Charter for Budget Responsibility

Paul Uppal Excerpts

Tuesday 13th January 2015 Commons Chamber

[Paul Uppal (Wolverhampton South West) (Con)]

I welcome the proposals today that enshrine into law sustainable public finances and aim for public sector net debt as a percentage of GDP to be falling in 2016-17. The argument today revolves around not whether we need to deal with the deficit but how to deal with it. Within that, we must remember that we live in a global market where capital, companies and people can choose where to live and where to be taxed, something that the Government are acutely aware of and have acted upon.

If we are to continue to reduce the deficit in line with the fiscal rules laid out today, aiming for public sector net debt to be falling in 2016-17, and the current budget to be balanced by 2017-18, we need to ensure that our tax system remains competitive. Tax competition and competitive tax rates need not be viewed as dirty words; they are an end to a stronger economy, higher employment and better public services. The problem is that the Labour party believes in two things: first, that higher taxes, corporate or personal, lead automatically to higher revenues; and, more worryingly, that taxation is not just a tool for raising money, but a punishment to be levied on success.

Instead of trying to tax more and more out of people and businesses already sitting around the table, we should be trying to attract more to the table itself, and subsequently ensure that they pay their taxes to the Treasury. Large multinationals choose where to pay tax. This is not the 1930s, where capital was difficult to relocate, although I secretly think that Opposition Members would like to take us back there.

On Sunday, the Leader of the Opposition said that there would be tax rises under a Labour Government. I hope that Labour will come clean about what tax rises it will impose on Britain. My fear, and, I suspect, the fear among Britain’s businesses, is that its first target will be corporation tax, undoing the hard work that we have done in the past four years and turning away companies that wish to be based here.

[Mrs Anne Main (St Albans) (Con)]

The other tax that my hon. Friend might like to mention is the redistributive mansion tax being proposed to send money north of the border to shore up the Labour party’s support there.

[Paul Uppal]

My hon. Friend makes a valuable point. In the current modern economy we need to encourage success. As Abraham Lincoln always said, no one is given a hand up by others being pushed down.

[Steve McCabe]

In the interests of coming clean, does the hon. Gentleman think that the Chancellor should come clean about VAT this time?

[Paul Uppal]

Everyone who is watching the debate today knows exactly where both parties stand on this. Come the May general election, most people will make a judgment on who has been clean about where we are on the country’s finances and where the future of its finances lie. That is the important thing.

We are starting to see the fruits of the UK’s low corporate tax economy. I read before Christmas that Ferrari is considering moving its headquarters to the UK to escape Italy’s high corporate taxes. Who would ever have envisaged the prancing horse fleeing Italy? That is a strong sign for the UK economy. I would rather companies locate to the UK, essentially importing tax, than threaten to leave, as we saw under the last Labour Government. Just to be clear, competitive taxes do not mean allowing or turning a blind eye to tax avoidance. The Government are tackling that with a target to raise at least £5 billion a year in the next Parliament from tax avoidance and evasion, with all the money used to help to reduce the deficit.

Focusing on corporation tax in this speech starkly illustrates the broader political chasm in the Chamber today and the short-sightedness of the Labour party. The top 100 companies in the UK employ nearly 10% of the UK’s work force and generate nearly a sixth of the tax take. By creating financial stability we have managed to achieve growth while still reining in Government spending, which the Leader of the Opposition said was impossible, then thought was possible, because it was happening in front of him, and apparently now thinks is impossible because we are months away from a general election.

Please do not take my word for it. Writing in The Times today, Paul Johnson, the director of the Institute for Fiscal Studies, says:

“If Labour is spending more—and if it doesn’t raise taxes—it will be borrowing more and, perhaps more important, presiding over a greater burden of debt.

The effect of this might be relatively modest in the short term, but borrowing as much as their rule would allow beyond 2020 would mean national debt about £170 billion higher (in today’s terms) by the end of the 2020s than would be achieved through a balanced budget.”

I would like to highlight one more important matter, and that is the impact that small businesses have on reducing the deficit and lowering the national debt. A competitive tax system does not just help large firms; it allows smaller companies to survive and grow. I am proud that more than a third of the country’s 1.2 million employers—around 450,000 firms—will no longer pay national insurance. This makes a huge difference to them, allowing them to take on more staff, lowering the unemployment rate and lowering welfare payments. I am proud that this has happened under this Government, and that exactly the same would happen again under a future Conservative Government.