Finance Bill

Chris Heaton-Harris Excerpts

Tuesday 20th July 2010 Commons Chamber

[Chris Heaton-Harris (Daventry) (Con)]

I shall canter through my comments because I know that time is very short. I always try to find something for which to thank the previous speaker, so I thank the hon. Member for Streatham (Mr Umunna) for not mentioning Doctor Who. The hon. Member for Wakefield (Mary Creagh) mentioned the Cybermen at quite an uncanny moment because I was wondering which planet she was on. Her speech reflected her state of denial about the level of debt that we are in and the budget deficit that the Government have inherited. It is ridiculous that a speech in this debate omits mentioning the astronomical amount that we have to pay just to service our debt.

Bizarrely for this debate, I would like to make several points about the Finance Bill. I am interested by the Treasury’s use of dynamic modelling to reach its 28% figure for capital gains tax, and would like to see what that dynamic modelling entails. If we were to use dynamic modelling for other taxes, such as income tax, I wonder what the ideal figure would be to generate the most income but hit people the least.

I had the privilege of attending a couple of lectures given by the great economist Art Laffer—he of the Laffer curve. He shows that if people are taxed at 100%, there is no receipt, because no one bothers working, that if tax is 0%, there is no revenue because none is paid, but that there are ideal points somewhere in between. I assume that the Treasury was using a similar process in its dynamic modelling, but it would be nice to see the detail.

I welcome the reforms and cut to corporation tax. We live in a global market, so we must set our corporation tax competitively. I hope that the measures will be good for all businesses because we want them to reinvest in themselves, and our approach will leave more money in small businesses for reinvestment.

I am pleased with the measures that will directly help small businesses, because I know that small businesses and the private sector will drive us out of this economic mess with wealth and job creation. Many Labour Members think that growth in the public sector stimulates the economy, but it does not. It does soften the fall of a weak economy, but the fall still comes none the less.

Measures such as waiving the first £5,000 of national insurance contributions for the first 10 employees in a small business—alas not in London, the south-east and eastern regions, although I hope that the measure will be extended—will be truly beneficial to businesses in Daventry. The 1% reduction in small companies tax represents a 2% cut in real terms because the Labour party planned to raise it by 1%. The rise in the entrepreneur’s relief threshold to £5 million should ensure that most small business owners are not penalised heavily when they come to sell their companies.

I grew up in a small business environment, which is a meritocratic place in which long hours and hard work sometimes pay off. Most small businesses have been looking at the public sector, with its pay, holidays and pensions, with a growing sense of disbelief and occasional anger. From talking to public sector workers, I know that most of them, especially those who directly face the public, know that the Government need to better cut their cloth. They do not like the pay freeze, but they will tolerate it because they know that it is targeted at those earning more than £21,000 a year and that most people in the private sector have had no salary increase for a long time. In fact, most understand as much as anyone else why the country is in such an economic position. They will do their bit to try to help us out of the mess that we are in.

There seems to be only one group of people in permanent denial about our position—they sit on the Labour Benches. I read yesterday that it was said of the Bourbons that they forgot nothing and learned nothing, and that could easily be said of Labour Members, given the way in which they wrought havoc on our economy and the fact that they are in such denial.

It was out of concern for Labour Members that I turned to my computer search engine to try to find them help. I typed in all the necessary symptoms and found an American website: debtdenial.com. The website asks many questions, such as

“Do you only pay the required minimum”

on your accounts to avoid interest payments? The previous Government did not even manage to do that because our debt was constantly spiralling. The website also asks:

“Do you know or have a ballpark figure about how much you owe?”

The Labour Government might have known once or twice, but not on an ongoing basis. The website asks whether people are

“Afraid to apply for a loan because you don’t want to hear that you’re ‘overextended’”—

that would definitely apply to Labour Members. It says:

“If any of these apply to you, you may be in Debt Denial.”

The website goes on to list ways in which individuals can help themselves, and I shall end with a salient piece of advice:

“if you continue living in Debt Denial, you’ll never make any progress towards paying off your debts. And paying off your debts improves your credit, giving you the freedom to do more things…you’ve”

been wanting to do. I am pleased that the coalition is moving forward with many sensible measures in the Finance Bill, and I also commend debtdenial.com to Labour Members.