Business and the Economy

Stephen Mosley Excerpts

Monday 14th May 2012 Commons Chamber

[Stephen Mosley (City of Chester) (Con)]

It is a pleasure to follow the hon. Member for Stoke-on-Trent Central (Tristram Hunt). At one point, I thought that he might actually admit that the problems in our economy had been generated over the past 10 years rather than at the time of the general election. He almost did that, but not quite.

Most people appreciate that if we run up a massive credit card bill, the longer it is ignored, the worse the debt gets, and the more it costs to repay. The disastrous condition of the British economy and the public finances that we inherited just two years ago cannot be underestimated, yet Labour fails to accept responsibility for the damage that it inflicted and also refuses to agree on any sensible measure to help to clear up its mess.

The decisions that this Government are taking to rebalance our economy and build for a sustainable future might not be entirely popular in the short term, but they are the right long-term decisions to take. If we compare our current economic situation with those of countries to which we were most closely linked when the coalition took office—countries such as Greece, Spain, Portugal and Italy were also borrowing massively more than they could afford—we can see the different paths that have been taken over the past two years. We need only to watch the news, read the newspapers or look at interest rates to see that whereas the UK can borrow today at less than 2% interest, Italy pays 5.4%, Spain over 6% and Greece over 22%. It is plain for all to see the dire straits from which we have been rescued by the Government.

Reducing the deficit must be and is the No. 1 priority of the Government. Their plan is supported by the International Monetary Fund, the OECD, the Governor of the Bank of England and the major credit rating agencies. Indeed, both the IMF and the OECD have said that without reducing the budget deficit there can be no sustained growth.

Yes, it is fair to say that growth has not been as we had hoped over the last two years. The international situation and the continuing problems in the eurozone have proved to be a drag on the UK economy, but the reality is that the tough decisions we have taken to clear up Labour’s mess have laid the foundations for long-term growth and prosperity. Consequently, the IMF now forecasts the UK to grow at twice the rate of Germany over the next year and three times faster than France. The coalition Government have set our country’s economy in the right direction, and the measures outlined in the Queen’s Speech will help to ensure that we continue with that underlying mission.

On the specific measures in the Queen’s Speech, I welcome the announcement of an enterprise and employment Bill. As the Chancellor has set out on numerous occasions, the Government have four overarching ambitions for the British economy: first, to create the most competitive tax system in the G20; secondly, to make the UK the best place in the world to start and grow a business; thirdly, to encourage inward investment and exports; and, fourthly, to create a more educated and flexible work force.

On tax, we have reduced the headline rate of corporation tax, meaning that it will fall to 22% by April 2014, with the small business rate falling to just 20%. We have scrapped Labour’s jobs tax; we have doubled entrepreneurs’ relief; and we have announced numerous measures to address the complexity of the tax system. To help businesses take off and grow, we have improved the Government’s Business Link service and we have introduced a new business mentoring programme. We have launched a national loan guarantee scheme, providing up to £200 billion-worth of guarantees, allowing banks to offer lower-cost lending to small and medium-sized enterprises.

On exports, the Government have set out major new initiatives to help more SMEs to export and to help larger companies seeking to win major overseas contracts. On skills, we have vastly expanded the availability of apprenticeships through funding incentives and the slashing of red tape. The introduction of the enterprise and employment Bill will build on the work already achieved and help to make Britain one of the most business-friendly countries in the world.

I welcome, too, the introduction of a banking reform Bill. Labour’s failure to fix the roof while the sun was shining played an enormous part in our economic downturn, and the culture of unrestrained risk practised by the banks, at the expense of hard-working savers, certainly made a bad situation worse. Again, building on the action taken in the first Session of this Parliament, the banking reform Bill will help to protect us from the prospect of a similar banking crash occurring in the future. The recommendations of the Vickers report are to be welcomed. It is right that banks should not be able recklessly to gamble with people’s hard-earned savings. We need proper regulation, and I look forward to the Bill being put before the House.

I warmly welcome pretty much all the Government’s programme as outlined in the Queen’s Speech. Rome was not built in a day, and our economy cannot be rebuilt in just a couple of years, but the last two years have put the foundation stones in place for a prosperous and a sustainable future. We achieved a great deal in the first Session of this Parliament, but there is still a great deal more to be done. Last week’s Queen’s Speech is an excellent step in the right direction.