The Economy

Nicholas Dakin Excerpts

Tuesday 11th December 2012 Commons Chamber

[Danny Alexander]

The Government are trying to move to a system of payment by results. Too often the model of spending under the previous Government was payment for absolutely no results—[Interruption.] I will make some progress, despite the shouting from the second row of the Opposition Benches.

The Government know how important businesses are to growth, and we are taking the necessary steps so that businesses can increase employment and exports and lead the country back to prosperity. That is why we have announced, among other things, an extension of the small business rate relief scheme that will benefit over 500,000 small businesses. The extension of empty property rate relief to newly built commercial property has been called for by Members across the House, and I hope it will enable commercial property development to move forward in many parts of the country that have recently been blighted.

We have announced increased funding for UK Trade and Investment to support the growth in exports, particularly in emerging markets, alongside a substantial new trade finance scheme that will significantly help medium-sized exporters looking to win new markets across the world. Most importantly, we have announced an increase in the annual investment allowance limit from £25,000 to £250,000 for a time-limited period of two years—a capital allowance relief that I hope will send a signal to medium-sized manufacturers that now is the best time to invest in new plant and machinery. I pay particular tribute to my hon. Friend the Member for Burnley (Gordon Birtwistle) and the Liberal Democrat campaign for manufacturing that he has set up for arguing so cogently and strongly for that measure.

The Government have also announced a further drop in corporation tax to encourage investment in the United Kingdom. From April 2014 the rate in Britain will stand at just 21%—significantly lower than current levels in France, Germany or the USA. We want the world to know that the United Kingdom is open for business and that companies that invest and employ people in this country are very welcome. At the same time, however, Her Majesty’s Revenue and Customs is also receiving a further £77 million in this spending review period to ensure that where taxes should be paid, they are paid—I am sure that even the shadow Chancellor welcomes that. That increase, on top of the £900 million I announced at the spending review, will mean that HMRC will bring in total additional revenues of £9 billion each year by the end of 2014-15.

Our agreement with Switzerland to recover previously unpaid UK tax is expected to bring in a further £5 billion over the next six years. We have signed a ground-breaking agreement with the United States on automatic exchange of information, setting a new standard in tax transparency. Today we are publishing the draft Finance Bill for 2013, which confirms the introduction of the UK’s first ever general anti-abuse rule in the tax system. That measure will act as a significant deterrent to all those engaged in abusive tax avoidance. It could have been introduced at any point in Labour’s 13 years in office, but it was not. That is an example of the failure to act on tax avoidance and evasion that we saw during that time. This is not just a matter of finance; it is a matter of principle. Millions of small businesses and tens of millions of people across the UK pay the proper amount of tax, day in, day out. Ensuring that people cannot avoid our tax system is a priority for the Government so that the burden can be spread fairly.

There has been a lot of recent interest in this area, particularly with regard to the tax payments of specific multinational companies. I will not comment on individual cases but I am sure that all businesses, large or small, will take note of the reaction of the British people to recent events. Everyone understands that we must all work hard to get the economy going again and that businesses will play a key role in ensuring that growth. The reaction also shows that people believe that those at the top who earn or profit the most should also contribute the most. I agree with that—yes, we want a stronger economy, but we also want a fairer society.

Measures announced by the coalition last week will help millions of people across the country who are working hard. I am proud that we will be increasing the income tax personal allowance by a further £235 next April. That will mean that 2.2 million people have been taken out of tax by this Government, leading to around 20 million people being nearly £600 a year better off from next April. That is £50 a month extra in people’s pockets as a result of the Government’s measures on income tax and is, quite simply, the biggest income tax cut for working people in a generation—from the front page of the Liberal Democrat manifesto to the pockets of 24 million working people.

I am also proud that the coalition Government are cancelling the fuel duty increase that was planned for next month.

[Nic Dakin (Scunthorpe) (Lab)]

Will the Chief Secretary to the Treasury remind the House which page of the Liberal Democrat manifesto the increase in VAT was on?

[Danny Alexander]

No, because it was not there. That was one of a number of difficult choices that we as a Government have had to make to clean up the mess in the British economy that was left by the hon. Gentleman and his colleagues.