Budget Resolutions and Economic Situation

David Rutley Excerpts

Thursday 21st March 2013 Commons Chamber

[Mr Tobias Ellwood (Bournemouth East) (Con)]

It is a pleasure to participate in this important debate.

Labour has had its moment to spell out what it would do. We heard a lot of noise yesterday, and we have heard a lot today. What we thought was Keynesian economics was actually Hayek’s economic policy, because Labour is saying “Let’s do absolutely nothing.” It is welcome news that in the coalition’s fourth Budget, following the biggest financial crisis in our history, the deficit has been reduced by one third, employment is at record levels and private sector jobs are finally replacing those in the public sector by a ratio of 6:1. It is a difficult climate out there.

[David Rutley (Macclesfield) (Con)]

Does my hon. Friend think that one reason why Opposition Members are so gloomy is that they have failed to notice that the International Monetary Fund growth forecast for France and Germany for this year and next is lower than that for the UK?

[Mr Ellwood]

My hon. Friend makes the point I was about to come on to. We are suffering from international gloom. Along with other major economies around the world, such as France, Germany, Japan and the United States, we are faring better, despite the problems of high oil and commodity prices and the frustratingly slow resolution of the eurozone crisis. That is thanks to the Government’s strategy of monetary and fiscal responsibility, along with supply-side reform.

In layman’s terms, monetary policies reflect the price the Government pay to borrow money and the total supply of money itself. It is thanks to our low interest rates that the cost of borrowing for individuals, banks and the Government is low. That helps to keep inflation low and provides the stability that investors need for confidence in the markets. On fiscal policy—how much money goes into the pot through taxes, and what comes out to influence economic activity—this Government are smaller than the previous Government. They have cut waste and are costing the taxpayer less, which is very positive. Indeed, the public sector borrowing requirement is down by a third from its post-war peak, only three years ago, of 11.2% of GDP.

There are many incentives in the Budget to help influence economic activity. I will mention just three main measures: the introduction of the £10,000 personal allowance, which essentially is a £700 tax cut for 24 million people; the new £2,000 employment allowance; and a cut in corporation tax to just 20%, which makes us one of the most competitive economies in the G20. They are all signs that Britain is open again for business.

There is not enough time to go through the other key aspects of the Budget that were mentioned in yesterday’s debate. The Help to Buy scheme, the new mortgage guarantee scheme, the cancellation of the 3p rise in fuel duty and the introduction of tax-free child care are all very welcome. I particularly welcome the £3 billion capital spending commitment and the £1.6 billion of sector-targeted funding, some of which I hope will come to my constituency of Bournemouth East, and to Dorset, which is developing an international reputation in aerospace industries and the digital economy. Indeed, it is nicknamed the silicon beach of south England.

The 0.7% GDP target for overseas development assistance spending is an historic achievement and sends an important message to the rest of the world about our lead role in the international community. Unsurprisingly, given the waste and mismanagement under the last Government, some are sceptical about how the money is being spent, but it is clear how ODA funds can be spent. It matters not who signs the cheques; what matters is what the project does, although traditionally the Department for International Development has signed them. On the modern battlefield, however, it is no longer just about defeating the enemy, but about giving the people who have been liberated the skills to look after themselves. Clearly, war fighting does not qualify for ODA funding—that would be wrong—but peacekeeping and nation-building tasks do.

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[Andrew Griffiths (Burton) (Con)]

I recognise that time is short so I will do my level best to keep my comments as brief as possible. I speak as the Member of Parliament for Burton, the home of British brewing, and as the chairman of the all-party parliamentary beer group. It is therefore incumbent on me to put on record my thanks, and those of the brewing industry, for the Chancellor’s momentous decision yesterday to scrap the beer duty escalator and cut beer duty by 1p. We cannot underestimate the importance of the decision for brewers, for publicans and for beer drinkers across the country.

In his speech today, the shadow Chancellor dismissed the 1p cut in a bit of a flippant way, but I think that the 1,745 people who are employed in brewing and pubs in his constituency will be hugely grateful to the Chancellor, who has shown himself to be on the side of the publicans and beer drinkers of this country. The previous Chancellor of the Exchequer appeared on posters in pubs up and down the country stating that he was “barred from this pub”, because his Government had chosen to introduce the beer duty escalator, which has resulted in beer duty rising by an incredible 42% since 2008. That has contributed to the closure of many of our communities’ pubs in that period.

I am therefore delighted to support a coalition Government who have done more for brewers and pubs than any other Government for a generation. I went to the House of Commons Library yesterday and spoke to the Treasury expert. I asked him when a Chancellor had last cut the duty on beer. He replied, “Mr Griffiths, this might take some time, as it was so long ago. I shall have to go away and research it.” He came back with the answer: Derick Heathcoat-Amory was the last Chancellor to cut the duty on beer, in 1959. Someone who was just old enough to enjoy a pint of great British beer at that reduced price in 1959 would now be 72 years old.

It is important to applaud the campaign that has led to these changes. As the chairman of the all-party parliamentary beer group, I want to thank colleagues from all across the House who have supported it. Members on both sides have worked incredibly hard on behalf of their brewers, publicans and beer lovers. We all recognise the importance of the community pub and the role it plays in the heart of our constituencies. This measure provides us with a real opportunity to support those pubs.

[David Rutley]

I join many others in paying tribute to the great work my hon. Friend has taken forward. I received one tweet yesterday from the Wharf in Macclesfield saying this was

“a good Budget for pubs, the brewing trade and all industry”.

Has my hon. Friend received similar plaudits from people across the country?

[Andrew Griffiths]

I thank my hon. Friend for the support he has given to pubs and breweries as part of this campaign. I agree: I have been overwhelmed by the number of publicans, brewers and members of the Campaign for Real Ale and beer lovers who have welcomed this announcement. He quotes one brewer and I will quote another—Belinda Sutton from Elgood & Sons in Wisbech in Cambridgeshire who said:

“The result could be the saving of our brewery, as this was just what we needed to…stimulate trade in our pubs and hopefully increase production.”

That is so important: every brewery and every pub in our constituency are important employers, so it is fantastic that we can give them this boost. I am absolutely sure that when this cut is introduced on Sunday, beer drinkers across the country will be raising a glass to the Chancellor and toasting his health.

I am hugely sorry that the Economic Secretary is not in his place on the Front Bench, as we owe him a huge debt of gratitude. Within days of him becoming a Minister—I think it was his first ministerial duty—he spoke in a Backbench Business Committee debate to which many Members contributed. He said then that he was listening. He is a listening Minister who has listened on behalf of pubs and brewers across the land.

I would also like to pay tribute to CAMRA and its thousands of supporters who took part in this campaign and who participated in the mass lobby organised by Emily Ryan and Jonathan Mail to explain to Members of Parliament just how important their community pubs and great British beer are to them. I commend, too, the work of the Beer and Pub Association, which works tirelessly to build a bright future for pubs and breweries across the country.

I end my comments there. Let me just say that this is a great Budget for brewers, a great Budget for beer and a great Budget for beer drinkers in Britain.

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[David Rutley (Macclesfield) (Con)]

I am sorry to disappoint the House, but I will not be speaking about beer—[Hon. Members: “Oh!] I said I was sorry. I will not be speaking about spirits either, but I will—

[George Freeman]

Lift our spirits!

[David Rutley]

I will indeed lift our spirits. Given the co-operation of my hon. Friend, I will also say a little about life sciences. Let me begin, however, by joining other Government Members in welcoming a Budget which has delivered a positive response that recognises the needs of hard-working people, and which, as others have pointed out, has clearly demonstrated that the doors of British business are firmly open.

It is sometimes wondered whether “To intervene, or not to intervene” is the question when it comes to industrial policy. I believe that in normal free, competitive markets intervention should be minimal, but that, given the burden of regulation that was imposed on the British economy for 13 years by the Labour Government, the question needs to change from whether there should be intervention to how that intervention can take place effectively. For me, the answer to that question is simple: we need to flatten the barriers to growth, which is exactly what Government Members are determined to do.

We need only consider the recent experience of our northern neighbours to see how that can be achieved. Sweden has enjoyed tremendous success since the mid-1990s with an ethos of deregulation across the economy. Estonia had 2,000 enterprises in 1992; by the end of 1994, the figure had ballooned to 70,000. By 2003, an economic basket case with inflation of 1,000% in 1992 had spawned the invention of Skype. There are clear lessons to be learnt from those northern neighbours, the most fundamental being that if industrial policy is to work, there needs to be a broadly “horizontal” approach. That does not mean being laid back, but it does mean having a more laissez-faire confidence in the ability of businesses to identify and satisfy customer demand—as they are best placed to do—and providing the right foundation for enterprise to flourish across the board, rather than backing policies in the sense of picking winners. That is the course the Government have charted, and I am delighted they are sticking to it.

We have an industrial policy with a foundation that encourages enterprise across the board and, in key sectors, focuses on the removal of the roadblocks that prevent growth, rather than the line-by-line, multi-targeting Brownite plan for daily tactical interventions that we have seen in so many parts of the public sector. We want that foundation to consist of low taxes, a high skills base and deregulated, competitive markets, and those are being put in place.

The Government are making good progress. Before the Budget, we were on track to have the lowest corporation tax in the G7; now, as a result of the Budget, we are on track to have the lowest corporation tax in the G20—20%—by 2015. The new £2,000 employment allowance will help to spur growth and build on the Government’s successful record of creating jobs in the private sector: the private sector, not the public sector. In an enterprising constituency such as Macclesfield, where an unusually high proportion of the population are self-employed, reforms like those can tip the balance for sole traders, encouraging them to incorporate themselves in businesses that can grow, and for the self-employed, encouraging them to become regular employers.

Those are positive steps, and the Red Book goes further. It provides an important update on the progress the Government are making with their industrial policy, and demonstrates that they are breaking down barriers in certain sectors of industry and in certain local areas. I welcome the creation of the single local growth fund, which will be devolved to local level through local growth deals.

Some industrial sectors will always have greater prospects for growth than others. The Government’s industrial strategy, announced last autumn, identified 11 broad sectors that the Government want to support, including advanced manufacturing, creative industries and life sciences. That approach is bearing fruit in the case of life sciences. The Government’s “One Year On” review shows that deregulation is helping to reduce the time taken to set up clinical trials from 600 days to a 70-day benchmark. Those are important steps which need to be mirrored in many other sectors.

This week we were given challenging news in AstraZeneca’s restructuring strategy statement. The good news is that, according to its plans, the Macclesfield manufacturing site will be secure, retaining 1,800 jobs which will be safeguarded for years to come. However, AstraZeneca also announced changes in the research and development plant at Alderley Park. The fact that 700 jobs have been safeguarded there is important, but the R and D facilities will move to Cambridge, which has created uncertainty for the employees. I am working with AstraZeneca to ensure that there are plans to provide them with proper careers advice and the support that they need.

The next priority—a vital priority for Alderley Park, for the sub-region, for the north-west and for the UK economy—is to ensure that the site has a vibrant future. The way in which to do that, and the way in which we are committed to doing it, is to provide a bio-science park where other businesses can go to work. We are working with the Government, and I am delighted to say that we have set up a taskforce. Evidence from other sites where the experience has been similar suggests that there will be spin-out operations.

We need to harness that energy, and ensure that we secure money from the regional growth fund on an emergency basis so that we can support this vital part of the UK’s life sciences sector. I am committed to doing that and to working with the Government, and I will knock on every door to make sure we receive the support that is required.

This Budget has been a huge success for British business, and I am sure that it will lead to further successes if we break down barriers, not just in life sciences but in many other sectors.