UK Economy
David Rutley Excerpts(8 years, 4 months ago)
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John McDonnell
It must be recognised that the trading relationship with India, although growing, is still relatively small. I welcome the negotiations that are taking place, but we know from our experience of the timescale in which trade agreements have been secured over much of the past decade that the process is lengthy, and that when individual states negotiate on their own, they do not necessarily achieve the benefits that they would have secured within a trading bloc.
The simplest explanation for these decisive economic weaknesses is the poor state of investment in the UK. Admittedly, business investment was already in decline before the referendum, but it is undoubtedly falling still further, and, as the press has reported, the ongoing uncertainty alone is enough to deter investment. That fall in business investment is being worsened by the Government’s plans to cut their own investment which, according to current projections, is set to fall by the end of the decade. Without sustained investment—private and Government investment—we shall not be able to address the economic decline that has blighted too much of our country.
David Rutley (Macclesfield) (Con)
The hon. Gentleman talks about the need for an industrial strategy. The Government have set out important strategies for key industries such as life sciences, and, of course, for a northern powerhouse to help to rebalance the economy. Given the challenges that we face and the continuing need to rebalance the economy, will the Opposition now get behind the Government’s plans and, in particular, support the northern powerhouse, about which they have been equivocal?
John McDonnell
We have welcomed initiatives to try to rebalance the economy; the problem has been the success rate. The investment pipeline that the Chancellor announced several years ago has been less than 20% successful. Five years on, we have seen only £1 billion of the £20 billion that was meant to come from pension funds. The Government announce well, but they do not implement very well. There is too much government by press release rather than by implementation.
Finance Bill
David Rutley Excerpts(8 years, 4 months ago)
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Kirsty Blackman (Aberdeen North) (SNP)
I specifically want to talk about clause 43 in relation to vaccine breakthrough. I have issues with a couple of the Government’s proposals. First, it has been made clear that this measure costs the Government very little. In terms of foreign projections, the removal of the relief does not increase the Treasury’s take by a vast amount.
The explanatory notes on this were incredibly helpful and I really appreciated them, but they seem to be missing a few things. First, they say that only 10 firms claimed the relief, but they do not make it clear how many firms research and develop vaccines. After my slightly rudimentary research, I could find only about 10 firms that research and develop vaccines, which means that all of them claim the relief. Therefore, if I am correct, the uptake is quite high. That could be why companies are choosing to research and develop vaccines. I would appreciate it if the Minister confirmed how many companies research and develop these things. If he does not have that information today, perhaps he could write to me with any details he has on that.
The explanatory notes mention the Ross Fund. I appreciate that the fund is a good thing and that it is good that the Government are financially supporting the development of vaccines, but it seems to me that the fund does not necessarily cover everything that the vaccine relief previously covered. The Ross Fund covers the following: antimicrobial resistance, which is a really important thing to be funding in this day and age; diseases with epidemic potential, which, given what happened with Ebola, is a really important area to be funding; and neglected tropical diseases, which is a fabulous area for the Government to support. It is really important to be putting money into the various areas of research that have previously been neglected.
From the research that I have, it seems that vaccine research relief covers HIV/AIDS, whereas the Ross Fund does not. I would really appreciate it if the Government told whether HIV/AIDS research now falls through a gap, because it is an area that we need to continue to research and for which we do not currently have any vaccine or cure. I do not want it to get lost because companies are no longer able to claim aid or funding for such research.
I will not speak at too much length, as my concerns are around clause 43 and the fact that, although helpful, the explanatory notes left me with quite a few questions.
David Rutley (Macclesfield) (Con)
I want to add my support to clause 42, notwithstanding the important points made by my hon. Friend the Member for Amber Valley (Nigel Mills), who set out the need for further thinking, perhaps, in the light of the Brexit vote. I was on a different side of the debate from him—only marginally—because I thought that there were concerns about economic risk, but there are certainly opportunities ahead, as well.
We need to ensure that we are ready to explore and realise those opportunities and the Government are absolutely committed to doing that. I hope that the Opposition are as well. It seems that the hon. Member for Wolverhampton South West (Rob Marris) is indicating that. We are up for that. As a result, I am perplexed about why clause 42 is not being supported by the Opposition. Such measures were vital when the proposals were first set out, and it is now even more important to put out a clear signal that we are open for business, that we understand business, that we want business to continue to come to the UK and that we want our exporters to thrive and flourish.
The corporation tax level is an important signal and an important driver in that regard. It is noticeable that the Federation of Small Businesses stated at the time of the announcement that it saw clause 42 as an important statement of intent that will provide a boost for affected firms. Small businesses are of course the backbone of our economy, but it is clear that the clause is an important signal for bigger businesses, too. It helps to illustrate and underline that Britain is open for business.
Given the decision made by the public, which I fully respect, it will be very important that we maintain the flow and increase the levels of foreign direct investment. I thought we were exposed in that area for a period of time, and I think that that exposure is still real, but we are currently the biggest destination in Europe for foreign direct investment. We have seen the biggest increase in FDI in projects in the north-west and I want to work with the Government and whichever party is around to ensure that we continue to see that flow. I want to ensure that the success we see in the country continues and that the northern powerhouse can fulfil its full potential. Key initiatives such as the life sciences corridor in Cheshire will require clear signals to businesses in the UK and abroad that we are open and want to move further forward, which is why I will support clause 42 when we vote, as I understand we will.
Sammy Wilson
I want to show our support for clause 42. In fact, I think it would be a bit strange for someone from Northern Ireland to take a different stance, especially given the fact that the Northern Ireland Government have put the reduction and devolution of corporation tax at the centre of their policy for attracting investment into Northern Ireland over the next 10 to 15 years.
There are two things. First, we must ask ourselves whether we believe that a reduction in taxation on businesses acts as an incentive. As I listened to the Opposition spokesman’s opposition to this measure, it raised a query in my mind: is the reduction of other business taxes regarded as acceptable and indeed desirable by the Labour party as a means of incentivising and helping small business? For the Opposition, it seems as though the reduction in business rates, which are a form of taxation, is desirable because it helps small businesses, but that the reduction of corporation tax seems to have no effect, or the opposite effect. If we are going to have some consistency, we must ask ourselves whether the principle of reducing taxes on businesses and their profits, and the impact that that has on the amount of money they retain for investment, is an effective means of stimulating business. If it is true of one form of tax, it is true of another. That is one of the reasons why I believe that the reduction in corporation tax is an important decision.
Secondly, during my former role as a Member of the Northern Ireland Assembly and as a Minister there, one of the things that came up consistently when we spoke to investors was corporation tax. We had an especially big problem, because we were living next door to a country—we have a land border with it—that had emphasised the reduction in corporation tax. Time and again, though not exclusively—there is no point in over-egging this pudding—investors mentioned the level of corporation tax: 12.5% in the Irish Republic and 22% then in Northern Ireland. When companies looked at the headline level of taxation, they viewed the Irish Republic as a much more desirable place to invest. Of course they looked at other things—the skills base, the availability of office and factory space, the infrastructure and so on—but corporation tax was an important factor.
Sammy Wilson
It is not the position of the Democratic Unionist party either, because there are other ways in which companies can be held responsible for their infrastructure requirements. For example, one of the forms of taxation that the Government have introduced recently is the apprenticeship levy, where companies will be held responsible. They need trained workers, and they have to make a contribution from their profits to train those workers. There are ways to target the contribution that we require companies to make. I am not saying that companies should not pay for the infrastructure from which they benefit, but we must address one of the issues that they raise when they are considering whether we are a competitive place to invest.
David Rutley
The hon. Gentleman is making characteristically important points. Although there has been a nod to what has gone on in the US, it is important to look at what is happening in the UK. As we have seen a reduction in corporation tax, we have seen a strong performance in foreign direct investment. Let us look at what has happened here, which has helped to move the situation further forward—and no doubt it has done so in Northern Ireland as well as the mainland.
Sammy Wilson
The hon. Gentleman is quite right: if we look at the record of companies in the United Kingdom as corporation tax has decreased, we see that we have experienced increasing foreign direct investment. Indeed, since the Northern Ireland Government announced that corporation tax will be reduced in, we hope, a year and a half’s time, there has been an upsurge of interest in the number of companies that wish to consider Northern Ireland as an investment proposition. We are already the second most successful region in the United Kingdom for foreign direct investment—I suppose that this bears out the Opposition spokesman’s point—because we have emphasised the other selling points that are available to us at present, but corporation tax is the additional one that will make things easier for us.
David Rutley
I am sorry that my hon. Friend is in so much pain when he stands up.
I am surprised by some of the things said in this debate. We all recognise the importance of enterprise and of encouraging further enterprise, particularly in the northern powerhouse, as the hon. Member for Salford and Eccles (Rebecca Long Bailey) recognised. We can achieve the aim of encouraging enterprise by using exactly the mechanism that my hon. Friend talks about. Does he agree that that is why the bodies he mentions have made this proposal? It will make a material difference to our enterprising spirit and economic growth.
Mr Gauke
My hon. Friend makes an excellent point. We must create wealth in this country to be a successful economy. We need to have an entrepreneurial and dynamic economy. He made this point earlier in the context of corporation tax, but similar arguments can be made in the context of CGT as well.
On the criticism that entrepreneurs relief is badly targeted, I argue that, of course, as with all tax reliefs, it is entirely appropriate that the Government keep it under review to ensure that it is well targeted and not open to abuse, but we believe that it is right to incentivise individuals to set up and expand their businesses. Entrepreneurs relief plays an important part in our pro-growth agenda. It is a highly popular and widely used relief, which supports about 40,000 entrepreneurs a year, according to our latest data. We do not believe that this support should be withdrawn. The latest published cost of entrepreneurs relief is £3 billion, but that is a static figure; the true cost will be different, due to potential changes in the disposals and behavioural change. That behavioural change is very important. On when the data for 2014-15 will be released, these statistics are published annually, and the new release is due in October 2016.
On rates going up and down, let me point out that the 28% higher rate of CGT was introduced in 2010, by the coalition Government, and this is the first change since then. The Government have published the “Business tax road map”, setting out plans for business taxes over the entire Parliament and providing some certainty and stability to businesses.
On the argument that employee shareholder status should be withdrawn, we believe that ESS provides vital flexibility for early-stage firms and that it is right that employee shareholders receive tax benefits on shares awarded in exchange for relinquishing certain employment rights. The purpose of the lifetime limit is to ensure that small firms can offer attractive tax benefits to employees, while ensuring that the benefits are proportionate and fair.
I hope that, with those remarks, I can seek to dissuade the Labour party from voting against the reductions in CGT and the SNP from pressing its amendment to a vote, but if I have been unsuccessful in persuading them not to do so, I urge my right hon. and hon. Friends not to support such measures.
Question put, That the clause stand part of the Bill.
Oral Answers to Questions
David Rutley Excerpts(8 years, 6 months ago)
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Mr Gauke
We are providing more support to help the disabled get into employment, but let me just make this point to the hon. Gentleman, and to the House: the way this country is going to be prosperous and able to afford good public services and support for the most vulnerable is by having a strong, growing economy, and competitive business taxes help us to have that strong, growing economy.
David Rutley (Macclesfield) (Con)
Is my hon. Friend aware that the Federation of Small Businesses has said that the decision to further lower corporation tax to 17% is an important statement of intent and will provide a boost for the affected firms? Does he agree that that will help to further underpin the enterprising economy that we need?
Finance (No. 2) Bill
David Rutley Excerpts(8 years, 7 months ago)
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Seema Malhotra
The hon. Gentleman makes an important point, and there are many measures we should explore, particularly as we go into Committee, to support house building and home ownership.
We know from the English housing survey that 201,000 fewer households own a home now than did at the start of the Chancellor’s tenure. That compares with an increase of 1 million under Labour. As of last year, the housing benefit bill is forecast to be £350 million more than the Chancellor intended. It is clear that this country needs a massive programme of capital investment in new affordable homes to rent and buy—nothing less will do if we are to tackle the growing housing crisis. That is why Labour has far more coherent plans to build homes and to make sure we tackle spiralling housing costs. That is the way to control the housing benefit bill.
Today’s report from the Women’s Budget Group shows that female lone parents and single female pensioners will, on average, have seen their living standards fall by 20% by 2020. Women are now set to bear a staggering 86% of the cost of changes and cuts to taxes, tax credits and benefits by 2020. That is worse than the figure of 81% identified last year.
The tax cuts in the Bill are likely to benefit men more than women. It is surely time that the Government conducted a full gender impact analysis of their proposals. That would give the opportunity for greater parliamentary scrutiny.
When it comes to measures on capital gains tax and corporation tax, the Bill must pass two tests: are they fair and are they effective? The Bill confirms that the main rate of corporation tax will be cut further to 17% from 1 April 2020, which will be worth £945 million. If corporation tax, which is already the lowest in the G7, can be reduced yet further, perhaps money can be found and the Government can think again about cuts to working age benefits and public services.
More importantly, a cut to corporation tax will not address the underlying weaknesses of our economy, such as the challenges in productivity, skills and the investment required in infrastructure. Businesses that talk to the Minister as well as to us say that these are the biggest issues affecting their future growth. Connectivity and new technology also require investment.
David Rutley (Macclesfield) (Con)
The response from the Federation of Small Businesses contradicts what the hon. Lady has said. It said:
“The decision to further lower corporation tax to 17% in April 2020 is an important statement of intent and will provide a boost for affected firms.”
Seema Malhotra
The hon. Gentleman certainly does not seem to have the same sort of direct conversations as I do with businesses. This is a question of choices and timing. They also raise the issue of housing, which affects the stability of their workforce, and of infrastructure investment, which affects access and their opportunities to grow. Investment is also required to support the scale-up of their businesses through developing skills. There is a whole host of issues. This is also about judgment, timing and what would be most effective in increasing our productivity.
Seema Malhotra
I will make a little progress and then I will take another intervention.
David Rutley (Macclesfield) (Con)
I am grateful for the chance to follow the characteristically thoughtful and hard-hitting speech by the hon. Member for Leeds West (Rachel Reeves). As she knows, I respect her and her experience, but there is no question but that a tax is required on the sugar in that speech, which was too sour on this occasion. I prefer the analysis of my hon. Friend the Member for Somerton and Frome (David Warburton).
I congratulate the Government and Treasury Ministers on the Bill. Before I explain why, I congratulate my hon. Friend the Member for Kingswood (Chris Skidmore), the Chancellor’s Parliamentary Private Secretary, on the recent addition, Henry, to his family. We are all grateful on this side of the House for his safe arrival.
It is a pleasure to speak in an important debate on an important Finance Bill, which builds on the success of the Government’s long-term economic plan and takes a number of long-term measures that will make life better and more prosperous, not just now but for future generations. It supports savings for lower earners, with the introduction of the savings nil rate in clause 4, as promised in the autumn statement. The measure excludes the highest-earning additional-rate taxpayers but allows for up to £1,000 of zero-rated savings income for basic rate taxpayers, and only up to £500 for higher-rate taxpayers. That adds to other measures that the Chancellor has put in place such as lifetime individual savings accounts, which were announced this year, and the help to buy ISA, which rightly focus on younger savers.
The Bill works to support further fiscal stability, with necessary uprating in gaming duty in clause 140 and tobacco duty in clause 142. It deals with anti-avoidance issues, as has been discussed, in part 10, with the new general anti-abuse rule penalty clause in clause 146 and escalating sanctions in clause 147. It also promotes economic dynamism, with taxes on income and dividend income—it raises the personal allowance in part 1—and the new dividend income nil rate in clause 5 and schedule 1.
It goes on. The Bill introduces in clause 25 welcome improvements and flexibility both to the averaging of profits in the tax treatment of farmers, extending it from two years to five years, and for creative artists. Farmers have long been central to rural life in and around Macclesfield, and in many other constituencies across the country, and creative artists are increasingly adding to our economic and cultural mix in Macclesfield, as demonstrated by the upcoming Barnaby festival—details are available on its website. I hope that the new tax relief for the production of orchestral concerts in clause 50 and schedule 8 will add to that mix.
The Bill is radical in reforming enterprise taxes, as has been said, with cuts to, and relief from, capital gains tax in clauses 72 and 76, and the cutting of corporation tax to just 17% in 2020 under clause 42. These measures show that Britain is open for business, and are for the benefit of the young and enterprising entrepreneurs whom we need for the next generation of business leaders. That economic dynamism is needed for the long-term projects that the Government are rolling out, and it will benefit our children and grandchildren throughout their working lives.
Young people understand—and young people certainly understand this far better than old Labour Front Benchers—that supporting an enterprise economy is not a selfish, atomistic pursuit but a recognition that we all advance by pooling more effectively our comparative advantages into a common, more productive economy. According to research by UK Trade & Investment and the Economist Intelligence Unit which was published only 15 months ago, “running my own business” is the No. 1 career aspiration for the year 2020 among young people in the UK.
Having listened to debates on the Budget in the House and elsewhere, I think that it is important that we remind ourselves why young people are champions of the common value and common purpose that enterprise provides and why it is important that the Bill responds to that. That is key to explaining why the Bill is important for building on the foundations of this Government’s economic success with enabling measures for the success of future generations.
All business transactions must involve at least two parties: the supplier and the consumer. The very word, “enterprise”, is derived from joint undertakings that have been prised—extracted—from “inter”, or working for mutual advantage. It is a profound force for good. It is also voluntary, so carries the element not only of opportunity but of suitably managed risk. For risk to be suitably managed, suppliers need to be flexible. They need to be responsive to demand to survive and thrive in competitive markets. The Government need to ensure that the freedom to be flexible and the confidence to be bold exist for enterprise to thrive. The Government need to remove barriers and provide a stable and enabling environment for entrepreneurs. They are doing so in clause 42 by reducing corporation tax and by incentivising capital gains through clause 72 so that investment improves. As I said in my intervention on the shadow Minister, the Federation of Small Businesses clearly welcomes this.
The Government need to ensure that we have decent standards of education and skills training, hence the importance of the enterprise levy in part 6. The Government need to clear barriers to growth, whether those are unnecessary regulation and high and complicated taxes, or poor infrastructure for transport and communications. These are sometimes known as horizontal measures as they stretch across the whole economy and across large sectors, and do not apply only to a few selected winners within those sectors picked by Ministers and mandarins. This Government have been right to facilitate joint working between Whitehall and local authorities and business on the ground through growth deals and city deals and by encouraging local enterprise partnerships. That is profoundly long-termist.
Caroline Flint (Don Valley) (Lab)
The hon. Gentleman highlights the importance of skills and apprenticeships. Does he share my concern that apprenticeships, in the way in which they are delivered, still adopt the gender segregation of the past? Most of those going on engineering apprenticeships are boys and men, and most of those going on childcare apprenticeships are young women. Would it not be a good idea to ensure that those in receipt of the apprenticeship levy should demonstrate that they have made every effort to undo the job segregation that exists in our workplaces and in apprenticeships?
David Rutley
The right hon. Lady makes an important point. We want to tackle such segregation. In Macclesfield, AstraZeneca, a great pharmaceutical company that employs many engineers, has 30 new apprentices who started last summer. Many of them are women. That is exactly the route that we need to take. With the new levy, businesses will hopefully have a greater say in how apprenticeships should be taken forward, their quality improved and the gender mix enhanced. That was a good intervention.
The hon. Members for Bassetlaw (John Mann) and for Kirkcaldy and Cowdenbeath (Roger Mullin) spoke about productivity. Clearly, productivity rates are too low. As we heard in the Budget, the OBR believes that the long-term challenges are even worse than it had originally thought. The Red Book shows that the IMF and the OECD point to productivity challenges in many other countries, as well as the UK. I am pleased to see that the Government are tackling that head-on. Hon. Members can take a careful look at page 61 of the Red Book and see the vast array of initiatives that are being taken forward to address the productivity challenge. Those reforms rely on encouraging and enabling local enterprise all over the country.
The present Chancellor is the first Chancellor I can think of who has looked at the powers of the Treasury and actively sought to devolve them—to transfer those powers. That is progressive and it is the right way to secure long-term economic progress. Opposition Members should welcome that, like their colleagues in local government in cities close to me, such as Liverpool and Manchester.
That all adds to the Government’s commitment to forge local strategic partnerships which are needed for the success of other productive sectors such as life sciences, not least in the cluster known as the life sciences corridor in east Cheshire, a sub-region of the country which has productivity rates 14% higher than the UK average and higher than in the sub-regions of Bristol or Edinburgh. We in east Cheshire cannot be alone in enjoying high rates of productivity, so I welcome again the tax measures in clauses 72 and 42 that reduce the barriers of capital gains tax and corporation tax and see the Government encouraging business across the UK, including in the highly productive fields of advanced manufacturing and innovation. We see that clearly in the work that AstraZeneca is doing on Zoladex and other treatments not just in Macclesfield, but across the country. Other businesses should follow suit. It is vital for our economic growth.
In conclusion, the Bill delivers concrete measures that will enable a more enterprising economy. It is a Bill for the long term that makes us more flexible in dealing with short-term shocks and impacts, and it is a Bill for rebalancing the economy and for promoting productivity, which is a vital challenge. That is why I will be proud to support it in the Division Lobby later this evening.
Budget Resolutions and Economic Situation
David Rutley Excerpts(8 years, 7 months ago)
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George Kerevan
I could not agree more with all three points, so I will just accept them.
The Red Book also shows that public sector net investment—capital investment in the public sector—is set to fall for the next four years. I have to ask Conservative Members this question. With industry in trouble and manufacturing contracting, as it has done in the past quarter, how will it help productivity if we have to cut public sector net investment in the capital side of the economy in order for the Chancellor to meet his rendezvous with destiny in 2020 and have his budget surplus? We need investment in capital in order to have productivity—that is where it comes from.
It is interesting to see what the OBR thinks we will have to do in order to get the books to balance. It believes that UK private sector business investment will have to make up the difference. It believes that private business investment will come to the rescue and contribute a quarter of the expenditure contribution to GDP growth in the period to 2020 in order to achieve the Chancellor’s fabled budget surplus. So, to make all the sums work, there has to be growth. Where is the growth coming from? According to the OBR, a quarter of all the potential expenditure in the economy between now and 2020 has to come from business investment. [Interruption.] Bear with me as I go through the numbers, because they are important. According to the OBR, business will have to contribute 0.6 percentage points each year to GDP in order for the economy to grow sufficiently to deliver the taxes to enable the Chancellor’s budget to come into balance.
There is only one problem. Historically, from 1990 to 2008—that is, throughout the boom period—the level of investment that British business managed to achieve as a percentage of GDP annually was 0.3, which is precisely half what the OBR thinks that business will have to invest between now and 2020 if the Chancellor’s numbers are to work. That is not going to happen.
David Rutley (Macclesfield) (Con)
The hon. Gentleman says that the Chancellor lacks strategy, but that is clearly not the case. He was clearly not listening to the same Budget speech that I was listening to. That speech included supply-side measures, with business taxes going down and infrastructure being improved. We are seeing massive Government investment in the northern powerhouse to tackle the challenges, and private sector investment is coming in on the back of it, including £1 billion of investment in Manchester airport over the next 10 years. Is not that the sort of leverage that the Government should be seeking?
George Kerevan
If the hon. Gentleman had been listening carefully instead of following his script, he would understand that I am in favour of all the supply-side measures that we can get, because that is how we get growth. I am simply pointing out that the Budget figures that we have been presented with in the Red Book, alongside the OBR’s independent analysis, suggest that business investment will have to be double the level of its historical average, at a time when the global economy is slowing, in order for the Budget numbers to work. That is not going to happen.
The hon. Member for Macclesfield (David Rutley) made a reasonable point, however, and I shall follow on from it by asking: how do we boost business investment? The Budget includes a cut in corporation tax, yet our rate is already the lowest in the G20. How can a further cut produce any more inward investment? The incentive is already the biggest it is going to be, so cutting it even more at the margins will not increase incentive. That will just waste funds. Even with that—I have raised this in the House before—because there is so little outlet for investment at the moment, much of companies’ profits from reduced corporation tax is going into share buy-backs, which is a complete waste of time because it does not add to productivity.
The other tax issue in the Budget is the cut in capital gains tax. There is an argument for cutting capital gains tax, but here’s the point: which Chancellor raised capital gains tax in 2010? It was the Chancellor who is sitting there. Where is the long-term plan in raising it and then lowering it? The confusion of signals is exactly why businesses are not investing. They do not know what taxes will be from one Budget to another, which, at the moment, is every three months. [Interruption.]
David Rutley
I thank the hon. Gentleman for giving way. I was not seeking to make a point, but I will now. The Chancellor has clearly demonstrated that he has his public finances under control—[Interruption.] The deficit is massively down and he is now in a position to take forward the changes to which the hon. Member for East Lothian (George Kerevan) refers.
Madam Deputy Speaker (Natascha Engel)
Order. The hon. Member for East Lothian (George Kerevan) has been on his feet for 15 minutes and is taking an awful lot of interventions—he is very generous like that —but over 40 Members want to speak and I do not think that I am going to get everybody in. If he limits the number of interventions he takes, I will be very grateful.
Budget Changes
David Rutley Excerpts(8 years, 7 months ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
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David Rutley (Macclesfield) (Con)
Does my hon. Friend agree that the Government’s positive track record of tackling unemployment and creating apprenticeships clearly demonstrates their commitment not only to enterprise but to improving life chances?
Mr Gauke
The Government’s record is that, again and again, we have taken steps to improve the life chances of the British people. It also helps, in the long term, the life chances of the British people to have public finances under control. Only a Conservative Government will deliver that.
Budget Resolutions and Economic Situation
David Rutley Excerpts(8 years, 7 months ago)
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David Rutley (Macclesfield) (Con)
It is an honour to follow the hon. Member for East Antrim (Sammy Wilson), who spoke with characteristic passion and commitment to his constituents.
I follow other Members who have welcomed the new sugar levy announced today. I have long campaigned hard to make sure we tackle public health challenges, particularly those facing young people and children. Individuals who get a chance to look at the sugar smart app will see how much sugar is in so many of the products we and our children consume. The levy is a positive step forward.
Jim Shannon (Strangford) (DUP)
I am pleased to hear that the hon. Gentleman welcomes the sugar tax, as do I. I have long felt we should introduce it. The Chancellor referred to the next generation and the £27 billion we could save. The levy will bring savings to the NHS, change people’s attitudes and address levels of obesity. Does the hon. Gentleman agree that if ever there was a good reason for a sugar tax, that is it?
David Rutley
I completely agree. The hon. Gentleman and I have been involved in numerous debates about promoting outdoor recreation and physical activity—for older people as well as young people—and the levy is a positive step further forward. I pay tribute to the Government for taking forward its sport strategy and to the Under-Secretary of State for Health, my hon. Friend the Member for Battersea (Jane Ellison), for her work in taking forward a very proactive public health agenda.
On other areas of the Budget, I felt that the Chancellor set out a clear, strong package of measures to help go on delivering the long-term economic plan and to make Britain the best place in the world to start up and grow a business. I have long talked about the importance of an enterprise economy. To achieve one, we need to focus on some key groups of people who make that happen: the entrepreneurs, the exporters, the employers and, of course, the employees who help put the pieces of that jigsaw together to create the enterprising economy that we want to see in Macclesfield, Cheshire and right across the country.
In recent years, I have also been campaigning hard on behalf of the self-employed. It is fascinating to see how self-employment is moving forward. I have been working with Demos and the RSA on various policy initiatives in this area, and it is clear that there is a long-term trend towards more self-employment—4.6 million, up from about 4 million in 2010. It is clear from the RSA’s own work that the pull factor is bringing more people into self-employment; there is not just a push factor. On the back of that, it is important that we welcome the Chancellor’s announcement on abolishing class 2 national insurance completely, to simplify the tax system for the self-employed.
The Chancellor also talked a lot about productivity, which the Government are absolutely committed to improving. For decades, the UK’s productivity has lagged behind that of other major economies. We need to address that. As a result of the drag from the financial crisis, the OBR has forecast lower productivity in the UK, as the OECD has done in the vast the majority of countries. That is why the Chancellor is absolutely right to keep an unrelenting focus on productivity and to take the strong action we need to take to bolster our economy now and for the next generation.
Colleagues should turn to page 61 in the Red Book to see the vast array of activity being taken forward to encourage more investment: lower taxes to boost enterprise, investment in infrastructure, as called for by Opposition Members, and a strong focus on science and innovation, which I believe is vital for the country and certainly for Cheshire.
I join the long list of colleagues on the Government side—and, I hope, Opposition Members, too—who welcome the fact that the Chancellor has set out that business rates will be reduced, which will have a huge impact on many small businesses. Capital gains tax has been cut; corporation tax has been further reduced to 17%. Stamp duty is to be reformed, not just in the residential sector, but in the commercial sector. These are vital steps in ensuring that we improve opportunities for investment. When we drive productivity further forward, it means more jobs and more skilled employment, which, when combined with the national living wage, will lead to higher wages, too.
Siobhain McDonagh (Mitcham and Morden) (Lab)
Is the hon. Gentleman aware that, as a result of the introduction of the living wage, most high street chains and supermarkets will cut their long-term staff salaries?
David Rutley
These are challenging issues. Clearly, there needs to be discussion between the employers and employees. The Government have made it clear that they will name and shame to highlight the organisations that are not going forward with the national living wage. We will have to wait and see, but it is a positive direction that the Government have set out, providing real opportunities to grow wages further beyond the 2% that we have seen in the last year.
The key to the long-term economic plan and the rebalancing of the economy is to ensure that we rebalance geographically as well. This Chancellor and this Conservative Government have set out a very clear narrative for the north—the first in decades. As with the long-standing challenges with productivity, we need to measure our expectations of what can be achieved now, and we should be resolutely ambitious about what can be achieved in the future.
The Treasury analysis of the opportunities from rebalancing the economy and putting more focus on the north suggests an additional £56 billion going into the northern economy over the next 15 years. That is a prize worth having, and a prize in which this Government are willing to invest. Of course the Chancellor and this Government have championed city deals and growth deals across the country, particularly in the northern powerhouse, and they have done the same today. This is a fundamental part of the Government’s reform agenda.
Local leaders and local partnerships are creating strategic partnerships, which are empowering a new scale of activity that is required to achieve the growth across the country that we want to see. Ambitious measures are being taken forward. For example, the creation of a northern transport strategy is vital. Within just two years, we have seen a fundamental transformation of our ambitions for the north—not just economically, but in terms of civic renewal.
Transport for the North will be put on a statutory footing, with a £50 million budget to 2020. There will be smart ticketing across rail services in the north, with £150 million promised for faster and more frequent train services with greater capacity. Strategic investment in High Speed 2 will have a huge impact on Crewe and Cheshire East, as well as on the north-west as a whole.
Today we heard more from the Chancellor about better links among the individual cities of the north that need to get better connected. That includes trans-Pennine rail services, better road links and making the M62 a smart motorway. There is talk now of building a case for a trans-Pennine tunnel between Manchester and Sheffield. These are fundamental and ambitious schemes. They are not just about Government funding, because private investment is being leveraged in as well. It is fantastic to know that Manchester airport has now had planning permission to take forward its £1 billion investment in a 10-year transformation programme that will be welcomed across the north-west.
Work is being taken forward to help create this northern powerhouse with the infrastructure and devolution that is required. It will connect northern cities to ensure that the sum is greater than the individual parts. In doing so, we can make sure that we create a globally significant economic entity. We hear of Randstad, Amsterdam, Rotterdam, The Hague and Utrecht working together, and the same applies to the Rhine and Ruhr, with Koln, Dusseldorf and Dortmund. They are stronger because they are better connected—and we have the same ambition for the north.
Success will not only be about infrastructure or devolution. We must ensure that we back the sectors that can help to drive our economic strength. That is why life sciences are so pivotal—not just in Macclesfield or Cheshire, where we are seeing an emerging life sciences corridor, but in helping the UK to continue to be a world-class centre of excellence in a leading role, creating clusters of high-skilled and high value-added jobs, as we are doing in Cheshire. I hear that clusters are likely to form in some other places down south. Oxford and Cambridge, I understand, also have some claims to be pretty good at science. The fact that we are taking scientific initiatives is critically important.
We are performing well according to a number of key output measures. We are producing 16% of the top-quality published research findings on the basis of just 3.2% of the world’s R and D expenditure. That is a sign of strength in the sector, and it is important for the Government to get behind that sector as part of their ambitions for the northern powerhouse and for our long-term economic plan. They have an important role to play as a champion of science, a funder of science, and a facilitator of scientific endeavour. I welcome recent announcements, in the spending review and confirmed in the Red Book today, that the science budget will be protected in real terms until the end of the decade. As a result, we shall have a £6.9 billion research infrastructure by 2021, which means crucially that our party can deliver on its manifesto commitment to achieve record investment in the country’s scientific infrastructure.
Of course, funding and spending are not the only drivers of success. The lesson that we can learn from the last Labour Government is that it is important for Governments to spend well, and to encourage businesses in the private sector to invest too. That does not mean recycling old policies and adding shiny new words. Over the weekend, we heard the shadow Chancellor talk about the “fiscal credibility rule”. Within a matter of minutes, it was deemed by many members of his own party to have a complete lack of credibility, so I am sure that businesses will not be fooled. They recall the size of the deficit that was inherited in 2010, and they recall that corporation tax stood at 28% and national insurance was set to increase. They will not be fooled by the soft words of the hard left which is currently running the Labour party. This Government are absolutely committed to increasing productivity, focusing on science, and rebalancing our economic geography in favour of the north.
EU Referendum: Timing
David Rutley Excerpts(8 years, 9 months ago)
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David Rutley (Macclesfield) (Con)
I am grateful to you, Madam Deputy Speaker, for the opportunity to speak in this debate, and to the right hon. Member for Belfast North (Mr Dodds) for securing it and bringing forward this subject. It is a very important subject—hon. Members from all parts of the House are passionate in their views on Europe—and the timing issue is clearly of concern to him and his colleagues.
I tend to find that my views agree with those of DUP Members most of the time. We clearly agree on one very important thing, which is that this is the time—this is a once-in-a-generation opportunity—to give the public a referendum so that they can have their say. However, I disagree with them today and I will not support them on the timing issue. I think that there will be enough time. The Prime Minister has clearly set out in legislation that there will be time for people to think and there will be enough information for them to make up their minds.
Let me explain why I will not support the motion. As colleagues have already mentioned, the aim of the Conservative party to hold a referendum on this subject has not exactly been the best-kept secret on the planet. Indeed, during the last election, many Conservative Members, and probably many Members on the Opposition Benches, talked about the referendum in their election literature. It was in our manifesto, and it was certainly in my election materials. I was very proud to talk about it, because I think it is time for this subject to be put to the British public so that they can express their views.
In fact, I distinctly remember that we were able to debate the issue extensively during the last Parliament, even though we were part of a coalition Government at the time. Government Members, particularly me and my Conservative party colleagues, found a mechanism to have such a debate on private Members’ Bills, particularly those introduced by our hon. Friends the Members for Stockton South (James Wharton) and for Bromley and Chislehurst (Robert Neill). They put forward those Bills continually to seek a debate on this subject, even though we were constrained within the coalition. As parliamentary private secretary to the Minister for Europe during 2014 and 2015, I know that the issue was much debated as a matter of clear concern that agitated many of our colleagues. They wanted to talk about Europe, and they did, and they wanted the referendum. During all the parliamentary discussions, it was also clear that a wider debate was taking place. News reports and TV programmes went on about it, and I did detect one or two tweets on the subject as well. This was not a surprise—it has been well trailed—and it is therefore important to address head-on the concerns expressed in the motion, because we need such a debate more quickly than not.
I listened carefully to the right hon. Member for Belfast North. I believe that his concerns, and indeed those of other Members on the Opposition Benches, are sincere, but that they are overstated. That brings me back to an experience I had in a Leeds shopping centre, not far from Pudsey, several years ago. I was in a rush—I needed to get to a meeting, and I had to move very quickly—and I had to make a quick decision about which escalator to go up to get to the meeting. I ran up it as fast as I could, and it became pretty obvious that I had chosen the wrong escalator: I was running up the down escalator. An older lady, who was mesmerised by the spectacle, looked me in the eye and said, “That’s what comes from rushing.” I have never forgotten that. Rushing is having to deal with decisions within split seconds. I can assure the House that this is not about rushing, but about having a conversation and a debate over weeks and, indeed, months.
Alex Salmond
I am still grappling with which side of the argument the escalator analogy supports, but if six weeks were enough, why does the legislation specify a 10-week period for the European referendum campaign? Does that not conflict with the argument the hon. Gentleman is making?
David Rutley
No. We know that if the Prime Minister is successful in securing the negotiation and is minded to put it forward in the referendum, there will be challenges in terms of the multiple debates that will be going on. Like the hon. Member for North Antrim (Ian Paisley), who talked about there being multiple choice questions, I do not think that is a problem. This is about putting two separate questions: who will the electorate vote for in local elections, or indeed the Assembly elections or the parliamentary elections in Scotland; and how will they vote in the referendum. Those two things are separate and clearly set out, and I do not think there will be a conflict. In the minute I have left, I will explain why.
If the Prime Minister chooses the timescales I have set out, there will be seven weeks between the May elections and the referendum. Indeed, there will be more than 17 weeks between the decision being made to progress with the referendum and the referendum being held, so there will be 17 weeks in which to have such a discussion. If we compare that with what happened in previous referendums, we can see that in 1975 there was just one month between the completion of the legislation and the referendum, and that in the alternative vote referendum, which some hon. Members have talked about, there were three months—it felt like an eternity—but the Prime Minister has promised more time. There is therefore enough time and I believe that the electorate will be able to separate their thoughts about whatever the issues are in Northern Ireland or Scotland from their thoughts about the referendum. For those reasons, I support those on both sides of the debate—whether they are ins or outs on this subject—who say we need to take the earliest opportunity to have the referendum.
Oral Answers to Questions
David Rutley Excerpts(8 years, 9 months ago)
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Greg Hands
The trade deficit is actually improving as a share of GDP, and it is projected to continue to do so in the Office for Budget Responsibility’s forecast. What would be an absolute disaster is the Scottish National party’s policy of full fiscal independence, which would cost Scotland £10 billion a year, added to which the collapse in the oil price would, according to the OBR, result in revenues this year being down by a staggering 94%. That would be a disaster for Scotland.
David Rutley (Macclesfield) (Con)
I welcome the Chancellor’s earlier comments about export initiatives to India. Will my right hon. Friend join me in welcoming the excellent work that is being done by businesses in the north-west and the northern powerhouse to boost exports?
Greg Hands
I join my hon. Friend in very much welcoming that, particularly with reference to exports to China and India, which have been a great success. UKTI is doing what it can to support that, with a doubling of funds in China over the spending review period and providing tailored support for first-time exporters, with an additional £20 million in 2015-16. It is supporting northern powerhouse trade missions on that specific basis, on the terms mentioned by my hon. Friend.
Oral Answers to Questions
David Rutley Excerpts(8 years, 11 months ago)
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Mr Osborne
I completely understand the hon. Lady’s interest in this subject, and the matter arouses a lot of interest across the House and the country. I am afraid she will have to be patient and wait for the Government’s response to that important report.
David Rutley (Macclesfield) (Con)
T4. I congratulate my right hon. Friend on this autumn statement, which continues to make science a clear priority. Does he agree that the new Cheshire science corridor enterprise zone will play an invaluable role not only in the local economy, but nationally as well, and particularly for the northern powerhouse?
Mr Osborne
My hon. Friend and constituency neighbour is right. Support for Cheshire science goes across the county, and it particularly supports the brilliant work being done in Macclesfield and Alderley Park not just by AstraZeneca but by many new companies that have come to that estate. It is something that I know he champions.