Amendment of the Law

Robert Syms Excerpts

Wednesday 21st March 2012 Commons Chamber

[Mr Robert Syms (Poole) (Con)]

First, I draw Members’ attention to my directorship and shareholding in the Register of Members’ Financial Interests.

We have to understand that the coalition Government inherited an extremely difficult situation, with a massive deficit. The situation cannot be dealt with in one or two years; we are talking about a process over several years to get the public finances into reasonable order. Of course that would be easier with a benign world economy, but given the eurozone issue and higher fuel prices, there have been a lot of headwinds over the past 12 or 18 months. Nevertheless, the British economy has continued to grow and many jobs are being created, although the outlook is more difficult.

I welcome the fact that today the Chancellor has stuck to his plan—long-term fiscal consolidation. Clearly, there is very limited room for manoeuvre. I despair a little when colleagues are always trying to spend more money because, as we heard from the last Government, the money has run out. We are really talking about marginal changes to the tax system. Early in his speech, the Chancellor said that the Budget was fairly neutral in terms of its impact on the British economy, and that is probably right. Indeed, I am of the school of thought whereby I sometimes think it would almost be better to cancel the Budget and continue with the same policy rather than have to jump up and make lots of announcements and pretend that one is being hyperactive.

There are things in the Budget that I welcome. I certainly welcome the rise in personal allowances. It is vital that we increase incentives to work. Universal credit, when it comes in, will be vital in increasing those incentives, and the benefit cap is also significant. On the other side of the equation, it is important that people on low pay, who pay tax at higher rates than many people abroad, should be taken out of the tax system. We have made progress today, and I hope that we will make further progress in going beyond the £10,000 limit, because we have to get to a position in which people on relatively low wages really feel that there is an incentive to get out there, take a job and make a contribution for their family.

I welcome the Chancellor’s reiteration of his view that we should pay our way in the world by restoring the balance of trade, getting investment in, and trying to improve investment in the manufacturing sector, which has shrunk for too long. We need a good financial services sector, but it is vital that we nurse and increase investments in manufacturing. Recent announcements on the car industry are very welcome and bode well for future export levels.

One of the legacies of the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) is that we have one of the longest tax codes in the world. We must simplify it because businesses and individuals spend an awful lot of time trying to deal with its complexities instead of running their businesses and selling their products. I welcome the Chancellor’s proposed tax simplifications, which are vital.

Over the past few months there have been negotiations about the European Union treaty on more fiscal consolidation and co-ordination of tax policy. That gives Britain a great opportunity. If we can get our tax rates below those of our competitors on the continent, we will get a lot more inward investment. I welcome what the Chancellor has done on corporation tax, because we must reduce the rate. Let us not forget that most British companies are owned not by multi-millionaires but by pension funds. This measure means that we will leave more money in businesses and create a better environment for investments and pension funds, and that we will all be richer and more employed.

I welcome the Chancellor’s acknowledgement of the fact that we need to do more about airport capacity in the south-east. I recognise that there are problems to do with noise at Heathrow, Gatwick and Stansted, but it is not sustainable in the long term to say that we cannot have another runway at any of those airports; we have to have it somewhere. I do not know whether a new magic runway somewhere to the east of London is the answer. If we are to compete in the world economy, we must have routes to the world so that we can sell our exports. Some continental airports, including Schiphol in Amsterdam, Frankfurt and De Gaulle, now have routes to centres that we cannot accommodate within our system. We must have regard to the environmental problems but we must also, as a forward-thinking Government, consider how we can get more airport capacity.

The 45p tax rate has generated a lot of heat, although it is not happening yet. At the end of the day, one should try one’s best to raise money. The existing rate is not raising sufficient sums, and those who pay themselves greater amounts are in a good position to vary what they are paid in ways that give them opportunities to avoid taxes. Today’s approach has been to see capital gains tax and stamp duty on very expensive properties as a more predictable way of raising money than trying to maintain a rate that is not doing the job.

[Dan Byles (North Warwickshire) (Con)]

Given all the hoo-hah about the 50p tax rate, does my hon. Friend find it interesting that in its 4,753 days in government, Labour had a top rate of 50p for only 37 of them?

[Mr Syms]

Absolutely. Most of our competitors have lower top rates of tax, and that is significant because it means that this is about how we compete with them. If we want to get more manufacturing and jobs in Britain, then it is important to remember that some of the people who are looking to invest in Britain are top-rate taxpayers. It is significant that the stamp duty changes will raise five times as much as would have come in from the 50p top rate of tax.

I welcome what we are doing to encourage the oil and gas industry. It is important that we do more to use those assets. The changes that we made last year were not very helpful. One of the components of GDP that has fallen the most over the past 12 months is oil and gas and quarrying. If we want to maintain the advantages of our oil and gas industry, we need to do far more to extend its life. The tax changes in that area are to be welcomed.

Overall, the strategy has to be “steady as you go”. We have to increase the incentives to work. The main aim is to leave latitude for the Bank of England. As the Chairman of the Treasury Committee said, low interest rates and, certainly in the short term, quantitative easing will have more of a direct impact on the economy than anything that the Chancellor could have done fiscally today. If we have increased the incentives for lower-paid people to take work, if we have stuck to the plan, if we have given confidence to the markets, if we have made a number of announcements that will help the economy, such as those about broadband and investments, it is a job well done. I welcome the Budget.