Budget Resolutions and Economic Situation

David Rutley Excerpts

Wednesday 19th March 2014 Commons Chamber

[Mr Mark Hoban (Fareham) (Con)]

It is a pleasure to follow the right hon. Member for Newcastle upon Tyne East (Mr Brown). As someone who was born and brought up in the north-east, I too understand the deep-seated challenges that the region faces, and I hope that the emphasis in the Budget on rebuilding the manufacturing sector and investing in high levels of skills will make some progress towards tackling those problems.

The Chancellor is absolutely right to highlight the progress that has been made since we came to office in 2010, but also the further progress that we need to make. Our job is not done, and that is why the reforms announced by the Chancellor today, which refer to the need to strengthen the roles of the makers, the doers and the savers, are vital if we are to secure the future of our economy in a competitive world.

I want to highlight some of the progress that we have made. Not much has been said about the unemployment figures that have been published today. We have seen a fall in the unemployment numbers, according to both the claimant count and the labour force survey. We have also seen a big increase in the number of people in work. Record numbers of women are in work. Often the Opposition’s criticism is that these jobs are temporary or part time, but the reality is that employment increased by nearly 460,000 last year, and 430,000 of those jobs are full time. During the last year, we have seen a contraction in the number of temporary jobs in the economy, and therefore a significant increase in the number of permanent jobs in the economy.

[David Rutley (Macclesfield) (Con)]

It is appropriate to recognise the important work that my hon. Friend made as a Minister in helping to move this agenda forward, which was a real contribution. On the important point that he has raised, does he recognise that there is also an increase in the number of full-time self-employed people, who have made a conscious decision that they want to have a real say in the future of their own employment?

[Mr Hoban]

My hon. Friend is absolutely right. The number of people who want to take control over their own lives and employment, and who want the security that comes from self-employment, is significant, and the number of schemes that we have introduced to help young people find self-employment as a route out of poverty and unemployment have been a huge benefit to those who want to set up their own businesses.

The dynamism that we have seen in the private sector, which has led to this increase in employment, has been coupled with welfare reform—a key part of our long-term economic plan. Welfare reform has sharpened the incentive to work, and we expect more of those who are out of work, too. We have brought forward the point when we work with lone parents before their youngest child starts school, so that they are better prepared to start work rather than remain on benefit. For far too long, people who have been out of work through illness have been written off by the system and expected to live on benefits for the rest of their working life. We have been working with them to ensure that they get into employment so that they can look after themselves and their families, and achieve the dignity that we so often take for granted.

The recovery in employment is a product of a strong and dynamic private sector. I welcome the measures that the Chancellor has announced today to encourage business investment and to double the annual investment allowance to £500,000. That will encourage businesses in my constituency that are strong, growing, dynamic manufacturing businesses to invest more in capital equipment. They are aided by the reduction in corporation tax. We should not forget the importance that that has in sending a signal to businesses overseas that the UK is open for business and a place where they should do business. The reduction in corporation tax is mirrored by measures around the employment allowance and scrapping national insurance for young workers under the age of 21. These tax changes, along with cuts to red tape, the investment in skills and the reform of training, are part of our long-term plan to sustain the economy and job creation.

I want to spend a few minutes on the savings measures announced in the Budget. Since they took office, this Government have made radical reforms to pensions and savings. They ended compulsory annuitisation and we are seeing the successful roll-out of auto-enrolment, which will give many people their first chance to build up a pension pot for their retirement. In the next Parliament, we will be launching a single-tier pension, which will mean that people will retire on a pension above the level of means-tested benefits. We have seen the launch of the Money Advice Service and strengthened consumer protection through greater powers for the Financial Conduct Authority. They are important steps that will help reform the savings landscape, and as the Chancellor said they also create a fresh platform for radical reform of pension savings.

When compulsory annuitisation was scrapped, people could take full advantage of the flexibility of income drawdown products only if they could demonstrate that they would not be entitled to means-tested benefits. That meant they had to have a guaranteed income of £20,000 a year. That of course predated the introduction of a single-tier pension, and the limit was set at an amount that ensured that people would not fall back on those means-tested benefits. Now that the single-tier pension is in place, it is right to reduce that amount to £12,000 this year.

We also know that for many consumers it is difficult to shop around to buy an annuity. They are bewildered by the choice in the market, and annuities are often the only product that many of them can buy. Recent surveys have shown just how badly off consumers are as a consequence of not shopping around. I think that the Chancellor’s announcement today about the simplification of the way people can use their defined contribution pension pot will radically transform the insurance and savings market. It will force insurance companies to demonstrate that their products are good value, and create room for innovation for others to come up with products that will help people maximise their income in retirement.