Budget Resolutions and Economic Situation

Baroness Bray of Coln Excerpts

Thursday 24th June 2010 Commons Chamber

[Angie Bray (Ealing Central and Acton) (Con)]

Let me start by congratulating the hon. Member for Kingston upon Hull East (Karl Turner) and my hon. Friends the Members for Staffordshire Moorlands (Karen Bradley) and for Hendon (Mr Offord) on their excellent maiden speeches. I am sure that they will all make great contributions to this House over the years to come.

I cannot imagine that many of us who sat in the Chamber on Tuesday to hear the Chancellor’s emergency Budget statement will have found it exactly an enjoyable experience. Theatrical, yes; dramatic, yes; enjoyable, no. It was a bleak Budget statement drawn from a grim economic landscape bequeathed to us by the previous Labour Administration. We will all now be thinking about getting back to our constituencies this weekend and discussing with our constituents how we can face these tough measures together. Yet I suspect, judging by the Leader of the Opposition’s response, that many of those on the Labour Benches will be blaming everyone and everything but themselves for the situation in which we find ourselves. That is neither wise nor credible. I hope that at least some of them will recognise that under their governance this country was living way beyond its means for far too long. As the well-worn but true saying goes, all good things come to an end—only on this occasion, not just an end, but a juddering halt that has shaken the whole country violently.

I would like to put on record how much I abhor the manner in which the previous Labour Government, in their last few months, went round dangling all sorts of promises—this project, that programme—to dazzle the electorate, all of them knowingly unfunded, so that they were inevitably withdrawn when reality kicked in with the new Government. Another Labour Government—heaven forfend—would have been in no position to do any different from what we are having to do.

I believe that the Chancellor’s Budget is tough but fair. Responsible governance means taking tough decisions now to get our country back on its feet down the road. Fair governance means the better-off shouldering the biggest share of the burden, but most important, it means taking account of everyone in our society, ensuring that pensioners can enjoy dignity in retirement and that families in poverty receive the support they need. The long overdue restoration of the link between pensions and earnings and the triple lock is to be welcomed. The increase in child tax credits for the poorest families demonstrates that fairness is a priority for this Government. Raising the income tax threshold for those on lower incomes is a huge step forward. It means that 880,000 of the lowest taxpayers will be taken out of tax altogether. I recognise that that was very much a Liberal Democrat manifesto pledge, but it is no less welcome in our coalition for that. It also resonates closely with Conservative values, and I hope that the Chancellor will be able to get even closer to the £10,000 threshold that we all want to see when we can afford it.

[Kate Green (Stretford and Urmston) (Lab)]

It is all very well to say that this Budget will protect the poorest, but how can that possibly be reconciled with a long-term freeze or cut in benefits as a result of linking them to the consumer price index rather than the retail price index? That is to be compensated for only by the short-term measure of increasing the child tax credit. Surely this is not a Budget that is fair to the poorest but one that will leave people who rely on those state benefits in a much worse position.

[Angie Bray]

I have to say to the hon. Lady that needs must, to an extent, and we find ourselves in these problems thanks to the appalling governance of the Labour party. I also suggest that part of the problem, and the reason why I agree with her that many will feel the pain, is that the previous Government had a record of allowing a dependency culture to grow. Far too many people in this country depend on benefits, and we need to turn that around if we possibly can.

[Matthew Hancock]

Does my hon. Friend share my surprise that Opposition Members can possibly comment on the fairness of the Budget, given that under the Budget as a whole the richest will pay the most and the poorest will not, and that when they were in office, they doubled the tax of the lowest-paid in this country?

[Angie Bray]

My hon. Friend makes an extremely good point, and let us not forget that the gap between the rich and the poor actually grew wider under the previous Government.

I believe that the measures I have outlined will help ease the unavoidable impact of the rise in VAT. I am well aware that that proposal is especially hard and will affect every single person in the country. Thankfully, food, children’s clothing, books and newspapers are still exempted, but we will all undoubtedly be hit to some degree. My question, however, is this: if not a rise in VAT, which will bring in an estimated £13 billion, then what instead? If the Chancellor had not gone for VAT, he would inevitably have had to look elsewhere, including possibly at further curtailment of public spending.

Those on higher incomes will face the biggest share of the Budget burden. Tax credits will be limited to households earning less than £40,000, and the figure will go down. The 50% tax bracket introduced by the previous Government is being kept in place for those earning more than £150,000, and capital gains tax will rise from 18 to 28%. Fiscal drag will also mean more people paying higher-rate tax. I am not exactly thrilled by the prospect of any of those measures, but I accept that they play an important part in providing a fair Budget.

Prosperity for all is the long-term positive message to take from this week’s Budget. To move forward and replenish the enormous hole in our finances, we must support the people who can make that happen. Britain needs positive entrepreneurs, so a reduction in the tax on the profits that they make is welcome news. Allied with reductions in business taxes, it should kick-start our economy and be the decisive action that we need to lift us out of the mess that we are in—the mess created by 13 years of a Labour Government.

In my constituency, there are many fine examples of the type of people who will drive this country forward again through their own enterprise. They will certainly welcome the rise in the national insurance contribution threshold to ease costs for employers, and the cuts in taxes on businesses small and large. The regional growth fund is a great step forward in helping small businesses get off the ground. At the moment its remit excludes London constituencies such as mine. I know that it is only too easy to present an image of London as having streets paved with gold, but as we Londoners are well aware, our capital has many areas of serious deprivation that need supporting. I hope that, in due course, the Chancellor and his team will consider extending the scheme or taking other measures to help grow small businesses across Ealing Central and Acton.

I would also like to put in a plug for Crossrail. I am delighted that the Budget allows capital projects to proceed and I greatly hope that Crossrail will be one of them. It is essential to London and particularly important in my constituency of Ealing Central and Acton.

It is fitting that the Chancellor was allowed to bring out Gladstone’s original Red Box to carry his Budget to the House. There can be no doubt that Gladstone, a Conservative before becoming a Liberal, would fully support the coalition and the Budget. He was passionate about free trade and lower taxes when possible, and was clear that borrowing was no way to cover over deficits.

The coalition’s task is to turn around the biggest financial deficit that this country has faced since the second world war. The Chancellor and his team have taken courageous and difficult decisions, and provided us with a Budget that gives us every chance to turn the corner, get our country back on track and, most important, open Britain for business again.