Budget Resolutions and Economic Situation

Debate between Lord Sharma and Michael Tomlinson

Thursday 17th March 2016 Commons Chamber

[Alok Sharma]

I have to disagree. If the hon. Gentleman looks at what Tony Blair said in his autobiography—he won three elections, but it does not look like any of this lot are going to—he will see that Tony Blair realised that Labour was spending more in the good years and that is why we got into the position we did. At the time, Bill Gross, the founder of global investment management firm PIMCO, said this about the UK economy. He described it as a “must avoid” and said that UK gilts were

“resting on a bed of nitroglycerin”.

Those were incredibly strong words from the market. We were looking over an economic precipice. Thank goodness we had a change of Government. That is why we are in a much better position now, with growth and wages up and the deficit down.

I of course welcome this Budget. It is a Budget for business and for individuals. It is a Budget for young people and a Budget for investment in infrastructure. When it comes to schools, I welcome what the Secretary of State said. In my constituency, I have helped to found two free schools and academies, and they are doing incredibly well. One that has been going for a few years was rated as outstanding in its first year.

[Michael Tomlinson]

Was my hon. Friend, like me, surprised that the Labour party did not welcome, or even mention the subject of fairer funding, which will have such positive effects on our schools?

[Alok Sharma]

My hon. Friend is absolutely right. As the Secretary of State said, Labour had 13 years to fix this and it did not. This Government are now getting that right.

I spoke this morning at the Association of Chartered Certified Accountants, which is much more interesting and exciting than it sounds. It greatly welcomed the business measures in the Budget, particularly the drop in corporation tax. I have to say to the shadow Chancellor, who is now back in his place, that if we drop corporation tax rates, investment will come into the country, which will allow us to raise more money. That is something that he needs to understand if he ever hopes to become Chancellor himself.

The changes to business rates are incredibly welcome to many small businesses, for which business rates constitute a large component of their fixed costs. I welcome, too, the abolition of class 2 national insurance. I hope that we are seeing a move towards a merger of national insurance and income tax. I know that this is potentially very complicated, but the dividends it will pay in terms of tax simplification will be huge, as will be the benefits for businesses.

Investment in infrastructure—many billions have been invested since 2010, and there is more to come during this Parliament—has been a hallmark of this Chancellor’s Budgets. My own constituency has benefited from significant rail investment: nearly £1 billion has been invested in Reading station, and Crossrail is coming, as is rail electrification. There has been investment in local stations as well. However, may I issue a plea to those who are looking at the Hendy report consultation? Two stations in my constituency, Theale and Green Park, are fully funded, but their development has been delayed. I hope that, as a result of the consultation, we can actually get moving so that my constituents can benefit. I welcome the work that the National Infrastructure Commission is doing in driving forward investment and infrastructure in the United Kingdom.

A few weeks ago, I was appointed the Prime Minister’s infrastructure envoy to India. I think that the experience that will be gained by us in this country, and by our companies, will be fantastic. It will not only allow us to help countries such as India with growing economies to raise finance in the London market, but enable our world-leading businesses that are involved in infrastructure to go out and assist those economies.

Finally, let me say something about Europe. I am very much in favour of a stronger, safer, better-off, reformed European Union, and I will be campaigning for us to stay in the EU. I know that we have a limited amount of time today, and I do not want to initiate a huge debate on the subject, but I will say this: if, on 24 June, we wake up and find that the British people have chosen to leave the European Union, there will be a period of uncertainty. That is the one thing with which no one can disagree. There will be uncertainty because we will not know how long it will take us to renegotiate some kind of relationship with Europe, what the cost will be, or how investors will react. I have heard Conservative Members say that investment will continue to flow in, but I do not agree. Given what is being said by foreign countries and foreign companies, I think that they will think twice, and will wait to see what our relationship with Europe looks like before investing in the United Kingdom.

Uncertainty has two impacts. Businesses hate it, which means that they stop investing, and consumers hate it, which means that they stop spending money. The effect of all that will be very bad news for our economy. Both the Office for Budget Responsibility’s book and the Red Book contain all sorts of predictions about how our GDP could be hit if we left the European Union, but, by any measure, it will go down. All the net savings that my colleagues who want us to leave the European Union say we will gain will, I think, disappear as a result of the losses that will follow a fall in GDP and a consequent hit on tax revenues. I therefore hope that all of us, not just in the House but throughout the country, will think very carefully before voting in the referendum on 23 June.