amendment of the law

Debate between Alun Cairns and Oliver Colvile

Monday 25th March 2013 Commons Chamber

[Alun Cairns (Vale of Glamorgan) (Con)]

In the limited time available to me, I intend to explain why I welcome the measures in the Budget, and also why I consider the views of Opposition Members to be highly inconsistent.

Given the lack of growth in our largest trading nations, it is easy to understand why the Chancellor was left with so little room for manoeuvre. After all, growth projections in Germany and the United States—just two examples—have been downgraded. We need to recognise the context of the present position: the scale of debt inherited in 2010, the major issues that confront the eurozone, the local impact of the high prices of commodities such as oil, gas and food and the inflationary pressures that that involves, and the lack of growth in other nations.

[Oliver Colvile]

Did not the last Labour Government create a structural budget deficit as long ago as 2001?

[Alun Cairns]

My hon. Friend is absolutely right. I shall say more about Labour’s inconsistency later.

All the issues I have mentioned have had impacts on the living standards of families throughout the United Kingdom. Decisions such as these are difficult to take, but they must be seen in context.

What I welcome most is the Chancellor’s drive to create the most competitive of economic environments. That will attract investment, and will also continue to encourage the private sector in the UK to invest. The further reduction in corporation tax goes to the heart of a sustained economic recovery, and underlines the economic imbalance that we inherited. The 20% corporation tax rate means that we now compare exceptionally well with our major competitors. In Germany the rate is 29%, in France it is 33%, and in Italy it is 31%. Those are material considerations for anyone who is thinking about where to invest, and for any United Kingdom investor who is thinking of expanding. We should also bear in mind the uncompetitive position that we inherited. The increase in employers’ national insurance rates led to the term “jobs tax”, with which we are now familiar.

The ultimate judgment will come in the grades that the World Economic Forum confers on the competitiveness of the various nations. Having ranked fourth in 1997, we were dragged down to 13th by the Labour party. At last, however, we have recovered enough to rank eighth—and that happened before the announcement of the welcome changes in the Budget. Neither the 20% corporation tax rate nor the employers’ national insurance relief were taken into account.

Other Budget measures that I welcome include the “help to buy” mortgage guarantee schemes. That is an area of policy in which no Government would ideally become involved. However, bearing in mind the context I referred to earlier, the Chancellor had little choice other than to get involved. The scheme will provide a welcome boost to the construction and retail industries and various elements of the service sector, and it will make a significant difference to many families who want to buy their own home.