Amendment of the Law

John Bercow Excerpts

Thursday 22nd March 2012 Commons Chamber

[Several hon. Members]

rose—

[Mr Speaker]

Order. Angie Bray will be the next speaker, but before calling the hon. Lady I inform the House that, in view of the large number of Members seeking to contribute, the time limit for Back-Bench speeches will now be five minutes, with immediate effect.

--- Later in debate ---

[Neil Parish]

I am interested in why you say that it is dubious to cut the rate from 50% to 45%, when in 13 years of your Government, you did not put it up from 40% to 50%.

[Mr Speaker]

I am extremely grateful to the hon. Gentleman, but I am not sure why he refers to my Government. There should be no reference to my Government in these matters.

[Neil Parish]

I meant the Government of which the hon. Member for Edinburgh North and Leith (Mark Lazarowicz) was a member.

[Mr Speaker]

I am sure that that is what the hon. Gentleman meant. It would be good in future if that is what he said.

[Mark Lazarowicz]

Those points were covered earlier in the debate.

I want to highlight the problems for businesses in my constituency. I say again that a cut in VAT would certainly make a difference for businesses in my constituency that are on the brink. Such a reduction in VAT would increase business activity, increase sales, increase the taxation income of the Exchequer and decrease unemployment, with a consequent cut in spending on benefits. The boost for smaller retailers and smaller companies in the construction sector would have other beneficial effects. From my constituency office, which is in a street that is still relatively well occupied, I can see shops and businesses closing and the resulting cycle of deterioration not only in the local economy, but in the local environment. I can see that happening in my constituency. That is why I believe that the temporary reduction in VAT that we have called for would be a great boost not just for business, but for the wider economy.

There were some announcements in the Budget that will benefit my constituency. There was confirmation that Edinburgh will be one of the cities that will benefit from superfast broadband and the green investment bank was also mentioned. However, those two announcements have been made a number of times already. The announcement about superfast broadband for Edinburgh and a number of other cities was made at the end of last year. The fact that the Chancellor chose to highlight those innovations again only goes to show the lack of imagination in the Budget when it comes to growth. We could have had a Budget for jobs and growth. Instead, we had a Budget with very few specific policies. That is regrettable and it is bad for the country.

I hope that the Government will change course and reduce VAT, if not in this Budget, then at a later stage, to support smaller businesses in the construction sector, which would benefit greatly from such a change.

[Kwasi Kwarteng (Spelthorne) (Con)]

I am pleased to have the opportunity to speak in the Budget debate, because we had a significant Budget yesterday.

We have to consider what the Chancellor said in the Budget in the context of 10 years of Labour profligacy in public spending and in the context of the international economy. The Office for Budget Responsibility has been clear about the problems that face the British economy. There are structural problems caused by too much debt, which in turn was caused by too much spending. It is clear to everyone that spending more money or running a greater deficit would not help to get us out of this situation. The Government are doing what they set out to do and they are reducing the deficit. The Budget yesterday was a step in the right direction. We are trying to cut regulation and to encourage enterprise and aspiration. All that was clear in the Budget.

I would like to talk about tax cuts. The most significant tax cuts in yesterday’s Budget were not at the top end of the income scale, but at the lower end. It was an historic step to take hundreds of thousands of people out of taxation. It is striking that in this debate, the Labour party has made no comment about that. It has not given us the courtesy of saying that it agrees with the proposal, nor has it opposed it, yet it was the most significant move in the Budget.

There were other, perhaps more controversial moves, such as cutting taxes for wealthier citizens and subjects, which have created some debate. It is received wisdom, I think, that high taxes did not stimulate economic growth. Some Members will remember that there was a 98% super-tax in the 1970s, and we were a very highly taxed nation. Other Members were here when Nigel Lawson cut the top rate of tax from 60% to 40%. That was so successful that in 12 years, Labour did not touch it. It always accepted that 40% was a reasonable and good tax rate, not because it was friendly to the rich but because Labour’s leadership realised that there needed to be incentives to make the economy grow.

[Mr Speaker]

Order. I think the hon. Gentleman was referring to his noble Friend the Lord Lawson of Blaby. It would be good to preserve some of the courtesies of the House.

[Kwasi Kwarteng]

Indeed. I am very grateful to you, Mr Speaker, for putting me in my place. I will refer to him with proper courtesy with his title. The Budget in which he cut the top rate—the 1987 one, I believe—was the most significant in recent years, and only latterly have a series of political games been played and has the top rate been increased. Other Members have referred to that, and it is an elephant trap that the Government have mercifully dodged.

We have to consider the Budget in its national context, but also in an international context. It is no good our having worthy debates here without referring to what is going on in the rest of the world. I was very pleased to see that the Chancellor had finally realised that aviation capacity in the south-east is a massively important issue. The fastest-growing cities in the world need to have more connections. We will not be able to make money or trade with them without connections, and the Chancellor’s step of recognising the problem is mature and bold.

While we are focusing on spending and regulation, we have to realise that other parts of the world such as China, India, Brazil and places in the middle east such as Dubai have favourable regimes for business. If we are to compete seriously with those countries and their regimes, we will have to do an awful lot more even than we are doing to make ourselves competitive.

The Budget was excellent and a step in the right direction, although we need to do more to meet the targets that we have set ourselves. The Office for Budget Responsibility has said that it is looking for 3% growth in 2015 and, to meet that, we will have work an awful lot harder.

--- Later in debate ---

[Pauline Latham]

I do not know how you have calculated that for my constituency, because I am not even sure you know where it is. We are looking after pensioners. They will not be losing what you are talking about. They are getting a bigger increase than ever from the triple lock, and we are increasing their allowances. There will possibly be a year when some people will have to pay slightly more tax, but not the majority. Most people will not be spending any more money, and they will certainly not be losing any more money next year compared with this year, so you might like to look a little more carefully at what we are doing.

[Mr Speaker]

Order. I gently remind the hon. Lady, as I did the hon. Member for Tiverton and Honiton (Neil Parish) earlier, that we direct debate through the Chair. I am not involved in these arguments.

[Pauline Latham]

I do apologise, Mr Speaker.

The change to child benefit is also something that we should welcome, as it shows that the Chancellor has listened to what people out there have been saying. There will not be a cliff edge, as people have suggested, and no one earning £50,000 or less will lose anything. Only when people earn more than £60,000, which is quite a lot of money, will they lose their child benefit.