Budget Resolutions and Economic Situation

Andrew Mitchell Excerpts

Wednesday 20th March 2013 Commons Chamber

[Mr Andrew Mitchell (Sutton Coldfield) (Con)]

It is perhaps not surprising that as a former Chief Whip, albeit one of relatively short duration, I rise to support the Budget set out by the Chancellor of the Exchequer, but that is what I do.

It is a considerable tribute to the strength of the Government’s purpose that the measures the Chancellor has announced today will be enacted. The Budget takes place against an extraordinarily difficult background. I cannot remember, in 26 years on and off in this House, a more difficult set of circumstances in which a Chancellor has had to craft the Budget, nor such a heavy volume of advice across all media, much of which has been contradictory. The article in last Saturday’s Financial Times by Terry Leahy, which set out the case for the morality of low taxation, is well worth reading and sets out an argument that we do not hear often enough in this House. The article was blessed with a cartoon that showed the Chancellor in a trench surrounded by mud, blood and barbed wire, and wearing a tin hit. He may well feel, after the past few days, that that is not a bad summation of where he stands.

[Sheila Gilmore]

Does the right hon. Gentleman really think that that is a good image with which to portray his Chancellor, since the squaddies were in the trenches and the first world war generals kept sending them out to be killed? Surely that is not an image that the right hon. Gentleman wants to portray.

[Mr Mitchell]

That was not my image, but the image in the Financial Times. Nor was it of a general, but of a soldier serving in the trenches.

Hemmed in as the Chancellor is, he steers between the Scylla of debt that must be paid down and the Charybdis of growth that must be fought for and secured. I believe that today he has made the right decision in the long-term interests of the country, and I want to focus on those two key issues in my brief remarks.

In terms of the Charybdis of growth, I think he has picked up on the excellent work done by Lord Heseltine, particularly in its reference to Birmingham, and on what we can do in local economies to ensure that growth is boosted.

[Paul Farrelly]

Today, the Chancellor announced an extra £3 billion of annual public sector investment, but in the 2010 spending review public sector investment was cut by £9 billion a year. Does the right hon. Gentleman agree that in hindsight the Business Secretary was right and that those drastic, immediate cuts were a mistake?

[Mr Mitchell]

I do not agree at all, and I will come on to address the substantial part of what the Business Secretary said in a moment.

I was talking about the importance of engendering growth in the economy through local activity, and mentioned specifically the work that Lord Heseltine has done in respect of Birmingham. He underlined the importance of the local enterprise partnership and the importance of stimulating growth in an area that remains at the heart of this country’s industrial base. I am reminded that it was only three years ago that I visited the Jaguar factory just outside my constituency in Castle Bromwich. At that stage, two of the three production lines were lying idle and employees were unable to continue to secure work. Now, just three years later, all three production lines are in operation. We see a company that is storming ahead and cannot produce enough cars to satisfy market demand. Last year, it exported more than £10 billion-worth of cars made in Britain and paid in to the Exchequer more than £1 billion of taxation. That real transformation offers hope at a very difficult time in the area of the country I represent. The announcement that we will have a single pot of central money to support local initiatives is enormously important, as is the emphasis that Lord Heseltine places on more effective governance to address the fragmentation and lack of coherence of the business voice, which he has been loud in commenting on.

On the stimulation of growth nationally, today we have heard the Chancellor announce the excellent news about cutting taxes on jobs. I can think of few measures that could be more effective. Prioritising the changes that make growth easier, cutting business taxes—not easy, and not the popular thing to do—and facing down the vested interests that the Chancellor has to wrestle with every day, are all important measures if we are to ensure that growth is supported nationally. Making life easier for entrepreneurs and businessmen is not the route to easy popularity, but it is the route to long-term economic success and growth.

The way the Government have sought, with single-minded emphasis, to boost trade with the BRICs—Brazil, Russia, India and China—and the other countries with growing economies has had a significant effect. I wonder whether my right hon. and hon. Friends on the Treasury Bench think that all the lessons from around the world on how to boost growth and entrepreneurialism have been learned. Encouraging entrepreneurship, improving links between schools and business, and making sure that all the lessons from these emerging markets are learned are all very important. For example, I wonder whether there is more to learn from Singapore, Sweden, Finland and the Netherlands, which consistently top the global competitiveness report issued by the World Economic Forum. I wonder whether the lessons from New Zealand, Denmark and Canada, which are consistently identified as the best countries in which to do business, have been learned, or whether there is more that we can learn from the Nordic and Asian economies that have been so successful in harnessing information and communications technology for economic growth. The Chancellor deserves great credit for the brave steps he has taken today to secure growth.

The Scylla of debt has hung around our neck, and hangs around the economy’s neck, for the reasons that are well known across the House. Anyone who doubts its scale and the anxiety it causes, as my hon. Friend the Member for Chichester (Mr Tyrie) set out, needs only to look at the absurd proposition, coming out of the crisis in Cyprus, that one can confiscate arbitrarily people’s deposits. That underlines the extraordinary difficulties that overweening levels of debt, which we and other countries face, cause.

It is irksome to repeat so regularly the irresponsibility of the previous Government in the levels of debt they left and the measures they took during the good times, but that needs to be repeated so that people understand the sheer scale of what happened. I remember studying the papers on the National Security Council when we were conducting the defence review, and noting that there was, allegedly, from the previous Government a £38 billion black hole in their accounts. I was unable to believe that that was possible and sent back the papers on the assumption that there was a decimal point in the wrong place. But no, it was confirmed on the Monday morning that there was indeed, under the previous Labour Government, a £38 billion black hole in the defence budget. We should never allow them to forget the appalling difficulties that their stewardship of the economy and their legacy have left for the coalition to clean up.

[Penny Mordaunt (Portsmouth North) (Con)]

Will my right hon. Friend give way?

[Mr Mitchell]

I am afraid that I will be out of time, if my hon. Friend will forgive me.

It is difficult to confront the welfare budget, as the Government have done. We still spend £23 billion on housing benefit. In looking at the welfare budget, which I urge my right hon. and hon. Friends to continue to do, they should of course be guided always by the principles of fairness and decency. It is enormously difficult to cut the welfare budget. People blithely say that we can cut £1 billion off the welfare budget, as that is just 0.5% of that budget. However, cutting £1 billion would take £1,000 off 1 million people, or £100 off 10 million people. That underlines the scale and the difficulty, and the essential need to tackle welfare budget commitments, curtail expectations, and determine the sort of welfare system we will have as a society in the next 30 or 50 years and that we can afford. It is essential that our reforms do that.

In conclusion, I wish to praise the Government and the Chancellor’s courage and wisdom in continuing the international development budget and ensuring that next year we meet our historic pledge of spending 0.7% of GDP on development. Of course, the special protection for this budget is justified only by the results it achieves and the effect it has, and we should never forget that this hard-earned taxpayers’ money has to be justified. Every pound we take off the taxpayer must deliver 100p of value on the ground. This is a huge investment in our country’s future prosperity and security and in the prosperity and security of our children and grandchildren, which is why the Government are absolutely right to stand by the commitment, ensuring that the coalition delivers on that historic pledge.

I have spent much of the past eight years of my life trying to work out the most effective use of public money and the most effective way of doing something about the colossal discrepancies in opportunity and wealth that scar our world and that our generations, for the first time ever, have a real chance to address. That is why I am pleased that the Government are standing by our commitment, that every day they continue to underline the effectiveness of development and that they are maintaining the implicit bargain with the public to spend the money well. I hope to hear far more from Ministers about why the development budget matters to our country. I want to hear all of them making that case, so that the sceptics outside can hear why it is important for our country’s economic and political future.