Capital Gains Tax (Rates)

Mary Macleod Excerpts

Wednesday 23rd June 2010 Commons Chamber

[Ms Angela Eagle (Wallasey) (Lab)]

As the hon. Gentleman is talking about the Office for Budget Responsibility and its forecasts, will he have the good grace to note that its recent deficit forecasts are considerably lower than those in the March Budget because more money has been collected in taxes? The deficit that the hon. Gentleman is obsessing about is actually 2% of GDP lower than the forecast in the March Budget. Will he have the decency to recognise the other side of the coin, as well as this side of it?

[Mary Macleod (Brentford and Isleworth) (Con)]

The structural deficit is higher.

[Mr Ellwood]

As my hon. Friend the Member for Brentford and Isleworth (Mary Macleod) says from a sedentary position, the structural deficit is actually higher.

Let me deal now with total borrowing as stated by the Office for Budget Responsibility. This is now expected to fall by 2.1% of GDP by 2015, or by £37 billion, which is exactly half of what Labour were predicting, and to reach 1.1% by 2016.

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[Mary Macleod (Brentford and Isleworth) (Con)]

I am grateful for the opportunity to speak in this debate on a matter that impacts on the life of every person in the country, every minute of every day. I congratulate my hon. Friend the Member for Harrogate and Knaresborough (Andrew Jones) on his maiden speech, in which he spoke warmly about Yorkshire at its best, and said that his constituency was open for business. He took the words out of my mouth, because I was going to say that my constituency was open for business, and that shows how we need the whole country to be open for business after the Budget. My hon. Friend the Member for Carlisle (John Stevenson) also made his maiden speech, in which he spoke about regeneration. I am sure that he will be just and fear not in his time in the House.

This is a serious Budget for serious times. As my hon. Friend the Member for Bournemouth East (Mr Ellwood) reminded us, this is also a day when England were playing a serious game of football. On behalf of the House I congratulate our team on winning the game, and perhaps they will continue to win throughout the World cup.

I really do not know what planet the hon. Member for Derby North (Chris Williamson), who has just spoken, is on. He should be apologising for what the previous Government did to take the country to the brink of ruin.

[Guy Opperman]

The hon. Member for Derby North quoted some statistics at us about the degree of unemployment in his constituency. I am lucky enough to have the paper on unemployment by constituency from June 2010; handily, it was in my pocket as I walked into the Chamber. Without going back 13 years in relation to the Labour Government, let me say that the paper indicates that in Derby North in May 2005 there were 1,318 jobseeker’s allowance applicants, but that that has now gone up to 2,576—a significant increase, one might think, of 95.4%.

[Mary Macleod]

My hon. Friend is absolutely right. That proves that the Opposition are living on a different planet, and that they have not a clue about what they have really done to the country over the past 13 years.

This emergency Budget is very much about a plan for the future. We have shown that we are bold enough to make the tough decisions that need to be made. The Chancellor has been faced with a deficit of a size that we have never seen before. I commend his Budget and his determination to stick to the principles of responsibility, fairness and enterprise. Not acting to reduce the deficit is simply not an option. We are not in a position to decide whether to deal with debts or go for growth, as Labour would have us believe. We have seen from the recent crises in the eurozone that unless we deal with those debts, there will be no growth. This Budget is about achieving balance in our economy by paring spending to affordable levels and stimulating growth so that we can encourage business and enterprise.

[Mr Tom Harris (Glasgow South) (Lab)]

I hope that the hon. Lady will steer away from misleading the House into believing that the Labour Government did not wish to reduce the national deficit, because she must know that they proposed to halve it over a period of four years. Can she tell us with what part of that package she has so much difficulty?

[Mary Macleod]

The hon. Gentleman clearly has a very short memory of what the present Opposition did to the country. What we, as the Government, need to do now is address the present situation and, as we have done in the emergency Budget, come up with measures to turn it around.

Far from being reckless, as was suggested yesterday by the right hon. and learned Member for Camberwell and Peckham (Ms Harman), this Budget has shown that the Government are prepared to take on their responsibilities and make the tough decisions required. That is something that the previous Government neglected to do. We are putting the country first, and doing the right thing. What would be reckless would be to continue to allow debt interest payments to increase as they have been doing. The cuts that are coming are actually Labour cuts. We have inherited a mess far worse than we were told we would inherit before the election, and we are paying the bills for the last Government’s irresponsible actions. That is their legacy to Britain. If we carry on as we are, we may be paying about £70 billion in interest on our debt in five years’ time.

[Huw Irranca-Davies]

I said in my speech that no one could avoid cuts, efficiencies, choices, priorities and projects, but there is a choice to be made in terms of both timing and speed. I ask the hon. Lady to hesitate before saying that the proposals from the coalition Government are the only way forward. There are plenty of voices out there saying that there are other ways of doing this.

[Mary Macleod]

The hon. Gentleman spoke very movingly about the impact on his constituents. Let me reassure him that I believe that this is the right Budget for the future, and that his constituents will recognise that over the next five years. If we retain our current debt in five years’ time, however, we could be paying more in debt interest than on educating our children, policing our streets and defending our country, and that would be a disgrace.

The United Kingdom remained in recession for longer than the other G7 countries. Output declined for six consecutive quarters, and we now have the highest inflation in Europe. Continuing with business as usual simply is not an option, so we are faced with the task of making the unavoidable, and in some cases unpalatable, decisions that have been called for by the Governor of the Bank of England, the G20, and many in industry. Mervyn King has described the Government’s deficit reduction as “strong and powerful”. He said:

“I am very pleased that there is a very clear and binding commitment to accelerate the reduction in the deficit over the lifetime of the Parliament”.

The hon. Member for Caithness, Sutherland and Easter Ross (John Thurso)—I went to Lairg primary school, so I am very fond of his constituency—talked about the risks and pain associated with the Budget, but he also said that this was something that we had to do. I agree wholeheartedly with that. However, we have tried to do it in a way that spreads the pain that is so inevitable, while protecting those most at risk and establishing the conditions required to ensure future growth.

First, let us look at the impact on business. Businesses large and small have much to be hopeful about following this Budget. As in other constituencies, there are many such businesses in Brentford and Isleworth. They need a stable economic environment in which to prosper, and this Budget will deliver that. The cuts in corporation tax will benefit them greatly and encourage them to continue to grow their staff and expand their operations in the UK, and smaller businesses will appreciate the cut in the small companies tax rate from 22% to 20%.

However, let me tell Members what some of my constituents said to me when I spoke to them today. The chief executive of West London Business, who represents more than 800 businesses in west London, said:

“Overall we feel that this is a pro-business Budget and we are pleased with it: a key element is the reduction in corporation tax which is positive for all businesses; 89% of businesses in our area have fewer than 10 employees so they will be happy with the relief on national insurance payments for small businesses. Whilst CGT has increased, these are welcome allowances for business.”

I also spoke to Andrew Doggwiler of the Hounslow chambers of commerce. He said:

“It was a tough Budget with a lot of pain being shared around, aimed at reducing the public sector deficit and restoring the confidence of the international markets in the British economy…There are positives for business in terms of reduction in corporation tax rates, extension of the enterprise finance guarantee scheme and increase in the entrepreneurs’ relief, which indicates that the Government are keen to promote business success. The Government must continue to find ways to support businesses, particularly small and medium-sized businesses, as their success is the best way of ensuring a sustainable economic recovery creating long-lasting jobs and wealth.”

That is what businesses in the hearts of our constituencies are saying.

[Owen Smith]

I ask the hon. Lady to reflect on the views of others in business. Ernst and Young has already said that it feels the Government have not fully understood the long-term financial consequences of the cuts, by which it means the reduction in demand in the economy. May I also point to the view of an inward investor in my constituency, GE Aircraft Engine Services Ltd, which feels that the reductions in corporation tax will not offset the damage done to its ability to invest by the reductions in capital allowances that manufacturing relies on?

[Mary Macleod]

I understand what the hon. Gentleman is saying, but I have been in business for 20 years, and I could cite plenty of others, including Richard Lambert, director general of the CBI, and the OECD, which says the Budget is far-reaching and courageous, so we need to have a balanced view.

I believe very strongly in the enterprise-led economy that we have put in place, and we have the building blocks in place to support future industry. That is why I was pleased to hear that spending on many capital investment projects will go ahead. Naturally, I will put in a request for Crossrail, a much needed capital investment for London.

Secondly, we also have to tackle the excess costs. This Budget has tried to create the right infrastructure for the future, but it is vital that we tackle the excess costs within our economy and get control of the welfare state. I have received letters from, and spoken to, constituents who feel it is unfair that they have worked hard all their lives and have paid taxes and are living in modest circumstances, whereas others are not working and are being supported by the state in accommodation way beyond anything they could envisage for themselves. As the Chancellor said, some of these benefits have got completely out of control, and we must review these costs.

The Chancellor was also right to point out the waste that the benefits culture engenders, not only in a financial sense to the state, but in terms of the loss of talent from individuals themselves and the ongoing impact on self-esteem and stress on family life to which living in workless households can lead. I therefore welcome the proposals that the various welfare to work schemes will be combined and simplified to support people back into jobs. It is vital for the revised scheme to be as flexible and creative as possible, particularly when looking at ways to bring groups such as lone parents whose children are at school back into the work force.

Thirdly, I want to comment on departmental budgets, which will focus the minds of many of us here in the next few months. I certainly support the target of making savings of 25% in those budgets over the next four years. I have spent many years in business cutting costs in operations around the world and I feel that the 25% figure is challenging and tough, but definitely achievable and necessary.

Fourthly, I want to mention a group in our society who are often overlooked and about whom I am often reminded by my constituents—pensioners. We all know the facts about how many of us are living and thriving into old age these days, but after 13 years under Labour there are still 1.8 million pensioners living in poverty. Many of my retired constituents feel that the contribution that they have made throughout their lives to our economy and society as a whole is not recognised as they struggle to live on their pensions or, if they save money, as they are penalised by taxation policies that seem unfair. I am delighted that we will now be able to restore some of that respect for our older citizens by putting in place the link between pensions and earnings from next April, and through the triple-lock guarantee.

I met one of my spritely 70-year-olds the other day at a surgery. He asked for the Government’s support in helping him to go on working. He said, “I’m fit and well, I love my job, I’m perfectly able to carry on working and I want to be able to continue to do so.” I hope that I will be as energetic as him at his age, and I should like us to take people like him into account when we consider the future of the retirement age.

[Andrew Percy]

My hon. Friend talks about support for older people. Does she agree that one of the biggest costs for elderly people in the past 13 years has been the doubling of council tax that we saw under previous Governments? In north Lincolnshire, that was done year after year by the Labour council.

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[Mary Macleod]

I agree wholeheartedly with my hon. Friend.

I commend the Government for their plan to increase the tax allowance to £7,475, and I should like to see that go further. Perhaps that level will rise in the next few years. In conclusion, this progressive Budget has set us off on a journey of change. It is well thought out and it gives us a route map for the next five years. I commend the Budget and the courage that it shows in doing what is right for the economy and the country.