Amendment of the Law

Mary Macleod Excerpts

Tuesday 29th March 2011 Commons Chamber

[Mr Darling]

The structural deficit was 0.4%. Throughout the past decade, we were spending money, but I must say, as a Minister in that Government, we were greeted with calls from the then Opposition not to spend less but to spend more on just about every occasion. They cannot have it both ways.

What worries me is that as we look forward, we face a number of pressures that are a threat to sustained recovery in this country. We, along with most other European countries, are following a deflationary policy and we are doing it together. This is not like Canada or Sweden 10 years ago, who reduced their deficit on the back of rapidly expanding neighbouring economies. That will have an effect. America, sooner or later, will have to deal with its very large debt problem that has been overhanging that country since the Bush years. That is not a recent phenomenon but it will have to be dealt with and it will have a knock-on effect on the rest of the world’s economies.

On inflation, for 10 years we in the west have lived off cheap goods coming from the far east. Now what is happening, as one would expect, is that those economies are growing and there are inflationary pressures. Commodity prices are increasing and wages are starting to go up, so those days are finished for us. It worries me that we are likely to face deflation as a result of Government policy with inflation as well. All that will result in lower growth, which is exactly what the Office for Budget Responsibility has said.

[Mary Macleod (Brentford and Isleworth) (Con)]

Does the right hon. Gentleman agree that many measures in the Budget will stimulate growth in future?

[Mr Darling]

I think there are many measures in the Budget, such as the reduction in corporation tax, the reform of planning law—if the Government can see that through their Back Benchers and councillors—and some others that will be helpful, but the thing that drives whether companies set up, take on more people or put in more investment is whether they can sell their goods and services. For as long as companies doubt that that is the case, we are going to have this problem with lack of confidence and we simply will not get the levels of growth that we expect.

That is why the story of this Budget was in many ways what the OBR—now independent of Government, which is a good thing—had to say. For the third time in 10 months it has downrated the growth that it expects in this country over the next couple of years and that should worry us. Yes, it picks up after that, but I suspect that is a function of the model that the OBR adopts: if growth is depressed in the short term, it is automatically assumed that growth comes back. However, I cannot see any evidence of where that growth is going to come from, either in the world economy or in Europe, especially if the eurozone insists on following what I regard as punitive policies towards those peripheral countries that are getting into trouble—visiting on Greece and Ireland conditions that I do not think they will be able to meet. Sooner or later, they will have to renegotiate or default, and the eurozone countries—principally Germany, which is the main driver of what is happening in the eurozone—will have to rethink the policies they are currently adopting. Otherwise, there will be a risk not only that Europe will fail to grow but that parts of it will go back into recession. That would be an absolute tragedy for the people living there and would also be extremely bad for us.

I have mentioned the uncertainties in the United States, but here at home we still have problems with the banks and their inability to lend. I recognise all the difficulties in that regard. I endured much criticism from the parties now in government when I was in charge of these things, but interestingly they have come up against exactly the same problems that I did, which is why their attempts to make the banks lend have had exactly the same reception as mine did. Next month, we will have the Vickers report into the future of banking but there is a risk that if we spend a long time discussing these matters and there is a lot of uncertainty about what should happen with the banks, that uncertainty will lead to lending being depressed. I hope there will be a full debate on the Vickers inquiry after the Easter recess, but I hope also that the Government will move to a conclusion one way or another in reasonable time. There is still uncertainty about banking regulation, particularly in Europe, and I regard the stress tests now being put in place as wholly inadequate and repeating the same mistakes that were made last summer. It is high time that we got to grips with this problem, which has not yet been resolved.

On the financial services sector, there is a lot of talk about rebalancing our economy and I am in favour of that, but we need to make sure that we build up other sectors of the economy and that we do not end up inadvertently running down one sector, which happens to employ more than 1 million people in this country.

Finally, it is important to recognise that in 2008 and 2009 international co-operation managed to prevent our collapsing into the abyss. There is a limit to what can be done through international agreements but they do matter when we are dealing with currency imbalances, trade talks, energy and so on. I hope that the Government will re-engage in that regard and will recognise that the policy they are currently pursuing within the United Kingdom runs the risk of derailing the recovery, meaning a long, slow recovery that will not bring the growth and jobs we need.

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[Mary Macleod (Brentford and Isleworth) (Con)]

Thank you, Madam Deputy Speaker, for allowing me the opportunity to speak in this Budget debate, which affects each and every household in the country. The Budget presented last week was unique in post-war British history because the country has never found itself in more difficult times and the level of borrowing is at an all-time high in modern memory. We needed to face that challenge. Real politicians do not come into politics to be popular—they come to do what they believe is right. Politicians need do what is right for the country and that is why the Government have taken some very difficult spending decisions. We need only look at Portugal, which has singularly failed to implement a credible plan to deal with its budget deficit, to see why we need to continue with our plan to get our country back on track. We need to continue to deal with the deficit while also ensuring that the conditions for economic growth are in place and I commend the Chancellor on a job well done in achieving the balancing act referred to by the Institute for Fiscal Studies.

The Budget is first about promoting business growth, as we have heard already, secondly about helping households and families and thirdly about dealing with the tough issues that need to be addressed. First, on business growth, one aspect that stood out in the Budget was the measures to encourage business growth. The Prime Minister recently spoke of his desire to implement the

“most pro-business, pro-growth, pro-jobs agenda ever unleashed by a government”

and I believe that the Government will achieve that.

How will we rebuild our economy? The new, low rates of corporation tax will help our home-grown businesses and will encourage new investment from overseas companies. Other measures include the entrepreneur’s tax relief and new finance available for small and medium sized firms, the simplification of the tax system, the removal of red tape and unnecessary bureaucracy, the extension of the small business rate relief holiday and the increased funding for work placements and apprenticeships, which will encourage investment and trade, as my hon. Friend the Member for South Basildon and East Thurrock (Stephen Metcalfe) has said. There is also the support for science and technology that my hon. Friend the Member for Warrington South (David Mowat) mentioned. Those measures and others will help to stimulate business growth.

The reaction to the Budget from business has been favourable. The CBI’s director general John Cridland has said:

“This budget will help businesses grow and create jobs. The chancellor has made clear the UK is open for business.”

I have been speaking to businesses in my constituency to get their views on the Budget and how it will impact on them. Frank Wingate, the chief executive of West London Business said that his company

“welcomes the measures aimed at stimulating business growth—particularly lower corporation tax, enterprise zones, fuel price caps, reduced red tape and simplified planning processes. They will all help.”

Mike Freely, the managing director of design firm Octink, who recently met the Prime Minister to discuss how the Government could help small and medium-sized enterprises, said:

“There is a lot in the Budget for Small and Medium Enterprises like ours and a feel good factor that should inspire more confidence throughout our sector”.

The Budget has a lot to offer businesses both large and small. My constituency is full of successful and aspiring entrepreneurs and I hope that some of the measures in the Budget will encourage new business start-ups and continued expansion and investment. I am particularly interested in encouraging women who would like to start their own business, because a recent Federation of Small Businesses report has suggested that women could contribute far more to the UK economy if they started up more businesses. If we had the same level of entrepreneurship among our women as there is in the US, there would be 600,000 extra female-owned businesses contributing an additional £42 billion to the economy. We also need to get more women on boards. I refer hon. Members to the recommendations in Lord Davies’ report that FTSE 100 companies should have 25%-female boards and that companies should publish and disclose the number of women at all levels in their organisation. I believe that that would help to create growth, improve performance and make use of the great skills that are available to us in this country.

Secondly, the Budget will help households and families. The oil price, the scrapping of the fuel duty escalator and the cutting of duty have already been mentioned. I am also delighted that the Chancellor has announced the next step in increasing the personal tax allowance, as was mentioned earlier. Also, the announcement of £250 million to help first-time buyers will directly benefit many young people and will help on to the property ladder people who would not otherwise have been able to get on it.

Thirdly, the Budget is about dealing with tough issues. The Government have proved that they are not afraid to deal with difficult issues and the Chancellor has shown that he is willing to be resolute in fighting the deficit.

In conclusion, the Budget is one for business growth, helping households and families and continuing to face up to and deal with tough issues. We have a job to do and we are getting on with it. This country of ours has a genius for invention, industry and trade. There are great and powerful forces awaiting liberation in our economy—the forces of commercial creativity and innovation. Entrepreneurs just need to have their hands untied so that they can create wealth for this country. The Budget supports aspiration, will help many people to achieve great things for themselves and will create a stronger, sustainable and stable economy—a better future for us all. I commend the Budget to the House.