Capital Gains Tax (Rates)

Debate between Heather Wheeler and Lord Sharma

Wednesday 23rd June 2010 Commons Chamber

[Alok Sharma (Reading West) (Con)]

I start by congratulating my hon. Friend the Member for Carlisle (John Stevenson) on his passionate speech and on speaking up for localism. That is something that Government Members strongly believe in, and I hope that we will see it acted out in the Government’s manifesto.

Having listened to Opposition Members during today’s debate, it is interesting that not a single one of them had anything positive whatsoever to say about this Budget; in fact, many of them have denounced it in no uncertain terms. There has been a great deal of shaking of heads and gnashing of teeth. What always happens in these cases is that Labour develops something called collective amnesia about why we are having to make these tough choices on public expenditure and on taxation. Let me therefore remind them, once again, why that is the case. I see that the hon. Member for Easington (Grahame M. Morris) is laughing, but he really should try to understand why this is happening. The reason is very clear. Under Labour, we have had the deepest recession on record and the longest recession of all the G20 countries. Under Labour, we have ended up with the largest deficit in Europe, and the national debt has doubled.

Let me quote what the co-chief investment officer of Pimco, the largest bond fund manager in the world, said in January 2010:

“The UK is a must to avoid. Its gilts are resting on a bed of nitroglycerine. High debt with the potential to devalue its currency present high risks”.

The trajectory under Labour’s plans is pretty clear. If we were to do what Labour is suggesting, we would have the potential loss of our triple A debt rating, higher interest rates, more business failures, and sharper rises in unemployment—everything that nobody, on either side of the House, wants to see. There has been a lot of talk about Greece. Perhaps Labour Members should look at what happens in a country such as Greece when it does not get to grips with its public finances and there is a loss of confidence by the capital markets.

In 1997, the Labour Government inherited a golden economic legacy. In 2010, what did Labour leave the current Government? Oh yes—a note from the former Chief Secretary to the Treasury declaring, “I’m afraid to tell you there’s no money left.” That is exactly why we are having to make these cuts. Let me absolutely clear about this, although Labour Members may not agree: out there—outside this House—very many members of the general public take the view that these public expenditure cuts are ultimately Labour’s public expenditure cuts, and that the tax rises are ultimately Labour’s tax rises.

Of course, the pied piper of Labour’s decade of debt—the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown)—has not been seen in the House for quite some time, but I hope he has had the chance to reflect on the damage his Government’s policies did to our economy, and that when he returns, he will say the one word we had hoped to hear from a Labour Member: sorry. I am sad to say that we have not heard it.

In the past four years, I spent a lot of time talking to businesses and business organisations in Reading, so I should like to spend the rest of my speech talking about the measures in the Budget for them, particularly small and medium-sized businesses, which are the backbone of our economy, save to make one point on public services. We can all agree that we want a world-class health service and the best schools for our children, and we want dignity and financial support in retirement for our pensioners, but to fund high-quality public services, we need a vibrant private sector to lead growth and recovery.

Businesses in my constituency in the past few years have invariably told me that they feel overtaxed, overburdened by red tape and regulation, and overwhelmed by a complex tax system. They want help in getting credit flowing. The base rate may be 0.5%, but that bears little relation to the spreads that businesses must pay when they go for bank debt. We need to get to grips with that. Above all, businesses want us to tackle national debt and to get some confidence back into the country. That is what we hope the Budget will do.

We talked about over-regulation and the tax system. Because of the previous Government, we now have the longest tax code in the world. According to the Federation of Small Businesses, small businesses spend seven hours a week filling out forms. According to the British Chambers of Commerce, new regulation since 1998 has cost British businesses almost £77 billion.

The Thames valley and Reading are relatively prosperous parts of the country, but the recession did not pass us by. Shops closed, businesses folded and people lost jobs. Labour Members say that Labour did a lot to help local businesses, but I can tell them that local businesses in my part of the world and the rest of the country got by because they helped themselves. They increased productivity and took pay cuts, and instead of people working five days a week, they worked four. There has been a lot of pain in the private sector.

[Heather Wheeler (South Derbyshire) (Con)]

My hon. Friend is absolutely right to draw attention to the fact that small and larger businesses have taken the hit. We hear so often from Labour Members that they are worried about what is happening in the public sector, but that sector needs to take a leaf out of the book of the private sector, in which people have taken 10% cuts and four-day weeks. That has not happened at all in the public sector. We are looking for an increase in productivity. A 25% reduction does not necessarily—