Oral Answers to Questions
Richard Drax Excerpts(9 years, 10 months ago)
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Danny Alexander
I am sorry to have to correct the right hon. Gentleman, but youth unemployment has come down by 171,000 over the past year and is 175,000 lower than when the Government came to power. In his constituency, it is down 53% since 2010—a fact that I am sure he will join me in welcoming. I would agree with him that we need to continue for a number of years with the successful policies that are reducing unemployment in this country, to ensure that every young person has the opportunity to make the best of their life.
Richard Drax (South Dorset) (Con)
May I congratulate the Front-Bench team on their economic policy and their long-term economic plan? Unemployment in South Dorset has halved over the past five years. Does the Chief Secretary agree that to hand the country back to the Opposition in a few months’ time would be an absolute disaster for the economic future of this country?
EU Budget (Surcharge)
Richard Drax Excerpts(10 years ago)
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Mr Osborne
Of course, the shadow Chancellor estimated that it would cost £114,000 a year, which is the EU penal rate on £1.7 billion. If interest had been charged even on the rebateable amount, it would of course have been about half that figure.
Richard Drax (South Dorset) (Con)
May I congratulate my right hon. Friend on getting half the money back? That is certainly a step in the right direction. However, does it not show that one economic cap does not fit all in the EU, and never ever will?
Mr Osborne
My hon. Friend is right. That is why previous Conservative Governments achieved things such as the opt-out from the single currency, even though the previous Labour Government toyed with the idea of joining the single currency, which reveals—
Economic Growth
Richard Drax Excerpts(11 years, 6 months ago)
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Richard Drax (South Dorset) (Con)
It is a pleasure to follow the hon. Member for Huddersfield (Mr Sheerman). I very much agree about the importance of apprenticeships, on which the Government are rightly concentrating. One radical solution would be to reduce welfare even further and use the money to encourage employers to employ youngsters so that we can train them and get them back into work, rather than giving them money to stay wherever they are doing nothing. That would be a radical solution, or part-solution, to our problems.
We have been talking about negotiating with Europe for some time, and I learnt from the Library today that we have failed to block a £6.2 billion hike in this year’s EU budget, a rise of 5.5% on the original plan. If that is a successful negotiation, I would hate to see a bad one. For the United Kingdom, that means an extra £800 million, taking our contribution this year to £14.7 billion.
Yesterday I heard Nick Robinson on Radio 4 describe the amendment tabled by my hon. Friend the Member for Basildon and Billericay (Mr Baron), and signed by me and others, as “parliamentary graffiti”, which I understand to be a meaningless scrawl that has no real impact. I must say that I am slightly tired of the way the press and other commentators just deride the genuine aim of looking at our relationship with the EU, which is desperately needed. Members on both sides of the House—this is what is so extraordinary—agree on that point. As I indicated at the start of my speech, despite the negotiations that go on, we simply do not succeed.
Richard Drax
After I left the BBC I think it certainly lurched to the left.
We have seen what happens when we peddle the line of fruitcakes and loonies: the electorate, who are disaffected enough with us as it is, vote for the party accused of having fruitcakes and loonies. The votes for UKIP two weeks ago only showed what thousands and millions of voters believe. They do not believe that the amendment is graffiti; they believe that we have a major problem and that we—this is why I was sent to this House—have to deal with our relationship with the EU.
The amendment is not, and we are not, attacking the Prime Minister at all. In fact, if hon. Members listen to what the Prime Minister has said, they will hear that he agrees with the amendment. We have been sent here—all of us—to look after our country’s interests and those of our constituents. It is my view, and that of many learned Members, that a renegotiation with the EU is vital. I suspect that it will not be successful, which will lead, I hope, to a referendum and the inevitable vote of “out”.
How often have I heard—I have heard it again in today’s debate—those who are opposed to leaving the EU say that we should focus instead on the economy and jobs? But that is what the EU debate is all about—it is about the economy and jobs. The hon. Member for Huddersfield turns his eyes to the ground as if to say, “Oh dear, here’s another xenophobic Euro-nutter banging on,” but that is not what I am doing; I am speaking for our country and acknowledging what the vote for UKIP showed. We have to wake up in this place.
Richard Drax
I will carry on, if I may.
If we do not wake up, we will lose the respect of the people of this country. I would suggest that repatriating the competences that still go to the EU, despite the treaties that have been agreed and the promises that have been made, would do more than anything else to generate jobs in this country. This is a golden opportunity that we must take if we want to restore the trust in this House and this country that was thrown away as a result of the failed promises over Maastricht and Lisbon.
What more evidence do we need that the EU is dead? It is finished. Look around! Wake up! Greece is a disaster and Spain is potentially on the brink of civil war—53% of youths are unemployed. [Interruption.] Hon. Members say, “Oh, my God!”, but there are riots in the streets and their own police are bashing youngsters over the head. This is the Europe that we now face.
Richard Drax
I will not give way, because I have only a short time left.
France is a basket case. Outside the EU, the economies of the BRIC nations—Brazil, Russia, India and China—and Asia are growing. In the past few days, President Obama has been encouraging our Prime Minister to fix the relationship with the EU. We have been trying to do that for years and years, but we have not succeeded. We joined the common market to trade with Europe and that is the relationship that we need and must have. Finally, this is not about nostalgia, as I think an Opposition Member has said, but about reality.
amendment of the law
Richard Drax Excerpts(11 years, 8 months ago)
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Mr Alistair Darling (Edinburgh South West) (Lab)
I shall follow up shortly the points made by the hon. Member for Bury St Edmunds (Mr Ruffley) on the Bank of England, but first I draw the attention of the House to my entry in the Register of Members’ Financial Interests.
The big problem we face at the moment is lack of growth. Here we are, five years since the crisis hit most western developed economies, yet contrary to what has happened in the past, there is absolutely no sign that growth will return to this country.
Richard Drax (South Dorset) (Con)
One of the many reasons we do not have growth is that the Opposition made the country such a client state that we are indebted up to our eyeballs and there is no room for growth.
Mr Darling
With due respect to the hon. Gentleman, I anticipated that predictable nonsense. I am grateful to him for intervening, however, not least because he has given me another minute in which to make my case.
As the Office for Budget Responsibility points out, the recession is taking far longer to come out of than any we have seen previously. The principal factor is that in 2007-08 we had a complete collapse of our GDP and that situation has not been recovered in the past five years. Frankly, on the evidence presented by the Chancellor last week, I see little evidence that it is going to happen. As a result, we are borrowing very large sums of money: £120 billion last year, this year and next year.
As I was saying before the hon. Gentleman interrupted, in the Chancellor’s forecasts, yet again in the back three years of the forecast period we see an expectation that growth will go from 2.7% to 2.8% in 2017. That is exactly the same profile that we have seen in each of the Chancellor’s Budgets and autumn statements. The problem is that these sunny uplands are moving to the right each time he stands up. I cannot for the life of me see why anything will be any different in 2017 from the bleak outlook we see today. The problem is that as long as we have low growth we will have high levels of borrowing, and debt is now expected to peak at 85% of our GDP. When we advocate a different approach, the Conservatives and the Liberals say that we are talking about borrowing more, but this Government are borrowing more than they ever imagined they would in 2010, and they are doing so not to invest in things such as infrastructure, but because of the price of their economic failure. That is what many of us have a problem with.
Richard Drax (South Dorset) (Con)
In the short time I have—five minutes is a very short time—I will just rattle through a few points.
I welcome a large part of this Budget—it is very good news. It sounds more like a Conservative Budget, which is why the press have, on the whole, welcomed it; I believe that the Chancellor was transformed into a former Prime Minister, because there was a feeling that this is, at last, what the country needs. My question to our Front-Bench team, which they can perhaps answer later, is this: why has it taken nearly three years for us to do this? I suspect that their answer will be, “Because we are in a coalition.” I am a little tired of hearing that. I want a lot more blue narrative and less coalition narrative, because that is the way forward on sorting out our economy.
I welcome the reduction in taxes. Raising the income tax threshold to £10,000 is a wonderful way to go, but we should go further; how many constituents have we heard say, “If I do a bit more work, I will lose my benefits”? Let us give them income they have earned—let them keep it. Let us keep on that path, encouraging people back to work and off welfare. That is the right direction to take.
The beer escalator has gone—hurrah! A great friend of mine, who sadly had a heart attack, used to run the Hall and Woodhouse brewery in Blandford and before he died he said to me, “Richard, when you get into the House, please try to get rid of this beer escalator because we are losing thousands of jobs across the country as a consequence.” It is now gone—well done the coalition Government. I am absolutely delighted about that, and, in addition, 1p was taken off the pint of beer so we could all celebrate a bit on the night.
I am also delighted about the freezing of fuel duty. I am not going to be partisan and say that it would be much higher if we still had a Labour Government; it is frozen and that is good. But we should go much further and cut into that vast amount of tax that the Government take off the normal man and woman in this country, who, in many cases, simply cannot afford to fill up their car—the situation is ludicrous.
On the ceramics industry, I am delighted that the levy has been removed. May I put in a small request on behalf of the aggregate industry? A constituent of mine is paying £2 a tonne to take aggregate out of the ground, which is costing him £160,000 a year. That is a tax on a small family business employing 48 people in South Dorset that cannot afford that huge burden. Dare I say it—common sense must replace green taxes when jobs will be lost.
My concern is about the Government’s planned equitable loan, or mortgage guarantee—whatever we call it, those are the two arms of the new policy. I hope it works and that more houses are built as a result, but I am concerned that taxpayers’ money is being used to guarantee mortgages. If that goes wrong, we will not want to carry it with us in the years to come.
As for solutions, as a Conservative I believe that the supply side must be boosted. We must cut taxes further. As I have mentioned, we must get more people back to work by raising the welfare threshold. I believe that that is working extremely well in Sweden, although it went much against public opinion. We are still spending more than we earn and although we lecture the Opposition about what they did, we are doing the same thing. We must live within our means. We cannot go on printing money. Billions of pounds are being printed because there is no charge on interest. That is an inflationary move and could lead in months or years to come to interest rates rising. If that happens, our constituents, businesses and councils will be bust. It is as simple as that. We must tell the country the truth. We are in a hole and we must stop spending money we simply do not have.
Lastly—how time flies—we must consider the ring-fencing of budgets. Surely austere times are not the time to ring-fence budgets. If any budget should be ring-fenced, it should be defence, in my view, but even the Ministry of Defence must be looked at. All budgets should be open to consideration and, if needs be, to being changed. On the whole, I welcome the Budget, but we have a lot further to go—and, please, may we have a lot more blue narrative in the future?
The Economy
Richard Drax Excerpts(11 years, 11 months ago)
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Richard Drax (South Dorset) (Con)
It is a pleasure to follow the hon. Member for Islington South and Finsbury (Emily Thornberry). I agree with her on one point: everyone should pay tax, but more of that later.
May I pay tribute to those who made their maiden speeches, and welcome them to this place? I remember mine all too clearly; it is a nerve-wracking moment for all of us.
In the eight minutes that I have, I do not want to look back or play the blame game with the Opposition, other than to remind the country of their profligate years, but enough said: we have to look to the future and how we get ourselves out of this mess. Let me go back over some basic principles which, it seems to me—maybe I am getting this horribly wrong—many in the House have forgotten. Baroness Thatcher, a lady for whom I have huge respect and admiration, was brought up, as the House knows, in a grocer’s store. Her economic principles, like most of her principles, were very simple and on the whole they were sound: “You spend what you earn. You borrow too much and you go broke. Eating into capital is the road to ruin.” She believed in a light-touch, low-tax Government.
We had the chance to be radical when we came to power, but regrettably, linked to the Lib Dems as we are, that was never going to be a reality. Taxes, both business and personal, remain at punitive levels. They curtail incentive, reinvestment, aspiration and jobs. Employers’ national insurance contributions are a classic example. I run a business, albeit a small one, and pay nearly 15% for each person I employ. That is madness, and it is certainly not based on Conservative or free-marketeer principles. My advice to those on the Government Front Bench is to scrap employers’ national insurance contributions if they want to see unemployment fall and businesses thrive.
The deficit is down, which I welcome, but borrowing is rising, as we have heard, and state expenditure remains unacceptably high, with savings in real terms at negligible levels. So we print more and more money—it is called quantitative easing—tons of it, in fact, and down the plug it has gone. But at some stage it will spill over into the bath and we will start to spend it. Inflation will rise and interest rates will inevitably have to rise to combat it. At that stage, we will see pain on an unprecedented level in this country.
In the meantime, we pile more and more taxes on the better-off, who already face punitive rates, while those at the bottom are taken out of tax altogether. Why? The hon. Member for Islington South and Finsbury said that everyone should pay their taxes fairly. If we take those on the lower end out of tax altogether, what incentive do they have to put away their rubbish or to contribute to their fire or police service?
Sheila Gilmore (Edinburgh East) (Lab)
The hon. Gentleman’s view of economics seems to miss the fact that when Governments invest, jobs are created, more money comes into the Treasury and less goes out by way of wasteful benefits. What has gone wrong in the last two and half years is that the Government have pulled the plug on investment, which now, rather belatedly, they are trying to put back in a small way. By the way, some people might not be paying income tax, but they are paying council tax towards the very services he has just mentioned.
Richard Drax
Unfortunately, the Government have invested; the hon. Lady is absolutely right. Governments, particularly during Labour’s 13 years in office, invested to such an extent that we are now in the mess we currently find ourselves in. It is not for Governments to play economics; it is for business men and women, entrepreneurs, small businesses and retailers to generate our economy. I hear again and again from people on all sides that the broadest shoulders should bear the biggest load and that we are all in it together. We are not, and we never will be, and we fool ourselves and do a disservice to those struggling to make ends meet if we think otherwise. Let us not forget that the better-off, whether businesses or individuals, play a useful role in our economy. Except for a few notable occasions, they pay tax. They create jobs and buy goods, which generates jobs, and in many cases they take their wealth responsibly and give back in countless ways, so let us stop killing the golden goose.
The simple fact is that we must cut state expenditure. The EU is a classic case. Some £51 million a day goes to that unaccountable, Soviet-style bureaucracy, the same EU that mislays €5.2 billion every year, according to the European Court of Auditors. Yet they want more, and we give it to them. We boast about giving 0.7% of our GDP in overseas aid. Do not get me wrong: I am all for charity, but charity should start in this country, particularly now that so many of our constituents are struggling. Let me give an analogy, the farming analogy, as I call it. If a third-world country needs to learn how to farm, we do not send it millions of pounds that go into the pockets of some genocidal maniac; we send a farmer and we teach them how to look after themselves. How many apprentices, nurses, doctors, hospitals and schools could be looked after if we had all the money that is going abroad?
Let us not forget the defence of our country and our armed services, which are being slashed to an unforgivable level. We have a bloated welfare bill; it has been discussed in this place again and again. Then there is the NHS, where all sides bury their heads in the sand. That bill will go on rising and rising to unaffordable levels. There may be—I am sure there is—another way, but no, we do not do that; we ring-fence it instead.
We need a country where the entrepreneur—the business man and woman—can fly free of red tape, punitive tax rates and burdensome regulations from the EU. In South Dorset, I have a young Marine who has set up a company called Ovik Solutions. He makes armoured vehicles based on old Land Rover chassis. Riot-proof and bomb-proof, they are currently serving in Northern Ireland—120 of them. One can see the white vehicles—they are his. The company is going from strength, from employing two people to 15. Ovik will provide British jobs, based on British engineering and ingenuity, in Britain. How ironic that its inspiration, Jaguar Land Rover, is now owned by India and production is moving to China.
What lessons have our Government learned? Here we are, on our knees, and what do we do? We appoint the right hon. Member for Twickenham (Vince Cable) as the Business Secretary. This man is no friend of business; he is a friend of those who say “Tax, and tax, and tax, and tax.” We do not need a man of that ilk in charge of our business.
Another crazy move, brought in by the Opposition when in government, involves our brewing industry. I am of course talking about the beer duty escalator—it is absolutely mad; jobs are going in their scores every year—and it is possible for no other reason than that people like to drink beer. This is a home-grown industry that we are singularly doing an awful lot to destroy.
What must we do? We must deregulate, we must lower taxes, and we must cut state expenditure. Yes, there will be pain—of course there will—but I am convinced that in the longer term, if the private sector is allowed to flourish, as it has done, much to this Government’s credit, with the creation of 1 million new jobs, then we, and it, will create the wealth and the jobs that we need.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
I congratulate my hon. Friends the Members for Middlesbrough (Andy McDonald), for Croydon North (Steve Reed) and for Rotherham (Sarah Champion), who gave three excellent speeches and demonstrated the great capabilities and talent coming into the parliamentary Labour party and which we hope to see more of in 2015.
The economy has been weakened by poor decisions by the Chancellor leading to declining growth, so borrowing is higher, which means that the public debt is worse. While public spending totals are similar to those in the March Budget, tax revenue forecasts are far more pessimistic. The Office for Budget Responsibility suggests that by 2015-16 tax receipts will be £662 billion instead of £692 billion. That is a 4% overestimation, as corporation tax, income tax and VAT at 20% have not brought in and will not bring in the tax take expected. That £30 billion shortfall translates into a £30 billion rise in public sector net borrowing.
In every year except 2012-13 borrowing is higher, and the gap grows over time. This year’s figures are flattered by the £3.5 billion sale of the spectrum for 4G, which is yet to occur, and by the £5 billion tax deal with Switzerland. Let us look at the Chancellor’s much lauded
“largest tax evasion settlement in UK history”.
It is anticipated by the Chancellor to bring in more than £5 billion over the next six years, although the OBR described that clearly as “highly uncertain” because of the lack of information about the value of the assets held by UK citizens in Switzerland. Indeed, the Treasury has stated:
“The final stage of the ratification process is expected to be concluded shortly, but there remains a possibility that the Swiss government will have to hold a referendum on the agreement… This is therefore a significant fiscal risk to the forecast.”
The Treasury added:
“The estimated revenue raised by this measure is also highly uncertain as there is little hard information about the value of UK individuals’ financial assets in Switzerland, and how these individuals will respond to the policy.”
Apart from those settlements, by 2015-16 three years of higher borrowing will push up public sector net debt by £67 billion, or 4%. The Chancellor’s own rules state that public debt as a share of national income must fall by 2015-16. To pass that test, the growth in public debt must be lower than growth in cash or nominal GDP.
In March, the OBR massaged its nominal GDP growth forecast up to 5.7% in 2015-16 alone, in order just to exceed the 5.3% rise forecast in public sector net debt. Now the OBR has slashed its GDP growth forecast for that year to 4.6%. No matter how much the Chancellor likes to fudge and fiddle the figures, he cannot massage down the 5.9% hike in debt forecast by the OBR for 2015-16. The chances of his meeting the terms of his own debt rule have taken only two and a half years to be completely destroyed by the growth-strangling policies he now wishes desperately to reverse, as we saw with the U-turn on capital allowances. The Chancellor says he has missed his debt rule by a fraction and that he will retain the 2015-16 debt target, even though it will now be impossible to hit.
The public finances are now difficult to compare with those under previous Budgets because the statistics are affected by large transfers of cash or classification changes. In fact, the Chancellor’s raid on surplus funds sitting in the Bank of England originates from his quantitative easing programme. The OBR says the surpluses are temporary, so although the Chancellor’s cash grab flatters headline public borrowing figures by some £12.3 billion in 2013-14, future Governments will have to repay the Bank of England an estimated £6 billion to £7 billion in 2021-22 for this Chancellor’s record purchasing of our own bonds. Without that cash grab, the Chancellor would have broken not just his fiscal rule—which he clearly has—but his debt target for 2016-17 and his deficit promises.
Here we are, going into 2013, and all the Chancellor can say is that we need another five years to deal with the deficit problem. That is exactly the same statement he made in June 2010—a stagnant sentence for a stagnated economy, stifled by a part-time Chancellor. This is an autumn statement following autumn statements and Budgets for the last two and a half years, all of which have failed to meet any of the stated aims of the Chancellor’s original objective. Two and a half years later, we are still five years away from the total eradication of the deficit. This Government will have accrued more debt in five years than in the entire 13 years of Labour’s rule. Under this Chancellor’s watch, in 2015 the UK will unfortunately hold the worst public sector net deficit in the west, according to OBR and IMF figures.
Was the autumn statement a growth strategy? No. Is this a deficit and debt-reducing strategy? No. Is this a strategy for borrowing? Yes it is, and on the backs of the low and middle-income workers—borrowing for failure, not for investment.
Tom Blenkinsop
I am sorry, I will not.
Can the Chancellor guarantee that we will borrow at a low interest rate because we will still have a triple A rating? No. The very cornerstone on which this coalition is premised has been utterly flawed. As a result, a recovering economy in May 2010 has been so damaged that we have witnessed a double-dip recession, with the strong likelihood that it will become a triple-dip recession—something that the Secretary of State for Business, Innovation and Skills had to admit only this Sunday was a distinct possibility. In essence, the Chancellor is on the brink of exchanging the triple A credit rating he inherited from Labour—and which he prized most of all—for a potential triple dip of his own making.
Mr Meacher
No, I am not going to give way; I have not even started. I am just observing what has happened.
I congratulate my three new hon. Friends the Members for Middlesbrough (Andy McDonald), for Rotherham (Sarah Champion) and for Croydon North (Steve Reed) on what I thought were quite remarkable speeches—confident, informed, quite amusing in places and committed. When I first came to this House—a long time ago—new Members took their listeners on a tour of their constituencies, touching on the buildings, the people and the history, but saying nothing about politics. That was not the protocol. I am glad that that rule has gone. We heard passionate speeches today that were all about politics, including the national health service, child care services and the defence of the unemployed. I think that all three of my new hon. Friends will make a big contribution to this House.
Richard Drax
I do not want to touch on the economy, but may I just say that if what the right hon. Gentleman has just described was indeed the case, is it not rather sad that that protocol was not observed?
Mr Meacher
I obviously made a mistake in giving way to the hon. Gentleman.
As the Chancellor acknowledged, he had two main objectives in his autumn statement/mini-Budget. One was to generate the growth that has certainly eluded him for the past two and a half years; the other was to rebalance the economy and lay the foundations for genuine, sustainable, long-term growth. He failed miserably on both counts. On the first test, the International Monetary Fund, the OECD, the Federation of European Employers, the CBI, the British Chambers of Commerce and the Federation of Small Businesses have all been telling him that he simply must inject growth into the economy and stop endlessly hacking away at public expenditure. Just how desperately such actions are needed is shown by the fact that the Chancellor’s own forecast in his 2010 Budget that cumulative public sector net borrowing over the next four years would be £322 billion has now been increased to a staggering £539 billion. That is an increase of £217 billion. The key point is that that increase is almost wholly attributable to the failure of the economy to grow. That is the significant point behind this debate.
Beer Duty Escalator
Richard Drax Excerpts(12 years ago)
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Richard Drax (South Dorset) (Con)
Thank you, Mr Deputy Speaker, for calling me to speak in this debate. It is a pleasure to be tail-end Charlie, and to follow the hon. Member for North Cornwall (Dan Rogerson).
Richard Drax
In that case, I am probably the gunner instead.
It is a great sadness to me that a great friend of mine, David Woodhouse, who was the boss of a brewery in Dorset, has died before the beer duty escalator was removed, as I hope and believe that it will be. Aged 49, he died prematurely of a heart attack. This tax was one of his main concerns, fears and worries, because, sadly, every time it went up, he had to lay people off.
The beer duty escalator provides the perfect illustration of the law of diminishing returns: the higher the duty, the lower the volume of beer sold. Yet despite the evidence, brewing has been cruelly lumbered with a 2% above-inflation increase every year since 2008. That means a 27% increase in beer tax in the life of this Parliament alone. Beer taxation now costs the average pub about £66,000 per year, with 35p in every pound taken over the bar being passed on in taxes, most of them duty, and while beer prices have risen, sales have fallen sharply by 23%. Over 6,000 pubs, or thereabouts, have closed, and a pint of beer is, sadly, fast becoming an unaffordable luxury. In fact, the Office for Budget Responsibility forecasts very limited additional revenue from beer tax in the next two years, and the wider costs—the loss of jobs and reduced VAT and corporation tax payments—have not been accounted for.
In my constituency, more than 2,000 people are employed in the brewing and pub trade. They form a small but vital part of the quarter of a million people who work in the sector in rural constituencies. The Dorset brewery that I mentioned, Hall and Woodhouse, has just invested £5 million in a new brewery, which will safeguard more precious jobs. Its reward? Yet more duty on a pint of beer. In the struggle for growth, how can it make sense to strangle this vital part of the UK economy?
Pubs have historically been a focal point for a community—a place to meet, eat, drink and socialise. Our naturally brewed ales are world renowned, and pubs are high on every tourist guide’s must-see list. Smaller, tenanted pubs, in particular, are suffering, and each new rise in duty is nothing less than a kick in the teeth. We are penalising one of Britain’s oldest and most cherished industries. This is not a recipe for growth—something that this Government have banged on about day after day—nor is it fair. As we have heard, UK consumers now pay 40% of the total EU beer tax bill, yet we consume only 13% of the beer. I could argue that perhaps the EU officials are guzzling too much, but that would be facetious. We are driving people out of pubs, where, in the main, law-abiding citizens consume a low-alcohol drink in a controlled environment.
I see that my time is running out because, being the gunner, we are now down to four minutes. I shall therefore end by making this appeal to the Minister: on behalf of the breweries and all those in the business, not least in my constituency, and my friend David Woodhouse, who has sadly passed away, please get rid of this dreadful tax.
Sajid Javid
I thank my hon. Friend, and I will come on to that point.
The Government really do recognise the importance to the British economy of pubs and brewers. I fully support the industry, and I know that Members of all parties would like to see it prosper. We have heard a lot from hon. Members about beer duty, but let us be clear that the previous Government introduced the escalator. They increased beer duty by 60% while they were in office, and in fact for the poorest households it went up by 80%. That was the inheritance that we had to deal with. At the same time, as we all know, we were burdened with a huge budget deficit of £159 billion, or 11% of gross domestic product, which was greater than that of any other developed country. That inevitably meant that the incoming Government had to take some difficult decisions that the Labour party dodged. We had to deal with that legacy.
We set out a clear plan to deal with the deficit, part of which was the planned increase in beer duty rises until 2014-15, about which we have heard so much today. We have announced no changes to that policy. Cancelling the planned 2% duty rise represented by the escalator portion of beer duty would cost £35 million next year and £70 million the following year. If that tax were cancelled, the revenue would have to be recouped one way or another, either through further public spending cuts over and above what is already necessary or by finding increases in other taxes or duties.
Richard Drax
The whole point is to reduce taxation and thereby encourage growth and employment. That will create wealth, which will inevitably end up in the Treasury’s pockets. Is that not the Conservative way forward for the long term?
Sajid Javid
My hon. Friend makes a good point, but I think he will accept that the Government need to raise taxes to pay for public services in one way or another. However, we continue to keep all taxes and duties under review, including the ones that have been discussed today, and we regularly monitor alcohol duties to ensure that we are on top of their impact on the industry and consumers.
VAT on Air Ambulance Fuel Payments
Richard Drax Excerpts(12 years, 4 months ago)
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Richard Drax (South Dorset) (Con)
It is a pleasure to follow my hon. Friend the Member for Rugby (Mark Pawsey). I am delighted that my hon. Friend the Member for Hexham (Guy Opperman) and the hon. Member for York Central (Hugh Bayley)—he might recall that I used to interview him as a fledgling reporter all those year ago—have brought this matter to the attention of the House.
First, like all other Members I want to pay tribute to the professionalism and bravery of our air ambulance crews. The A31 just outside my home is, sadly, notorious and I often see that yellow bird of mercy landing to rescue people and take them to hospital. It saves countless lives. In my constituency, the Dorset and Somerset Air Ambulance saves lives as we have no motorways as such, at least not in Dorset, and our roads are narrow, which means that getting down them is extremely difficult. It is especially important, therefore, for us to have that air ambulance cover.
Which air ambulances pay VAT on fuel and which do not—I hope I am being accurate because I know we like to be accurate in the House—is a matter of who owns and operates them. As has been said, owner-operators—those who own and operate the helicopter directly through their charities—are seriously disadvantaged. Because they are VAT registered they must pay VAT. In contrast, leased aircraft, operated through a third party, such as Bond Aviation, which is the case for the Dorset and Somerset Air Ambulance, which bills for a total service, including fuel, are exempt under an agreement with HMRC in 2005.
Tracey Crouch
It is worth pointing out that not every helicopter that is leased is done so with the fuel included. Some air ambulance helicopters are on a lease agreement, such as the Kent air ambulance, but that does not include the fuel.
Richard Drax
I totally accept that. I am not saying that they are all the same. I am looking for some harmonisation. I am not for one minute saying that we should not tackle the VAT issue. However, it seems from my research that there are some anomalies in the system.
Of the 18 charities, operating 29 helicopters, 12 operate such leasing agreements—admittedly, as my hon. Friend said, under different arrangements. For example, our Dorset and Somerset Air Ambulance pays no VAT, while our neighbouring Devon Air Ambulance pays £3,000 a year, which is about the cost of a mission, give or take a few pounds. The situation is clearly deeply unsatisfactory, with thousands of pounds of hard-raised money being squandered needlessly. I would have thought that some harmonisation would resolve the issue.
Overall, the Association of Air Ambulances must pay £100,000 every year in VAT. That rises with every increase in the price of fuel. That sum would pay for about 30 mercy flights to road traffic accidents and medical emergencies and for urgent hospital transfers. As has been said, this is not really about money; this is about saving people’s lives.
It is interesting how many of our valuable services in this country are charitable. Think of our armed services. These are men and women whom we send to places such as Afghanistan who are relying on charity to be looked after. That begs another debate altogether.
I hardly need point out that charging VAT on fuel for our air ambulances is an EU initiative. In a characteristic Catch-22 situation, the EU VAT directive allows no zero-rating provisions, except for those that were in place in 1975. Again as we have heard this afternoon, there were no air ambulance helicopters in the UK in 1975. Only the RNLI has been allowed exemption from duty charges on marine diesel due to its life-saving role—no different, in effect, from that of the air ambulances. With such a precedent already set, it seems an obvious and relatively inexpensive step for HMRC to extend this exemption to helicopter emergency air services.
The Association of Air Ambulances has suggested three solutions, each of which I would commend to the Minister. The first is a total exemption for all helicopter emergency medical services. The second is a refund arrangement provided by HMRC for air ambulance charities. The third is for new legislation to exempt air ambulances from VAT, as with the RNLI.
As all hon. Members have said, this is a worthy cause, and, frankly, the sums of money are a pittance when one looks at the Government’s overall expenditure. I cannot think of a better cause in the big society. That is not a phrase I entirely endorse, but I would use it in this case, because it conjures up the worthiness, bravery and dedication of those who crew the ambulances and the lives that are saved, and, importantly, the knock-on benefits to the families of those who have been injured and who can continue to live their lives with their fathers, mothers, brothers and sisters because they have been rescued by this exemplary service. I hope that common sense prevails today.
Beer Duty Escalator
Richard Drax Excerpts(12 years, 4 months ago)
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Gavin Williamson
The worst thing we could possibly see is the growth of the illicit trade and the Chancellor of the Exchequer getting none of the money whatsoever. We want to make sure that people are paying their taxes and their duty, but we do not want to tax people out of the market.
Richard Drax (South Dorset) (Con)
May I add a slightly solemn note to what has been a light-hearted debate? I had a great friend, David Woodhouse, the chairman of Hall and Woodhouse in Blandford, who died aged 49 of a heart attack, running his company. He said to me on many occasions that he could not understand why Governments, and ours in particular, were proposing this tax every year, given that it is a tax on jobs at a time when we are trying to increase jobs. Surely that must be a point for the Government to take away from this debate.
Gavin Williamson
My hon. Friend touches on an important point: this is not only about jobs, but about British jobs. Some 68% of the drinks that our pubs sell are beers, so this duty is having a detrimental impact on every one of our pubs. Furthermore, 86% of all that beer that is consumed is produced in this country, which compares with a figure of 0.2% for wine.
Section 5 of the European Communities (Amendment) Act 1993
Richard Drax Excerpts(12 years, 7 months ago)
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Mr Hoban
It is not appropriate for any of us to provide a running commentary on the French presidential elections, but it is important that Governments, whether inside or outside the euro, make their argument as to why they believe that the measures required to bring about fiscal stability and economic growth are necessary. Those arguments need to continue to be made, because that is vital to Europe’s long-term interests. We will wait and see what the outcome of the French presidential election is and what the view of the new President is on the fiscal compact.
Richard Drax (South Dorset) (Con)
What will the Minister tell the millions of people in the eurozone when it goes horribly wrong—as it will—and their lives are ruined, given that we have had the chance, as has been suggested, to rebalance the euro from a position of control? It will collapse.
Kelvin Hopkins
I am not as skilled as the hon. Gentleman in using the internet. Old-fashioned though it may be, I go to shops and buy books, I am afraid.
As for the Budget, the reality is that it will not solve our economic problems. Our problems are not really about the deficit; they are to do with unemployment. Looking back, another time when we had an enormous public debt and enormous deficits was the second world war, after which the then Labour Government ran a full-employment economy, which was the way they overcame our problems. If our Budget was directed towards creating employment, we too would solve many of our problems. The important thing is to generate directly in labour-intensive areas, which are not expensive. We are talking about relatively low-paid workers in the public services or the construction sector—labour-intensive sectors with low import content, which are just the sort of sectors where we want to be generating. However, public services and construction are the very sectors we are cutting.
If we had a massive Government-driven house building programme, along with the creation of more public service jobs, we would bring down unemployment and people would be paying taxes rather than living on benefits, and over time the deficit would solve itself. That is what the Labour Government did after 1945. We were living in Keynesian times then, and I think that Keynes was absolutely right. I like to think that if he were here now, he would be saying what I am saying, albeit possibly in a more sophisticated way.
Richard Drax
Perhaps the hon. Gentleman could say where all those homes would be built. I believe the last Government had a target of some 1.8 million, but I recall that something like half were on a floodplain. Where are we going to build all those homes?
Kelvin Hopkins
That is a problem for Ministers and local authorities, but it has been estimated that we need another 4.5 million homes over the next few years if we are going to house our people. However, I will not go into that now, because I want to talk about the European Union.
I do not agree with the Budget—I think we ought to have a different one—but even if it were a good Budget, I nevertheless do not think that we should necessarily be required formally to send it to the European Union. I say that because the motion before us refers to the European Communities (Amendment) Act 1993—the Maastricht Act—which, I am pleased to say, my party voted against. Indeed, some Government Members voted against it as well. It is the Act that requires us to send the report to the European Union. Personally, I do not feel bound by that, because my party voted against it, and I do not think it is sensible anyway.
However, let us return to the stability and growth pact, which, as I have suggested, is like building castles in the air. What stability? What growth? We have grotesque instability at the moment—terrifying instability, in fact—and absolutely no growth. Indeed, even the powerhouse economy of Germany has serious problems. There is talk of convergence, but who do we want to converge with? Greece? Portugal? Some of the countries that are actually contracting, with mass unemployment? In Spain there is even talk of unemployment rising to 6 million, which, as a proportion of the population, is the equivalent of 9 million in Britain. This is absolutely insane. I do not want to be “disable-ist” about this, but anybody running that economy must want their head examined, quite frankly.
Amendment of the Law
Richard Drax Excerpts(12 years, 8 months ago)
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Richard Drax (South Dorset) (Con)
Perhaps it is appropriate that I should follow the right hon. Member for Tottenham (Mr Lammy). He certainly made a thought-provoking speech. I would just make the point that what we need to do, surely, is to create the environment for jobs, so that that large percentage of his constituents, the black population, can get a job. Until we create the right environment for jobs to be created, there will not be jobs for anyone in this country, whatever colour they are.
I congratulate the Chancellor on his Budget, which was delivered in quite trying circumstances. It has been pointed out that a lot of it was leaked before his statement in the Chamber. It has been delivered in circumstances in which, due to Labour’s undoubted profligacy and the world banking collapse—which I accept played a part—there is little room for manoeuvre. There is still less room for manoeuvre because we are constrained to a certain degree, whether we like it or not, by our coalition partners.
I therefore warmly welcome the good news. I welcome the reduction in corporation tax and the higher personal tax allowance. I welcome the reduction in the top rate of income tax from 50p to 45p. I particularly welcome the extra investment in our armed forces, and especially in their accommodation. Having served myself, I well recall the abysmal standard of much of the accommodation in the 1980s. I am also mightily relieved that we have left our beleaguered pension system alone. It would have been madness to tread on that particular nest at the moment. The right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) did so, and we all remember the consequences.
The 50p rate has engendered a lot of heat, and I can understand where that heat is coming from. I remind the House, however, that it was introduced in the dying throes of the Labour Government as a political move. It was, in effect, an elephant trap; it was well laid, politically, and it is a nightmare to climb out of. We had hoped to come into power as a Conservative Government, but that did not happen. We need to be bold, and I wish that we had gone further and reduced the top rate in the emergency Budget, but we did not. Yes, everyone should pay their fair share of tax, but the top 1% in this country already pay 28% of all income tax, and the top half pay 90%. Milking them of their rewards for all their hard work and aspiration will hardly encourage endeavour, and spending the money that we take from them on a bloated, runaway welfare state is sheer madness. This is the politics of envy. The Institute for Fiscal Studies estimates that, by the next election, one in four of us will be paying tax at 40%. Not so long ago, that figure was one in 20.
As Tories, we must remember what we stand for: less state, less red tape, less taxation, less government, less public spending, more enterprise, more wealth creation and more support for business. We remain deeply in the red, thanks in large part to Labour. Public sector debt is still at £1 trillion, and borrowing will be £120 billion this year. We need that
“forensic, relentless focus on growth”
promised by our Prime Minister. We must encourage that. We should not only cut taxes but slash them. We must release business from all its constraints. We often proclaim that we are open for business but, as Willie Walsh writes in The Daily Telegraph today, the Chinese laugh when they hear that.
The Federation of Small Businesses in the south-west came to see me recently, and begged for more help from the Government. Small businesses are struggling with high fuel costs, as other hon. Members have mentioned, and I regret that we cannot go much, much further in cutting fuel taxes. Small businesses are also struggling with high business rates, with a lack of infrastructure and with banks that are refusing to lend. We have heard those stories repeatedly in the House. The national loan guarantee scheme for small businesses that was announced yesterday will provide credit at a lower rate of interest, but access to that credit is as difficult as it has always been. Indeed, the FSB said yesterday that the scheme is not a “game changer”, yet that is exactly what we need now. We need really radical policies. We must be brave; we simply cannot go on tinkering at the edges.
Most of all, we need to cut state spending; many inroads into it have been made, but in my view we have not gone far enough. We need to take the state out of people’s lives. This is a Conservative philosophy, and, I believe, a right one. The public sector as it currently stands is unaffordable.
I regret that we have made changes to child benefit. At whatever level the “cliff edge”, as it has been called, is set, many hard-pressed, hard-working families will be worse off. I heard my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) saying—on “Newsnight”, if I recall correctly—that he looked at that from every angle some years ago, but could not see how to alter it. What I say, however, is that it is disingenuous to suggest that poorer families were or are subsidised by the better-off, because the better-off pay a higher rate of tax. There must be other ways to give families with children some help—without the unintended consequences. Perhaps a system of tax allowances rather than benefits could be examined.
We must also admit that much of the pressure on public expenditure is ultimately due to immigration. Immigration in this country is at an unacceptably high level, putting huge pressures on this country and her services, and we are struggling to keep our roads and rails going and to provide enough housing. In the longer term, it is unsustainable. A sudden increase in birth rates means, I am told, that we will need 540,000 new primary places by 2018.
Finally, I cannot leave the European Union out of my speech, because it is inflicting a high price on business in this country. We can say a lot here and we can have aspirations here to release our business and let it fly, but we will never get what we want or the jobs and wealth we need to generate until we are free of the red tape from Brussels. Only then can we break free from the shackle of deficit that hangs around our neck. When we have, the important thing to do is to spend only what we earn.