Kit Malthouse
Main Page: Kit Malthouse (Conservative - North West Hampshire)
Mr Tyrie
The hon. Gentleman makes a powerful point, and of course I support his support for the proposals that we worked up together on “Making tax digital”. I will continue to make those points as vigorously as I can on behalf of the Committee, and I am sure that the Chancellor is listening. We should welcome his acknowledgment that the pre-existing proposals were not workable, and we have already had a bit of adjustment. Now that the door is ajar, perhaps we could have another conversation through the gap.
Kit Malthouse (North West Hampshire) (Con)
Like my right hon. Friend, I welcome the easing for businesses below the VAT threshold, but does he recognise that for those businesses over the VAT threshold, and they are not necessarily enormous businesses, that are struggling with some of the additional burdens that he mentioned, not least auto-enrolment, business rates and the changes to dividend taxation, particularly for owner-managers—I declare an interest as an owner-manager—accommodating the new system within the next 12 months will be a challenge and have a significant compliance cost?
Mr Tyrie
My hon. Friend, who is also a member of the Treasury Committee, makes the point that modest or slightly larger businesses will also find the bureaucratic burden introduced by the “Making tax digital” proposals pretty tough. The Committee has taken a lot of evidence on that. In the very long run, digital returns will be the future, but the question is how we get there. This is a generational change, and it is important not to sour relations between small businesses and the Revenue, which can easily happen if we hit small businesses over the head in the hope of getting a bit of extra money in years 1 and 2, or years 2 and 3. With a little more caution, small businesses can be brought into the system and yield a higher long-term revenue because we have their co-operation.
The second change—I will not linger too long on this because I lingered on “Making tax digital”—is to business rates. The Chancellor has announced a welcome relief for those businesses hit by revaluation. He has announced three concessions, which will cost quite a bit of money taken collectively. The concessions are not only important but essential. The small businesses that are being hit by the business rate changes are the lifeblood of the local economy in all our constituencies, and the measures will give them some relief from the pressure.
The Red Book suggests that the Chancellor might consider proposals for more frequent revaluation of business rates. I am pleased about that, because the big problem is the cliff edge created by revaluations every five or seven years. In a nutshell, we require both more frequent revaluation and quicker appeals. We need both. It cannot be beyond the wit of man to devise a reform that can deliver them.
While I am thanking the Chancellor, I thank him for agreeing, as he did when he came before the Treasury Committee recently, to publish the distributional analysis of the Budget measures on a basis comparable to that published in the last Parliament. The Committee will look carefully at the distributional analysis and other tax measures, and it will do so in a slightly more considered and less rushed way than we have in the past.
Kit Malthouse (North West Hampshire) (Con)
I must confess that I feel as though the Chancellor has dusted off the black polo neck that he apparently used to wear as a young man and has delivered to us a box of Milk Tray, such are the delights that we heard about this morning. I want to run through a few of them before I get to the coffee cream and the nutty centre, which may provide a little more grist to the mill.
On schools and skills, more money in the system is extremely welcome. I particularly welcome the formalisation of training in the new T-levels. A huge number of young people in my constituency will look to those new qualifications with glee and will be pleased to participate in them. Such careers are increasingly developing as an alternative to going to university. A lot of young people want to get straight into the workforce, so the qualifications will be extremely welcome.
Similarly, the new money for the social care system will be welcome in constituencies such as mine, where the average age is higher than the national average. I have a large number of older people, and they often get trapped in the health service and look to the Government to help them to transfer back home, and back to a happy life.
Although the vast majority of businesses in my constituency are seeing a reduction in their business rates bill—hooray!—some smaller pubs in which there has been particular investment, and that have had success in trading over the past few years, have been presented with quite large rises, notwithstanding the transitional relief available. It is extremely welcome that the Government are making more money available to those pubs, and a foaming pint will be raised to the Chancellor at The Wellington Arms in Baughurst this evening.
I will now pick out and welcome one or two of the more obscure items mentioned by the Chancellor that have not been part of the general debate. His commitment to science as part of the British economic mix over the next few years is extremely welcome. His predecessor had a similar commitment, but the current Chancellor has made a point of mentioning science in pretty much every announcement he has made.
The £300 million allocation towards more PhDs and more research into innovative technologies, particularly in academia, is extremely welcome, as is the crucial simplification of research and development tax credits. If we are to bring together the alchemy of private capital and publicly backed science, we need to make it as simple and as easy as possible, so the encouragement to companies to invest capital in order to take advantage of R and D tax credits in a simplified way is extremely welcome.
The Chancellor also announced a Green Paper on consumer markets, which will be critical over the coming years, because notwithstanding the fact that the internet has disrupted a number of consumer markets, including insurance and energy, there is too little uptake by consumers of the advantages that the internet provides in markets such as energy and telecoms. Some 90% of people have yet to consider switching their energy provider, but by doing so, they could save a huge amount of money. Those areas need to be looked at, and I will participate in the Green Paper with enthusiasm.
The NHS capital programme is absolutely key, and it is brilliant that we are getting more support. In North West Hampshire, we are looking at a whole new model of operation around a new critical treatment hospital at junction 7 of the M3. The clinical commissioning group is wrestling with the issue at the moment, so more resources to help it would be fantastic.
Finally, domestic violence is an issue with which we have struggled. When I was doing the policing job at City Hall, we were the world’s first major capital city to introduce a strategy to address violence against women and girls, and we did so with our own resources. That was followed shortly thereafter by the Government, under the leadership of the then Home Secretary, now Prime Minister. It is fantastic to see her ongoing commitment, through the Chancellor, to investing in this important area.
Now on to the coffee creams. I am grateful to the Financial Secretary—this is part of her responsibilities—and the Chancellor for listening to the howls of anguish about “Making tax digital”, the prospect of quarterly returns of information to the Inland Revenue, and the burden that would place on small businesses. The extra year for those below the VAT threshold is extremely welcome. Nevertheless, I am sure that the Financial Secretary will appreciate that many of the small businesses that will be left out of the easing of that obligation will now feel that they should be included. I hope that she and her colleague, the Chancellor of the Exchequer, will be open to more conversations about how the system can be improved.
I accept that the path, in reporting business taxation, should be towards digital, as there will be enormous savings for the Government and for businesses, but I encourage the Financial Secretary to listen to the professional and business organisations that still think the Government can go further to make the system work. I am more than happy to sit down with her to talk about that, but I am grateful for the fact that she has listened to the campaign by me and others.
Finally, it will come as an enormous relief to an awful lot of businesses that the predictions of doom and gloom before the referendum have not come to pass, and that the macroeconomic picture is improving, forecast by forecast. Every organisation, from the OECD and the OBR to the Bank of England and, indeed, a lot of private forecasters, have revised their ideas about the economy upwards with every month and quarter that passes. That is a great relief.
Suella Fernandes (Fareham) (Con)
Is my hon. Friend pleased that Donald Tusk’s prediction did not come true? He said in June last year that Brexit would bring about not only the “destruction of…the EU” but the end of “western political civilisation”.
Kit Malthouse
Yes. Of course, given the comparative economic situation in the EU, his words seem even more hollow.
The economic picture is looking better and better as each forecast is delivered. Having said that, I am enormously reassured by the Chancellor’s continued commitment to sorting out the deficit and trying to get our public debt under control. I know I am not the only person in the House who, on seeing the figures he presented, was reassured about the economy’s path but remained terrified by the level of our national debt and the speed with which it is growing. We accrue national debt of around £5,000 a second. We are spending enormous amounts of money over and above what we earn, and unless we get that under control, we will leave a dreadful legacy to our children and grandchildren. It would have been easy for the Chancellor to ease up a bit—to try to keep Members happy, or happier, by splurging a bit of money here and there and spending even more on the chocolate box—but the fact that he did not, and instead prioritised the notion that we should get our house in order, is enormously reassuring. In the early days of his chancellorship, he is showing great promise in helping us to turn the country around.
North West Hampshire is a part of the county of Hampshire, which is teeming with small businesses. We do not have that many large ones—one or two—but we have hundreds, if not thousands, of small businesses that are extremely sensitive to movements in the national economy. The fact that we are in the hands of a Chancellor who is committed to steering the economy on a steady path, without lurches one way or the other, will be an enormous reassurance to them and will set the course for future success.
Suella Fernandes (Fareham) (Con)
I am pleased to respond to the Budget. I welcome the Chancellor’s commitment to consolidating the UK economy and investing in the next generation through education, skills and innovation.
I have two main points to make. First, support provided for ordinary families, children and young people is only possible because of a resilient economy. I am delighted by the various forecasts and upgrades that were set out at the beginning of the speech delivered by my right hon. Friend the Chancellor. As well as the OBR having updated growth this year from 1.4% to 2%, we should note the jobs miracle in this country and the upturn in employment since the Conservatives were elected to power in 2010. The fact that employment has risen from 70.2% to 74.6%, with a further two thirds of a million in work by 2021, has not happened by accident. It has happened because of a concerted effort to get people off welfare and into work and to create a jobs climate in which employment pays. Despite the higher than target inflation, real wages will also continue to rise in every year of the forecast.
The positive picture is further reflected in the predicted fall in public sector net borrowing and in relation to the debt we still face in this country. When Labour left office in 2010, we were borrowing £1 in every £5 we spent, which was unsustainable and irresponsible. This year, it is set to be £1 in every £15, so we are back on track towards living within our means.
All those elements contribute to and add up to a strong economy. Since the referendum, that strength has been undeniable. We heard today about Nissan and Google investing in the UK, but it goes much further. Despite the predictions this time last year about a recession, with a cost per family of £4,300, and of negative forecasts from the IMF, the IFS, the OECD and the Bank of England, the reality has been very different indeed. UK manufacturing has hit a two-and-a-half-year high, and services are seeing similar growth. The UK was the fastest-growing economy of the G7 last year, and PwC predicts that we will be the fastest-growing economy until 2050. Other companies are making significant commitments to the UK: Jaguar Land Rover, McDonald’s, Facebook, Adobe, IBM, Ford and Toyota have all made commitments to significant job creation and investment in the UK. I say that “Project Fear” is over and that it is time for “Project Cheer”.
Kit Malthouse
Does my hon. Friend agree that the fact that economists and forecasters systematically underestimate the growth in the British economy reflects the fact that they cannot quite believe that the British people who voted so overwhelmingly for Brexit feel optimistic about the future and are therefore reacting in that way economically? That is what is driving growth forward. Does she think that if they embraced the idea that the British are optimistic about Brexit, they might get their forecasts a bit more accurate?
Suella Fernandes
I agree entirely. The facts and figures and the behaviour in our economy since the referendum reflect the strength and resilience of our consumers, our economy and our businesses. That is laying the ground for a successful future as we leave the European Union.
My second point relates to education and skills. Education is the engine of aspiration and one of the core reasons that I am a Conservative. I believe in self-improvement, personal responsibility and hard work. This Conservative Government have notable achievements, such as 1.8 million children now being in good or outstanding schools. Of course, the job is not done. Much of that success can be linked to the free schools revolution. Today, we have seen £320 million of capital investment to create new free schools and extend this success story, which is empowering teachers and improving standards in schools. Some 70,000 new school places will be created following today’s announcement.
As someone who co-founded, set up and now chairs a free school, I am a fan of them. I have seen in the three years in which I have founded and chaired Michaela Community School, in an area of deprivation in inner-city London, how our teachers have been freed to pioneer new teaching methods and how they have gained more power and autonomy over their spending, curriculum and teaching methods. We are seeing fantastic results.
Free schools work. They perform above average: 28% of free schools inspected by Ofsted have been graded outstanding, compared with 14% of those maintained by the council. Free schools are popular among parents: secondary free schools attract, on average, 3.5 applicants per place, compared with 2.3 applications to maintained schools. Free schools are not just for the middle class: two thirds of free schools have opened in deprived areas. They are also cost-effective, as the National Audit Office found recently. Free schools signify a revolution in education, liberating teachers and communities to deliver high quality, high expectations and high standards for their children.
That leads me to selection and grammar schools. We know that grammar schools also work very well, with 90% of them being good or outstanding. The Select Committee on Education has examined considerable evidence of their effectiveness in achieving high progress rates for their children. In the Netherlands, selection takes place at 12 and it does better than us in the PISA tables, which shows that selection is compatible with good results. The Sutton Trust has showed that there would be no adverse effect on non-grammar schools and ResPublica recently commissioned an independent study that showed that a grammar school would have a transformative effect on a deprived area like Knowsley.
I am a Conservative because I believe in aspiration, in rewarding effort and in fairness. The Budget reflects those values and I am pleased to support it.