Finance (No. 4) Bill

Julian Sturdy Excerpts

Monday 16th April 2012 Commons Chamber

[Julian Sturdy (York Outer) (Con)]

It is a real privilege to be called in such an important Second Reading debate and to follow the hon. Member for Middlesbrough (Sir Stuart Bell).

As the coalition made clear upon its formation back in 2010, the overriding priority of the Government and the House must be the economy. We have heard many comments this afternoon about the difficult financial legacy inherited from the previous Administration, but as we consider this wide-ranging Finance Bill, the focus of my contribution will be on not the past but the future.

In such turbulent and difficult times, we must govern not only for today but, perhaps more crucially, for future generations. Failure to ensure economic recovery, encourage new technological industries and reduce the deficit while simultaneously promoting growth will consign not just one generation but multiple generations to long-term economic hardship and its consequences. The international economic waters make steering such a delicate course difficult, and we should appreciate that everything that the Government do, including in the Bill, is hugely shaped and constrained by international factors. A quick glance at Greece and the eurozone provides a daunting reminder of the long-term economic troubles awaiting our continent.

The general thrust of the Government’s financial policy to date has been entirely sensible—to reduce the deficit while promoting and freeing the private sector. Sadly, that careful approach has pleased few. For some, the idea of any reduction in public spending is completely unacceptable, while for others the Government have failed to front-load the cuts enough or cut deeply enough. Indeed, following the Budget a few weeks ago, a number of media outlets have portrayed their concern, frustration and anger. The focus has largely been on the Government’s proposals to reform child benefit and personal allowances, including those of pensioners, and on the politically questionable crackdown on Cornish pasties.

Lost in the wave of negative press cuttings were some of the positive steps that the Chancellor outlined, which should be highlighted and celebrated, particularly by pro-business Government Members. I truly believe that cutting the main rate of corporation tax to 24% from 1 April 2012, as outlined in clause 5, and then to 22% over the next three years, sends out a clear signal that Britain is open for business once again.

Throughout the new Labour years, Britain’s lead on corporation tax was sadly lost. In 1997, we had the 10th lowest main rate among the 27 EU nations. By the 2010 election, we had the 20th lowest. The Government’s corporation tax reforms and other measures will give us the most competitive tax system in the G20.

I will be completely honest: I have always been happy to nail my colours to the mast and declare, as I do again, that I passionately believe in a low tax economy. Low tax economies are attractive places in which to set up, relocate and expand a business. A competitive and vibrant private sector is essential for job creation, economic growth and, by extension, delivering a higher tax take. Ensuring that Britain can offer such incentives to businesses around the world will mean that we remain the No. 1 place in which to do business, and the Chancellor should receive a great deal of credit for putting us on such a pathway, despite the wider constraints of the budget deficit.

Thus far, I have focused on the wider economy and the creation of a private sector-led recovery through providing incentives and tax reliefs. However, I would also like to consider individual households, as the same principle can and should be applied to them. As several hon. Members have said, times are incredibly tough and households face real pressures. I confess that I would have liked some news in the Budget about fuel duty, particularly given the importance of fuel prices in rural areas such as my constituency of York Outer and across north Yorkshire. Yet I recognise that fuel duty will have been frozen for 16 months, thanks to the Government’s actions in the 2011 Budget and autumn statement, and that they also introduced the fuel stabiliser. We must be realistic. Under the current financial conditions, the Government can do only so much in each area. Altogether, we have done more in two years on fuel than the previous Government did in 13.

[John Mann]

Does the hon. Gentleman know that when the Government came in, unleaded petrol was 119p a litre? How much is it now and how much will it be after the next increase in October?

[Julian Sturdy]

I was going on to say that we must be realistic. However, if we had continued over the two years with the rises that the previous Government introduced, fuel would have cost between 9p and 11p a litre more than it does today. Having said that, I still hope that the 3p rise planned in August will be kept under review because we must not forget the impact of high fuel prices on rural areas and the wider rural economies.

[John Mann]

Some of my family originate from Copmanthorpe in the hon. Gentleman’s constituency, and petrol is sold there. Today, petrol in his constituency, mine and Mr Deputy Speaker’s is around 143p or 144p a litre, and it is going up. So, 119p and 143p or 144p—how much more is petrol since the Chancellor took office?

[Julian Sturdy]

I hope that some of the hon. Gentleman’s friends might support me in Copmanthorpe—you never know. He is right that many rural garages in my constituency and throughout north Yorkshire are struggling. Independent forecourts are struggling even more than the supermarket chains. Fuel prices have gone up, but that is due to the higher oil prices, which have escalated dramatically over the past two years. As I said, if we had not stopped the previous Government’s tax increases on fuel in the past 18 months, fuel prices would have been 9p to 11p higher than they are. The impact on rural areas and hard-working families across the country would have been huge.

[Nia Griffith]

Has the hon. Gentleman asked the Chief Secretary why a rebate seems to be available in some parts of the highlands and islands of Scotland, but not in Yorkshire or Wales?

[Julian Sturdy]

Obviously, as a north Yorkshire MP who represents a rural constituency, I understand the impact of fuel prices on rural areas and economies, and the Government must consider that. However, as I said, the Government have to consider the wider impact when they make such decisions. They would like to do many things, and I would like them to do a lot of things—I would like the 3p rise not to come in in August, and I hope that it will be kept under review if oil prices continue to rise—but they have to take a balanced view.

[David Rutley]

Is my hon. Friend aware that every penny reduction in the fuel duty allowance costs half a billion pounds? I wonder whether the hon. Member for Bassetlaw (John Mann) and other Opposition Members can tell us how they would fund such changes in fuel duty.

[Julian Sturdy]

My hon. Friend is right that any cut in fuel duty or reduction in potential rises that are coming down the line has a huge impact on the Treasury’s finances, and the money always has to be found elsewhere. However, I go back to my original point, which will have some resonance across the House: rural areas are particularly affected by high fuel prices and that has an impact on the rural economies. I ask the Exchequer Secretary to keep the matter constantly under consideration whenever he looks at increasing fuel prices.

[Neil Parish (Tiverton and Honiton) (Con)]

My hon. Friend makes a good case for reducing fuel duty, especially in rural areas. However, I also recognise that the Chancellor has only so much money and that taking people who earn up to £9,000 out of tax will help many lower-paid workers in many rural areas. That will help. We must concentrate our finance on where we can put it to best use.

[Julian Sturdy]

I agree. Raising tax thresholds will be hugely helpful, and I will speak about that later. My hon. Friend is right that the number of people we will take out of tax has sadly been a little lost in the press and media coverage of the Budget. We must champion and emphasise that policy.

I want to consider another controversial issue at a household level, which several hon. Members have already mentioned: the child benefit reforms in clause 8. In the early consultation on the proposals, I wrote to Her Majesty’s Treasury, asking for them to be reviewed. The amendments in the Budget are clearly positive developments, which brought some fairness back to the policy. My concern now is about how it will be implemented and whether the costs of administering the reduction in child benefit will be worth the benefits. I hope that more light will be shed on that in due course. I would also like to put on record again my support for transferable tax allowances as a way of increasing fairness in the system. I believe that Ministers are still examining that, and I hope that it will get due consideration.

My hon. Friend the Member for Tiverton and Honiton (Neil Parish) briefly raised the personal tax allowance changes that the Government have made. Again, I commend the Government for raising personal tax allowances faster to ensure that more of the lowest paid are lifted out of paying tax altogether. That is an excellent policy and a very Conservative principle.

The controversy about the so-called granny tax in clause 4 is understandable. I have great sympathy with those who are unhappy about the changes, but I must make a couple of points. We live in extreme times. The largest budget deficit since the second world war requires a strong Government to make decisions that they would not choose to take in other circumstances. Opposition Members can attempt to make political hay out of such decisions, but they were not charged with the responsibility of cleaning up the current mess. With an increasing state pension, the triple-lock guarantee and the protection of key benefits such as free eye tests, prescriptions, TV licences and bus travel, pensioners remain at the top of the priority list when it comes to protecting individuals from the full impact of the economic crisis.

In summary, the Bill contains a great deal of positive, forward-thinking and private sector-encouraging policies. It deals with the difficult but necessary financial decisions and judgments, which will be truly appreciated and tested only in the fullness of time, and yet the message is almost more powerful than the contents. The Bill is unashamedly proactive in building a more competitive international economy. For that reason alone, I hope hon. Members give it full backing tonight.