Section 5 of the European Communities (Amendment) Act 1993

John Redwood Excerpts

Monday 22nd April 2013 Commons Chamber

[Chris Leslie]

To whomever we are asked to submit this document—to the IMF, the EU, the hon. Gentleman’s constituents or his mother-in-law—I would be embarrassed, if I were the hon. Gentleman, to stand behind it as a true reflection of the state of the UK economy. To cap it all, last week, we saw another humiliating blow to a Prime Minister and Chancellor who kept saying that our triple A credit rating was the No. 1 test of their economic and political credibility.

[Mr John Redwood (Wokingham) (Con)]

Given that the latest Government plans envisage borrowing £60 billion more in 2014-15 than in the original summer 2010 plan, how much more than that extra £60 billion borrowing would the hon. Gentleman recommend?

[Chris Leslie]

Unfortunately, we are not likely to have a general election until 2015. I would be grateful if hon. Members did whatever they could to bring that forward a little, but heaven knows what state the economy will be in—even by the time we get to 26 June, which I believe encompasses the spending review period. I am sure that yet further revisions of these figures, which keep changing like shifting sands before us, will be made. We simply do not know what a future Labour Government will inherit—hopefully in 2015. I will get back to the right hon. Gentleman nearer the time. One thing seems clear to me: we have to take some bold action to stimulate the economy, rather than adopt this laissez-faire, arms-folded, non-interventionist approach. Even the Financial Secretary used to disparage that, but he has now signed up wholly to it.

Finance (No. 2) Bill

John Redwood Excerpts

Thursday 18th April 2013 Commons Chamber

[Mr John Redwood (Wokingham) (Con)]

Can the hon. Lady tell me her definition of the “strong growth” that her new clause says would trigger VAT being put up again?

[Cathy Jamieson]

I thank the right hon. Gentleman for his intervention. Given that I have not really got under way with all the details of the new clause, I will come to those points later. However, I will say that one thing we know is that the Office for Budget Responsibility has halved the growth forecast for this year and downgraded it again for next year, so we are not in a situation of strong growth. The Government really have to take responsibility for that, because since the Chancellor’s spending review in 2010 the UK economy has grown by just 0.7%, compared with the 5.3% forecast at the time. I do not think that anyone could suggest that that was particularly successful. Last year, of course, the UK went through a double-dip recession and the economy shrank by 0.3% in the last quarter.

[Mr Redwood]

The hon. Lady is quite right that growth has been very disappointing and that the forecasts have been revised downwards, but we are debating her policy, which is that VAT should go up again when the UK economy returns to “strong growth.” It is a very simple question: can she tell us what strong growth would trigger an increase in VAT?

[Cathy Jamieson]

As I have indicated to the right hon. Gentleman, whose views I listen to and who always raises pertinent questions, I will come to that, but the Government must also take responsibility for, as we heard in the previous debate, trying to give all sorts of reasons why the economy has not recovered. As my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) suggested, we were surprised to hear that the latest reason given seems to be the issue of the 50p tax rate, rather than looking at the situation in the round. I want to talk a little more about some of the issues that the economy currently faces and why we think our proposal is one way of stimulating the economy and looking to the future in order to help local businesses.

--- Later in debate ---

[Cathy Jamieson]

My hon. Friend is a powerful advocate for the people in his constituency who are bearing the brunt of the Government’s policies, and he is absolutely right. It is important that there is no further widening of that gap. This is not just about the money in people’s pockets, important though that is, but the fabric of society and the relationships that people build in their local communities.

It is important to consider the impact on our high streets. For generations, local businesses have offered jobs and the convenience of shopping in the local high street, and have been involved in providing services there. They are now under pressure from the flatlining economy. Consumer spending has been constrained by high inflation and stagnant wages, leading to a 6% fall in real disposable income in 2008, with a devastating impact on our local high streets. Shops are lying empty, with a threefold increase in that trend since 2008. Household names such as HMV, JJB Sports, Blockbusters and Comet have been forced to close a large number of stores or to shut up shop completely. It is estimated that last year 1,800 shops were forced to close—a staggering tenfold increase on the year before. We have heard about the impact on the pub industry, and there has been a call for the VAT rate to be considered in that context.

Not only is retail suffering, but businesses of all kinds up and down the country are feeling the impact of the Government’s failed economic policies and the flatlining economy. That has led, and is still leading, to a lack of confidence, particularly in the construction sector, with many arguing that more must be done to get people back to work and to get projects under way. Sadly, Project Merlin did not deliver the new era of loans that it was supposed to. We learned this week that lending to UK businesses fell by £2 billion in December alone, and it is down by £18.6 billion over the past year, while businesses continue to suffer. The Business Secretary seems perhaps finally to be recognising this failure. He boasted at his party conference that he would set up a Government-backed bank to get billions of pounds to businesses that need it, but we are still awaiting the fine detail of what that bank will do and when and how businesses will be helped. They may well have to wait some time for it to be up and running.

I shall draw my remarks to a conclusion because I want to give other hon. Members the opportunity to raise issues on behalf of their constituents and put the case to the Government. There are things we can do to help businesses and individuals through these tough times. We could reform the funding for lending scheme so that banks can access the lowest rates of funding only if they increase lending to businesses as well as overall lending, and extend it beyond the end of 2013, as currently envisaged by the Government, to the end of 2014. Let us do what every other G8 economy has done and set up a state-backed investment institution to provide credit to small businesses where others will not by establishing a proper British investment bank. As we have argued, that could be done through a new network of regional banks like the German Sparkassen. That would also help to return SMEs to a local relationship with banking, with managers who know what is needed on the ground and have the discretion to make local lending decisions. Regional banks are committed to their regions and in touch with local business. We have called for, and will continue to call for, the Government to bring forward these measures to help boost our businesses and get our economy moving again.

Even if the Government accepted all those proposals and they were acted on today, the benefits would take some time to come to the fore and to be felt. However, the one step we could take now that would immediately make a difference would be for the Government to agree to reduce VAT to 17.5% to put money back into the pockets of hard-working people and give a stimulus to local economies. That would put something back into the pot to help the local businesses we have talked about, whether by reducing fuel costs or stimulating the economy such that people feel that they are able to spend again. We need to get consumers back out there spending their money, supporting our high streets and businesses, and helping our economy to grow again. It is for the Government to explain to the people of the UK why they will not listen to the arguments that have been advanced and are not prepared to take this action as a stimulus to the economy and to help to get things moving again.

[Mr Redwood]

The proposed new clause is designed to stimulate strong growth, which I suspect everyone in this House would welcome. I trust that the Government are in the market for ideas that would stimulate strong growth, but my sad conclusion is that a sudden cut in VAT of undefined duration is neither a sufficient condition for stimulating strong growth in the economy nor even a necessary precondition of such stimulation.

We have to ask what the alternative is to the Opposition’s recommendation, which we all agree is well-intended because they wish to see strong growth. I submit that the prime thing the Government need to do to raise the growth rate and get over this period of extremely disappointing performance is mend the banks. It is surprising that the official forecasters at the Office for Budget Responsibility thought there would be strong growth over the past three years, because they knew that the official policy on the Royal Bank of Scotland, which is largely state owned, was to push the bank through the most enormous slim-down, a continuation of the policy begun in 2008 when it was largely acquired by the state under the previous Government.

So far, £900 billion of assets and liabilities have been removed from RBS’s £2.2 trillion balance sheet since the state foolishly took them on. How can we expect the British economy to grow rapidly when its leading bank is going through a forced slimming programme of £900 billion? This is big money, even for a £1.5 trillion economy. We spend most of our time in this place discussing the odd £5 billion or £10 billion—we are now billionaires in our discussions rather than millionaires— but these figures have very little overall impact on a £1.5 trillion economy, whereas £900 billion is eye-poppingly large. We have to deal in trillions now if we want to see the things that really make a difference to the economy. I submit that the main reason why our economy is not growing rapidly is that the banks, led by RBS and abetted by HBOS, have been on a very sharp slimming programme. It is true that some of those assets were foreign and a lot of them were derivatives and so on, but overall, this massive slimming programme has clearly placed enormous pressure on the UK economy.

In addition, this place, as part of the political debate, has discovered that bankers are even more unpopular than politicians, so it has taken great delight in trying to do as much damage as possible to the banking industry. I understand that the banking industry did not do well for itself—I am enough of a politician to realise the politics of all this—but if we target one of our biggest and most successful industries of the previous decade and force it into slimming down measures and tax it more, we should expect a drop in output, and that is what has happened. One of the reasons why we do not have much growth in this country is that our lead sector of the previous decade has taken such a big hit and is now so politically unpopular that pressures remain to prevent it from growing and recovering as some of us would like.

A third area that has caused considerable problems is oil and gas. We cannot legislate to change the age profile of our reservoirs, many of which have aged a lot recently in terms of the amount of oil and gas left to exploit. There are arguments about other tax policies we could pursue to stimulate more finds and exploitation, but some of the big, successful reservoirs of previous years are now ageing, so whoever was running the country was going to experience a reduction in output from another of our high-value-added sectors—oil and gas—and that was bound to hit the growth rate.

What more can we do to overcome those difficulties in two of our lead sectors? Tax measures proposed by other clauses that we will discuss later could be helpful. Broadly speaking, the lower the tax rate, the better from the point of view of stimulating growth, and there have been some measures in the right direction.

The problem with the proposed new clause’s VAT measure is that it is so expensive and I do not think we would get a big enough return for the colossal loss of revenue that it would cause. We have already heard an estimate of about £10 billion, but the Labour Opposition have given us no figures whatsoever. They have not told us how much it would cost, how long it would be a concessionary rate and on what conditions they would return to the new rate. That weakens their case, because if they wish to make this a serious policy, they need to cost it and explain by how much the deficit would rise in the early stages and at what point the growth would accelerate enough to start to generate serious revenues from increased activity.

The evidence seems to be that, whereas it is possible to do serious damage to the revenues generated by income tax and capital gains tax if the rates are put up too much—I fear that that is what has happened under the Labour and coalition Governments in recent years—it is more difficult to depress the revenues of VAT. Indeed, the increase from 17.5% to 20% actually produced some increase in revenue, despite the poor performance of the economy, so the argument that cutting the rate generates more revenue—economists call it the Laffer curve argument—does not apply in the same way as it does to taxes geared towards gains and income, whereby more realistic rates would do two good things, namely generate more growth and, therefore, more tax revenue. I fear that the problem with the VAT proposal is that this short-term measure would definitely increase the deficit and that the stimulus from VAT would not be sufficient to replace the lost revenue in any serious period of time over which this experiment might be tried.

--- Later in debate ---

[Mr Redwood]

The hon. Gentleman makes a fair criticism of my remarks, but to stay in order I did not mention the changes to energy policy necessary to have cheaper energy or the changes to other taxes that I would like implemented to boost to the economy.

[Albert Owen]

As a member of the Energy and Climate Change Committee, I understand the difficulties. I realise that one of the major problems—the price of crude oil and gas—is external and that we could have a wider debate about that, but I am talking specifically about the need to boost the domestic economy.

Small businesses tell me that high street names are folding, first, because they have tight margins, and secondly because, although footfall might be steady, people are spending less money. The 2.5% increase in VAT is making a real difference and taking money out of people’s pockets. I support raising personal income tax thresholds as a way of helping the low-paid, but it can have no impact if cancelled out by a VAT increase. That is what business tells us. A small business leader in my area makes a little joke about the Chancellor: every time that that business leader goes out with his wife, daughter and son-in-law, he has to take the Chancellor with him, because one-fifth of the bill is shared with him. That is not a good state of affairs. If business people are starting to think like that, it means that confidence has been eroded. One way of providing the necessary boost to confidence in the domestic market would be to reduce VAT temporarily.

Those are not just my words; they were also the words of the Prime Minister before the general election, when he said that VAT was a regressive tax, which it is. I am in full agreement with him. The Deputy Prime Minister—there are not many Liberal Democrats here today—said that putting up VAT during a recession would be a bombshell for the economy, yet that is exactly what the Government have done. I have argued consistently for keeping VAT, which is a regressive tax, as low as possible in order to stimulate the economy.

--- Later in debate ---

[Mr Jackson]

The hon. Gentleman might say that, but it is incumbent on Her Majesty’s loyal Opposition to specify the amounts and where the cuts would be made in other ways. It is not acceptable to dodge the issue, and that goes even for the simple question of what is “strong growth”. At what stage would that be measured? How would we quantify “strong growth”? It is rather mealy-mouthed.

Let us look at the wider context. Interest rates are historically low. Perhaps the hon. Gentleman is not old enough—or maybe he is—to know that in 1975 they were 27%, under a Labour Government. Inflation was substantially higher through most of the ’70s and ’80s. We now have big cash balances, lower interest rates, relatively low inflation, lots of money in the economy and quantitative easing, which has been in place for many years. Even if we accept the traditional Keynesian view—that just pumping money into the economy will deliver growth, jobs and prosperity, which seemed to inform the argument that the hon. Member for Kilmarnock and Loudoun made—we should accept that it has not worked so far through quantitative easing, with the balances that are available. The issue is business confidence.

In the wider context—wider even than that—between 2000 and 2010, public expenditure rose from roughly £450 billion to more than £700 billion. That is the context in which we should look at these fiscal changes. It is not as if we have starved the economy of money in the public sector. The difficulty for the hon. Member for Ynys Môn in arguing in defence of the Government at that time is that the economy was so unbalanced. It was focused disproportionately on the housing market, public expenditure and financial services. Part of our challenge as a Government is to try to rebalance the economy, so that it can make people prosperous and create jobs across wider economic activities, which is happening organically on its own.

Those on the Opposition Front Bench also fail to take into account the other, bigger policies that the Government have embarked on. I will not pretend that things such as the national insurance holidays or the regional growth fund have been an enormous success. I serve on the Public Accounts Committee and we have been critical of things that the Government have pursued in some areas. Nevertheless—the hon. Gentleman alluded to this—the Government are looking at tariffs for utility bills, the beer duty escalator and the fuel duty escalator. We are looking at substantial changes that will have a fiscal impact on welfare, through the universal credit and so on making work pay, rather than paying for idleness and allowing people’s talents to be wasted. We are also putting money into the mortgage market and assisting new house building. Some 42,000 of my constituents had a tax cut last week as a result of the massive fiscal changes that this Government have made, with 2,000 of my constituents paying no tax at all and 24 million people affected. It seems rather unfair not to take that on board.

I also alluded earlier to the progressive nature of our tax changes. Whatever we say about them, it cannot be argued that we have not looked at the top 5% or 10% of income earners in this country to ensure that they are paying a significantly higher share than others. They are the people who will specifically be more worse off than anyone else, whether the hon. Gentleman likes it or not.

[Mr Redwood]

It is unfair to say that VAT is a very regressive tax. If it were applied across everything, it would be, but because it does not apply to food and some other items that figure much more highly in low-income budgets, it is not nearly as regressive as has been suggested.

[Mr Jackson]

Exactly. We could argue at length about the progressiveness of various taxes—no doubt others would want to—but my right hon. Friend makes an astute point.

The final example is council tax. That depends on the local authority, but in general, most councils have frozen council tax. Therefore, the suite or portfolio of the Government’s fiscal changes that have helped working people is quite significant.

Let me say in finishing that we expect more from an Opposition two and a half years into a Parliament. We expect them to come up with policies that are credible. We expect them to move on from policies that just tick the box of opposition. No doubt the hon. Member for Kilmarnock and Loudoun, who is well connected in the Labour party, will have read the comments of Tony Blair, a three-time election winner, in the 100th anniversary edition of the New Statesman. He cautions the Labour party not to fall back into the comfort zone, not to be a repository of anger, but to be an outward-looking, forward-looking progressive party. I am sure that the Labour Whip on the Front Bench, the hon. Member for Sedgefield (Phil Wilson), would agree with his predecessor and say that that is sage and intelligent advice. It is so because we expect proper, costed policies. What we have had today is an unfunded tax cut that does not help the people I believe the Labour party genuinely wants to assist to have a better life. I would caution the hon. Member for Kilmarnock and Loudoun to come back with more coherent, more intelligent and more credible policies. That is why I will not support new clause 2.

Finance (No. 2) Bill

John Redwood Excerpts

Wednesday 17th April 2013 Commons Chamber

[Chris Leslie]

Never let it be said that this Government have any consistency whatsoever, but perhaps that is where we should turn to the Liberal Democrats—or the Liberal Democrat as I will henceforth call the hon. Member for Bristol West (Stephen Williams).

There is another part of the Help to Buy scheme. We have talked about the equity loan aspect. The second part is the mortgage guarantee, supposedly designed to help individuals without a large deposit; they may have only 5% and are looking for a 95% mortgage from participating lenders. The Government say they will guarantee up to 15% of the mortgage in an attempt to encourage banks and building societies to offer loans to borrowers with small deposits.

Interestingly, the scheme is not starting in April; it will not start until January 2014. I hope Ministers can explain why they picked that date, because there is a potential risk of forestalling. We may have constituents who are wondering whether they should get on the housing ladder to help their family, or who are in the construction sector wanting to supply new homes. Is there not an incentive for many potential home purchasers to wait—to hold off and not enter the housing market until January next year? Paradoxically, further problems might emerge as a result of the scheme.

[Mr John Redwood (Wokingham) (Con)]

Does the shadow Minister agree that since the crash of 2008 there has been a chronic shortage of mortgage finance and of new homes being built? Do we not need some way around the problem that RBS and HBOS are so damaged that they cannot supply the normal amount of mortgage credit?

[Chris Leslie]

The Opposition are not opposed to schemes that are well targeted and well designed to increase affordability for people who want to buy their own home, and we want people to get that first step on the housing ladder, but the way in which the Government are going about these things is shocking.

The funding for lending scheme has shown some signs of altering mortgage affordability at the margins, but it was predominantly designed to boost lending to small and medium-sized enterprises, and in that respect it has not worked at all. In fact, yesterday the Bank of England started talking about doing what the Chancellor should have done in his Budget and properly getting a grip on funding for lending—splitting the scheme in two, to ensure that it provides not only housing support, but particularly SME support.

Finance (No. 2) Bill

John Redwood Excerpts

Monday 15th April 2013 Commons Chamber

[Mr Gauke]

As I was trying to make clear a moment ago, I will turn to the subject of evasion and avoidance later on in my speech. The Government have a proud record of taking steps to reduce evasion and avoidance, with legislative measures, support for Her Majesty’s Revenue and Customs and what we are doing at an international level to encourage greater co-operation between jurisdictions to ensure that the net is closing in on those who wish to evade their responsibilities. We will continue to take positive steps on that front.

[Mr John Redwood (Wokingham) (Con)]

The Labour Government set capital gains tax at 18%, which is somewhere near the revenue-maximising rate. This Government put CGT up to 28% and, predictably, their own figures show that revenue is lower. When will they promote enterprise with a lower rate that will generate far more revenue, something we clearly need?

[Mr Gauke]

One has to look at the tax system as a whole, including capital gains tax, and I am not sure that I necessarily agree with my right hon. Friend’s interpretation of the period as a whole in relation to CGT revenues. In the year in question, there was certainly a reduction in deals done and transactions completed after the increase in the rate of CGT, but subsequent CGT revenues have picked up. We also have to bear in mind the relationship between CGT and income tax. I agree strongly with my right hon. Friend that it is important to have a competitive tax system that encourages enterprise and growth—indeed, I will turn to that now.

One of the most important questions facing the country is this: at a time when much of the world is still coming to terms with the consequences of the financial crash, when many of our export markets face significant difficulties, and when international competition is becoming greater, and, because of the recklessness of the previous Government, we cannot afford to borrow more, how do we put in place the conditions for growth? In the specific context of the Bill, how do we ensure that we have a tax system that helps us to achieve growth and encourages businesses to locate and invest in the United Kingdom? As the Chancellor has made clear, our objective is to have the most competitive tax system in the G20.

--- Later in debate ---

[Mr Gauke]

I hope the reduction to 20% will have all-party support, but I am sorry if it does not. The advantage of 20% is that we will have a corporation tax rate that is consistent with the small profits rate. It is the lowest in the G20 and sends a clear signal to businesses around the world that the UK is open for business. That is something that we in this Government are proud of and that we believe is putting in place the conditions for growth. I hope that the Opposition will support this measure, although Labour in government did not make as much progress in reducing corporation tax rates as it might have done and we lost a competitive advantage. This Government are restoring that competitive advantage, which is something we are proud of.

It is not just corporation tax rates: clause 34 will introduce the new above-the-line credit for large company R and D investment from April 2013—a measure that will make the level of support more visible to those making investment decisions and thus more beneficial to foreign-parented multinationals looking to invest in R and D in the United Kingdom. This Government have also made a clear commitment to support the creative industries through the tax system. Building on the success of the film tax relief, which last year supported investment in more than 300 British films, clause 35 introduces new corporation tax reliefs for the animation, high-end television and video games sectors. The new reliefs will be among the most generous in the world, encouraging investment in these highly skilled and innovative parts of the creative economy. They are measures that will bring jobs to the United Kingdom and funds to the Exchequer.

This Government recognise the need for a broad industrial base, and measures in the Bill will support a wide variety of sectors. Clauses 77 to 90, for example, provide certainty over decommissioning relief on the UK continental shelf. Clause 7 supports small business by increasing the annual investment allowance for two years and clause 56 provides for an extension of the capital gains tax holiday. Those measures send the clear message to businesses, entrepreneurs and investors across the world that if they want to come to the UK, invest in the UK and employ people in the UK, they will be very welcome in the UK.

[Mr Redwood]

I strongly support the corporation tax move, which will be extremely helpful to Britain’s competitiveness, but when people are thinking about where to locate their businesses, they worry not only about profits tax but about personal tax. Does my hon. Friend agree that, given the current inherited income rates and capital gains tax rates, a lot of the high earners in those companies do not want to be anywhere near London because the taxation rates are still very heavy?

[Mr Gauke]

My right hon. Friend makes a valuable point. This underlines the fact that the Government were right to reduce the 50p rate of income tax, because it was out of line with the vast majority of our international competitors. We have to look at the tax system as a whole. I believe that we have made striking progress in delivering that, and in ensuring that we are open for business. It is also striking that, since we have embarked on our package of reforms, the flow of businesses leaving the country has already been stemmed. Indeed, we have seen many businesses either returning to the UK or coming here for the first time. They include WPP, Lancashire, AON, Rowan and Seadrill, and I believe that more will follow.

Cyprus

John Redwood Excerpts

Monday 18th March 2013 Commons Chamber

[Greg Clark]

The right hon. Gentleman will know that the agreement reached at the weekend includes action to address the reputation Cyprus has established as a potential home for money laundering and that is part of the conditionality for the package.

[Mr John Redwood (Wokingham) (Con)]

Given the importance of the euro’s stability to the London banking system and the wider world, will the British Government be lobbying the European Central Bank to ensure that it provides sufficient liquidity at all times should a run develop in a weaker bank or a weaker country, given the invitation to people to withdraw their deposits from any difficult institution?

[Greg Clark]

The pace of negotiations, thanks to the fact that today is a bank holiday in Cyprus and that that could potentially be extended, is meant to resolve the matter before a run on the banks is possible. My right hon. Friend is right that the situation is unsatisfactory and it is necessary to establish a more orderly system for anticipating or managing potential bank failures in the future. It is in everyone’s interest to ensure that there is no such collapse of the banking system in Cyprus.

Economic Policy

John Redwood Excerpts

Monday 25th February 2013 Commons Chamber

[Mr John Redwood (Wokingham) (Con)]

Does the Chancellor agree that the state balance sheet would look an awful lot better, and that the economy would function better, if RBS was sorted out more quickly and sold back to the private sector in a way that promoted banking competition?

[Mr Osborne]

I agree with my right hon. Friend. RBS is now pursuing a policy of becoming a much more UK-focused bank than it was under the strategy we inherited. We are absolutely clear that it should not be in the universal banking business on the scale that it has been and that the investment bank should be supporting its corporate and retail business in the UK, and it has made important steps in that direction.

Banking Reform

John Redwood Excerpts

Monday 4th February 2013 Commons Chamber

[Greg Clark]

I do take seriously those recommendations, but this is not a difference between just the Government and the commission. The shadow Chancellor himself said only a little while ago that

“there is no need to break up institutions but there has got to be clear separation.”

I think people across all parts of the House have come to the same view on this, but I am respectful of the conclusions that the hon. Gentleman has reached.

[Mr John Redwood (Wokingham) (Con)]

If break-up and segregation may be necessary for a bank in a future crisis, why do the Government not understand that they may need those techniques to deal with the inherited, still very serious banking crisis that we are living through, which is preventing the financing of a full recovery? Will the Government look at what they can learn from their studies to sort out the problem of RBS today, which is our biggest obstacle to recovery?

[Greg Clark]

My right hon. Friend makes a forceful point. The legislation is about the future. It is quite right that it should proceed with consideration and that we should not introduce things that might have unintended consequences without adequate consideration in this House. The Government are obviously the major shareholder in RBS. It is important that RBS should be returned as swiftly as possible to private hands. The current situation is far from ideal, and I know that my right hon. Friend shares our ambition on that.

The Economy

John Redwood Excerpts

Tuesday 11th December 2012 Commons Chamber

[Justin Tomlinson (North Swindon) (Con)]

I congratulate the hon. Member for Croydon North (Steve Reed) on a powerful maiden speech—I cast my mind back to the nerves I felt during my first speech—which he delivered in an exceptionally articulate way. It is clear that his local government experience—championing the future of public service, along with understanding and delivering much needed improvements—will be a great asset to this House. I also congratulate the hon. Member for Rotherham (Sarah Champion), whose exceptional experience in children’s services will be a vital asset to us all in Parliament.

Let me turn to a few key messages in the autumn Budget that I picked up on, having spoken to a number of my constituents. On fuel duty, I pay tribute to my hon. Friend the Member for Harlow (Robert Halfon), who has championed the campaign with huge support across the country and among MPs. It was absolutely essential that we froze fuel duty, because it is the most tangible tax there is. We all pay all sorts of taxes, and although people will have a rough idea how much council tax, income tax or national insurance they pay—they will not know exactly—everybody knows exactly what it costs to fill up the car. That impacts on consumer confidence, which is something we desperately need to protect in this country, so this move by the Government was welcome.

I also welcome the further move on the income tax threshold. It is a principle of ours to ensure that work pays, and what better way to incentivise people than to leave more money in their pockets? By the end of the Parliament, those on the minimum wage will be paying half what they were paying in income tax when we came to power. That stands in stark contrast to the 3.9 million workless households we saw under the former Government. Some 24.4 million people will benefit from the changes we have made to the income tax threshold by an average of £247 per person, but I would like to see a further change. Whenever any changes are made to pay-as-you-earn—whether by this Government or future Governments —they should be shown on employees’ payslips. We get excited in these debates about such changes, but more often than not they fly past the public. If we are going to get the public to take ownership of the tax system, those changes should be displayed clearly. I welcome the move to introduce an annual tax statement. I was one of the 10 MPs who supported the private Member’s Bill on that subject. Any notification of changes to PAYE on people’s payslips would make a big difference.

I am also delighted to see further measures to support business. Before I became an MP, I was a small business owner in Swindon. We now have 4.2 million self-employed people in this country, which is a record number. That shows that we are truly open for business. The cut in corporation tax takes it down to the lowest rate in the G7, and the extension of the small business rate will make a huge difference to small traders. I would also urge the Government to continue to look at the principle of the rates system, because to a certain extent the golden goose has been killed. High street businesses in particular are facing further threats from internet companies, which benefit from not having high street rate bills to pay. That is something that we must take into account.

The £250,000 annual investment allowance will also make a huge difference. I know that my hon. Friend the Member for Dudley South (Chris Kelly) has championed that cause for a long time. The need for this measure reflects the fact that businesses are nervous. For the first time in history, businesses are holding more money in their current accounts than they are borrowing. That is partly because of the perception that they will be unable to borrow money, and they want to stay in control. I hope that the increase in the annual investment allowance will open up the coffers, and that the effects of that will filter through to the election.

[Mr John Redwood (Wokingham) (Con)]

Given the warm welcome in the House, particularly on this side, for all tax freezes and reductions, will my hon. Friend urge those on our Front Bench to do more of that, so that we can get the economy growing more quickly?

[Justin Tomlinson]

I thank my right hon. Friend for that important suggestion, which I endorse. We would all welcome such measures being taken whenever possible, given the financial constraints that we inherited.

I also welcome the extra investment in UK Trade & Investment in relation to exports. The Office for Budget Responsibility has recognised the challenges involved in exporting to the eurozone. Honda, the biggest employer in my constituency, has faced challenges in exporting cars to a declining market, although the UK market has experienced an 8.6% increase. We have seen our exports to emerging markets double, however, and the investment through UKTI will make a big difference. I have attended lots of events with the Government and with banks to encourage businesses to consider exporting to those markets, and that extra help to remove barriers will make a big difference.

I want to make a plea for a greater push promoting young entrepreneurs. The Government have launched the £2,500 start-up loans. I have been working with Young Enterprise, Virgin Media Pioneers and the National Association of College and University Entrepreneurs. Even the Scouts have a young entrepreneur’s badge now, and my wife and I had a very enjoyable evening helping to judge that. They even offered us free cake and cups of tea to try to influence our decision. I was the only one of the 350 students studying business at my university who went on to run their own business. I believe that that university education taught any entrepreneurial flair and risk-taking out of us. We need to encourage more young people who have boundless energy and enthusiasm, and enough cheek to question the accepted ways, to find new niche markets.

I have been working with New college and Swindon college in my constituency to try to set up further opportunities for young people. This will involve not only the traditional young enterprise scheme set up in the main foyer in which the students sell to their friends but the opportunity to set up a pitch in the local market. They will have a wooden table and do three days’ trading. If they are not set up by 9 o’clock in the morning, they will lose that day’s trading. Those who are successful will then be offered cheaper pitches in the summer holidays, after they have finished college, and we hope that they will be the next generation of entrepreneurs. Many famous business people, including Lord Sugar, Richard Branson and the founders of Marks & Spencer and the Superdry clothing brand, started on a market stall. If we can get those young people to take that risk, we can create the next wave of jobs, and I encourage the Government to do what they can on that front.

On the banks, we all welcome the fact that we still have record low interest rates. That is due in no small part to the fact that the tough decisions we have taken have protected our triple A credit rating. That has made a huge difference to businesses that are borrowing money and to mortgage holders. However, we still need to do more to encourage access to finance from banks. Whenever I talk to banks, they tell me that they have money and that it is available to borrow. Whenever I talk to businesses, they say that there is no such money. There is clearly a perception problem.

The Government should help to provide information on the funding that is available, whether from the Government, from the banks that say they have money or from the national loans guarantee scheme. I am told time and again that everything possible is being done to communicate such information but that it is difficult to get hold of the businesses that need it. That is not the case, however, because once a year the Government send out a business rates mailer to every business. It might simply say that they do not have to pay anything because the small business rate relief has been extended, but the Government still have to write to them to tell them that. My suggestion is that we should include something in that mailer—we have already paid the postage, so the taxpayer will be no worse off—outlining what funding is available through the banks and through the Government, what opportunities there are to employ and offer opportunities for apprentices and about the business mentor scheme. Some 40,000 business mentors are there to help and I have seen them make a big difference when I met Mentorsme, an organisation that has helped a number of businesses in my constituency. Let us use the business rate mailer to spread the opportunities that are available. Those measures will make a big difference to us all.

Autumn Statement

John Redwood Excerpts

Wednesday 5th December 2012 Commons Chamber

[Mr Osborne]

The right hon. Gentleman often has interesting and intelligent things to say about welfare to work programmes, and I am happy to consider the points he makes. I read some of his work earlier this year—it was quite a good job application for being shadow Chancellor.

[Mr John Redwood (Wokingham) (Con)]

Given that we need sensible amounts of new money and credit to fuel the private sector recovery, will the Chancellor update us on when RBS might be in a position to increase its balance sheets again—prudently—in order to make those loans available and when it might start to make a profit for the taxpayer, and will he consider the comments of those of us who think it needs to be split up to have more competitive and sensible banking?

[Mr Osborne]

I very much respect my right hon. Friend’s observations on the problems in our banking system. There is an aggressive plan to reduce the bad bank elements of RBS, and that plan is on track, but, as I said earlier, I want more to be done. RBS is reducing the size of its investment bank quite considerably. It also recently received advice from the Financial Policy Committee, and I hope it takes that advice into account.

Bank of England

John Redwood Excerpts

Monday 26th November 2012 Commons Chamber

[Mr Osborne]

I welcome the hon. Gentleman’s support. Perhaps we could bottle this cross-party consensus and use it on future occasions, but I doubt it.

Mark Carney will apply for British citizenship, but he is absolutely clear that he should do so in the normal way—the same way in which anyone else would apply for it. One thing that I have learned from the last Government is that Ministers of the Crown should be very careful about becoming involved in citizenship decisions.

[Mr John Redwood (Wokingham) (Con)]

I welcome the appointment of someone who should bring new thinking to troubled banking and monetary policy in the United Kingdom. Will the Chancellor confirm that, when he has studied the subject, Mr Carney will be free to change our monetary and banking policy in ways that could promote a more sustained and favourable economic recovery?

[Mr Osborne]

I thank my right hon. Friend for his support for the appointment. We have now united all points on the spectrum.

The Governor of the Bank will chair the Financial Policy Committee, the body that will be responsible for macro-prudential regulation. In other words, he will set overall guidance on issues such as capital and liquidity, about which I know my right hon. Friend has spoken powerfully. Any decision on the framework of the inflation-targeting regime and the like will be made by the elected Government and not by the Governor of the Bank.