Budget Resolutions and Economic Situation

Guto Bebb Excerpts

Thursday 21st March 2013 Commons Chamber

[Susan Elan Jones (Clwyd South) (Lab)]

I am grateful to you, Mr Deputy Speaker, for allowing me to speak in this important Budget debate. I shall make a relatively short speech, because I know that many other Members wish to speak. I make no apology for focusing on my constituency, and on the people who elected me to be their representative in Parliament.

I do not think there is a single issue in my area that people care about more than jobs, and I entirely agree with them. My constituents know that without work, there can be no community and no prosperity. Much concern has rightly been expressed about the fact that growth in our economy now stands at less than a seventh of the amount that the Chancellor anticipated in his 2010 spending review: 0.7%, rather than the 5.3% that was forecast at that time. However, I believe that we are right to be even more concerned about the fact that yesterday the Chancellor, rather alarmingly, had to admit that the growth forecast for this year had been cut in half, to just 0.6%. The forecast by the Office for Budget Responsibility that borrowing will hit £114 billion this year, instead of the already immense £108 billion that was previously forecast, should fill us all with concern, as should the fact that yesterday’s UK unemployment figures were up by 7,000 to 2.52 million.

It troubles me, in human terms, that according to the very latest unemployment figures, one person in every 20 in the economically active population aged between 16 and 64—1,770 people—in my constituency is unemployed. I believe that that figure would be even higher were it not for the serious efforts of the Welsh Government’s Jobs Growth Wales fund, which has provided 4,000 jobs for young people throughout Wales.

On the day on which a new Archbishop of Canterbury is to be enthroned, I think that we can do worse than reflect on the words of one of his great predecessors. Archbishop William Temple wrote:

“The worst evil of unemployment is in its creating in the unemployed a sense that they have fallen out of the common life. However much their physical needs may be supplied the gravest part of the trouble remains; They are not wanted!”

Those are the words of someone who lived through the great depression of the 1930s, and who realised that without the politics of one nation, our country could never have stood against fascism. They are, I believe wise and prophetic words for us today. That is why I believe that discussions about unemployment affect us all, and why unemployment can never be seen as a price worth paying. It is why I am deeply disappointed that the Chancellor did not take the step yesterday that my party would have taken by guaranteeing a job for every young person out of work for a year or more and for every adult unemployed for more than two years—funded by a fair tax on bank bonuses and changes to pensions tax relief for the very richest. That would be a far better investment than the subsidy for second homes. For Labour Members, it is the flesh and blood of one nation politics and would have been the best and fairest option.

Real action on national insurance to help small businesses take on more staff would have been the fairest option too. Any Government Members awake at this point may say, “Did you not hear what the Chancellor said yesterday?” Of course I did, and I like the idea of the national insurance cuts for employers so much that I am delighted to be a member of the party that proposed them. It is just that, in the interests of fairness, growth and getting our economy going again, I have to ask: if it matters so much to him, why will he not do it now? Why does he think that excellent local small businesses such as the Community café in Rhosymedre should not be supported this year, yet millionaires will get their tax cut from next month? Why will he not commit to a British investment bank? The hon. Member for Burton (Andrew Griffiths) spoke eloquently about the Campaign for Real Ale and real ale pubs. Unlike him, I have last year’s CAMRA pub of the year in my constituency. One of its biggest problems in setting up was that bank managers persistently refused it loans. It is exactly the sort of programme that our British investment bank would support. The Government’s thinking on this one just does not make sense.

[Guto Bebb (Aberconwy) (Con)]

In view of the need to support small businesses with finance, how can the hon. Lady justify in the current economic scenario Finance Wales, which is funded by the Welsh Government, giving out loans at 8% or 9% above base?

[Susan Elan Jones]

I am sure that we could carry on this conversation ad infinitum. I am sure that the hon. Gentleman could tell me how he can justify all the cuts in revenue spending that are coming to the Welsh Government, but we will carry that one on some other day. I am sure that he could also tell me about the excellent impact there will be on his local economy when the holiday homes subsidy is in place, but, again, we will carry that on later.

I believe that investment, growth and employment are not just terms in economic textbooks; they are at the heart of what makes communities and countries work. I am talking about communities in my constituency and, more widely, across the nations and regions of the United Kingdom. If our Government and our Chancellor cannot understand that, it is high time for them to be replaced by a genuinely one nation Government who do understand.

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[Guto Bebb (Aberconwy) (Con)]

It is a pleasure to follow the hon. Member for Worsley and Eccles South (Barbara Keeley), but I think that her speech was representative of those we have heard from Labour Members today: there was no effort to explain the context; not a single acknowledgement of the problems the Labour party left this Government; no mention of the fact that there is a crisis in the eurozone; no mention of the fact that the IMF has indicated that UK levels of growth will be higher than those of Germany and France; and no mention of the fact that we are facing an international energy crisis—there was no mention of reality. That is the truth about what we have heard from the Labour party. Labour Members seem to be living in their own fantasy world in which money grows on trees or can be created from nowhere. The truth, as my constituents, the people of Wales and the people of Britain know, is that money does not grow on trees; we have to pay our way in the world.

The worst thing I heard today from Labour Members is their complaint that there is no demand in the economy, apparently because of the welfare cuts being implemented by the Government. Those cuts are being implemented to deal with the mess the previous Administration left behind. There is no acknowledgement that the so-called growth period under the previous Government was basically built on unsustainable Government and personal debt. There is a lack of demand in the British economy because the British public have realised that they have to live within their means, and this Government realise that they must deal with the mess left behind by the previous Administration and that we must live within our means—[Interruption.] The hon. Member for Hartlepool (Mr Wright) might laugh, but the people of this country are not laughing at the mess the previous Administration left behind. That is the context of this Budget and, in that context, I think that the Government have made a substantial and significant move in the right direction.

We need confidence that businesses will create jobs. Labour Members continually talk about Governments creating jobs. Governments do not create long-term sustainable employment. The private sector does that; businesses do that, working with Government. This Government are making sure that people can invest in the United Kingdom with confidence and know that if they make a profit in this country they will do so with the right to a more competitive tax advantage than in any other part of the world. The competitive levels of the UK economy in comparison with the situation under the previous Government show that we are definitely moving in the right direction in creating the circumstances for business investment.

[Michael Ellis (Northampton North) (Con)]

Does my hon. Friend acknowledge, as the Opposition clearly do not, that the OBR is forecasting 600,000 more jobs in the coming year than had previously been anticipated?

[Guto Bebb]

Indeed, and I welcome every single one of those jobs.

The worst thing about the argument that we are having is that every time Labour Members appear in the media in Wales, they complain, “Yes, jobs have been created, but they’re not our type of jobs—they’re not proper jobs.” They insult people who are going out to work and trying to earn a living in supermarkets and hotels by claiming that they are not taking the right type of jobs. People in my constituency know that a job is an opportunity to help themselves. This Government are making sure that people in low-paid jobs are keeping the money they earn because their tax rates are going down. Labour Members bribed people with their own money; this Government are allowing people to keep their money in order to look after themselves, encouraging self-sufficiency and responsibility rather than the expectation that the state will look after them. We are moving in a direction that I am proud of, because we will have a country in which people are confident that if they invest, they will be able to keep more of their money without being taxed and in which people will be able to earn money without being penalised for doing so.

In my constituency and in many other parts of Wales, we are very dependent on the small business community, which was never understood by Labour Members; indeed, they do not understand it now. I will give an example of how bad Labour is at understanding business. Labour’s Minister for Finance in Wales says that she does not believe in capitalism and prefers Marxism. If she were a trade unionist or a Labour activist, I would understand that, but she is the Minister responsible for economic development in Wales and does not believe in capitalism. She should give up her job and get somebody better to do it who will ensure that Wales can benefit from the policies of this Government.

Every single one of the small businesses in my constituency will benefit from a reduction in employer’s national insurance contributions. Labour increased national insurance contributions for people employing staff; we are reducing them significantly. Some 35,000 businesses in Wales will benefit, 20,000 of which will pay no employer’s national insurance contributions. My hon. Friend the Member for Burton (Andrew Griffiths) talked about small breweries and the fact that the beer duty escalator has been stopped, which is a good thing for the industry. In my constituency I have four small breweries that will benefit not only from the changes to the beer duty escalator, which was brought in by Labour, but from the reduction in employer’s national insurance contributions, allowing them to invest and to develop more opportunities for work in the area.

There is a 13% differential between the rate at which Labour would be taxing petrol and what this Government are doing. In a rural constituency such as mine, that is crucial—13p per litre makes a huge difference. Labour Members might not understand this because they do not understand rural areas, but in my part of the world there is an understanding that the changes to fuel duty and excise duties are crucial for a rural area that depends on self-employment and the small businesses that do understand the needs of the community and the need to invest in order to improve.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

What does the hon. Gentleman think would be the effect on rural and, indeed, urban communities in his constituency of a housing measure that will apparently subsidise people to buy second homes up to a value of £600,000?

[Guto Bebb]

We await clarity on that issue. However, I am absolutely terrified about the fact that the administration of that measure will be partly devolved to Wales, where the situation is astonishing. The NewBuy scheme was introduced by this Government in April 2012, but it has yet to be introduced in Wales. The Welsh Labour Government will introduce it in June 2013. In other words, 15 months after the money was made available, the Labour Government in Cardiff are still not helping people in my constituency who want support to buy new houses.

I am concerned that the Labour Government in Cardiff are not delivering. Their decisions on every single policy are made for political reasons to undermine the work of this coalition Government, and nowhere is that more the case than with how the Welsh Government refuse to co-operate with the Work programme. Many programmes in Wales are funded by money from the European social fund and they provide support to those who need it to get back into employment, but the Welsh Labour Government refuse to allow those individuals to access the Work programme and the ESF business support programmes at the same time. The Labour party’s commitment to employment growth in Wales is zero, while its commitment to wrecking the work of this coalition Government is 100% and total. The people of Wales realise the betrayal of their communities by the Labour party.

The fact of the matter is that, on every single issue, this Budget is making an effort, in very difficult circumstances, to help those people who want to help themselves. As a Member who represents an area that is very dependent on self-employment, I welcome the key decision to introduce the flat pension rate. For far too long, the option of self-employment was penalised by the pensions system. The move to a flat system whereby people will benefit by about £144 a week from a guaranteed state pension is crucial. The decision to become self-employed is a difficult one to make, especially so in Wales, where it is also difficult to then provide for a pension, because the position of the public sector is so different. I warmly welcome the fact that this Government are tackling the need for a fairer pension system. Every single person in my constituency—employed or self-employed—will realise that if they put money aside for their own pension, they will be supported by a Government who are committed to supporting people to do the right thing.

Finally, one of my concerns about the current economic situation relates to financing for small businesses. This is not a criticism of the Government. Time and again I meet representatives from banks who claim that they have money available but that there is a lack of demand for funding. We have heard the same complaints from the Labour party. The key thing is that MPs can do a lot of work on this matter. During the Easter recess I will hold two surgeries to tell businesses how to get themselves fit for the lending available. Circumstances have changed. The time when money was thrown at businesses has gone, but businesses that go to the banks with appropriate business plans and ideas for development and growth should and could access money at much cheaper rates than the Welsh Assembly-funded Finance Wales scheme. MPs can stand up in this Chamber and complain as much as they want, but the key thing is that we—I know that my Government colleagues do this—work with businesses to help them access that funding, rather than complain all the time in the way that the Labour party does.

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[Justin Tomlinson]

Absolutely. I also commend the constructive and proactive way they lobbied politicians on both sides of the House, so that they realised what a benefit such a move would be to the local economy, as well as for those who enjoy the odd pint in their local pub. It is cause for rejoicing.

I have two further requests. A considerable number of pubs are starting to provide food as a mainstream part of their offer. More needs to be done to encourage hospitality and catering students to consider becoming landlords, as a lot of breweries are struggling to find younger landlords. Secondly, I urge the Minister to consider the excellent work of my hon. Friend the Member for Burton and to commission him to look more widely than the beer duty: to consider why we are losing pubs and what more we can do in that regard, just as we commissioned Mary Portas to carry out the high street review.

[Guto Bebb]

Is my hon. Friend aware that the increase in the personal allowance can be crucial for businesses such as public houses, which are often run by a husband and wife working in partnership? Our changes mean that such partnerships can make a profit of £20,000 without paying a penny in tax.

[Justin Tomlinson]

Absolutely. The industry can react quickly and provide flexible employment opportunities, and it is a major contributor to local economies across the country.

The Help to Buy scheme will provide £3.5 billion to help those wanting to get on to or move up the property ladder. I know that more details need to be considered, but we should think not only of the people who will benefit directly but of the huge numbers of people in the house building industry. Over the past 20 years, Swindon has been pretty much the fastest growing town, and a huge number of local residents are connected to that industry. They will welcome any measure to help restore confidence in the housing market.

We come up with these fantastic schemes, and I was challenged on local radio last night about whether this scheme would catch on. As entertaining as we all think we are, our wonderful debates in the Chamber often pass the public by. As the scheme comes into force in 2014, it would be nice to promote it in the annual council tax bill. The councils have already paid for the postage, so let us put a little information flyer in with the bill so that people can see what opportunities there are and whether they apply to them.

Finally, I want to talk about business rates, on which I would have liked a little more to have been done. Our high streets are struggling and business rates are becoming a bigger burden, with landlords lowering rents and so on. I was fortunate enough to become a member of the Public Accounts Committee, but one of my biggest disappointments is that that happened 24 hours after Starbucks and Amazon had their hearing. Amazon kindly came to meet me yesterday and it is fair to say that we rowed. Its actions over tax and transferring money to Luxembourg are disgraceful. The company is not operating on an even playing field. We have to investigate some form of internet consumer tax for such organisations, but with every single penny ring-fenced to subsidise the business rates of the traditional high street. If the high street struggles any more, Amazon will also struggle because the high street is the shop window. I have spoken to a number of independent retailers who provide the customer service—and consumers then simply pick up the phone and order from Amazon. Let us create a fair playing field for all retailers.