Amendment of the Law

Mark Garnier Excerpts

Friday 23rd March 2012 Commons Chamber

[Mark Garnier (Wyre Forest) (Con)]

Like all Members, I am frequently visited by members of my community asking for many things that the Government can do to help their businesses or special interest groups. I have recently taken to asking them what they would do if they were Chancellor of the Exchequer for the day. I ask them to come up with three ideas, and invariably they come up with a whole load of ideas, and after a few minutes I have to say to them, “I’m terribly sorry, but you’re Chancellor for the day, not Father Christmas.” Once they have been told, people realise that when our back is against the wall, it is vital that any budget has to be balanced. Anybody who knows how to run a business knows that they simply cannot carry on borrowing to stimulate that business. Cuts have to happen, and it is important that we all share the burden of those cuts. Labour is keen to ask those on this side of the House how we will be affected by them and what our interest in them is.

[Kelvin Hopkins (Luton North) (Lab)]

The hon. Gentleman says that businesses cannot live on borrowing, but they have to borrow in the short term, and surely part of the problem is that the banks will not lend to them.

[Mark Garnier]

That is a slightly wider point, but the fact is that when someone has run out of credit on their credit card, they can use the debt that they already have, but they cannot increase it.

Many of us on this side of the House have a vested interest in the cuts. I declare an interest, in that I shall be £2,450 a year worse off as a result of child tax credit cuts, but the other side of the coin has to involve stimulating economic growth. The problem is that the Chancellor does not have a volume knob on the economy that he can easily turn up. He has to use a number of different measures. There is no simpler way to generate quick economic growth than to import investment from overseas, but to do that we need to demonstrate that we are open for business and competitive. We need a tax regime that attracts inward investment. That is why I see the combination of the accelerated fall in corporation tax to 22% by April 2014 and the cut in the top rate of income tax to 45p as crucial to the opportunity that we offer to international companies and entrepreneurs looking to set up their businesses in the UK.

I cannot overstate the importance of that international competitiveness. Brintons carpets in my constituency has recently been reviewing its operations. It is absolutely committed to Kidderminster, but it has received overtures from the Portuguese Government, who are offering free loans and grants for it to move its carpet looms to Portugal to increase manufacturing there. This is a real threat to UK manufacturing and to my constituency, but that threat is significantly diminished when the corporation tax differential is increased to 7 percentage points. The top rate of income tax in Portugal is 46.5%. In other words, Brintons would have a 33% higher corporation tax bill by moving to Portugal. The managing director of Brintons assured me last night that this was absolutely a pro-business Budget.

Those two tax measures represent an important step towards achieving the relatively quick fix of attracting inward investment, and making it harder to justify leaving the country, but it is incredibly important that we support this with home-grown prosperity that will provide opportunities for local entrepreneurs. The Government have already introduced measures to help small and medium-sized enterprises, as well as announcing the business enterprise zones.

I must confess to being disappointed that my constituency was not granted such a zone, but it is a credit to the local enterprise partnership and Wyre Forest district council that the South Kidderminster business park continues to be a reality. We have just had a planning application submitted for a new development of 27 hectares of mixed use, including a 4 hectare employment development, retail, hotels, a restaurant and a café, care and crèche facilities, a railway halt for the Severn valley heritage railway, and up to 250 new homes. That planning application demonstrates a strong commitment to my constituency by a far-sighted investor, and follows on from two significant investments in local businesses— £36 million in Brintons carpets and £15 million in Sealine yachts—and precedes a further planning application to create a 250-room conference facility at the West Midlands Safari Park that will be the premier facility in the county. In addition, a brand new Premier Inn hotel is opening today in Kidderminster.

I am not trying to pretend that everything is entirely rosy, but it is important to balance negative news with all the positives, and there is a lot of positive news about. It is also worth remembering that unemployment, although too high in Wyre Forest, has remained flat since 2010, having doubled in the years between 2005 and 2010. A strong local will to make a difference is incredibly important and, if I may, I will use this opportunity to plug my jobs fair, which is being held in Kidderminster next Thursday. It will try to match those who are looking for jobs with businesses that are hoping to expand.

The key point, however, is that an enthusiasm to do well locally and to run with initiatives—from something as simple as a jobs fair to something as strategic as significant local investment—has to be balanced by support from the top. That can be illustrated by the fact that the recently announced Kidderminster college tie-up with Birmingham Metropolitan college to provide high-tech courses in the video, animation and gaming arena will benefit hugely from the announcement yesterday of tax reliefs in that industry. I should declare an interest as I am a governor of Kidderminster college. Cutting red tape for micro-businesses, giving research and development credits above the line, introducing measures to make the UK a centre for technology for Europe, and other measures will help to create opportunities for a whole raft of small businesses to start up and develop.

Mr Speaker, you will note that I am an enthusiast for this Budget. I am absolutely convinced of its pro-business credentials and I broadly welcome them, but I have one or two points that I would like to raise. I am pleased to see the Secretary of State for Transport in her place. The High Speed 2 project will certainly bring benefits to Birmingham, the main city of the west midlands and the second city of this country. I urge the Secretary of State to look into the possibility of building a new regional hub airport in Birmingham to reinforce the important link that HS2 will provide between Birmingham and London. A hub airport would certainly be of huge benefit to the economy of the west midlands, and indeed of the midlands as a whole.

I also want to sound a note of caution about the regionalisation of pay scales. I completely agree with the logic that the private sector will be unable to compete with the public sector on pay when the public sector pays as much as 18% more for equivalent jobs in the regions.

[Sheila Gilmore (Edinburgh East) (Lab)]

The areas in which public sector pay tends to be higher than that in the private sector also have extremely high unemployment. I am therefore puzzled by the idea that high public sector pay is preventing job vacancies from being filled, or that there are any such vacancies as a result of this so-called problem. That does not appear to be the case, given that there are so many people chasing each job.

[Mark Garnier]

If I may, I shall develop my point. I am not entirely unsympathetic to the hon. Lady’s point, but the important point is that private sector pay is not set on a national basis—

[Helen Goodman]

Some of it is.

[Mark Garnier]

Not all of it. Small businesses do not set their pay on a national basis. It makes complete sense that public sector pay should be treated likewise, and in the broadest sense I welcome the freeze on regional public sector pay awards, but I have one caveat. Moving public sector jobs around the country—especially in Government Departments such as vehicle licensing, which went to Swansea—brings cash to a local economy. That cash can provide economic activity and liquidity that supports jobs in the local private sector that might otherwise struggle. While the public sector regional pay adjustment is going on, I urge the Government to take careful note of what is going on locally, to ensure that the proper efforts to reduce the crowding-out of the private sector by the public sector do not unwittingly starve the private sector of much-needed local liquidity.

I also worry about the rising cost of fuel for our constituents. This is a huge burden on families and although the increase in tax-free allowances is welcome, the rising cost of fuel is an issue for rural and semi-rural constituencies such as mine. I welcome the help that the Government have given—we are 10p better off than we would otherwise have been—but there are two further issues to consider. The first is that fuel companies charge consumers what they can get away with locally. Prices in Kidderminster are around 5p dearer than they are in the constituency of my hon. Friend the Member for Bromsgrove (Sajid Javid), for example. On writing to the chief executives of Tesco, Sainsbury and Texaco, I was told that prices were set locally. When I contacted the local managers, they told me that the prices were set regionally. Whatever the method of price setting, the fuel companies are ripping off my constituents in Wyre Forest and I want them to stop.

When we compare the price of oil to pre-tax profits over the years, we see that the oil companies are simply not passing on extra profits to consumers. Indeed, they are making extra profits from consumers. Of course duty and VAT are part of the price of oil, as is the dollar-sterling exchange rate, but the underlying commodity price at the pump is the key component, and any means by which the Government could persuade the oil companies to pass on their profits to consumers would be gratefully received.