Budget Resolutions and Economic Situation

Tom Tugendhat Excerpts

Wednesday 8th July 2015 Commons Chamber

[Tom Tugendhat (Tonbridge and Malling) (Con)]

Thank you, Madam Deputy Speaker; I will stick as closely as I can to your request. I would first like to congratulate my hon. Friend the Member for Louth and Horncastle (Victoria Atkins) on her maiden speech. Her fantastic tour de force as the champion of her constituents was quite something. I was also grateful to hear—sadly by television, rather than in the Chamber—the maiden speech of the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell).

This is the first Budget that I have had the honour of hearing in this House. It is a delight to be able to support my right hon. Friend the Chancellor, because he has done some fantastic things for our country. The three that I will focus on are not exactly the same as those that have been extrapolated by so many of my right hon. and hon. Friends, which I will allow to stand on their own.

The first measure is the drop in corporation tax, which is linked, brilliantly, to the rise in the national living wage. That is an absolutely essential part of any Conservative manifesto, and it is absolutely right that my right hon. Friend has made it such a priority. Tying the amount that a company pays in taxation to the amount that a worker can earn is essential if we are to break the moment at which the state puts its hands in their pockets and, in so doing, merely adds grit to the engine of the economy. That is important because when taxes are taken the state charges for the privilege, and when it hands out benefits it does so again. By removing the state, all that happens is that both sides benefit.

The reduction in corporation tax will have a further effect: it will spur industry and help to spur international competition. The United Kingdom already has one of the lowest rates of corporation tax in the European Union. I welcome it falling down that list. As it falls and moves towards the rate that Ireland has adopted, we will have a greater ability to compete with others, and we will do better because of the industry of our people, not because of the intervention of our state. I am confident that that, in turn, will lead to an increase in revenue. That increase in revenue is absolutely essential for the things that we need as a nation.

We need one of those things very much. I am very glad to welcome my right hon. Friend the Chancellor’s decision to link defence spending to the UK’s GDP. By making that 2% commitment, he has effectively guaranteed an extra £6 billion of defence spending a year by the end of this Parliament in 2020. That is a very important sum not only because of what it will contribute to immediate defence, by which I mean the purchase of ships and aircraft and the hiring and training of soldiers, but because of the message it sends to our friends and allies. By tying ourselves to NATO’s 2% target, we are stating very clearly that we are a committed member of NATO, that we will face the aggressions we see around the world, and that we will face them squarely. We will stand with our allies and face our enemies. I am very proud that this Government have made that commitment.

[Bob Stewart (Beckenham) (Con)]

I thank my hon. and gallant Friend for allowing me to intervene. The commitment also sends to our armed forces the incredibly important message that this Government will be steadfast in their support, which will be very good for morale.

[Tom Tugendhat]

I welcome my hon. and gallant Friend’s comment. In fact, he pre-empts the next part of my speech. The amount we spend also points to our priorities as a nation, and he is right that this is vital for our future. It points to the importance of readiness. The amateurs always talk about numbers; about kit and money. The professionals talk about readiness, and they do so because that is what we get with those numbers. It is the morale that he talks about. It is the training and preparation that mean a group of young men are not a rabble, but an army; that a bunch of steel is not simply a welding exercise, but what my gallant friends in Her Majesty’s Royal Navy often refer to as Her Majesty’s sleek grey messengers of death. I am very pleased that the things I have described are what our soldiers, sailors, airmen and marines will be getting. This welcome increase comes as we are reconsidering our priorities as a nation at the time of the strategic defence and security review. I must declare a slight interest as my wife is working on it on behalf of the Foreign Office.

As the decisions are being made, I urge her and the Ministry of Defence to think hard about where they allocate this money. It could go to various areas. It could go, rightly, into a lot of the ship purchasing being done, whether that means the two carriers that are being built in Scotland, the submarines being built in Barrow or the equipment programme for the Army. But I would I urge that they put this money into the things that are so often overlooked: training and ensuring that our soldiers, sailors, airmen and marines are properly housed and that their families are cared for.

I also welcome the joint security fund, which is a fantastic development that puts into the defence budget the flexibility that has so often been lacking. Those of us who have worked in defence know that very often the size of the budget is a fiction, not in the sense that it does not exist but in the sense that it is unusable in any flexible sense. It is so committed to a carrier or a submarine programme that when we suddenly need money for something else we do not have it. The joint security fund is a brilliant development that will inject that flexibility.

For example, today it could be used to fund GCHQ, the Royal Navy or our Border Force to deal with the scourge of people traffickers and that vile crime, which exploits the poorest and most vulnerable across the world. In a few years’ time, perhaps it could be used to hire cyber-experts to address the threats that are already coming from China and Russia, attacking our NATO allies and our own businesses. In the future, who knows what it could be used for? It could be used to develop technologies to put spy cameras into the small brooches that some people wear, Madam Deputy Speaker. All those things are possible, as the fund is entirely flexible.

[George Kerevan]

One of the problems in our reconnaissance capability, particularly our maritime reconnaissance and drone capability, is that we have to import the equipment. When there is recognisably a gap, we will have to import it and that will add to our budget deficit. The OBR report accompanying the Budget statement shows a deterioration in the current account deficit to record levels. All that the hon. Gentleman is showing is the weakness in our manufacturing capability, and that has not been resolved in all the years of his Government.

[Tom Tugendhat]

The hon. Gentleman’s point is interesting, but I would argue that the manufacturing capability in our country for the defence technology we are talking about is largely there. The problem is that we are not bringing it together in a suitable manner. I urge the hon. Members from the Scottish nationalist party to support the development we need in the maritime patrol aircraft field and I would agree entirely with some of the comments made by the SNP that we must fill this gap with some urgency. I urge the Ministry of Defence to look hard at the money it will be getting and to use some of it to fill that gap.

Sadly, as there is a gap, I would urge the MOD to fill it with something that is more off-the-shelf than bespoke because of the urgency of the requirement, but if we look at the manufacturing capability across our islands, we will see that the technology required for the type of sea-penetrating radar and other such elements is completely available in the United Kingdom. We have a great series of businesses from the north of Scotland to the south of Cornwall, and some in west Kent, that can totally satisfy that requirement. I urge them to support us in ensuring that this capability comes about.

[Alison Thewliss]

Given the budget constraints the hon. Gentleman is talking about, does he consider Trident renewal to be a good priority in the defence budget?

[Tom Tugendhat]

Yes, I do, and on the same basis that I believe that insurance is not something that should be cut in good times.

The final element of my right hon. Friend the Chancellor’s speech that I welcome is the extension of the scope of the investigation into the Lewes-Uckfield line. I realise that this is a local priority, but, for those of us in west Kent, the ability to develop a rail link to the south coast will make the coastal powerhouse just as important as the northern powerhouse.

This Budget does many things to help the people of the United Kingdom and those of Tonbridge, Edenbridge and Malling. In my own constituency, 839 people have been lifted out of tax and nearly 50,000 will benefit from the increase in the personal allowance. Along with the fuel price freeze, this is going to be one of the most important and welcome Budgets in west Kent. I welcome the Chancellor’s commitment to fairness and to the principle that he has made very clear today, namely that work will always pay and that the state will stop creaming off the labour of the people only to give them their own money back.