Lord Bellingham
Main Page: Lord Bellingham (Conservative - Life peer)Budget Resolutions and Economic Situation
Lord Bellingham Excerpts
Mr Henry Bellingham (North West Norfolk) (Con)
I, too, welcome you to the Chair, Madam Deputy Speaker. I congratulate the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) on a superb maiden speech. To secure a swing of just under 40% over a well-established incumbent was a remarkable achievement and I am sure that he will make a superb representative of that constituency.
I also pay tribute to my hon. Friend the Member for Louth and Horncastle (Victoria Atkins) for her maiden speech. She will also be an impressive Member of this Chamber. She took over from a near neighbour of mine, Sir Peter Tapsell, who was a terrific Father of the House and someone with whom I worked closely on local issues. I remember on one occasion we were dealing with local hospitals, and at the end of a meeting of local MPs I said to him that I would probably do a press release and speak to Radio Norfolk. I said, “Sir Peter, are you going to talk to Radio Lincolnshire?” He said, “Don’t be so ridiculous. I’ve never spoken to local radio in my life and I do not plan to start now.” I believe that the new Member for that constituency will probably take a more modern view of the media.
This Budget will help secure our ongoing recovery and prosperity. It will also be pivotal in getting our finances on to a more sustainable footing. As far as the welfare reforms are concerned, I thought that the Chancellor of the Exchequer made a telling point when he explained to the House that we have 1% of the world’s population, 4% of its GDP but 7% of the world’s welfare. I absolutely believe that he was right to home in on the tax credit regime, which I believe has reached a point at which it lacks credibility in any way, shape or form, particularly as far as child tax credits are concerned. They have no work requirement at all and in fact make work less attractive. The maximum amount received is received by those who do not work at all, so action had to be taken. Furthermore, tax credits overall impose ridiculously high marginal tax rates on recipients who earn more and have their credits withdrawn. We want a system that encourages people to go to work, rather than the reverse.
We will have to do a lot of work to explain the case, but if we weigh the changes to the welfare system and the reductions in the welfare budget against the extra measures to get people into work, the help that we will give people who are already in work, such as the new national minimum wage, which I welcome, the reduction in corporation tax, the new tax threshold and the measures to help small businesses, as well as the tax evasion measures announced by the Chancellor, we can explain that these were essential changes in the interests of Britain’s maintaining its growth and prosperity. Above all, they will help those people who are in work and encourage more people to get into work, providing a big incentive at a time when jobs are becoming ever more available.
On tax more generally, I certainly welcome the changes to corporation tax and I greatly welcome the increase in the basic tax threshold and the target of £12,500, as well as the increase in the 40% threshold. That is incredibly important, but we cannot be in any way complacent about taxes. If we look at higher rates of tax elsewhere in the world, we will see that this country’s top rate of 45% does not compare favourably with the global average of 31%. It is 41.6% across the OECD, 31.8% across Europe and 37% across the European Union, and in the US it is 39%, so we compare very unfavourably with all those countries. In fact, the only countries in the world with a higher high tax rate than us are the Nordics, a few small economies such as Austria and Belgium, and a few unknown economies such as Aruba and Saint Martin, with great respect to the Dutch and the French. I say to the Exchequer Secretary that more work needs to be done as we get the economy under control, as growth progresses and, above all else, as we start to live within our means. We must look at the competitive position of Britain, and our high rate tax is a very important part of that.
I certainly welcome what the Chancellor had to say about trying to make tax more simple. Indeed, my right hon. Friend the Member for Chichester (Mr Tyrie) has pointed out that Tolley’s tax guide is, for the first time in a long time, going to get slightly smaller after this Budget than it has after previous Budgets.
The Chancellor referred to Britain’s productivity challenges, and many people have described our productivity puzzle. It is staggering that on average the UK produces 30% per hour less than workers in Germany, the US and France. The key to that is to look not only at those areas that the Chancellor has made clear that the Government are looking at, including education, skills and training, but at technology and research and development.
In what was an excellent speech until its last few minutes, the SNP’s economic affairs spokesman, the hon. Member for Dundee East (Stewart Hosie), referred to some of the changes needed to sort out the productivity puzzle, one of which relates to technology. As a nation, we must spend more on technology and R and D. In Germany, there are 1,034 R and D staff for every 100,000 people. In this country the figure is 800. We need to be aware of that and do more. Perhaps we should look again at the R and D credits referred to by the hon. Gentleman.
Infrastructure is another key part of increasing our productivity. I welcome what the Chancellor said about infrastructure spending, particularly his commitment to maintaining expenditure on trunk roads. The reform of vehicle excise duty and the launch of a new roads fund will help guarantee that. I say to the Exchequer Secretary that in East Anglia we are really keen for the dualling of the A47 to be brought forward, and for the different programmes and schemes on that essential east-west trunk road to be given maximum priority.
On exports and trade, we are a great mercantile nation and we have always taken a lead in opening up new markets in the world. In fact, we were the first country to liberalise our own trade. Of course, in the 18th and 19th centuries we not only liberalised our own trade, but sent the Royal Navy to force others to do the same, even if they did not want to co-operate. It is absolutely essential that we do more to liberalise world trade.
In our renegotiations with the EU we should be not just asking what more the EU can do for Britain in terms of the repatriation of various competences—that is essential—but telling the EU that, in certain areas of activity, it could do more to help wealth creation, productivity and growth across Europe. It is essential that the EU completes the free trade agreements with the US and China as a matter of priority, because if we do not do that, there will be no significant improvement in either the EU’s or our wider trade. Trade has slowed down, so it is absolutely essential that it is given a kick-start.
In conclusion, this is a very bold Budget and a number of very imaginative and impressive measures have been announced, particularly with regard to wealth creation and small and medium-sized enterprises. Obviously, it is the first Conservative Budget for 20 years, as a number of my colleagues have pointed out. It spelled out above all else that Britain must now be really serious about living within our means. I ask right hon. and hon. Members on the Opposition Benches who are challenging our welfare alterations and changes what they would do about the ongoing budget deficit. According to our plans, the deficit will come down and we will reach a budget balance by 2019-20. If they are not prepared to support us in making those changes, we will not hit such a target. In a world where—
Mr Bellingham
I will not give way, because I am concluding.
As my right hon. Friend the Member for Chichester pointed out, dark clouds are blowing in over China and Greece. The parallels between China and Wall Street in 1929 are incredibly scary. In Greece, the oxi to austerity has already triggered a bond rout, to which Britain—with only 1%—is not overexposed. On the other hand, our much larger exposure to other economies on the periphery in relation to our banks’ capital buffers is hugely more worrying. Above all, the UK must continue to manage the economy prudently, and this Budget is a vital step in that direction.