Budget Resolutions and Economic Situation

David Ruffley Excerpts

Friday 20th March 2015 Commons Chamber

[Mr David Ruffley (Bury St Edmunds) (Con)]

A Conservative Chancellor is at the height of his powers. We see falling inflation, falling unemployment, rising living standards and healthy growth, built on the basis of deficit reduction and falling borrowing.

That was, of course, the legacy of my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke) in the 1990s. I was his special adviser then, and he is the man who is responsible for my being in this place. However, my right hon. Friend the current Chancellor can boast of an even greater achievement than that legacy. He has achieved stability, and put the country on the path from austerity to prosperity, from a much more difficult starting point: the great recession. On the basis of the Budget statement and the subsequent announcements that we have heard over the past few days, I believe that the current Chancellor will receive a better reward than our party received in 1997. He certainly deserves it.

I have spent about a dozen of my 18 years as a Member of Parliament focusing on Treasury matters, and during that time I have had my fair share of Financial Times headlines quoting what I have said. I was therefore grateful when, the day after this week’s Budget, the paper quoted me as praising it for being a “grown-up Budget”, which is my valedictory FT headline. I described the Budget in that way because it is demonstrably not a giveaway or a populist Budget, but a Budget that is in the national economic interest.

One of my few regrets during my time in this place is that too many of our constituents, and too many in the media, believe that we are all the same—that there is not much difference between the parties. That is probably partly due to their sense that a number of politicians and Governments are buffeted by global economic forces that they may not understand, much less control. I think that that is wrong. I have a slightly more idealistic view of nationally important economic statements such as Budgets: I believe that they should have a moral purpose.

I should add, in a spirit of bipartisanship, that the Budgets of the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) were momentous events, although I did not agree with many of the measures that he introduced. I often thought that, in the noughties, he relied too much on the flow of very buoyant corporate tax receipts that were never going to last for ever, but on the back of which he spent too much. That is something that even Tony Blair has acknowledged, believing—and I think that, on this occasion, he was right—that in 2005 we could see the beginning of the opening up of a structural deficit in the Government’s public finances. Be that as it may, the fact remains that the former Labour Chancellor, ably assisted by the right hon. Member for Morley and Outwood (Ed Balls), undoubtedly had a moral vision of where the country was going.

[Emily Thornberry]

I was interested to hear the hon. Gentleman say that he believed that the previous Labour Government had spent too much. He talks of being on the record, and of making a valedictory address. Is he on the record as spelling out to the former Prime Minister, or the former Chancellor, any areas in which we were spending too much, and urging us to spend less? Were there, for instance, any hospitals that he did not want us to open?

[Mr Ruffley]

I will give one example: middle-class welfare-ism, as it is often described. We all supported the introduction of working tax credit, a repackaging of income support and family credit, as an in-work benefit for those on low pay—it was, and is, a good thing—but it extended much too far up the income scale, and a great deal of money was spent. Most economic analysts would not deny that that spending judgment opened up a structural deficit. The country was spending more than it could afford.

Let me return to my key point. I believe that valid differences, based on a moral outlook, are exhibited in this week’s Budget, and I will shortly explain why I think that it has purpose and deserves to be praised for that. Before I do so, however, let me say that during my time here, the economic Front Benchers of the Labour party have certainly made us think. I am reminded of what Edmund Burke said in his “Reflections on the Revolution in France”. It serves as a description not just of my experience, but of what I think the Chamber is and should be about. Burke said:

“He that wrestles with us strengthens our nerves and sharpens our skill. Our antagonist is our helper.”

I want to make two points in the context of the clash of ideas to which I have referred,. One relates to the part of the country that I represent, Bury St Edmunds in East Anglia. It was looked after in the Budget in two ways. First, there was the announcement that there would be a reform of business rates, and that a considered consultation on the matter would take place in the next 12 months. Why is that important? It is important because high-quality market towns such as Bury St Edmunds rely on the shops and small businesses in the town centre. They have been hit disproportionately by the great boom in internet shopping, and we have had to acknowledge that they have significant on-costs if their business is supported by bricks rather than by clicks. The basis of business rate taxation needs to be looked at to ensure the future of our market towns. The other point is that a car is a necessity, not a luxury, in areas such as Suffolk, so another freeze in fuel duty—the longest freeze for 20 years—is warmly welcomed in the East Anglia economy.

I want to make a general point about job creation. We know that 1,000 jobs are being created every day under the coalition Government, of which 80% are full time and 80% are in high-skill occupations. The apprenticeship scheme, which will be seen as one of the great achievements of this coalition Administration, needs to permeate more into rural economies and areas like as mine. The excellent West Suffolk college should do more to offer courses in skilled occupations, increasingly levering in the apprenticeship scheme, so that we can have more high-skill jobs in Bury St Edmunds, Stowmarket and surrounding areas. It seems to me and many others that while Cambridge has expanded north towards Ely and west towards Huntingdonshire, not enough of the Cambridge effect has spilled over eastwards down the A14 to west and mid Suffolk, as we wish it to do.

Ours is a relatively well-heeled and successful part of the country. Like you, Mr Deputy Speaker, I was born and raised a Lancastrian. I understand that the north of England has earned a lot of brass for this country during the past couple of centuries. I am delighted that the Chancellor of the Exchequer has understood that and has been so imaginative in putting together his northern powerhouse proposition. I welcome the pilot for Greater Manchester to keep 100% of additional business rate revenue, and the devolved powers that he will give to transport for northern areas and, in Manchester’s case, on NHS and training budgets. We want that proposal to be extended to Yorkshire and the north-east, as well as to those parts of the midlands that have not yet had the benefits that East Anglia and the south-east of England have received.

My second point relates to the big fiscal judgment in the Budget, which is that we will run an overall fiscal surplus. We will not just balance the current budget by 2018-19, but have capital and current surpluses by 2020. The surplus will not be as big as the £23 billion-plus projected at the time of the last autumn statement, but it will be several billion pounds—and such a relaxation of the fiscal position is good—because we as a nation absolutely must run a surplus. Why? Because as anyone will tell you in the City, where I shall return after May, there will one day be another recession. There just will be, no matter who is in power. Above all else, what we must learn from the past 10 years is that we need to be prepared. If we do not have a surplus for a rainy day, the cuts and the squeeze on living standards will be that much greater.

At the same time as wanting to run a surplus, the current Chancellor has very clearly set out two paths that are consistent with core, right-of-centre Conservative principles—the first is that individuals who work should be allowed to keep more of what they earn to spend as they choose, not as the state chooses; and the second is that individuals must be allowed to keep more of what they save to do with what they decide, not what the state decides. That is why two sets of measures in the Budget need to be praised. One set involves the new personal savings allowance, taking 17 million people out of tax on savings, which is a modest start to bolstering the savings culture. There is also the freedom for 5 million annuity policyholders to get out of their policies in a year’s time if they so choose, and the flexible ISA. The other set relates to income tax. The ambition of taking lower-paid people out of tax means that in two years’ time the personal allowance will be £11,000. That will help not just the low-paid; everybody, including those who pay income tax at the 20p and 40p rates, will receive a tax cut.

Finally, I would say that I leave the House wiser and more optimistic about this country’s economic health, its future and the ability of its citizens to compete in the world. I feel hugely grateful for, and very privileged to have had, the opportunity to represent the most beautiful constituency in the country, Bury St Edmunds. I still believe that this country is, and I hope it will remain, the greatest on earth.