Amendment of the Law

Robert Syms Excerpts

Thursday 20th March 2014 Commons Chamber

[Vince Cable]

Yes, indeed. I think that the apprenticeship model which we are now developing and expanding rapidly, in terms of both quality and quantity, is the remedy for the long-standing neglect to which my hon. Friend has rightly drawn attention.

[Mr Robert Syms (Poole) (Con)]

Is it not a fact that the British car industry will produce 1.6 million cars this year, and that Jaguar Land Rover alone will export 13.5 billion? Is it not also true that the Budget, with its help for manufacturing and exporters, is bound to help such industries and produce a good British success story?

[Vince Cable]

I had intended to say something about manufacturing incentives, but let me now emphasise a point that my hon. Friend has made very well. Some of our manufacturing industries, including the car industry, are expanding rapidly, and showing very high productivity and rapid export growth. The aerospace industry is another example. I was delighted to learn this morning that Hitachi, the leading Japanese company, is to establish the global headquarters of its railway manufacturing business in the United Kingdom on the basis of its existing investment in the north-east of England, and it is expanding and seeking business opportunities from the rail revolution that is taking place here. Manufacturing industries such as those, which were previously in decline, are now beginning to become resurgent in some key sectors.

--- Later in debate ---

[Mr Robert Syms (Poole) (Con)]

I welcome the Budget, not just in and of itself specifically, but because it is part of a long-term economic plan. It is important that Governments look at issues on a long- term basis. I think we sometimes forget the depth of the crisis of 2008. There was a 7.5% fall in output and it was the biggest recession in British history, significantly worse than that of the 1930s. On top of that, there was a major banking collapse and, following that, a euro meltdown and crisis. Therefore, the stability provided by the coalition Government’s steady plan to rebalance the British economy is a sensible and welcome development.

We have been blessed over the past three or four years by lower levels of unemployment than might have been predicted and we have started to see a recovery and higher levels of employment. The reason for that is that British workers have reacted in a rational and sensible fashion and have tried to price themselves into jobs. The consequence of that is that living standards have fallen and, as the Institute for Fiscal Studies has said, the fall from about 2007-08 until last year was about 7%. If there is a massive fall in output, it is inevitable that living standards will fall.

We are now starting to see much more evidence of a proper recovery, with pay picking up, inflation coming down—they should cross during the year—and the Government making a great priority of raising tax thresholds. If we are reforming welfare to encourage people to take jobs, it is both logical and sensible to make many jobs more attractive by reducing tax. I have heard some of the criticisms, such as, “What if you don’t pay tax?” Part of the problem of the Government taking 3 million people out of the tax system is that fewer people will pay tax at lower levels. However, it is good to provide more incentives within the British political system.

We are getting more growth, and we are starting to see a recovery in investment. If the eurozone, which could still be problematic, settles down, there is a prospect of higher exports. I welcome what the Government have done in providing more export credit. I also welcome what they have done for manufacturers by addressing some of the problems with the EU carbon floor price, which would have made many of our heavy or energy-intensive users uncompetitive. The key point is that the Government have listened to representations and made adjustments to help British business.

My principal point is that I welcome the changes in savings and pensions. Throughout most of my time in the House, people approaching the age of 65 have come to me to bemoan the fact that they are forced to buy an annuity, and that it will remain with the insurance company when they die. We are giving people the real freedom for which we campaigned in opposition and that we had in our manifesto, and it is absolutely right to do so. Moreover, we are allowing people to make their own decisions about how they spend their own money. It seems to me rather bizarre that people have a pension pot, but then have the problem of trying to calculate at the beginning of the year how much they can take out. I see no reason why we cannot just trust people, and ensure that they can make their own decisions about their retirement. That requires a bit of maturity and we will provide more advice, but it will be a very real freedom for many pensioners in Poole.

In addition, I welcome the Government’s proposal for the bond that, at least for a time, will give a higher rate to many pensioners who have not had a big rate of return on their savings. Quantitative easing has made life very difficult for pensioners with savings, and the bond is one way to offset that in these extraordinary financial times. Again, the Government have listened and have responded to that particular problem.

We are encouraging savings. We are giving pensioners more flexibility. We are addressing the needs of and helping exporters; we have seen many good examples in the car industry and aerospace. We are helping heavy manufacturers, who have real problems with the carbon floor price. The Budget will help jobs and growth. We are seeing the start of higher productivity and higher investment. I hope that that continues, and that our country goes from success to success.