amendment of the law

Brooks Newmark Excerpts

Tuesday 25th March 2014 Commons Chamber

[Margot James (Stourbridge) (Con)]

It is a pleasure to follow the right hon. Member for Edinburgh South West (Mr Darling).

Four years ago, I promised my constituents that if we were elected our first priority would be to repair the public finances. No longer could we go on borrowing £1 for every £4 we spent. Reducing the deficit has involved tough decisions, and I pay tribute to the Chancellor for sticking to the necessary path, which has seen the deficit come down by a third. It is forecast to fall by 50% next year.

Even after all that work, the OBR estimates that we will still be spending more than we earn by £108 billion this year, so the job is not yet done. However, people are at last starting to enjoy the fruits of progress. Earnings are projected to exceed inflation this year, and the increase in employment has been huge. In my constituency, unemployment has fallen by 25% since the election. Contrary to the Labour party’s predictions, the 1.6 million private sector jobs created since 2010 have exceeded the number of jobs lost in the public sector by a factor of three.

There was a time, 18 months ago, when the International Monetary Fund, which was broadly supportive of our policies, looked on nervously as Britain was the one country that was serious about tackling an out-of-control deficit. The proof of the pudding is in the eating, and UK unemployment stands at just over 7% and falling. That is in sharp contrast to the rest of Europe, where unemployment averages 10.9%. Likewise, the OBR has raised its forecast for economic growth from 1.8% to 2.7%, which makes the UK the fastest-growing economy in both the EU and the G7.

[Mr Brooks Newmark (Braintree) (Con)]

It is fascinating that the hon. Member for Leeds West (Rachel Reeves) resorted to quoting the old Etonian George Orwell during her peroration.

It is interesting to note that in today’s Treasury Committee meeting, the economists there predicted that growth would exceed that 2.7% figure, and even the Bank of England’s projection of 3.3%.

[Margot James]

I heartily agree, and I would not be surprised if things got even better than that over the next few years. We have momentum now, as my hon. Friend’s point shows.

Our economic strategy has been about far more than reducing the deficit: how we do that matters. The Chancellor set out a strategy to rebalance the economy, and we wanted to see growth that was more balanced between London and the south-east and the other important regions, between the service sector and the manufacturing sector and between the public and private sector. We also wanted to build an economy made more secure by savings and investment, instead of one built on excessive debt.

This Budget marks another milestone—it capitalises on the hard-won and sustainable economic progress to secure radical reforms that will restore the incentive that has been so recklessly destroyed over recent years. Scottish Widows estimates that fewer than half of us are saving enough for our old age, and that one in five are saving nothing at all. The bold increase in the ISA tax-free limit to £15,000 is welcome. There are more than half a million ISA savers in the west midlands alone. Not all of them will be able to put away the maximum every year, but the fact that they will now have complete freedom to invest cash as well as equities will encourage more saving among people who just want their cash to grow in a tax-free environment.

Before 1997, Britain had one of the best-funded occupational pension systems in the world. That proud state was totally undermined by the last Government’s decision to end dividend tax relief on pensions. Incentives to save were also undermined by the growth of means-testing of the state pension. The welcome pension reforms that the current Government have already introduced were given a further boost last week by the Chancellor’s dramatic announcement that we are no longer to be forced to buy an annuity. That is welcome news for everyone who is saving into a pension scheme, regardless of their age.

Just under 20,000 people in Stourbridge are of pensionable age, and many have been badly hit by the poor annuity rates and exceptionally low interest rates of recent years. I was therefore delighted on their behalf by the new pensioner bond, which from next year will offer a much better return than anything available on the market today. Low-income savers will also benefit from the abolition of the 10p tax rate on savings from income of £5,000 or less.