Capital Gains Tax (Rates)

Claire Perry Excerpts

Wednesday 23rd June 2010 Commons Chamber

[Huw Irranca-Davies]

Well done England. Keep it going. I am sure that the hon. Gentleman will join me in wishing the Welsh team all the best in the repeat match against the All Blacks at the weekend.

I do not often get depressed in this place, but I was utterly depressed yesterday as the Budget statement approached, and not for the obvious reasons. First, I was depressed because we were sitting on the Opposition Benches. We will say what we can, and we will do our best to articulate a different vision of the best way forward and the practical measures that should be taken, but the truth is that we are now in opposition. Secondly, I was depressed because the members of the coalition appear to have closed their minds to any alternative argument. If they are right, and if in a year or two I see that my communities have not been damaged disproportionately by the measures that they are proposing, I will acknowledge that. However, I was surprised to note that—as has already been pointed out—the poverty commitment in the Budget extends for only two years.

[Claire Perry (Devizes) (Con)]

Will the hon. Gentleman give way?

[Huw Irranca-Davies]

In a moment.

The previous Government had a long-standing commitment to tackling poverty, and, although they were not succeeding in everything, they were doing a great deal to lift people out of it. That commitment could have been one of the fundamental principles in the Budget even in a time of austerity—a time of “We’re all in it together”—and not just for two years, but for the five years guaranteed by the 55% breakaway option. I hope that the hon. Lady will join me in saying to her Front Benchers, “Come forward with the figures that show that poverty is not going to increase for the five-year life of this Parliament.”

[Claire Perry]

Thank you very much for giving way, and I am looking forward to hearing what else you have to say. What you have said so far would, however, have much more credibility if you had not represented a Government who tried a different approach for 13 years, with high-falutin’ goals to reduce poverty to help your constituents, and who failed miserably in that. Is the hon. Gentleman truly saying that in his view there should be no cuts—that the broken economic model should roll on as before and that that is the way to repair the economy—or does he have some idea of where the cuts should have fallen?

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Before the hon. Gentleman replies, may I just say to the hon. Lady, first, that interventions are supposed to be brief—I hope that all Members will take note of that? Secondly, on the use of “you”, may I remind the hon. Lady that her comments are not addressed to me in the Chair? Given that we have been back in the Chamber for quite some time now, I think Members need to come back to addressing each other correctly when putting questions.

--- Later in debate ---

[Geoffrey Clifton-Brown]

No Government would willingly take such action, as my hon. Friend the Member for Caithness, Sutherland and Easter Ross said. My right hon. Friend the Chancellor had to set out a host of tough choices yesterday, but I do not think that the Budget was ideological. The hon. Gentleman has to be honest with himself when he thinks about ways to deal with the deficit. We should not underestimate the scale of the problem. This year’s public sector net borrowing requirement of £149 billion is almost the equivalent of the combined budget for health and education. The scale of the deficit explains why my right hon. Friend the Chancellor had to make really difficult and brave decisions, but by taking such action now, I hope that we will be able to return to a situation in which we can start to help some of the poorest and most vulnerable people in our society, which is what any responsible Government ought to be about.

We will get out of this mess by promoting growth in the private sector and rebalancing our economy. We need to get Britain innovating and making things, and to sell our goods and services to the rest of the world. All the calculations in the Budget are predicated on a rate of growth, and it is the private sector that will deliver that growth. By taking the right measures in the Budget and concentrating on the right things, we might be able to exceed the growth targets set out by my right hon. Friend the Chancellor yesterday. Labour Chancellors have been pretty bad at forecasting growth rates. My right hon. Friend, in line with the Office for Budget Responsibility, has given very prudent forecasts of growth rates. I sincerely hope that we will be able to exceed those forecasts.

Until the election, I served as the shadow Minister for international trade and development, and I know that the actions of the Chancellor in supporting exporters will be critical to how our country moves forward in the coming months and years. After all, in the years from 1996 to 2004, firms that were new to exporting achieved, on average, a 34% increase in productivity in their year of entry—the very fact of their going into exporting made them increase their productivity—and 60% of the UK’s productivity growth was attributable to exporting firms. It is therefore welcome that the Chancellor mentioned exports twice in his speech yesterday.

UK Trade & Investment is the Government’s arm that encourages exports and foreign direct investment. Its chief executive, Andrew Cahn, worked under seven different Trade Ministers in the previous Government. I hope that we will not have that revolving door in the present Government and that we will have consistency of Ministers, who will be able to look at our exports problem and achieve considerable improvement. In the years of Labour Government, UKTI’s budget was cut consistently.

Manufacturing accounts for more than half of our country’s exports. Labour Members will not like the figures I give, but they are absolutely true. In 1997, manufacturing employed 4.19 million people, but by December 2009, under Labour’s stewardship, that number had fallen to only 2.592 million. In other words, there had been a significant decline in the number of people employed in the manufacturing sector. That happened despite the value of sterling falling 24% between July 2007 and the present day. Perhaps one of the most devastating of figures pertaining to the period of Labour stewardship is on our trade deficit in goods, which has increased from £3.1 billion to more than £21 billion.

If Labour Members want to know the reason why we had our longest and deepest recession of our post-war history, it is that the Labour Government failed to support sectors of our economy that provide sustainable economic growth. If we are to exit the grips of recession, cushion the impact of austerity and have a sustainable future, exporters will be the engine room and will need to be given priority in the Chancellor’s thoughts and, indeed, across all Departments.

In his Budget statement, the Chancellor said that departmental budgets will be set out in the spending review later this year—quite rightly, he set a date for that of 20 October—with an average real reduction for unprotected Departments of 20%. Let me say to my right hon. Friend the Chancellor and my hon. Friend the Economic Secretary, who is on the Treasury Bench, that UKTI—our trade promotion body—is a rare thing: it is one of the few parts of Government that actually makes this country money. To meet the challenges of the future, to provide adequate support for our exporters and to attract FDI into this country, its budget must be protected, so that it can continue to support private sector growth and job creation in the UK.

We must also recognise that real reforms are needed to how we support our exporters and attract FDI to adapt to an ever-changing global marketplace. Those changes cannot be made without the correct budgetary support for UKTI, but the rewards for successful implementation are there. We appreciate the opportunities presented to us by having Europe on our doorstep and through our close relationship with north America. Currently, 70% of our exports go to the traditional developed markets of north America and the EU, but the financial support available for firms seeking to export to the wider and increasingly accessible world beyond that must be maintained, because estimates suggest that, by 2020, the EU and USA share of global gross domestic product will have declined to less than 40%. As was correctly identified—I tried to intervene on the shadow Chancellor—we have turbulence in our European markets and EU growth is expected to be sluggish for some time. That is why it is important that we pay due attention to rapidly expanding global markets elsewhere, which cost proportionately more to service than the easier markets of Europe and north America.

We must be proactive, not reactive. British firms must be backed to head for the second-tier cities in larger markets such as India and China. They must also look for unrealised potential in other countries first, before our competitors have won all the contracts. I looked at that problem around the world, and I found country after country where there was huge potential. The British were welcomed, our business men went out there and expressed interest, but somehow it was the Japanese, the Germans, the Americans and the Chinese who popped in and got the contracts. We must provide better support for our companies.

We must benchmark the performance of UKTI against the best of other countries, so that our trade efforts match or exceed those of our competitors. With our overseas network of embassies, we have a fantastic platform for developing British business, and we cannot afford to let departmental cuts affect their work. We need a widely respected senior figure—a FTSE ex-chairman —to go out banging the drum for the UK, selling the country around the world, and consistently to visit those markets to build up contracts.

Nationally, we must concentrate our efforts away from the regional structure introduced by the previous Government. What nonsense that was. Different regional assemblies had offices in the same city, such as Shanghai or Mumbai, all competing with one another for the same business. What a waste of taxpayers’ money, and what confusion it caused to those countries in which they were located.

[Claire Perry]

I am interested in my hon. Friend’s important proposal for a roving ambassador for British business. Does he agree that there might be potential to retread Sir Digby Jones in that role, particularly as he said yesterday after the Budget:

“I think that sign has gone up around the world saying that Britain is serious about sorting out its economic mess”?

[Geoffrey Clifton-Brown]

I am grateful to my hon. Friend. I know that she was upbraided by Mr Deputy Speaker a little while ago—it takes a long time to sort out parliamentary language, and references to “you” and the “hon. Gentleman”. She is absolutely right. I was modelling my remarks exactly on Digby Jones, who did a huge amount of work for this country, and spent an enormous amount of time travelling around the world. He had great, in-depth knowledge of huge sections of industry, having served as chairman of the CBI. We need to appoint someone of that calibre, who has the time, energy and availability to be able to do precisely that job.

As I said, the notion that RDAs should have offices around the world competing with one another led to a huge dilution of the UK brand. It caused confusion in the country in which they were located, and it did not serve our interests of attracting foreign direct investment to this country. I have no doubt that Ministers will abolish that structure rapidly, thereby producing much better results. I welcome the proposals for local enterprise partnerships, which are a huge step forward. We can help the private sector by not having a stratified structure of RDAs across the country. We need different structures in different parts of the country, to deal with the problems in each area. We must concentrate Government advice on business sectors, rather than on regions. It was complete nonsense that the Government’s car adviser was based in the north-east, unable to give advice to car manufacturers and component suppliers in Birmingham. We must concentrate on sectors, so that the automotive sector, for example, has a proper advice team in the Department for Business, Innovation and Skills.

We must try to support those sectors that the UK is good at, and see how we can improve their export structure. I say this with hesitation at the moment, but our oil sector was respected throughout the world. Our pharmaceuticals, defence and financial services sectors were respected throughout the world, too, and in line with Sir James Dyson’s recommendations, we must aim to become the No.1 high-tech exporter in Europe. We will do that by concentrating on the new, high-growth market sectors, such as those involving low-carbon and green technologies. Those are the industries of the future, and we ought to concentrate on them. We must also ensure that our universities and their basic research are world-beating, and that companies have the incentive to develop those world-beating ideas into products and services that we can sell in greater and greater quantities throughout the world.