Finance Bill
Chris Heaton-Harris Excerpts(10 years, 12 months ago)
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John Mann
But on this occasion, Mr Speaker—one scratches one’s head at some interventions, which are so inaccurate, so irrelevant and so unconnected to the clause. I will not rise to the bait, Mr Speaker, and risk your ire by explaining to the hon. Member for Braintree (Mr Newmark) exactly how the unions invest their money, interesting though that subject would be. I fear your wrath, Mr Speaker, if I did so. Instead, I shall return to the key core theme of the clauses, which is morality—
Chris Heaton-Harris (Daventry) (Con)
The hon. Gentleman is being very generous in giving way. In his shy, retiring and meek way he is making some interesting points. I sometimes wish he would come out of his shell a bit more and tell us what he actually thinks. He weakens his case, does he not, when he tries to say that this is a party political matter? Last week, my hon. Friend the Member for Dover (Charlie Elphicke) highlighted how little money water companies and utilities were paying in tax in this country. My hon. Friend the Member for Stevenage (Stephen McPartland) has a website with a record of what corporate taxes are being paid by major corporates in this country. I am a member of the Public Accounts Committee, and across the parties on the Committee there has been a big push in this area. Is it not better for us to work together to try to sort it out?
John Mann
I thank the hon. Member for Daventry (Chris Heaton-Harris)—the fruit and veg man, a successful small business man—and I commend him. He is another on the Tory Back Benches like the hon. Member for Amber Valley, whom I specifically itemised in precise praise, as I did in last year’s Bill Committee, encouraging him to press to a vote his sensible and modest proposals to simplify the tax system. He would have had my support in that. In this House, there are times when we need to work across the parties to deal with an incompetent Treasury Front-Bench team. I would welcome further discussions beyond this Chamber with the hon. Gentlemen and others on the Conservative Benches about how best those of us who fully understand—be it a café in Worksop, or the fruit and veg man in Daventry or the accountant in Amber Valley—the economic inefficiency of this Prime Minister, this Chancellor and this immoral Treasury Front Bench’s failure to deal with tax dodgers, tax avoiders, corporate structures and the opaqueness of the overseas territories.
As a country, through this Government, we are unwilling to give the international lead that our position in providing defence and other support to the Cayman Islands and many others requires. That economic efficiency, that justice and that morality would liberate good British companies who are prepared to do the decent thing and to pay modest, small amounts of taxation rather than avoiding their appropriate duty to do so. That is what competition in the market is about and what those of us on the Opposition Benches are about. It is also what some—I am happy to give them plaudits—on the Conservative and Liberal Back Benches are about, but it is absent from the Prime Minister, the Chancellor and Treasury Front-Benchers, who are devoid of it. They do not get the real world, have not come from it and will never understand it. They do not get what the public and small businesses are saying. I would suggest that they do not really care about that, because they are interested in their paymasters and in ensuring that the status quo remains. They are failing to challenge vested interests.
Financial Transaction Tax and Economic and Monetary Union
Chris Heaton-Harris Excerpts(11 years ago)
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Chris Heaton-Harris (Daventry) (Con)
When did this change in Labour’s policy come about? I distinctly remember, when I was in the European Parliament from 1999 to 2009, Labour MEPs who supported a financial transaction tax being slapped down by their Chancellor, who became Prime Minister. Is it a change in policy that Labour supports a financial transaction tax at European or worldwide level?
Chris Leslie
I did not know that the hon. Gentleman was so close to Labour Members of the European Parliament. I am not familiar with what they were thinking at that time, but on the Labour Benches here we are keen on the principle of an FTT and I have no idea why he is not. I do not understand why Government Members are taking such a stick-in-the-mud view of the issue when it is clear that some of the obstacles that are in the EU variant could be overcome if we engaged and took a leadership role. We have dealt with the stamp duty issue. There are ways of dealing with the extraterritorial and residence issue.
Infrastructure
Chris Heaton-Harris Excerpts(11 years, 4 months ago)
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Rachel Reeves
I do not know how the hon. Gentleman bought his house, but when I bought mine, I had a mortgage because I could not afford to buy it outright. That is why schemes such as PFI were introduced. I am not sure what school, hospital or children’s centre in the hon. Gentleman’s constituency he would prefer not to have opened during the last Labour Government. I bet a lot more of those things opened under the last Labour Government than have been opened under this Conservative and Liberal Democrat Government.
The reality is that what the Government are doing is hurting business confidence. The director general of the British Chambers of Commerce has described the Government’s plan for infrastructure as
“hot air, a complete fiction”.
Rachel Reeves
I will give way to the hon. Gentleman if he would like to explain why even the director general of the British Chambers of Commerce thinks that the Government’s plans are hot air.
Chris Heaton-Harris
I thank the hon. Lady for giving way; she is very much on broadcast rather than reception. On PFI, she mentioned her mortgage, so what would happen to her if she were unable to make the repayments on that mortgage?
Rachel Reeves
I hope the hon. Gentleman is not suggesting that the Government are not going to be able to make the repayments on their debt. We know that their triple A rating is under threat, so if this is a warning that the Government are planning on not paying their debts and the deficit back, it will be interesting news.
The CBI has warned the Government that
“businesses in Britain are looking for action and we haven’t seen any yet”.
Yesterday, the monthly index published by BDO showed that business confidence hit a 21-year low. That is the lowest level of business confidence since Norman Lamont was Chancellor and sterling was ejected from the exchange rate mechanism on Black Wednesday in 1992. I am sure that right hon. and hon. Gentlemen will remember that day. The Prime Minister certainly does—he was working for the Chancellor at the time. Confidence is now at those low levels again.
It is now clear: business has lost confidence in this Government, who do not have a plan for jobs or growth. It is hardly surprising, then, that the Government are failing to attract the private sector funds they need for their infrastructure investment. It is worth remembering how the Government’s plan to target £20 billion of pension funds for investment is going. Responding to a question from my hon. Friend the Member for Ochil and South Perthshire (Gordon Banks), the Chief Secretary to the Treasury had to tell us that the Government were on course for just a 10th of their original target: £2 billion out of £20 billion raised.
The Government lack the policy framework to attract the long-term investment we need. Changes such as cuts to feed-in tariffs have had a detrimental impact on low-carbon investment. The CBI warned the Government that such measures have been
“damaging to business confidence, with implications not just for immediate investment decisions but for longer-term trust in government policy”.
It is no wonder that, last year, 50 companies, investors and industry bodies wrote to the Chancellor asking him to set a firm decarbonisation target for 2030 to give investors the confidence they needed. On energy policy, the Institution of Engineering and Technology has been clear in saying:
“Short-term uncertainty around UK energy policy…is very unhelpful and has the potential to… delay much-needed investment in all forms of energy infrastructure.”
According to the findings of a poll by KPMG, two thirds of businesses believe that the UK’s energy and water infrastructure is unlikely to get any better because of uncertainty about the policy framework.
From the business community, we hear resounding frustration when it comes to the Government’s infrastructure policy. The Government do not seem to understand that businesses long for certainty when attempting to grow, employ more people and build for the future. Those are the people and businesses that we need to encourage, not put off, and infrastructure is vital to that, but the Government’s ideological decision to cut infrastructure investment further and faster is hampering confidence rather than nurturing it.
Small businesses, the engines of growth, are still waiting for the Government to roll out universal broadband. The Government abandoned the commitment from the last Labour Government to provide broadband for virtually every household by 2012. When business needs this Government, they are nowhere to be found.
Fundamentally, the Government fail to understand the need for a comprehensive and long-term plan to build Britain’s infrastructure for the 21st century. That is why the Labour party has commissioned Sir John Armitt, chair of the Olympic Delivery Authority, to consider how long-term infrastructure decision making, planning, delivery and finance can be radically improved. The Olympics taught us what we could achieve together as one nation. With the right leadership and the right investment, and by building consensus around the long-term projects that are essential for our energy, transport and housing needs, we can compete globally, with a national infrastructure that is fit for the 21st century. Labour is therefore making the case for a British investment bank, which would help to support long-term finance for British businesses so that they could take risks and grow. That is especially urgent given that net lending to businesses has fallen by a staggering £13.5 billion over the last year.
Investing in infrastructure is about more than the tarmac on our roads or the bricks that make up our schools. It is about creating skilled jobs for our youngsters. It is about supporting the entrepreneurs who want to export and grow their businesses. It is about ensuring we can grow and operate across the globe. It is about attracting investment from abroad. It is about being ambitious in the face of challenges, and attempting to build a better country for the next generation.
The Prime Minister said in his new year address:
“This is, quite simply, a government in a hurry. And there’s a reason for that. Britain is in a global race to succeed today.”
Whichever way we look at it, however, this Government do not seem to be in a hurry to invest in our country’s infrastructure. Indeed, as I said earlier, they are spending £12.8 billion less on capital investment than the amount specified in the plans that they inherited from the last Government, which amounts to an 8% cut. A Government in a hurry? Hardly. Inertia is the watchword of this Government, at a time when what we need is action.
When other countries are investing in their infrastructure, aware of the benefits, this Government dither. On infrastructure, as on so much else, the country needs decisive leadership. Instead, we get incompetence, delay and cuts. It is time that we changed course.
Draft European Union Budget
Chris Heaton-Harris Excerpts(11 years, 11 months ago)
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Mr Hoban
The negotiations on regional funding are a matter for my colleagues in the Department for Business, Innovation and Skills, and I am sure that they will respond to the points that the right hon. Gentleman has made. Our overarching priority is to ensure that our spending in the EU gives us value for money, and the overall settlement for the next seven years and the multi-annual financial framework must reflect that. He may wish to participate in the debate on the preparations for the framework which will take place in European Standing Committee B when the House returns in September. That is one of the many opportunities for debate provided by my hon. Friend the Member for Stone (Mr Cash) in his role as Chairman of the European Scrutiny Committee.
Chris Heaton-Harris
According to a paper produced recently by the Fresh Start group, of which I am co-chairman, if we repatriated structural funds among countries whose GDP is more than 90% of the EU average, we would be able to spend £4 billion more—money that would come directly from the Government—on growth in the United Kingdom without having to go through the middleman of the European Union.
Mr Hoban
My hon. Friend makes a powerful point. We need to view expenditure issues in the context of the impact of our contribution and how it is linked with the rebate, but I do not want this to turn into a debate entirely about structural funds. There will be many other opportunities to discuss those.
Kelvin Hopkins
I do not really agree with the amendment, because it seems to suggest that the Prime Minister is some sort of militant Eurosceptic, which is far from the truth. I would like him to take a stronger line.
Chris Heaton-Harris
My hon. Friend is being a bit soft on the Opposition, because their amendment is absolutely pathetic. It is like student politics, trying to re-write a bit of history and deny the past. It is quite pathetic, because they signed up to the rules by which this Government have to negotiate.
Chris Heaton-Harris (Daventry) (Con)
This subject has been omnipresent throughout my political career. For 10 years, I served on the European Parliament’s Budgets Committee and Budgetary Control Committee.
Chris Heaton-Harris
Yes, indeed.
I am very keen that the Government get their principles in line and their priorities straight. I want to explain why the amendment tabled by the Opposition is complete rubbish and to give the Minister a feel for why many Conservative Members think that we need to be doing slightly more, in a slightly stronger way, to achieve the aims that I think we all agree on, given that the European budget is way too high.
This year is important in budgetary terms because 2013 is the last year of the current multi-annual financial framework. The work that is done now on the 2013 budget will hold firm for next multi-annual financial framework, within which the Commission is bidding for a lot more money. That is significant for the United Kingdom.
The Commission raises this money in a number of ways: direct payments from national Governments based on each country’s gross national income, a levy on each national Government that takes a slice of their VAT income, customs duties on various imports from outside the EU, and levies on sugar production. That accounts for about 99% of the budgeted income of the European Commission. To put that into scale, in 2010 the UK’s gross contribution to the EU budget was €14.66 billion and we received back €6.75 billion, equating to a net contribution of €7.91 billion.
Jacob Rees-Mogg
My hon. Friend mentioned the repatriation of funds to the UK. The net figure that he cites assumes that the European Union spends money in the UK in a way that we would like, but that is not a fair assumption.
Chris Heaton-Harris
That is a correct assumption. A number of those projects would not have been financed by this Government or by previous Governments, so the money is being diverted into different things. That is why the last Prime Minister, when he was Chancellor of the Exchequer, mooted the idea of repatriating those moneys.
Andrew Percy
I agree that the Labour amendment is total nonsense. Is it not true that a lot of money is being spent on infrastructure projects in parts of the European Union that are wealthier than the area that I represent, where a great deal of Government funding is being cut? That is completely unacceptable to my constituents.
Chris Heaton-Harris
I agree with my hon. Friend that it is a difficult ask for us to explain to our constituents why no money is forthcoming for reasonable projects in our areas, when we are giving money to richer areas across the European Union through the regional structural funds. That is an aberration that we should look at seriously.
We were the second largest net contributor to the European Union in 2010. Germany was ahead of us with €11.95 billion. Behind us were France with €6.48 billion and Italy with €5.84 billion. Obviously, Italy is not the richest country in the world at the moment, so it, too, is trying to do something about its net contribution. The largest net recipients in 2010 were Poland with €8.17 billion, Greece with €3.44 billion and Spain with €3.1 billion. So there are lots of fiscal transfers across the 27 member states.
Many other costs are hidden in the European Union budget.
Mr Nuttall
The figures that my hon. Friend quotes show that, in essence, we are transferring the entirety of our net contribution to Greece and Spain.
Chris Heaton-Harris
If it was done as a simple transaction, that would be the case.
The Commission’s budgetary expenditure is divided into five headings. “Sustainable Growth”, which mainly involves the EU structural funds, and “Preservation and Management of Natural Resources”, which relates to agriculture and the environment, are the biggest items and accounted for 87% of EU spending in 2012. “Citizenship, freedom, security and justice”, which relates to social policy, crime and policing, and “The EU as a global player”, which involves foreign policy issues, were the smaller items of the budget. The heading, “Administration”, relates to the finances of the staff of the European Commission and other institutional expenditure, such as that of the European Parliament, the Committee of the Regions, the Economic and Social Committee and various other EU agencies and quangos.
Kate Hoey
I hope that the hon. Gentleman’s attention has been drawn to the wonderful little DVD that has been sent to a number of Members by Marta Andreasen, who has done a terrific job of showing all the waste that has gone on and how massive amounts of taxpayers’ money are being wasted. If we stopped that waste, we would not have to increase the budget, but could cut it. Would he like to ensure that every Member of Parliament can see the DVD?
Chris Heaton-Harris
It is not often that I would commend anything to do with a politician from the UK Independence party. However, if we look at the front page of the Financial Times from 1 August 2002, we see sitting beside Marta Andreasen at the press conference one of the MEPs for the East Midlands, who is now the MP for Daventry. She was the first person to hold the role of chief accountant of the European Commission who had an accountancy qualification. I am very keen that her expertise is shared. I have seen the DVD and it is well worth looking at.
The Minister set out some obstacles to the reform of the budget, and they are great. When there are big vested interests, with big countries getting way more money out than they will ever put in, there is no chance of reducing the budget under qualified majority voting. As I have tried to explain, we are one of the biggest net contributors, and we will continue to be so way into the future. However, we will always be outvoted on budgetary matters under qualified majority voting, because more countries gain from our expenditure than pay themselves.
Blocs exist to protect certain things. There is the bloc of net gainers, but France, which is a net contributor, exists in another bloc to protect one of the big areas of spending: the common agricultural policy. It does not want any major changes to the CAP, because that is how it diminishes its net payments to the EU. With such vested interests built in, reform of the European budget is much easier said that done, as the Opposition prove in their amendment.
Another problem with the EU budget is that its own auditors do not sign it off. This is the 17th consecutive year in which the European Court of Auditors, having checked the legality of EU spending, has refused to give it what is called a positive statement of assurance. Essentially, it has refused to sign off the accounts. As the Financial Secretary said, we must consider that alongside the fact that the European Commission constantly asks for much more money to spend but then cannot spend it properly. Until recently, it was running up massive surpluses in its own accounts.
There are also aberrations that people do not like. The latest is that we are told that EU chiefs are splashing out on a new £350 million headquarters, at a time when everybody else is having to cut their budgets. That new headquarters, by the way, is in Luxembourg, where MEPs no longer go because they are based in Brussels and Strasbourg. There is obviously too much money in the system. The case for reform is therefore greater now than it has ever been.
Although the European Council will not formally adopt its position on the European Commission’s proposed EU budget for 2013 until 26 July, member states’ ambassadors to the EU reached a deal on it yesterday, as the Financial Secretary mentioned. The Commission has proposed an overall 6.8% increase in payment appropriations compared with 2012, which amounts to about £7.2 billion—a decent sum. As he said, the member states’ position agreed yesterday means a £2.9 billion increase in payments. That is an increase of 2.79%, which can be compared with the EU inflation rate of 1.9%.
The Financial Secretary and I know that the UK, the Netherlands and Sweden all oppose the deal and will vote against it at the Council on 26 July. However, if we are the only three states to do so, the budget will be adopted by a qualified majority of countries in the blocs that I outlined, which want to receive more than they put in. If the estimated UK gross contribution of 11.3% to the 2012 EU budget were replicated, under yesterday’s deal the UK would pay about £12.2 billion gross into the budget next year.
Essentially, we are just about to increase the EU budget, and our part of that increase is £330 million. That would pay a year’s basic salary to 18,500 Army privates, the average basic salary to 10,500 NHS-qualified nurses, or a year’s basic salary to 12,500 police constables.
Graham Stringer
The hon. Gentleman is providing some extraordinarily insightful and useful information about the absurdities of the EU. When the Financial Secretary was asked to be a bit tougher, he made great play of always having to obey the law. We are law makers, so of course we agree, but can the hon. Gentleman think of any organisation in the UK that would hand over £100, let alone £12 billion, to an organisation that cannot get its accounts audited?
Chris Heaton-Harris
No, I cannot. One point that I am trying to make is that, if we want to be stronger and to cause a bit of upset among our European partners, we could dig our heels in. The Government are doing what they can, while abiding by the letter and spirit of the law, but we could change the face of public services in the UK with just the increase in our contribution to next year’s budget. It is therefore perhaps worth digging our heels in that bit harder and threatening to do something that might be against the letter of the law. There would be a relatively large amount of public approval for such actions in respect of an organisation that has not had its accounts signed off for 17 years, as the hon. Gentleman says.
There would be more public approval for such actions if people knew what the money is spent on. I shall speak for just one more minute, because I know other hon. Members wish to speak, and outline a handful of things that the European budget goes on. Total EU spending in 2012 on quangos and agencies, which the Minister mentioned, was about €2.48 billion. Some agencies and quangos completely duplicate other bodies that serve the EU and member states, such as the Economic and Social Committee and the Committee of the Regions, which the European Commission is meant to consult but which no one has ever heard of, apart from those illustrious members of our communities that enjoy going on the monthly trips to serve on them. We could cut those and save €215 million straight away, but British Governments of either political complexion have never suggested it.
There are two human rights agencies. We could cut at least one of them, saving €15 million. Four agencies are involved in workplace and environment issues. We could cut a number of those and save €50 million. If we dig and delve deeply enough, we find that each EU Commission budget line funds all sorts of things that it probably should not. Hundreds if not thousands of non-governmental and other organisations get money from the EU budget. The have become slightly too close to the EU and should question whether that helps them to get their point across, even if it helps them in budgetary terms. Greenpeace is not one such organisation—it refuses to take any money from any governmental institution.
Mr Davidson
Is the hon. Gentleman aware of how the system operates? The EU gives money to organisations that it has established, so that they can lobby the EU to spend money on their aims.
Chris Heaton-Harris
To illustrate exactly that point, I shall quote the reasons Greenpeace gives for not taking money from governmental institutions:
“Greenpeace does not solicit or accept funding from governments, corporations or political parties. Greenpeace neither seeks nor accepts donations that could compromise its independence, aims, objectives or integrity… Greenpeace relies on the voluntary donations of individual supporters, and on grant support from foundations.”
I take EU lobbying by Greenpeace way more seriously, because it comes from the heart and not from an EU budget line.
My next example is the LIFE+ programme budget line, which funds, among other groups, Avalon, which co-ordinates activities and lobbies on behalf of sustainable rural development in central and eastern European regions; BirdLife Europe; CEE Bankwatch; Climate Action Network Europe; Coalition Clean Baltic; Danube Environmental Forum; EUCC Coastal and Marine Union; Eurogroup for Wildlife and Laboratory Animals; EUROPARC; the European Environmental Bureau; European Environmental Citizens Organisation for Standardisation; European Federation for Transport and Environment; European Landowners Association; European Water Association; Federation of Associations for Hunting and Conservation of the EU; FERN; Friends of the Earth Europe, which constantly lobbies hon. Members on all sorts of things; Health and Environment Alliance; International Federation of Organic Agriculture Movements EU group; International Friends of Nature; International Network for Sustainable Energy; Justice and Environment; and the Mediterranean Information Office for Environment, Culture and Sustainable Development. The list goes on. Just one budget line funds all those organisations.
Mr Cash
On a broader question, will my hon. Friend consider that if we were to consider a Swiss-style relationship with Europe and negotiate a proportionate drop in our net contributions, we could reduce the amount we pay to no more than £1.3 billion, saving nearly £7 billion? Does he find that an attractive idea?
Chris Heaton-Harris
Anything that saves UK taxpayers significant sums of money I deem worthy of further investigation.
There are lots of areas in which the Government, working with others on the Council and Members of the European Parliament, who have an opportunity to amend the budget, can do a lot more, but only if there is a tiny threat that we might not want to increase our contribution at all. We have the reason to do it—the accounts not being signed off—but I urge the Minister to consider the opportunities that present themselves in the coming years. I support the Government in trying to reduce our budgetary contribution. I know that it is unbelievably hard work—I have sat in on these trilogue meetings in Brussels—but it is worth the effort, because we could save the UK taxpayer billions of pounds.
Finance Bill
Chris Heaton-Harris Excerpts(11 years, 12 months ago)
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Mr Jones
Does the hon. Gentleman get it? Does he not understand the anger of even middle-income earners, who pay their taxes, work hard and cannot use any schemes such as those he has been suggesting which are open to those on ludicrous sums of £250,000 a week? Many people in Somerset must be in this category?
Chris Heaton-Harris
Does that not make the point? If there was this anger, thousands of people would not queue in lines to get their season ticket for Manchester United at the beginning of each season and millions of people would not be watching on television, because the strength of anger that Labour Members seem to want to articulate would mean that people would boycott these disgraceful sports and pursuits.
Jacob Rees-Mogg
My hon. Friend is absolutely right and he has hit the nail on the head.
Jacob Rees-Mogg
In 1979, when the hon. Gentleman had a real socialist Government, that figure was about 8%. One can see that massive expansion in the burden of tax falling on the richest in society—the ones who can bear that burden—comes when the rate is lower. That is an excellent part of this Budget; perhaps the best part.
Chris Heaton-Harris
I thank my hon. Friend for being so generous in giving way. If one could possibly take the politics out of tax, surely one would want to hit the tax rate that brings in the most revenue, in order to pay for hospitals and everything else. If that tax rate was proved to be lower than the higher tax rate, one would like to think that common sense would prevail and that Ministers would choose the tax rate that would bring in the money.
Jacob Rees-Mogg
I agree with my hon. Friend. I believe that there are studies that show that that rate would be 36p in the pound. I hope that the Minister is listening and that we can look forward in the next Budget to the rate being lower still.
We have heard discussion about the morality of tax rates, and I dispute that there is morality to tax rates, but there is a perniciousness about taxing for the sake of it and about taxing for the sake of envy, because people do not like the rich or because they wish to crush the income earners in society. That is not the type of envy that we have on these Benches. Even our Liberal Democrat friends do not suffer from that type of envy; they recovered from it after their experience in 1909.
We Conservative Members have never had that type of envy. We recognise that if the maximum amount of revenue is raised, it is better for everybody. We heard our Prime Minister giving an invitation to our friends in France, saying, “Come and join us. The weather here may be rainy, but the tax rate is only 45p in the pound, compared with the 75p that you may have to pay.”
Jacob Rees-Mogg
I am always grateful for the hon. Gentleman’s thoughtful interventions, but one of the greatest mistakes that Governments make is to have this merry-go-round of taxation and benefits, whereby we tax people and then pay them back their own money in benefits, with a cut taken for administration in between. It is much more sensible to take people out of tax altogether. I would like the threshold to be raised considerably higher, basically towards average earnings, so that the bulk of people do not pay tax at all on what they earn, but do, of course, pay in other ways, through other taxes—through indirect taxation. That takes away the major disincentive to go into employment, and lets people benefit from the fruits of their labour. That is an important proposal that has come forward, and it is popular throughout the country, though I would not say that there was literally cheering in the streets.
Chris Heaton-Harris
My hon. Friend talked about the recycling of money through the system. In May 2010, nine out of 10 families were able to claim some sort of tax credit. Surely it is completely wrong if everybody —or 90% of people—is relying on the state to give them money back in some grandiose scheme. Surely taking people out of tax is the right way to get rid of that problem.
Jacob Rees-Mogg
I am in entire agreement with my hon. Friend. We want to get people out of the tax and benefits system as much as possible so that they can stand on their own two feet. That is what people want.
The Exchequer Secretary to the Treasury (Mr David Gauke)
We have had an interesting debate that has addressed what are perhaps two of the most controversial issues in the Budget: the change to age-related allowances and the reduction in the 50p rate of income tax. The debate has lasted three hours, but at one stage I thought we might finish early, until we heard the tour de force from my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg). I hope that I will have time to respond to the various comments that have been made. We heard the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) quote Groucho Marx, which I suppose is an improvement on other Marxes who might have been quoted, although I was reminded of the other Groucho Marx line:
“I’ve had a perfectly wonderful evening, but this wasn’t it”,
at least until I heard the speech from my hon. Friend.
The changes the Government have made to the rates and thresholds of income tax will provide a competitive platform for our tax system while also ensuring fairness. The measures in the Bill will reduce the additional rate of income tax in 2013-14 to 45p, increase the personal allowance to £8,105 and simplify the working of age-related allowances. I will discuss each of the amendments in turn, but it is important first to set out why the Government have taken this approach.
The fact is that the 50p rate of income tax has not raised the revenue it was intended to raise. It is currently the highest statutory income tax rate in the G20. When we came to power we inherited an economy that the previous Government had driven into a parlous state, with regard to not only the state of the public finances but our overall competitiveness. The fact is that the 50p rate came in only at the fag end of the Labour Government, who for 13 years had kept the 40p rate, and when they brought in the 50p rate they declared that it was temporary. There was a reason for that: they recognised that the 50p rate would damage our competitiveness. The hard evidence backs up that claim. The report by HMRC sets out that the 50p rate is distortive, damaging to international competitiveness and an economically inefficient way of raising revenue.
In short, the 50p rate is a failed policy. We were told that it would raise over £2 billion and, given the crippling deficit we were left, that was not something we could just wave away as if it did not matter. However, higher taxes are worth while only if they raise more revenue, and the analysis by HMRC shows that at best the yield would be £1 billion, and at worst it may raise nothing at all. That is because the behavioural response has been substantially larger than expected.
Chris Heaton-Harris
One part of HMRC’s gaming for this actually did not look at how much extra money would come in as a result of the incentive to pay the lower level of tax. Surely it would have been worth while doing that so that we could prove to some of those who do not understand simple economics that it would be worth while.
Mr Gauke
HMRC’s analysis, which is a good piece of work, showed through two different mechanisms that the reality was that the amount being raised was somewhat less than had been predicted. The fact is that the behavioural response was much greater.
Let me say a word or two about that. To start with, HMRC estimates that as much as £18 billion worth of forestalling took place in 2009-10, of which about two thirds, up to £11.3 billion, has been estimated to unwind in 2010-11, but this forestalling was not factored into the original revenue calculations. Furthermore, HMRC estimates that between one third and one half of the behavioural effect comes from genuine reductions in income. We have heard this evening that this is all about tax avoidance, that tax avoidance increases when we increase the rate and that we can be sure we will get the benefit of it as we unwind, but the reality is that between one third and one half of this was simply the result of less economic activity, because people reduced their hours and participation in the UK labour market and moved elsewhere.
Interest Rate Swap Products
Chris Heaton-Harris Excerpts(12 years ago)
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Chris Heaton-Harris (Daventry) (Con)
Thank you for calling me to speak in the debate, Mr Deputy Speaker. I appreciate the opportunity as I did arrive late. I have come directly from the Defamation Bill Committee, but I hope that I shall not defame the banks too much as I talk about this scandal that they have been perpetrating. I shall test the Enoch Powell theory of public speaking today; if it is true, this is going to be a blinder of a speech.
I congratulate my hon. Friend the Member for Aberconwy (Guto Bebb) on securing the debate. The quality of all the contributions, raising constituency cases as I intend to do, has shown me that this scam, which has been taking place for a long time, is a massive one of ginormous scale that requires firm action as soon as possible. I also congratulate the Backbench Business Committee, which has yet again come up trumps in calling a debate that our constituents would like to hear, and that probably would not have been heard in normal circumstances under previous mandates.
I will try not to repeat the points that other Members have made, but I want to give some details about a couple of cases in my constituency. I also want to press the Minister on the matter and issue a call for action. My hon. Friend the Member for Staffordshire Moorlands (Karen Bradley) gave the House a description of the swaps. I was a small business man before I entered politics, and I can understand how those businesses were caught by this scam. The relationship that they have with their bank manager—and perhaps with their relationship manager, as we have heard—is all important, or it certainly was until these products started to be sold. It was a relationship based on friendship and trust. It was understood that products were being bought and used, but it was always felt that independent advice was being offered and that the bank would put you right all the time. That has been completely lost with the sale of these interest rate swap agreements. Something really bad happened back in 2003-04 when all this started to happen.
Two of my constituency cases are happy to be named and others are not. My constituency is full of vibrant small businesses. In one case, Mr Benyon has two companies: Oastlodge Ltd and Hallway Estates Ltd. Oastlodge had been with Lloyds bank for over 35 years, and Hallway for just over 10. In 2004, Oastlodge was taking out a large loan and was advised to take out a swap. This would have increased overall borrowing costs—the right questions were asked of the person trying to sell the product—so the company requested not to enter. In 2005, Lloyds came back with an offer for a swap where the bank would halve interest margins on all existing loans. The offer was in writing. A business man confronted with having interest loan costs halved is likely to be interested in taking up the offer. In 2006, the company was sold a further swap, on the basis of reducing the overall cost of borrowing and saving even more money.
In 2008, Oastlodge and Hallway were offered several more swaps, and one in particular was highlighted. All the benefits were listed in great detail, but none of the downsides; neither was any information provided on potential breakdown costs. It was also explained in writing that
“there would be no risk to borrowing costs trailing higher”.
The previous swap had been for 10 years; the new ones were for 20 years—far longer than the duration of the loans at the time. The swap was signed up to, with the companies knowing full well—or, at least, thinking they did—that there was a ceiling on the borrowing costs.
In 2009, the companies were informed, when their loans were up for renewal, that their lending margin was going to double. They complained that the bank was reneging on a deal, but were told that there was nothing formally agreed. The bank could, however, sell them another swap to reduce borrowing costs until 2013. They now had no choice but to enter the new swap at a cost of about £200,000 a year.
While they were making their complaint, the companies discovered that the swap was not a relationship with the bank they thought they were dealing with, as it had been sold on in the financial markets. Other Members have highlighted this. The companies took legal and financial advice but, despite having a good case, were wary of risking the extra costs of taking the bank to court. In fact, my hon. Friend the Member for Aberconwy is their last best hope, and I suspect that that is so in many other cases, too.
George Eustice
One problem many businesses have is that when they decide they want to take legal action against a bank, they often find that many of the law firms that might appear to be the natural ones to turn to have effectively been bought off by the banks through things called permanent retainers and through the approved panels. Some of the best litigators in the country are thus often barred from acting against the banks.
Chris Heaton-Harris
I did not know that, and I thank my hon. Friend for raising it.
Lloyds bank has denied any wrongdoing whatever, claiming that the margin reduction was not necessary for the duration of the swap, and it hides behind the small print that says, as we heard earlier, that any advice given was not, in fact, “advice”.
Matthew Hancock (West Suffolk) (Con)
Does my hon. Friend agree that his constituency case is like that of many across the country in that the question of duration is the problem? A very successful business in my constituency was offered a loan of five years and a swap of 10 years; the mismatch between the two time periods is likely to cause a huge jump in costs as the loan runs out in a few months’ time, with five further years of swap, which the company did not need, remaining to match off the initial loan.
Chris Heaton-Harris
My hon. Friend is right. My constituents are in exactly the same position.
There is, at least, provision for my constituents to break the swap, but doing so would cost them a cool £1 million. They have complained to the financial services ombudsman, asking for compensation and asking for the original swap margin to be reinstated at its 2006 level or, alternatively, for the swap to be torn up so that they can keep their existing margin. They have been advised that the 2008 swap was mis-sold and inappropriate for their business, and they are discussing the details of that with the financial services ombudsman.
In 2008 Lloyds sold another of my constituents, Phillip Derbyshire, an enhanced collar—or, as it was described by my hon. Friend the Member for Wyre Forest (Mark Garnier), an enhanced noose. It has cost him £1.275 million, about 75% of his pension pool. He is 64 years old. Both the FSO and the Financial Services Authority are unable to assist him, and Lloyds claims that there has been no wrongdoing. My constituent claims that the circumstances of sale were
“tantamount to a sting operation under duress”,
and I completely believe him.
Richard Fuller (Bedford) (Con)
Does not the abuse of trust that my hon. Friend is describing give rise to another fear—that the FSA will roll over and talk about changing the rules while missing the critical issue of compensation for people who have suffered, which is what the House wants to see?
Chris Heaton-Harris
I entirely concur with my hon. Friend, and I shall end my speech by making the same point.
Lloyds repeatedly referred to the product that it was selling to my constituent as “a protection”, both orally and in writing. The downsides were simply not explained. My constituent was told that if he sold his business or died, the product would be an asset. All that was independently witnessed, because he is quite a savvy man. He was told by an independent banking consultant that the product was totally inappropriate to his needs, and that it was beyond the level of his financial sophistication to understand it. He is now looking into whether he can sue Lloyds.
Does the Minister agree that it is wrong for banks to make loans contingent on the purchase of other financial products such as IRSAs? Where are we with this issue now? What conclusion will be reached from the debate? We have seen the motion, and we have heard from many Members in all parts of the House who want to see forthright action by the Treasury and the FSA, and compensation for their constituents. Can the FSA be persuaded to move faster? As for compensation, there is an absolute need for it.
This is a scandal and a scam. It is finished now, but we need to ensure that it never happens again.
IMF
Chris Heaton-Harris Excerpts(12 years, 2 months ago)
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Mr Osborne
There is not much danger of my being influenced by the shadow Chancellor’s flip-flopping. My hon. Friend draws to our attention the interesting point that the Australian Liberal party, which is hardly the most Europhile party in the world, understands that Australia has obligations to the international community and to the IMF. Given that Australia is prepared to make a contribution, it would be quite odd if Britain was not.
Chris Heaton-Harris (Daventry) (Con)
May I congratulate the shadow Chancellor on his epic exploits yesterday? I note that he kept on message by going neither too far, nor too fast.
I voted for the loan and believe that it would have been bizarre had the Chancellor not offered a loan of the level agreed to by Parliament. Will my right hon. Friend guarantee that he will come back to this place and ask for Parliament’s assent should more funds be asked for?
Budget Leak Inquiry
Chris Heaton-Harris Excerpts(12 years, 3 months ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
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Mr Gauke
I do not believe that the figure of 7% came from the Treasury, but we also ought to recognise that in last year’s Budget the Chancellor made it clear that we were looking at getting more money from those owning high-end properties, so it should not have come as a complete surprise that there was an announcement along those lines in the Budget yesterday.
Chris Heaton-Harris (Daventry) (Con)
It was widely reported in the press before the Budget, and in fact before Monday, that on Monday morning the quad would meet for a final sign-off of the Budget. Surely anything that was in the papers about the Budget before that point would have been complete speculation?
Amendment of the Law
Chris Heaton-Harris Excerpts(12 years, 3 months ago)
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Chris Heaton-Harris (Daventry) (Con)
It is a pleasure to speak about the Budget on Budget day itself, and, indeed, to have quite some time in which to speak. The last time I tried to speak in a Budget debate, I was curtailed at three minutes and 52 seconds, just as I was building up a full head of steam. I hope to enjoy the nine minutes and 42 seconds remaining to me today.
I welcome the Budget for many reasons, but, in common with any Back Bencher trying to represent their constituency, I also have some questions and there are some areas on which I want to probe and seek commitments from the Government for future Budgets.
I listened carefully to the contributions on their constituencies of the right hon. Member for Tottenham (Mr Lammy) and the hon. Member for Hackney South and Shoreditch (Meg Hillier), who serves with me on the Public Accounts Committee. For the first eight minutes of the right hon. Gentleman’s speech, I did not disagree with a single word he said. It was a fantastic speech. I know his constituency very well. A friend of mine has set up a boxing club on White Hart lane, and he takes in young people from the Broadwater Farm estate. The right hon. Gentleman has led his community in a highly commendable way since last year’s riots.
Let me set out what I think we all want, and what I certainly want as a former small business man. Before going into the European Parliament, I ran my own business wholesaling fruit and veg in New Covent Garden market, working nights for 11 years. My second language at the time was Cockney, and the sort of people I used to work with were keen on trying not to pay any tax. These were cash businesses and people tried to keep it that way. They wanted to generate wealth and then to choose how they spent it. There is a delicate balance to be struck in government between encouraging as many people as possible to create wealth and ensuring the bit that is taken in tax is spent well, so that people feel they are getting value for their money. I would like to think that everyone in this House welcomed elements of this Budget, and certainly those dealing with small businesses.
I know that the threshold is set at only £77,000 of cash passing through someone’s small business, but some of the paperwork associated with their return to Her Majesty’s Revenue and Customs goes overboard—it is way too much. These people are normally one-man bands, although perhaps they have a partner, so reducing and simplifying their paperwork is fantastic for them. We are giving people who want to set up a chance to know that they are not going to be hammered by the taxman, because they will understand the form that they are filling in and will not be fearful of getting it terribly wrong.
The Budget contains lots of other good things. I am sure that the whole House welcomes the £36 billion that is being saved as a result of interest that we are not paying because of the low interest rates engendered by this Government’s economic policy. Some Opposition Front Benchers have been suggesting ways of dismantling this fantastic set-up that enables us to borrow at low interest rates, but, realistically, everyone has to welcome the fact that we are paying less for our debt at the moment.
Neil Carmichael (Stroud) (Con)
I am thoroughly enjoying my hon. Friend’s speech and he is hitting on the important issue of interest rates. Does he agree that smaller businesses, too, are going to benefit enormously from low interest rates, both now and in the future, because they mean long-term investment for those businesses?
Chris Heaton-Harris
I thank my hon. Friend for his intervention, and of course I agree with what he says. The more we can spread lower interest rates, the better it is. As hon. Members from across the House will know, it has been difficult getting the banks to lend to all sorts of small businesses in the past two years. Any measure we take that strengthens lending to small businesses is a thoroughly good thing, because these businesses are the acorns from which big businesses grow. The Labour Government had this fantastic policy of how to manufacture small businesses: they took a big business, taxed it and added loads of regulation, and a few months or years later they had a small business. We are doing exactly the opposite.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
The hon. Gentleman has been extolling the virtues of low interest rates. I would certainly agree with the thrust of his argument, but what has he got to say about, and would he condemn, those financial institutions that have started to raise interest rates for mortgage holders?
Chris Heaton-Harris
I would not necessarily condemn them, but I would very much like them to answer the case on why they are doing that. I understand their business case, and people find it interesting when they start to talk to them. I like to think that the measures we have taken in the Budget, whereby we are trying to allow the flow of low interest rate money through our business sector in bigger and better ways—I think, for example, of the seven partners that the Chancellor is now looking at to do that in the future—are a valid way of proceeding.
I also welcome the broadband investment. My constituency is in the heart of England and could not be more different from that of the hon. Member for Hackney South and Shoreditch. My constituency is largely rural with lots of dynamic businesses, including lots of small businesses, based in it. However, we have awful broadband connection. When hon. Members talk about trying to get regular download speeds of 2 megabits, I look at them in awe, because my area is at the end of a copper exchange and we barely get speeds of 1 megabit. Where I live, I still watch my e-mails download, and plenty of hon. Members from across the country find themselves in exactly the same position. If we want proper inclusion across the whole country, we have to have fast broadband. I would settle for fast broadband, although superfast broadband would be a delight, and I very much welcome the measures we are taking on that.
I welcome—not because I am a Tory, but because I was in business—the fact that corporation tax is being lowered. We want to encourage businesses to invest. One way of doing that is by lowering corporation tax and I welcome the trajectory in which we are travelling.
I welcomed the waving of Order Papers when it was announced that this Government are lifting 2 million people out of paying tax, but—
Meg Hillier
Before the hon. Gentleman moves from the issue of small businesses, may I ask whether he has spoken to business people in his area about the possibility of a cross-Government body looking at small business administration to make sure that different Government policies do not have perverse outcomes, which Governments of all parties ought to consider?
Chris Heaton-Harris
As the hon. Lady knows from the Public Accounts Committee, where we have often talked about such matters, it would be lovely if Government Departments had a holistic approach to any area of policy. If we could start with small business, that would be fantastic, but I do not think we are quite there yet. That is something we would all support across the political spectrum and without political point-scoring.
I was speaking about the waving of Order Papers and the 2 million people being lifted out of paying tax altogether—a thoroughly good thing, which I would like to think is welcomed in all parts of the House. It benefits everyone who is working—people who are trying hard for themselves, have got on the job ladder and are moving forward. I benefit. From what I see on Twitter and other media sources, if people are earning around £60,000, have children and drive a car, they are not in a great place after the Budget. That includes most Members here. We have managed to produce a Budget that penalises MPs, which I am sure our constituents will be relatively happy with. Most people want to see the lowest paid in society not paying tax, and long may that continue.
I have one or two concerns and plenty of suggestions. The Treasury Minister will know of my long-running love affair with onshore wind turbines and what they do to my constituency. Although there was not much about renewables or the subsidy levels, I welcome the words spoken by the Chancellor in his speech. An investment in gas and in nuclear is proposed. If we chose that method to hit our 2020 carbon target, we would save more than £35 billion, compared with the route that we are currently choosing to go down, which involves other types of renewables that cost an awful lot more. The subsidy that is given to landowners and energy companies makes energy cost more, increasing fuel poverty at the other end of the cycle. I suggest wholeheartedly that we look carefully at the policy choices we are making when we talk about energy, green taxes and fuel poverty in the future.
Personally, I do not mind consumption taxes. I know that Labour Members take issue with that, so let me give an example. I would love to see the end of vehicle excise duty. Fuel prices are too high, as we all know because we all regularly fill up our fuel tanks. Getting rid of vehicle excise duty would add, I believe, roughly 1.5p to the cost of a litre of unleaded petrol and diesel. But we would not have to pay vehicle excise duty and we would pay as we drove, so if we drove a gas-guzzler we would pay a lot more. The old lady who drives hardly at all would pay a lot less. There would be a huge simplification of the tax system. That might not work, but I would like us to think outside the box and consider areas where we could simplify taxes.
Andrew Bridgen (North West Leicestershire) (Con)
Is my hon. Friend aware of the millions of vehicles that are not paying vehicle excise duty? Putting the tax on fuel would catch them all and bring them within the scope of taxation.
Chris Heaton-Harris
I am aware of that; it is one of the reasons I moot the idea at this point.
I would like to finish by talking about personal taxation and the general excitement across the House about the reduction in the top rate of tax from 50p to 45p, based on the Laffer curve. I have been reading the document that the Treasury has produced and note that the comparison has been made on the changes to the additional rate of income tax and the money that we might have expected to get in, or not to get in, as a result of increasing taxes. I humbly suggest that that completely underestimates the value of reducing taxes, because reducing taxes means that there is more of an incentive to pay and not to try to divert or put off paying them for a certain amount of time. I would love to see more work done in the Treasury on what those figures would end up like, because we want to encourage the creators of wealth, and one way of doing so is by saying to them, “You can keep more of the income you generate.” We want people to take a chance and a risk and to set up their own businesses, and this is one way of encouraging them to do so.
Neil Carmichael (Stroud) (Con)
It is a great honour to speak in this debate because it is an important one, given that the Budget is of decisive importance in terms of our economic future. It is also a great honour to follow the hon. Member for Belfast East (Naomi Long).
There are several reasons why this Budget is a good Budget, the first of which is that it reaffirms the need to tackle the deficit, and demonstrates that the efforts to do so have been successful. That is critical to this country’s interests, because it is about the price of money—interest—and we must secure a long-term, sustainable rate of interest for small businesses, mortgage payers and so on.
Chris Heaton-Harris
My hon. Friend will be interested to hear the views of John Cridland of the CBI, who said in the reaction to the Budget that
“the best news for businesses is that he”—
the Chancellor—
“stuck to his guns and delivered a fiscally neutral programme…by putting more money in the pockets of ordinary people, the Chancellor has provided a much-needed confidence boost.”
Neil Carmichael
I thank my hon. Friend for that intervention and helpful quotation, because it underlines my point, which all hon. Members should have firmly in their minds, because it is the key issue.
Sensible debt management goes on to secure lending at a reasonable price. We have seen how that has worked in Italy to some extent and it certainly works here. It is the real test of good government, and I am delighted that the Chancellor is pursuing it so determinedly.
The second thing I am pleased to welcome is the actions on tax avoidance. It is important that we demonstrate that we will not stand for people deliberately avoiding tax using inappropriate routes. That the new stamp duty mechanism and the mechanism to prevent tax avoidance in stamp duty are scheduled to recoup some £300 million is absolutely excellent news. That will lead to a total of £600 million, which is well worth having. We are therefore sending the right signal and getting some useful money. It is a good thing that the Chancellor has underlined that. There is annoyance in my constituency at tax avoidance, and I am pleased to be able to say that we are taking robust action. The general anti-abuse rule will be extraordinarily useful and a final threat to anybody who goes down that route in future.
Thirdly, I welcome the lifting of personal allowances, which the Liberal Democrats were right to promote. I am not going to argue about who promoted it first, but it is a useful policy for us to have and we should celebrate it.
The final thing I want to celebrate from the headline announcements is the action taken on child benefits. I received a lot of pressure in my constituency about them, right up until the last moment. One person came to visit me in Stroud tourist office while I was doing a stint to promote tourism week. In fact, he was one of many to talk about child benefit instead of buying tickets for various excellent shows and so forth. The fact remains that we have taken action, and I celebrate that fact. The Government have done a good thing.
In my constituency, I am having a festival for manufacturing and engineering next month. I am doing so to celebrate the successes in Stroud, and there are two key messages I want to get across. First, we need to invest in our small and medium-sized sectors, particularly in manufacturing and engineering, and the Chancellor has signalled that that is the direction of travel for the Budget and the Government. Secondly, I want to signal the importance of young people getting involved in manufacturing and engineering, because they need to think about manufacturing and engineering as a career. Again, he has signalled that that is a key part of the Government’s economic strategy. He has signalled many things, but those are certainly the two that matter most to my constituency.
Chris Heaton-Harris
I appreciate my hon. Friend for giving way a second time. I rise to help him with yet another quote, this time from Paul Everitt of the Society of Motor Manufacturers and Traders, who says that these Budget measures
“will trigger substantial extra business investment in the years ahead.”
That is obviously a solidly good thing.
Neil Carmichael
That is another first-class quote from my hon. Friend. He and I agree about many things, and certainly about this. I thank him very much for underlining my point again.
I want to canter through various critical measures announced in the Budget. One concerns infrastructure. It is absolutely right that we invest in infrastructure. The national infrastructure plan is a first-class document that signals the Government’s commitment to taking these measures. The recent announcement, confirmed in the Budget, about the possibility of private firms taking over roads is absolutely right. I would say, however, that although the Government are rightly reviewing the private finance initiative—it is far too cumbersome, has left us with a lot of debt and has created difficulties with procurement and so forth—we have to enable the private sector to invest more easily in infrastructure. Whatever the outcome of the review—I hope it is a robust review in terms of changing the PFI—we must still encourage the private and public sectors to work together to leverage in the money that we desperately need to improve our infrastructure.
On technology, it is great news that we will have a centre for aviation. I hope that it is in Stroud—it would be very convenient for Airbus just down the road—but wherever it is, it is important that we give that platform for development and technology. Technology matters, so I will throw in a comment about broadband, because it, too, is part of this story of ensuring that we are technologically advanced. I visited a firm called Jatech in my constituency last week. It is producing some excellent products for data management, and lots of different industries and firms are accessing that information. That means good technology in the computer and broadband industry. We need to celebrate those things too.
We had a great debate last week in Westminster Hall on UK Trade & Investment. We need to ensure that this organisation continues to do a lot of good work, so I am pleased that the Government are talking sensibly and robustly about encouraging exports and helping firms find office space and so forth. These measures in the Budget draw our attention to the need to export, because we certainly need to do that. At the end of the day, it is no good looking at Germany and saying, “Well, they’re doing better than us,” and putting our heads in the sand. We have to do as well as Germany and then better still. That is this country’s main mission on economics and growth. Let us ensure that we can promote that.
Energy is a critical issue. Again, the Government are right to talk robustly about investment in energy. The Chancellor is absolutely right to talk about supporting the oil and gas industry. That is great news for firms in my constituency supplying those sectors, notably in Brazil. For example, a firm in Eastington, Arc, is doing extraordinarily well. However, we need to provide a market opportunity for new forms of energy and even new forms of storing electricity. We need to think about that. If we can create market conditions where firms feel comfortable about investing in new technology that has not yet properly taken off, but which can add value to our energy infrastructure and provide that platform, so much the better.
Lord Heseltine will be talking about bringing the private sector and Government together—absolutely, and it is great that he is looking at implementing an industrial strategy, as it were, and how that could best be done. There are some good examples of what can be done in countries such as Germany—I mention Germany again, but it is worth looking at other countries, especially when they are doing so well. I remind the House of Germany’s market penetration in countries where we might not normally expect it, such as China and India, and so forth. We have to understand how the Germans do that and learn a few lessons from them. That is something that the Treasury, the Department for Business, Innovation and Skills and other agencies of Government would do well to consider.
The Chancellor quite properly referred to education and training, which we really have to focus on. I am absolutely delighted that, in the Budget and elsewhere, the Government have made a lot of the importance of skills training and education. The Chancellor said that we could put all the fiscal measures in place, but we really need the people to make it work—he did not use those words exactly, but that is the point he was trying to get at. We therefore have to do it. We have to ensure that the resource we have in this country—our people, all of them—have access to decent education, which will enable them to adapt and develop in their careers. It is no longer the case that people just turn up, do a job and then retire; this is about a process of development.
I want to talk a bit about banking. It is essential that we manage to get more money into the right places. One of the things about monetarism in the ’70s and ’80s is that it was quite a blunt instrument, as is quantitative easing, so we have to ensure that we get money into the right places. The issue of banking constantly recurs. The Government have mentioned a large number of measures that they intend to take, not least the national loan guarantee scheme. That is absolutely brilliant and good news, and I look forward to that. However, we need more banks, with a greater variety of offerings and more specialisms in appropriate sectors, and more competition in the banking sector. We also need to be alert to new ways of financing firms and encourage them to think about new ways of doing that. It is not just about the banks, although they need to improve their lending; it is also about firms themselves and the cultural change we need to bring about to encourage small and medium-sized businesses to think out of the box when it comes to borrowing money.
I finish with a comment about the business finance partnership, which is a great scheme. Indeed, the Chancellor mentioned it today, with £100 million in the Budget for non-traditional lending, which is exactly the sort of thing I am thinking about. It is also important that we continue to recognise, understand and promote the development of supply chains, because they are critical in the SME sector—they really do matter. Interpreting how supply chains will develop, recognising where the blockages are and understanding them as part of the export issue to which I referred will enable growth to take place, because the component parts of the chain will understand that process and be ready to support and buy from each other.
This is a good Budget, but there is a lot still to do.
Energy and Climate Change
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Chris Heaton-Harris (Daventry) (Con)
It is such a pleasure to follow my hon. Friend the Member for Warrington South (David Mowat), who is a great mind in all areas of energy and one of the more assiduous Members of the House when it comes to constituency work, I am told.
I welcome the hon. Member for North Norfolk (Norman Lamb), who is standing in on behalf of Department of Energy and Climate Change Ministers. So far in this debate, the Government business managers have replied, probably better than most of the Ministers would have been able to do on their own, so I welcome the hon. Gentleman. He should be aware that the Secretary of State for Energy and Climate Change has a history of getting people to stand in for him in various matters, but I trust that his Christmas present from the Secretary of State will be slightly nicer than others that he might have given in the past.
Like my hon. Friend the Member for Montgomeryshire (Glyn Davies), I am suffering from a spate of wind farm applications in my constituency. For years I have been campaigning against them. We should have gone nuclear a lot earlier, as my hon. Friend the Member for Warrington South said. There is a fantastic quote in a very good book, “Let Them Eat Carbon” by Matthew Sinclair of the Taxpayers Alliance: “Renewable energy is plagued by old problems. Whilst the wind and the sun are free, using them to supply energy when and where we need it to power a modern economy is extremely expensive.”
We all know that, and even the hon. Member for Brighton, Pavilion (Caroline Lucas) would have to recognise it, so why do we keep trying to foist onshore wind farms on to areas of low wind speed, where they devastate areas of natural beauty? I guess it is because wind was the only game in town for a long time and its lobbyists are among the best.
I thought that in the spirit of localism, it would be a good idea to give power to local authorities, so I introduced a ten-minute rule Bill, the Onshore Wind Turbines (Proximity of Habitation) Bill a number of months ago. It languishes, I think, at No. 13 for the next Friday sitting that we might have, so is unlikely to see the light of day in this Session. However, I would like to think that, like the gubernator of California, it will be back in some form in the future. I offer it to Ministers as a way forward in trying to solve some of the problems by letting local councils decide the correct proximity of wind turbines to habitation.
Why am I so interested in this? In Daventry district, 19 sites are being looked at, are in the planning stage or are on appeal for wind turbines, most of which would be about 126.5 m high, roughly the size of the London Eye, and in a beautiful, green part of rolling English countryside. I am against the turbines because they simply do not work. Last December was one of the coldest periods on record, but it was also remarkably still. The turbines barely produced any energy and we needed to use all the other carbon-eating technologies.
Glyn Davies
Does my hon. Friend agree that the sheer antipathy to wind farm development right across Britain is turning people against the development of renewable energy? It is transforming antipathy to onshore wind into antipathy to renewable energy.
Chris Heaton-Harris
I absolutely concur. I know from my mailbag and from the number of e-mails I receive every day on the matter that people are turning against renewables of just about every type because wind turbines are, among other things, so badly sold. Onshore wind generation requires a 100% back-up of carbon-burning technology or nuclear energy, should the wind not blow, and in addition to the devastation of the visual environment there are the problems of noise and flicker. They are the wrong renewables choice.
That brings me to some unbelievably bad news I received yesterday about my constituency. There was—how can I put it?—a disgraceful, vulgar, disrespectful, terrible, shameful, contemptible, detestable, dishonourable, disreputable, ignoble, mean, offensive, scandalous, shabby, shady, shocking, shoddy, unworthy, deplorable, awful, calamitous, dire, disastrous, distressing, dreadful, faulty, grim, horrifying, lamentable, lousy, mournful, pitiable, regrettable, reprehensible, rotten, sad, sickening, tragic, woeful, wretched, abhorrent, abominable, crass, despicable, inferior, odious, unworthy, atrocious, heinous, loathsome, revolting, scandalous, squalid, tawdry, cowardly, opprobrious, insulting, malevolent, scurrilous and basically stinkingly poor decision of the Planning Inspectorate to approve the Kelmarsh wind farm, which will devastate huge swathes of beautiful rural Northamptonshire. It used an old-fashioned east midlands regional plan, which I thought we had abolished in the Localism Act 2011, did not take into account any emerging policy in this area, not least the national planning policy framework, and used the targets, which the hon. Member for Brighton, Pavilion is so passionately attached to, of getting 20% of our energy from renewables by 2020.
It is unbelievable that one planning inspector can overrule all elements of democracy, local and national, including parish and district council opinion, MPs, Lords and Members of the European Parliament, and say, “Well, actually, because of these particularly poor policies we have, forget democracy. This is what you are having.” That is what upsets people about the onshore wind industry. The sooner that can change, the better.
Significant damage will be done to the local environment, and even more will be done to what my constituents might think comes with the Localism Act. If I were a Secretary of State in the Department for Energy and Climate Change and was driving down the A14, I really would put my foot down. A three-point penalty easily outweighs what I and my constituents think of him, this decision and the policy it is based on. That said, even I wish the Secretary of State and everyone else in the House a very merry Christmas.