Budget Resolutions and Economic Situation

William Wragg Excerpts

Thursday 9th July 2015 Commons Chamber

[William Wragg (Hazel Grove) (Con)]

It is a pleasure to follow the hon. Member for Berwickshire, Roxburgh and Selkirk (Calum Kerr). I wish him a long and distinguished career in the House. I hope that he and his colleagues will forgive me if I add that I hope to see his seat represented here for a long time. We are, of course, relieved to learn that the SNP is no longer agitating for independence from the House. As a Unionist, I am greatly reassured by that.

It is also a pleasure to follow the maiden speech of the hon. Member for St Helens South and Whiston (Marie Rimmer). Many people have asked what the boundaries of the northern powerhouse will be, but I can see that, in typical northern fashion, she will be boundless in pursuing the interests of her constituents. I pay tribute to her for making a characteristically warm speech. I also pay tribute to the hon. Member for Bradford South (Judith Cummins).

I warmly welcome the Budget as both a strong plan for the country’s finances and an important statement containing a considerable number of measures that will affect my constituency. As many Conservative Members have already noted, the continued strength of the recovery in the economy is impressive. Our growth is outstripping that of the rest of the G7, employment continues to rise, and unemployment continues to fall.

In my constituency, substantial progress has been made over the last five years under a Conservative-led coalition Government. Since 2010, there has been a fall in the number of people claiming jobseeker’s allowance, and an even more impressive fall of 58% in youth unemployment. Those may sound like the dry statistics that are pronounced all too regularly in the House, but they are much more than that. They reflect real people. The 49% fall in unemployment in my constituency represents 713 people: 713 people with greater prospects, greater financial security and greater peace of mind when it comes to providing for themselves and their families.

It is against that background that I want to speak briefly about two specific measures in yesterday’s Budget. My right hon. Friend the Chancellor’s announcement of a living wage of £9.00 an hour by 2020 is to be welcomed. Tackling low pay is part of our plan to move to a higher-wage, lower-tax, lower-welfare society, building a more productive Britain and giving families the security of well-paid work. This measure will benefit 6 million workers across the country, and will boost pay for those who are currently earning the minimum wage by £5,200 a year. To see just what that means to working families on low wages, one had only to look at the expression on the face of my right hon. Friend the Secretary of State for Work and Pensions, such was his obvious joy at the announcement.

Beyond the euphoria of that moment, however, it is worth considering the careful balance that has been struck between the new living wage for employees and what we must do to offset the resulting cost to employers. Small businesses can be reassured by the plans to extend the employment allowance to £3,000, cutting the jobs tax for firms, so that a business will be able to employ up to four people, full time, on the new national living wage and pay no national insurance at all. Larger companies will benefit from a reduction in corporation tax from 20% to 18% between now and 2020. As part of the Government’s plan to make work pay, the announcement of an increase in the personal allowance is also significant. A further 727 people in my constituency alone will pay no tax at all, and the total number of beneficiaries will be some 34,677. Again, those are seemingly dry statistics, but there is a real, positive story behind them.

While the Chancellor was able to pull the living wage rabbit out of the hat, the nettle that he had to grasp was that of tax credits. Members will, I hope, forgive me for reminding them that tax credit expenditure trebled in real terms between 1999 and 2010 to an estimated £30 billion—a far higher level than was expected by the “prudent” Labour Chancellor of the time. Some Chancellors can be accused of robbing Peter to pay Paul, or giving with one hand and taking with the other. However, the policy of tax credits itself, created by the last Labour Government, meant that the state would, in effect, tax with one hand and “give” benefits with the other, thus creating an inefficient cycle of tax and spend. The policy succeeded in greatly inflating the size of the welfare state and bloating the system that was required to administer it, but by taking money away from people in tax only to credit it back to them later, it did little to increase their net income and standards of living. My right hon. Friend the Chancellor is now faced with the unenviable task of unpicking that knotted system, built up under 13 years of Labour rule. It is no easy task, but the Budget makes some important headway.

As I have said, I welcome my right hon. Friend’s Budget. I believe that, by allowing people to earn more and, most importantly, to keep more of what they earn, it will raise the living standards, prosperity and wealth of the country as a whole and my constituents in Hazel Grove in particular, and I commend it to the House.