Budget Resolutions and Economic Situation

Andrew Selous Excerpts

Wednesday 20th March 2013 Commons Chamber

[Andrew Selous (South West Bedfordshire) (Con)]

We have heard significant news today that we had not heard before. The first piece of news is that the deficit has been cut not by a quarter, but by a third. We know that the conditions are tough, but that is further proof that the Government are making progress with clearing up the absolute mess that we inherited from the Labour party.

We also heard that the economy has created not just 1 million net new private sector jobs under this Government, but 1.25 million. That is six extra private sector jobs for every job that we have unfortunately had to lose in the public sector. We learned that in the west midlands, more private sector jobs have been created in the three years of this Government than were created in the last 10 years of the Labour Government. When Opposition Members talk about unemployment, which Government Members are desperately concerned about, they should recognise that this Government are delivering jobs in the face of considerable economic adversity.

It is this Government who understand that we need to be an aspiration nation. Some Opposition Members laughed when the Chancellor used that phrase in his Budget speech, which was desperately sad. Government Members understand that nations rise when people rise. We are in a global race and no one owes us a living. That is why we have to make ourselves competitive in the world markets.

[Mr Kevan Jones (North Durham) (Lab)]

I am very impressed with the hon. Gentleman’s whipped speech. What is aspirational about the situation of a constituent of mine who has just been made unemployed, has gone out and got himself a part-time job in a local petrol station, and will be hit by the bedroom tax?

[Andrew Selous]

The Government have created 1.25 million net private sector jobs. The hon. Gentleman’s constituent will probably be able to do two extra hours a week at the minimum wage to deal with that situation. He could also let out his room or downsize to an appropriate sized property. There are a number of things that his constituent is able to do.

I praise the Government hugely for abolishing stamp duty on AIM and ISDX shares. I do not believe that any other Member has mentioned that. Members from all parts of the House talk about the difficulties that businesses have in raising loan finance. We all recognise that, but that is only one of the two ways in which businesses can get money to grow. The other is to get share capital. Every school knows that if it has a good nursery underneath it, it will have a good supply of children. Exactly the same is true of stock markets. If we can help our small and growing companies, which provide so much job creation, to raise share capital, which means that they do not have to pay back money in a fixed period and can decide when to pay as well as the level of dividends to pay, that is hugely helpful, so the change for AIM and the junior ISDX market is incredibly important and very welcome. The stock exchange estimates that there will be between 40 and 50 initial public offerings in high-tech businesses as a result of the move and Deloitte has estimated that that will create some 38,000 jobs.

The second measure for which I want to praise the Chancellor is that on ultra-low emission vehicles. In just one small sentence in the Budget speech, the Chancellor said that he would support the manufacture of ultra-low emission vehicles with new tax incentives in this country. That is absolutely right. We make the Nissan LEAF in this country, in Sunderland, but the Vauxhall Ampera is made in the United States. I want electric vehicles and other ultra-low emission vehicles to be made in this country to help British workers stay in jobs. I do not think anybody in this House anticipated the scale of the change as we move to ultra-low emission vehicles. I want those jobs in this country and do not want to see the industrial advantage going to China, Denmark, Israel or any of the other countries that are making major moves in this area.

I hugely welcome the announcements on shale gas. It is disappointing that in the time it has taken Cuadrilla to get one exploratory rig up and going in Lancashire, 72 have been got going in Argentina. I know that the excellent Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for South Holland and The Deepings (Mr Hayes), who is on the Front Bench, understands that and will drive the policy forward with the passion for which he is well known and well regarded across the House.

The Government understand the importance of business competitiveness. As I said, no one owes this country a living, which is why I hugely welcome the decrease in corporation tax. Is it not good to look through the Budget book and see that the United Kingdom will have the lowest rate of corporation tax of all our major G20 competitors? By 2015, it will be lower than that of South Korea, Germany, France, China, India, Brazil or the United States of America. That is exactly what we need to do to keep business successful in this country.

The employment allowance that the Chancellor announced at the end of his speech is unbelievably well targeted. It will take off the tax on jobs, which the Opposition, had they been elected at the last election, would have increased. Think of the damage that would have done. It is the Government who understand that we get more people into work if we tax jobs less, so that move is to be welcomed. My colleagues on these Benches have mentioned the KPMG report that said that this country is the most competitive in the world in which to set up, start and run a business. That is hugely to be welcomed.

The measures in the Budget on home ownership are excellent and hugely to be welcomed. Government Members understand and support the desire of people to own their own homes. That is a thoroughly Conservative aspiration and it is one we want to see extended to as many of our constituents as we possibly can. The Help to Buy scheme and the mortgage guarantee scheme are excellent in that regard and I am pleased that my local authority, Central Bedfordshire council, is rising to the challenge and looking to build some 6,000 houses to the north of Houghton Regis in my constituency. That is exactly what it should be doing.

I am hugely pleased to see the Chancellor support the proposals in the Heseltine review. The document contained 89 proposals, 81 of which are being supported by the Government. That is excellent. Local authorities have a lot to add in this regard, as do local further education colleges and university technical colleges. I am proud to have one of those colleges in my constituency. For example, Central Bedfordshire council has worked out where unemployment is slightly higher and where the new jobs are and will be setting up transport between the two with the wheels to work scheme. It will not just leave it to bus companies and so on but will take practical measures to get unemployed people to where the jobs are further to drive down unemployment. I am pleased that unemployment is lower in my constituency than it was at the general election.

My constituents will also hugely welcome the significant increase in the personal allowance to £10,000, brought in by a Conservative Chancellor. It is hugely welcomed by Government Members. It clearly makes sense: rather than taxing people and giving them back some of their own money in tax credits, we believe in letting people on low incomes have more dignity by letting them keep more of the money that they earn in the first place. That is absolutely right.

The measures on fuel duty will be hugely welcomed and I refer the House to what I said earlier about ultra-low emission vehicles. I know that pubs in my constituency will be delighted with the measures on beer duty.

The one area to which I would like the Government to attend before too long is the transferable tax allowance, and I will conclude with a quote from the Prime Minister:

“What is so backward looking in a country where we have social breakdown and social problems of saying that committed relationships, encouraging people to come together and stay together is a bad thing? Of course it isn’t, it’s not outdated if you look around the European Union, if you look around the OECD, we’re almost alone in not recognising marriage in the tax system. And why do we think, why do we think that with our appalling record of family breakdown that somehow we are in the right position and everyone else is in the wrong position…they’ve got it right and we have got it wrong.”

We need to change that. The Prime Minister was right then, and he is right now.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

I think I could summarise the Budget with a slightly nautical metaphor: the message from the bridge to the economic engine room is, “Steady as we sink.” The Budget does not recognise the scale of this country’s problems, and although some of the measures that have been announced may be good in a micro sense, they are totally inadequate to combat the macro problems that we have.

Let me go back to the months immediately after the May 2010 general election and the emergency Budget. Although under the Labour Government we had had economic growth, the budget deficit and inflation were falling and employment was rising, and we were told that that was extremely dangerous. The Chancellor conjured up an apocalyptic vision of an economy that was about to be devastated by a reduction in our triple A rating.

Three years on, we have lost our triple A rating, the economy is at best stagnating and at worst falling, we are having to borrow more and inflation is rising, yet we are told that it is all so good that we must have it for several more years. I feel that the electorate—like me—are beginning to doubt the credibility of that argument. I recognise that the carefully choreographed political narrative that was built up after 2010 had some traction, but that traction is going as a result of the incompetence and lack of vision displayed by the Chancellor since then.

[Andrew Selous]

Does the hon. Gentleman recognise that the Government’s borrowing costs have fallen since we lost our triple A rating, precisely because the international markets believe in the credibility of the Government’s economic policy?

[Mr Bailey]

I think those costs have dropped by 0.15%, which the public might think—well, shall we say that they have had to bear a huge sacrifice for a minimal improvement and drop in interest rates? I am concerned—this point has not been mentioned by anyone in the House, including those on the Front Benches—that the Government’s current predictions are based on December figures from the Office for Budget Responsibility. We might think that that is okay, but since May 2010 the OBR’s predictions have been conspicuously inaccurate and over-optimistic. If its predictions for the next two years are equally inaccurate and over-optimistic, we are in real trouble. That may not be the case, but if we look at the Library research papers, most other independent commentators and assessors of our economic position predict a lower rate of growth than the OBR. That is of concern and underlines the Chancellor’s failure to put in place measures to combat that issue.

On the opportunities available currently in the economy, the emergency Budget, in order to be successful and meet the Chancellor’s targets, was predicated on an assumption of exceptionally high investment and exports. Since then, the eurozone has had problems. It takes 47% of our exports but is the lowest-growing export market.