Amendment of the Law

George Freeman Excerpts

Thursday 22nd March 2012 Commons Chamber

[Vince Cable]

I think we are talking about integrity and statistics. Of course there has been a big change under this Government, compared with their predecessor. The numbers that the shadow Chancellor used to use were his own numbers. The numbers we are quoting here are independently verified by the Office for Budget Responsibility. We will analyse the underlying assumptions in those figures. The figures in the Budget document are absolutely unambiguous and they have been endorsed by an independent assessor—something that the right hon. Gentleman was never used to when he was in government—which confirms the value of the numbers that we have described.

[George Freeman (Mid Norfolk) (Con)]

Is not the shadow Chancellor’s knockabout class warfare much more to do with appeasing Labour’s union paymasters? The truth is that all the evidence shows that a competitive personal and corporate tax rate is a powerful driver of entrepreneurship. We proved in the 1980s, when we last had to dismantle Labour’s tax time bomb, that lower marginal rates of tax increased revenue. The announcement today from GlaxoSmithKline of inward investment in this country is a sign that this is working.

[Vince Cable]

It is certainly true. My hon. Friend’s central point, which was made very effectively by the Labour Government when they were in office, is that in a highly mobile world, we have to take account of marginal rates of tax in comparable countries. The current top rate of marginal tax in Canada, Australia, France and Germany is around 45%, and that is the level to which we have moved.

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[Mr William Cash (Stone) (Con)]

I welcome many aspects of the Conservative parts of this Budget, including its emphasis on the need to encourage small businesses, enterprise and research and development, and its encouragement of economic growth, which is the key to everything. I welcome the simpler cash accounts system, which will bring significant benefits to small businesses, and the R and D tax credit system, as well as the seed investment programme for start-ups, which is very important. The patent box arrangements will be very useful, too, as will the proposals for young enterprise loans. Indeed, I recently attended an event in my constituency at which young people from Alleyne’s school in Stone were selling produce, based on proper commercial principles. They were learning key enterprise skills, therefore, and it would be wonderful if they could have access to some loans as well, to enable them to continue in that virtuous direction.

I welcome the reductions in corporation tax. In fact, I believe we should aim to reduce it to 15% by 2020, as the Institute of Directors proposes. I also approve of the proposals to reorganise personal allowances. That will be enormously beneficial to many people. However, despite the statements made this morning, I remain slightly concerned about the situation of pensioners. I am not yet convinced on that issue, so I think we shall have to tease it out during our deliberations on the Finance Bill.

I remain deeply worried about fuel duty. I do not think we should increase it at all. At least £31 billion comes into the Exchequer as a result of that duty, and 60% of the price at the pump is represented by taxation. Therefore, more positive policies were required. I would have liked fuel duty to have been reduced, and certainly not increased.

There will be no economic growth unless we have proper private enterprise, as that is what pays for every penny received by the public sector. There is no money except for what comes from reasonably taxed private enterprise. We must therefore ensure that we are truly competitive, and if that requires reducing our tax rates, that is the direction in which we must go.

I am deeply concerned about the failure to deal with the problem of over-regulation. I have read the Red Book, and it does not fill me with a great deal of confidence. On page 43, under the heading “Exports and inward investment”, there are a few comments about export finance. The next heading on that page is:

“Making the UK the best place in Europe to start, finance and grow a business”.

[George Freeman]

The best place in the world, surely?

[Mr Cash]

My hon. Friend anticipates what I was about to say: the UK should be the best place for businesses in the entire world, not just Europe.

That is very important. Especially given the current eurozone crisis, we cannot carry on kidding ourselves that our future depends on our trade with Europe. It is an important part of our trading relationships, but it is a failing part. Our balance of payments figures show that in just one year the deficit in our trade with the other European Union member states has risen from £14 billion to £46 billion. I understand the figures will be revised on 28 March. I trust the figures for 2010-11 will not show that the deficit is worse still.

The previous Government put all their eggs in the European basket. This Government, to their credit, are beginning to refocus their trading relations with the rest of the world. We have a monumental opportunity to be able to get that straight in terms of—

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[George Freeman (Mid Norfolk) (Con)]

I congratulate the Treasury team on a Budget that I believe will come to be seen as an historic Budget that will put Britain back on track for sustainable economic recovery. I want to say something in the time available about the problem we inherited, because it bears repeating, about the challenge we face and about the opportunity that I believe we can and should be optimistic and ambitious in tackling. The problem has been well chronicled, but the views and ignorance displayed by Opposition Members in this afternoon’s debate suggest that we need to repeat it for them.

We have inherited from the Labour party the worst deficit and debt crisis in this country’s peacetime history; a structural deficit that would have been a crisis alone; an annual deficit from Labour’s historical explosion in public spending; a crisis in the situation with debt as a percentage of gross domestic product; and interest payments that are set to rise, if we have not tackled them, by £76 billion a year—£1 in every £4 the Government spend. As a result, there is a deep fiscal crisis, with tax increases and restraint on public spending hitting every family in the country, and a legacy of rising unemployment because of the credit crunch and bank financing for small businesses. Most powerfully of all, and most damningly after 13 years, there was the unsustainable economic model—a labour boom fuelled on cheap credit and cheap immigrant labour and a consumer boom that Labour knew was unsustainable. Worst of all, perhaps, there is a deep crisis of trust and confidence in political economy and in the belief and faith that the Government can do anything about it.

The challenge is to restore some credibility and confidence, first, in the capital markets through the coalition’s programme for tackling the deficit, and secondly in the boardrooms and businesses of Britain that are the only true mechanism for sustainable recovery. There is also a need to restore credibility and confidence in relation to the entrepreneurs we will need to take the risks to drive growth and the citizens and consumers of this nation so they can have faith again. That requires a new economic model, which my right hon. Friend the Chancellor spoke passionately about yesterday—a model for sustainable recovery. We cannot borrow and spend our way out of a debt crisis.

Recovery needs to be sustainable not just in terms of avoiding the mistakes of boom and bust. We must produce the things that people around the world want to buy and we must have a clean economy in terms of resources and the environment. Recovery needs to be sustainable in the sense that our public services must be financed in a sustainable way. Every pound that we in this place claim as government money has to be earned by citizens and businesses and taken from them, and we should never forget it. At heart, that means that the coalition’s programme for a rebalanced economy must shift from over-dependence on the public sector to the private sector, from London and the south-east to the cities and the regions and to the real businesses of this country that can drive sustainable growth. I congratulate the Treasury team on keeping interest rates low, paying off the debt and supporting business. We have the most competitive corporation tax regime.

[Mr Bain]

Will the hon. Gentleman give way?

[George Freeman]

I am going to plough on if I may. The move on the top rate of income tax from 50p to 45p has set a clear direction.

[Angela Smith]

Will the hon. Gentleman at least acknowledge that a significant proportion of the private sector jobs created are part-time and in that sense are doing much less than he suggests to drive growth in the economy?

[George Freeman]

If my constituents were given the choice between a part-time job in a sustainable private sector business or a full-time job in the public sector that was not sustainable, I know which they would choose.

More than 600,000 new jobs have been created in the private sector since the election.

[Mike Weatherley (Hove) (Con)]

Will my hon. Friend welcome with me the measures for the video games industry, which are so important to Brighton and Hove, protect jobs in this country and stop them going abroad?

[George Freeman]

My hon. Friend makes an excellent point with which I entirely agree.

If I had only one small complaint about the Budget it was that, for reasons I well understand, the Government were unable to do anything to relieve the pain of rural fuel prices in areas such as my constituency, where the cost of living is an acute problem. I urge the Government to look at what might be done to relieve the effect of fuel prices on the rural economy.

I said that I would touch on why I believe that this country can begin to be optimistic about our future. The Government have begun to set out a credible and coherent plan for long-term economic recovery based on a model of trading again around the world. There is a high rate of growth in the emerging nations—the so-called BRIC nations, Brazil, Russia, India and China—and with the pace of globalisation and the explosion in those markets, if this country can set out a model of producing and selling the things that those countries need, we will be on the road to a secure recovery.

Last year saw the publication of the foresight report, which set out how the world population is rising to 9 billion, which will drive huge demand for life sciences such as food science, biomedicine and energy and environmental science. The Government have set out over the past 18 months a long-term strategy to unlock that science and research base and tackle the problems of sustainable development around the world. That is a sustainable model for us as well as for other countries.

There is a huge opportunity for the UK to trade on our great strengths and to unlock the power of the City and financial services sector to back and build the companies and businesses of tomorrow in the sectors of tomorrow. So I support—it is worth repeating—the measures that the Government have taken, especially in the Department for Business, Innovation and Skills, including the Green investment bank, new sources of finance for infrastructure, the enterprise zones, the competitive tax regime and the £20 billion of credit easing, allied with the reforms to welfare, schools, universities and science and research. The Government are setting out a modern industrial policy for a modern innovation economy. Will it work, I hear you ask, Madam Deputy Speaker? Well, it is already working. The programme has been welcomed by the Office for Budget Responsibility, the Institute for Fiscal Studies, the World Bank and the International Monetary Fund. Even the BBC’s business editor last night said that the Budget had had the most positive response of any Budget he could recall. If any more proof were needed, today one of the world’s great businesses, GlaxoSmithKline, announced a major £500 million investment in the UK, directly citing yesterday’s Budget as a reason. It is an historic Budget that will put us on track for a long-term recovery.