Budget Resolutions and Economic Situation

Debate between James Duddridge and Brooks Newmark

Friday 22nd March 2013 Commons Chamber

[Mr Brooks Newmark (Braintree) (Con)]

I almost choked on my cornflakes this morning when reading Jonathan Portes’s blog. We have to remember that Mr Portes, like Mr Blanchflower, is an arch-Keynsian and proponent of plan B—borrowing more money in a debt crisis. Referring to Robert Chote and the Office for Budget Responsibility, he observed that the OBR has shown

“that, as a percentage of GDP, the deficit has indeed fallen by a third. The Chancellor is correct.”

He went on to say:

“The UK’s underlying economic strengths remain, as the current health of the labour market illustrates.”

The Budget and, indeed, the performance of the Chancellor and his team at the Treasury have much to commend them. If we remember, three years ago, UK plc was on the verge of economic collapse. We were living far beyond our means, and the Chancellor’s emergency Budget in 2010 sought to address that problem. Two and a half years later, where are we and what progress has been made? First, the deficit is indeed down by a third. Annual borrowing has come down from £159 billion and is almost under £120 billion. We have more men in work than ever before, and we have more women in work than ever before. Indeed, the amount claimed in jobseeker’s allowance in Braintree, my constituency, has dropped by 11%. We have created more than 1.25 million jobs in the private sector. We have created 250,000 new businesses, so the Chancellor, the Treasury and the Government have much of which to be proud.

It is true, however, that growth has not been as robust as we would like, and neither has the pace of Government debt reduction been as fast as we would like. The reason is a combination of the crisis in the eurozone, which has become worse since the emergency Budget, and the inflationary impact of energy costs—a fact acknowledged by Mr Chote and the OBR. The bottom line for many of our constituents is a record level of employment. In other words, more people are in work than ever before. We have record low interest rates, which means that more homeowners have low mortgages and businesses have low interest payments.

This week’s Budget seeks to build on the strong foundation established by the original emergency Budget, addressing the need to help those who aspire to work hard, as the Chancellor said. It is a Budget to help families. Indeed, as we have heard, the personal allowance, which has been raised to £10,000, will help, as there will be a tax cut for more than 24 million families—or, in my constituency, 38,391 families. Families, in fact, will pay roughly £700 less than they did in 2010—2.7 million families will be taken out of tax altogether, or, in my constituency, 3,905 families. Fuel duty will be frozen, saving people, particularly in rural areas in my constituency, £7 every time they fill up the tank, compared with what would have been under Labour.

We will help a typical family with two children under 12 with child tax credit to the tune of £2,400— 2.5 million families will benefit from that. There is help, too, to enable people to get on the housing ladder, with the shared equity scheme that the Government have proposed, as well as the mortgage guarantee scheme. It is a Budget to help businesses. The new £2,000 employment allowance will help the average business to hire an extra person for £22,400 or, hopefully, four young people on the minimum wage. I pay tribute to Lottie Dexter and the Million Jobs campaign, which tries to help young people to get back into work.

Some 450,000 small businesses and a third of employees will pay no jobs tax at all. Corporation tax will be driven down from 28% to 20% by 2015, which will make it the lowest such tax in any G20 country. Help to Buy will help the building industry which, we all know, has been struggling. In my constituency—the constituency of white van man and Essex man—I have many entrepreneurs such as electricians and plumbers, and the scheme will help them to secure much-needed work. There is help, too, for angel investors and entrepreneurs. I have been plugging the seed enterprise investment scheme, and on capital gains tax for reinvestment in qualifying schemes there will be another holiday for another year. I commend that measure.

[James Duddridge]

I recall that in the Budget, the Chancellor praised my hon. Friend in relation to that work. What advice can he give me and other hon. Members on how best to promote those schemes in our constituencies, as that seems to be a really good way to drive growth?

[Mr Newmark]

This is an important scheme, because it will help angel investors and people starting businesses. There is a gap in the market, and funding has been lacking. The tax scheme is highly attractive, and offers 50% off income tax. For example, for a £10,000 investment, people will get £5,000. If they hold the investment for three years, it is capital gains tax-free, so it is highly attractive.

Labour got us into this mess. Having listened to the responses from the Leader of the Opposition and the shadow Chancellor, I do not think they have a solution to the country’s problems other than plan B, to borrow more. That would cost up to £200 billion more, according to the Institute for Fiscal Studies. We have already had a debt crisis. Labour’s plan would cost an average family £2,000 more.

The Chancellor has set out a Budget for those who work hard and want to get on. This Budget backs families; this Budget backs jobseekers; this Budget backs drivers; this Budget backs home buyers; and this Budget backs businesses. The Government are clearing up Labour’s mess, they are backing those who want to work hard and want to get on, and they are moving Britain forward. I commend the Budget to the House.