Amendment of the Law

Nadhim Zahawi Excerpts

Monday 28th March 2011 Commons Chamber

[Mr Pickles]

In a moment.

I am proud to say that we are able to set aside £3 billion to support councils with a freeze on spending, and that is despite the mess that the Labour Government made of our nation’s finances. It sounds as though some on the Opposition Benches would like to wash away the past few years and drown out their bitter legacy: record national debt; unsustainable public spending; and a crushing burden on ordinary families.

The Opposition do not like to admit that their Labour Government planned spending cuts of £44 billion by 2015. Labour’s cuts were to be front-loaded cuts, with £14 billion of cuts falling this April, and Labour’s spending plans would have made bigger cuts to housing, regeneration and local government.

On Saturday, the Leader of the Opposition should have told the crowds the extent of Labour’s cuts. That would have been much more convincing, as hon. Friends have said, than comparing himself to Martin Luther King or, more bizarrely, to Emily Pankhurst.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

Will my right hon. Friend give way?

[Mr Pickles]

In a moment. I am sure that my hon. Friend would like to hear this point.

Perhaps that omission prompted the right hon. and learned Member for Camberwell and Peckham (Ms Harman) to say today on “The Daily Politics” that a Labour Government would have employed fewer people in the public sector. I have obtained a transcript of the interview, and the interviewer said:

“Some of the people on that march, some of those people listening to Ed Miliband, would have lost their jobs under a Labour Government. Yes or no?”

The right hon. and learned Lady was wise enough not to give a yes or no answer, and said:

“Well, I think that basically we would see, err yes, fewer people employed in the public sector.”

[Hon. Members: “Ah!”] Yes. I think “err yes” neatly covers the point.

[Nadhim Zahawi]

Does my right hon. Friend not think it bizarre that the Leader of the Opposition chose to compare his party’s struggle to that of apartheid?

[Mr Pickles]

Well, I suppose there comes an occasion, you turn up, there’s a lot of people there—and you just start to talk. These things happen, and we should be in a forgiving mood. I mean, anybody can compare themselves to Martin Luther King.

--- Later in debate ---

[Caroline Flint]

For goodness’ sake. I have always put on record my pride in what the Labour Government did to ensure that this country recovered from 18 years of Tory rule. Whatever my disagreements with them, I will never take that away from any of our leaders of the past 13 years.

This Budget has offered more of the same. The Government claimed that it was a Budget for growth, but we got nothing of the sort. Only a few weeks ago, the Chancellor told us that it would be an “unashamedly pro-growth Budget”, as though economic growth was something that he would normally be embarrassed about. What the Government should really be embarrassed about is that as a direct result of their policies, the Office for Budget Responsibility has downgraded its growth forecast not once but twice. Now we know that growth was down last year and will be down this year and next year. The only things that are growing at the moment are the prices in the shops and the number of people out of work.

[Nadhim Zahawi]

Let’s try again. Does the right hon. Lady think that, in the court of public opinion, people blame Labour for the economic mess that we are in?

[Caroline Flint]

I think we are doing quite well in by-elections, but I do not take the public for granted, and I know that they believe the deficit should be tackled. That is quite right, and I absolutely agree. However, as every day goes past and people see the choices that the Government are making, they say that they are going too far and too fast. That was expressed on Saturday, and it will be expressed on 5 May.

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[Nadhim Zahawi]

rose—

[Caroline Flint]

I have already given way to the hon. Gentleman, so I am going to make some progress.

I turn to some of the measures announced in the Government’s plan for growth. I think we would all agree that the planning system shapes the places where people live and gives character to our communities. It helps us to protect our natural and historic environment, and it should ensure that everyone has access to green space and unspoiled countryside. It is crucial for growth, because it supports economic development, helps to create jobs and contributes to our prosperity as a nation. I have never shied away from the fact that we as a country need to build more homes, and that our planning system has to support that. When the Government were elected, they promised bold, radical reform of the planning system that would speed it up, reduce bureaucracy and support growth. Let us look at what has happened.

Following the Government’s chaotic and botched reforms to the planning system, there has been a dramatic fall in the number of planning permissions for new homes, which are now at a near-record low. The figure for the third quarter of 2010 was the second lowest seen in the past 19 quarters, and in the last quarter of 2010, new planning permissions were down 22% on the previous year. It is no good the Government blaming the previous one, because things have got worse and not better since they came to power. The biggest drop of all came just after the last general election. In the first quarter of 2010, before the election, more than 40,000 planning permissions were granted to developers for new homes, but by the third quarter, after the election, that had fallen to just 30,000.

The Chancellor sought to address that last week, but I am afraid that in doing so, he sounded the death knell of localism. I offer my condolences to the Communities and Local Government Secretary for the demise of localism, because after months of the Government pledging power to the people—neighbourhood plans, communities in the driving seat and so on—the Chancellor blew localism out of the water in a single sentence. He said that

“from today, we will expect all bodies involved in planning…to prioritise growth and jobs, and we will introduce a new presumption in favour of sustainable development, so that the default answer to development is yes.”—[Official Report, 23 March 2011; Vol. 525, c. 956.]

I cannot recall cheers from Government Members when that was said. While the Secretary of State trumpets devolving power to local people and promises to give them a real say in the development of their area, the Chancellor wants to make it easier for developers to bypass the planning system altogether. They cannot both be right, which reinforces the confusion that has paralysed the planning system in the past 10 months.

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[Nadhim Zahawi (Stratford-on-Avon) (Con)]

As a nation, we borrow almost £150 billion a year. That is £12.5 billion a month, £410 million a day or an incredible £4,745 every second. By the time I sit down, we will have borrowed another £1.7 million. That is the economic reality that we face, and the reason why balancing the books and business growth are so vital to our country. As an entrepreneur and business man I feel that I have some knowledge of what will damage and what will encourage growth in business, and I am delighted to say that the plans set out in the Budget are most certainly of the latter variety.

I ask Members to imagine, if they will, that we are a group of men and women who are considering setting up or expanding a business. Times are tough, but there are now a number of incentives that can help us make up our mind. One of our earliest decisions is where to site our business. In the early stages, we want to make our capital and that of our investors go as far as possible, so we settle on an enterprise zone, where we get up to a 100% discount on business rates, new, superfast broadband and, as a manufacturing firm, access to enhanced capital allowances, giving us relief on investment in plant and machinery.

At the beginning, like many businesses, our budgets are tight and banks are unwilling to lend, so we look to angel investors for support. The enterprise investment scheme offers tax relief to those investors, and thanks to the Budget the income tax relief on an investment has been increased from 20% to 30%, and the amount that an individual can invest in our business has been increased by 400%. Those changes will make investing in our business, which is an obviously excellent proposition, even more attractive.

[Heather Wheeler (South Derbyshire) (Con)]

Does my hon. Friend agree that businesses in my constituency will grow because of the reductions in corporation tax in the Budget?

[Nadhim Zahawi]

My hon. Friend is absolutely right, and I shall come to the effect of corporation tax in a moment.

As a result of the measures in the Budget that I described, our business has raised early stage finance and begun an expansion programme. As a small company, our R and D tax credit will increase from 175% to 200% this April, and to 225% this time next year. That will allow us to invest in products for the future, helping us to carve out a real niche in the market and to sell our products to the rest of the world. That is crucial. In the real world, that helped me and my business, as we evolved YouGov and invested in its future.

Often the smallest things such as changes in regulation, red tape, and complicated tax and health and safety rules greatly affect businesses.

[Charlie Elphicke]

Does my hon. Friend also welcome the Budget because it represents a vast crackdown on regulation? That will help businesses in Dover and Deal as much as those in his constituency?

[Nadhim Zahawi]

My hon. Friend is absolutely right. That is exactly what the Budget would do for our imaginary business. Three hundred and fifty million pounds’ worth of regulation will be scrapped, the dual discrimination rules in the Equality Act 2010 will be ended, Lord Young’s recommendations on health and safety will be enacted, and new business regulations for the smallest business will be stopped. That is a great starter for 10 from the Chancellor.

As my hon. Friend the Member for South Derbyshire (Heather Wheeler) rightly pointed out, our corporation tax has been reduced by 2% this year, and by 2014 we will be paying the lowest corporation tax in the G7—16% lower than in the US. Many say that that is just a tax cut to line the pockets of business owners, but I disagree. Business owners know that every extra £1 paid in corporation tax is £1 less to reinvest in their business to support growth and job creation, which the Labour party seems never to have understood.

Lowering corporation tax is vital in attracting new, overseas business to the UK. Corporation taxes are not the sole attractor, but they and tax certainty are important in attracting overseas investment. The fact that chief executive officers, such as that of WPP, have announced that their companies are coming back to the UK is testament to that, and today’s letter in The Daily Telegraph from the leading private equity houses reiterates the point.

Let us go back to our little business, which is growing, employing more people, and making more and selling more to the world. However, the cost of fuel is hurting us, and we watch our costs and those of our suppliers increase with transport costs. Luckily, the Government are listening. They feel our pain, and decide to deal with the high petrol price. Under the previous Government, our fuel duty would have shot up by 6p in three days’ time. After all, by the end of their 13 years in power, 75% of the cost of fuel was taxation.

For the employees of our company, the 45p per mile allowance is another huge milestone. The allowance has been 40p for so long that most young people in work cannot remember it ever increasing. That amount was out of step with economic reality. This increase not only makes sense, but is vital for those in business who use their own vehicles, and is particularly helpful to the self-employed. It also, by the way, helps voluntary organisations such as Voluntary Action Stratford-on-Avon, whose volunteer drivers provide such an excellent service.

I return to our little business. What happens if we are successful, and if through our hard work and entrepreneurship it grows, and another business wants to buy us, or we want to float our company? Thanks to the Budget, our capital gains tax relief for entrepreneurs has been doubled to £10 million, increasing the reward for our hard work and investment, and encouraging more individuals to invest in their own business. As you can see, Mr Deputy Speaker, our hypothetical company, like millions of real-world start-ups, will have been aided by the announcements in this Budget. It is a Budget for growth, and through it many start-ups and small firms will get a fighting chance to be a great success. I commend the Budget.

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[Nic Dakin]

The alternative is to go much more slowly and much more carefully so that things can be managed out there in the real world. [Interruption.] I am sorry that Conservative Members just do not understand the difference between double and half. They simply do not understand it, but perhaps that will get through to them over time.

[Nadhim Zahawi]

rose—

[Nic Dakin]

I turn to deal with aspects of regulation and economic reform.