough’. To which I might add: ‘fiscal policy is not enough’. And that points to the third thing Thatcher knew: that we need to reform the supply side. Above all, that means taking advantage of the incredible opportunity of Brexit, to do things differently and better. Outside the EU, we now have greater freedoms and flexibility than we’ve had in forty years. And we’re seizing them.

Take Freeports. First proposed in a CPS report by a certain fresh-faced young backbencher, they’re now a reality, and have already attracted nearly £3bn of investment and 6,000 jobs to some of our most overlooked areas. We’re delivering more agile, pro-innovation regulation of Financial Services. Putting UK farmers at the forefront of the agri-biotech revolution. Sharpening our edge in future technologies through the Data Bill. Revoking or reforming thousands of pieces of EU red tape saving more than £1bn for small businesses. And doing new trade deals around the world, increasing choice and cutting costs for consumers. All of that will have huge benefits to our economy. And none of it would’ve happened if we were still in the EU.

But our supply side reforms don’t end there. We’re getting millions of people off welfare and back to work. Delivering energy security with more investment in renewables, energy infrastructure and new domestic oil and gas. Cutting taxes on R&D to encourage businesses to innovate. And radically reforming education, with plans for an ABS, and at long last, putting technical and academic education on an equal footing.

This, then, is what Thatcher knew: that an economy built on sound money, low taxes, and supply side reform was the best way to deliver low, stable inflation, encourage work, and drive growth. That was not just an economic but a moral vision for freedom, aspiration, and opportunity. A vision of the world that gave our country it’s confidence back. And a vision we must fight for again today.

And in that fight, there are no better campaigners than the CPS. For 50 years, you’ve shown that ideas can – and do – change the world. You are the change makers. And we need you now, more than ever. Thank you – and have a wonderful evening.

Click here to subscribe to our daily briefing – the best pieces from CapX and across the web.

CapX depends on the generosity of its readers. If you value what we do, please consider making a donation.

Rishi Sunak MP is Prime Minister of the United Kingdom.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.