Debate resumed (Order, 22 March).
Question again proposed,
(1) That it is expedient to amend the law with respect to the National Debt and the
public revenue and to make further provision in connection with finance.
(2) This Resolution does not extend to the making of any amendment with respect
to value added tax so as to provide—
(a) for zero-rating or exempting a supply, acquisition or importation,
(b) for refunding an amount of tax,
(c) for any relief, other than a relief that—
(i) so far as it is applicable to goods, applies to goods of every description, and
(ii) so far as it is applicable to services, applies to services of every description.
It is a great pleasure to be able to resume the debate on the Budget today. This is the coalition Government’s third Budget. It is a Budget that helps Britain to earn its way in the world, rewards working families, backs business, and sticks to our course of clearing up the economic mess that the previous Government left us. This Budget, like the last two, cannot be divorced from the urgent need to deal with Labour’s debts. Let us remember the crisis that we inherited less than two years ago. The state was borrowing one in every four pounds it spent and spending £120 million a day on debt interest alone. The country was taken to the brink of bankruptcy by a profligate Labour Government, leaving our people with the biggest deficit in the developed world.
This Budget marks another step on the road to a strong and stable economy, and that is why we are sticking to our deficit reduction plan, winning credibility in the markets and keeping interest rates low.
Many people who see that the hon. Gentleman’s party’s strategy is to borrow in the middle of a debt crisis will wonder why he is asking that question. I presume it is because he thinks that borrowing is not high enough.
This Government ultimately have a laser focus on making Britain the best place in the world to start, finance and grow a business.
On the subject of Labour waste and profligacy, is my right hon. Friend aware that the Institute for Fiscal Studies says that had Labour been re-elected, it would have borrowed an extra £200 billion, which would have had a huge impact on interest rates, in particular, and, given the debt legacy in households, a calamitous impact on the economy generally?
I will not give way; I am still replying to an intervention. The worst thing that Britain could do right now is to listen to the siren voices of the Opposition. They are very good at criticising, but they have absolutely no credible alternative, and that is probably the key message that will come across to the public who are watching this debate.
From easing access to credit and bringing down the cost of borrowing for small businesses, to cutting corporation tax and reforming the planning system, the measures set out in this Budget will help to get growth back into our economy. They will also help to rebalance the economy by supporting our companies—wealth creators shifting UK plc from a spend-and-borrow path under the previous Government to a make-and-sell future under this one.
If the hon. Gentleman reads the whole OBR report, he will realise that Britain is an economy that operates in a global marketplace. Of course, his solution to the challenges faced in that global marketplace is to go and join all the countries that are facing problems, not to tackle our own economic crisis that his party left us. I assume that most, if not all the interventions that I get from Labour Members will be cherry-picked statistics that offer no alternative solutions to the challenges facing Britain.
I am not about to cherry-pick a statistic, but let me give the Secretary of State some facts. I appreciate that she was not here at the time, but when the Labour Government came into power in 1997, the servicing of the debt that was left behind amounted to more than was being spent on transport and defence combined. That was a major task to be handled by the incoming Labour Government, so everything was not rosy in the garden.
The previous Conservative Government handed over a golden economic legacy. It was the Labour party that handed over a Britain loaded up with debt, costing us £120 million a day in debt interest, and that left unemployment higher than when it came to office, like every single Labour Government we have ever had. I will take no lectures from the party opposite on economic management, and neither will the British people.
On the question of investment from overseas, is my right hon. Friend aware that some Labour shadow Cabinet Ministers have said that they would reverse the corporation tax cut, which was cited by GlaxoSmithKline yesterday when it announced 1,000 new jobs in this country?
Ultimately, Labour Members seem to know nothing about how business runs. It may be that none of them has ever worked in business. Keeping our corporation tax rate low is critical in re-establishing our economic credibility and our tax competitiveness. Those are fundamental building blocks in getting the investment that we are seeing. I wholeheartedly welcome the steps that the Chancellor has taken.
As my right hon. Friend the Prime Minister has said, the infrastructure deficit that we inherited is just as serious as the budget deficit for our future productivity and the country’s ability to be successful. Infrastructure matters because it makes possible our journeys to work, delivers light when we flick on the switch and provides the connections that have created the communications revolution. Whether it is the congestion on our roads, our ageing power stations or the slow speed of our broadband connections, we face massive challenges to ensure that we have the infrastructure that we need to put Britain at the head of the competitiveness curve, not just in the next four to five years, but in the next four to five decades.
My remarks will focus on transport, because the Budget sends a clear message about how crucial the Government and I believe our transport infrastructure is to our economic future. That reflects what business is telling us. The CBI states:
“There are large amounts of business capital waiting to be unlocked if the Government achieves a step-change on transport”.
The Institute of Directors says that it is
“essential to provide more and better transport infrastructure in order to sustain the UK’s competitiveness.”
The British Chambers of Commerce rightly states:
“Infrastructure is the lifeblood of British business.”
I could not agree more. The last Government delivered the biggest boom and the biggest bust. As we chart our way back to economic recovery, what companies and firms up and down the country rightly want to see is a Government taking action.
I find the Secretary of State’s emphasis on infrastructure appealing, because infrastructure is needed. Unfortunately, the Office for Budget Responsibility has put the majority of growth for the foreseeable future down to personal consumption. Last Budget, it said that 12.5% of growth would come from private consumption. It now says that the figure is 37.5%. That is the very growth that the Government have now condemned.
I am not sure that the hon. Gentleman’s intervention made much sense. I agree that infrastructure is critical. The key part of the OBR report, which he ought to focus on, states that we are on course to meet our fiscal mandate and to get our public finances back in order. I am sure that he welcomes the OBR’s assessment that we will see the net creation of 1 million jobs in this country over the coming year.
To explain further the point made by my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), if the Secretary of State turns to table D.1 in the Red Book, which shows the detailed summary of the OBR’s central forecast, and looks along the line for “Fixed investment” by “General government”, she will see that it falls in 2011, falls in 2012 and falls in 2013. That is the point that my hon. Friend was making. The right hon. Lady clearly has not looked at the Red Book.
This Government are investing more money in capital spend than was planned by the previous Government. If the hon. Lady is complaining about those numbers, she would be complaining even more if we had the misfortune of having her party in office. This Government are investing in infrastructure and putting unprecedented levels of investment into the railways, as I am sure she is well aware, even though she prefers to score a political point.
The Government are rightly taking action to make it easier for people and businesses to go about their daily business. We are cutting commuting times and speeding up journeys; getting people and products moving faster and more reliably; and ensuring that Britain is plugged into the global marketplace. Of course, the easy choice, faced with Labour’s debt and deficit, would have been to cut capital spending and major infrastructure projects. We are not doing that. Instead, we have taken a deliberate decision to invest in our transport infrastructure, from relatively small interventions that make a big difference such as hard-shoulder running on motorways, to huge projects such as Thameslink and Crossrail.
I am delighted that we have a London Mayor who is committed, alongside the Government, to driving forward projects such as Crossrail, which are vital to our capital’s future prosperity. It is vital that we continue to have a Mayor who is passionate and successful in campaigning on London’s behalf at the heart of the Government; a Mayor who refuses, unlike his opponent, to make empty spending promises based on imaginary pots of money; and a Mayor who will be the best possible advocate for London’s economic success when he welcomes the Olympic tourists and athletes in the summer.
I am extremely grateful to the Secretary of State for giving way after that party political broadcast to re-endorse the London Mayor. Turning to a point of substance, may I ask her what her policy is on airport expansion in the south-east? The Government were keen to show a bit of leg in that regard, but have ruled out a third runway at Heathrow.
The hon. Gentleman will be delighted to know that I will come on to that matter shortly. After all, this is a speech on infrastructure. I hope that when the Opposition spokesman responds, he will take the time to set out some kind of alternative plan. That would be of real interest to us all.
Five months into this job, I could reel off a long list of the transport investments that we are making. We are electrifying the trans-Pennine railway and the Great Western line from London to Cardiff, far surpassing the 39 miles of electrification that happened under the previous Government. That would not even stretch from Cardiff to Swansea, let alone from London to Cardiff. We are upgrading the Tyne and Wear metro. There are 45 local authority major schemes to improve connectivity across the country. We are finally progressing with the first parts of the northern hub project, which is so important to many Members.
I could continue, Mr Speaker, but we are investing in so many projects that you would probably call me out of order for speaking for too long. Therefore, let me summarise. The spending review set out more than £30 billion of investment for road, rail and local transport projects across the country. On our roads, we are investing billions to unlock extra capacity and ease congestion. We have set up the £560 million local sustainable transport fund, which gives local communities more power to design and deliver local transport systems. We have put in place the Growing Places fund to kick-start infrastructure projects.
We have given the green light to High Speed 2, a national high-speed rail network that will radically improve the connections between our great cities and, by doing so, help to create jobs and generate growth and prosperity. That sits alongside our unprecedented investment in the existing railway network, from new stations and rolling stock to line electrification, which will help to decarbonise the industry. That amounts to the biggest modernisation programme since Victorian times.
Hand in hand with additional resources for our railways goes the reform of our railways. The rail Command Paper sets out our vision for an efficient, effective and value-for-money rail industry. Our reforms will put the customer first and allow us to end the era of inflation-busting regulated fares increases once the vital savings are made.
Building on all those investments, the Chancellor announced further measures on Wednesday to improve our country’s transport links. He announced a £323 million package that includes a range of projects. There is an extra £150 million contribution towards the Growing Places fund, which will facilitate the economic growth, jobs and house building that our country needs so badly. There is £15 million for cycle safety in London, which will enable the innovative redesign of some of the capital’s most dangerous junctions for cyclists. There is £11 million more for low-carbon buses, which is part of the £101 million bus investment package that the Under-Secretary of State for Transport, my hon. Friend the Member for Lewes (Norman Baker) is announcing today.
In addition, the Chancellor has announced that the rail industry will benefit from £130 million of funding from Network Rail to improve rail connectivity in the north of England by giving the go-ahead to further parts of the northern hub project. That will include increasing line speed and capacity on the Sheffield to Manchester Hope Valley line, and reducing journey times on the Manchester to Bradford via Rochdale and Halifax line and the Manchester to Preston via Bolton line. We are linking up the great counties of Yorkshire and Lancashire in the way that they have always wanted to be linked. That all adds up to passengers enjoying better connections, faster services and more seats.
Our national road network is also a key part of our national infrastructure. The strategic road network carries two thirds of all the freight on Britain’s roads, and it is vital for all types of business from mail order retailers to industrial parks and shopping centres. We have already announced, in last year’s growth review, £1 billion of additional investment in the nation’s strategic roads, on top of the £2.3 billion planned investment in major improvements announced in the spending review. However, as the Budget makes clear, we want to go further and examine the opportunities for more private investment in the road network in future. We want to consider where we can learn lessons from other industries, and we want to build on the proposals in Alan Cook’s report on the Highways Agency.
The hon. Gentleman will be aware of the work on how we can improve the A14, for example, and some of the options being considered could include tolling. If he is interested in finding out more about how the Government are approaching the issue, he can meet up with people who are involved in the A14 challenge. That programme of improvements will deliver for the community in that region in a way that his party’s Government failed to in 13 years.
The hon. Gentleman is looking at the sky and shaking his head, but I have a very, very long list of investments that the Government are making, whereas the Labour party delivered precious little. The biggest irony, of course, is that we ended up with all this debt, but what did it get spent on? Not the things that would have made a real difference to Britain—not roads, not trains. Labour frittered it away and wasted it on an unprecedented scale.
This Government understand that Britain is not just an island nation but a trading nation, so our ports must be world-class global gateways. That is why we are backing major container port developments such as Liverpool, Bathside Bay, Felixstowe South, London Gateway, Teesport and the port of Bristol. It is also why we want to see a successful and sustainable future for that other crucial global gateway, our aviation industry.
We should remember that our country and our capital are right up there with the very best when it comes to international connections. Only China and the USA have aviation networks more extensive than ours. We are directly connected to 356 international destinations, and no European country can match our connections to the world’s great commercial centres. There are more than 9,000 flights every year to New York, 3,000 to Hong Kong, 2,500 to Singapore—I could go on. To each of those important destinations and many others, Britain is the world leader.
Nevertheless, if we are to maintain that status, we have to take on the tough challenges facing the industry, whether it is improving the passenger experience or enhancing capacity and connectivity, while tackling the industry’s impact on climate change and the local environment. We are determined to look at those difficult issues. As the Budget makes clear, we will set out our thinking on aviation capacity and a sustainable aviation framework this summer. We are determined to ensure that we retain our aviation competitiveness and hub status in the decades to come.
An economy built on success requires investment in infrastructure that is built to last. That is why we need to invest in, reform and modernise our transport networks to make them the very best that they can be at not just national but local level. This Budget helps to lay those foundations for Britain’s future economic success.
We will not follow the Labour party’s advice to spend more, borrow more and put our economic credibility at risk. We will hold our course to cut Labour’s deficit, rebalance our economy and forge a path to sustainable growth. We will make the investment decisions needed to ensure that our economy is well placed to compete in the decades ahead. Tackling today’s challenges and investing in tomorrow’s future—that is what this Budget is about and what this Government are about, and we will build a country that we can be proud of again.
I begin by passing on the apologies of my hon. Friend the Member for Garston and Halewood (Maria Eagle), the shadow Secretary of State for Transport, for not being present today. It turns out that Ministers were on to something when they refused the offer to speak at the TUC’s railway event earlier this week. Conservative Members often seem to think that our brothers and sisters in the trade unions must be contagious, but on this occasion there is no getting around it—I am afraid they made my hon. Friend ill.
It therefore falls to me to point out what the Secretary of State already knows—that over the past 48 hours, the Chancellor’s Budget has unravelled at astonishing speed. We now know that it will inflict pain on the millions, so that millionaires can be spared. On the subject of transport, the Secretary of State has shown that she and the Chancellor are wedded to a platform of pain today and more pain in the future, with woefully little to return to the country the jobs and growth that we so desperately need.
We must not be unfair, for action has been taken to ease transport costs in at least one area. Fares on cable-based transportation systems carrying fewer than 10 people will now be subject to 5% VAT. That is unalloyed good news, and I am sure Government Members will think it is a clear sign of a Chancellor with his finger on the pulse of the lives of hard-working families up and down the country. If people travel to work by cable car, they are laughing, but if they are among the millions of motorists and train passengers squeezed as never before, facing the prospect of whole new charges in future, they are definitely not laughing.
I am not aware of any, but my hon. Friend might make proposals as a result of that excellent tax cut.
Yes, there are tough choices to be made, and the Opposition have set out the choices that we would have made. Of the £9 billion of cuts and efficiencies being made by the Department for Transport, we have accepted more than £6 billion.
I am sure that businesses will now see a great opportunity to set up offices at the top of Mickle fell as a result of this great tax cut.
Ministers are making decisions that will make our economy more fragile and that expose where their true priorities lie.
I will be happy to, within the constraints of time, but I want to try to keep to the same time as the Secretary of State took. If you will allow me to go slightly over that time, Mr Speaker, I can do so.
We have not opposed £3.36 billion being taken from the Highways Agency’s budget, out of the total reduction of £3.86 billion. We have not opposed £1.73 billion being taken from the Transport for London budget, which represents the full reduction. [Interruption.] The Secretary of State looks surprised. If she had paid a little more attention to what we have been saying over the past several months, she might not have had to ask the question now.
We have not opposed £794 million of the road maintenance budget out of total reductions of £1.23 billion or £528 million of cuts from the Network Rail passenger budget out of total reductions of £1.29 billion. We have not opposed the efficiencies that are being made to the Crossrail budget, or the £231 million from the local authority major transport teams out of a total reduction of £731 million. The Secretary of State asked for the list and has got it. I hope she is happy.
I am glad the Secretary of State asks me that. I would expect a little more humility from the Government given that on their own plans they are set to borrow £150 billion more. We strongly believe that the cuts we do not accept represent a false economy that will act as a drag on the nation’s growth and stop us returning to the prosperity that this country desperately needs.
The Government’s priorities are not with the family who are struggling to make ends meet, with the small business that wants to create more jobs or with the employee who wants to be able to afford to turn up to work in the morning.
I am not going to give way at the moment because the Secretary of State has taken up the hon. Gentleman’s time.
On all those counts, Wednesday’s Budget was a great disappointment. I will give the Secretary of State one thing: at least she is consistent. When we dig beneath her unrealistic claims that everything will be peachy, we see that she is not gearing up to deliver jam tomorrow after the pain today. Instead, with the Budget the Government set out this week, motorists, train passengers and bus users will be squeezed today, tomorrow and for years into the future. The effect will be a decade-long drag on jobs and growth, with the prospect of drivers and commuters being priced out of getting to work, or left stranded at a bus stop wondering why the service has been axed.
The Chancellor offered nothing to hard-pressed motorists this week. In fact, he has made things worse. He has raised the prospect of finding new ways to make things harder in future. Even from the comfort of No. 11 Downing street, the Chancellor cannot have failed to hear the growing calls for some relief on fuel taxation. If he refused to listen, it was the Secretary of State’s job to prise open his ears and tell him just how hard it is for Britain’s motorists. In the Budget negotiations, however, she secured diddly squat—[Interruption.] Instead, faced with rising and record petrol prices, she set her face against calls for relief in fuel tax, including the call for a temporary—[Interruption.]
I remind the hon. Gentleman that this April petrol duty will be a full 10p lower than it would have been under the previous Government’s plans. That will save the average family £144 and be a massive benefit—a far greater benefit than if Labour had remained in office.
That shows just how out of touch the hon. Gentleman and Government Members are. I would like to see him go to the forecourt in his constituency, or any forecourt around the country, and say, “Let’s welcome the further rise in fuel taxation that you’re getting this week. What a great job the Government are doing in keeping fuel prices down!”
Families in Britain, worried by energy bills, clobbered by spiralling rail fares and made poorer by cuts to tax credits, are, thanks to this Secretary of State’s inaction, once again being squeezed even harder at the fuel pump. There is pain today and pain tomorrow. The ultimate victims are jobs and growth, and the nation’s return to prosperity. What is the Chancellor offering motorists in return for their growing fuel bills? He is offering only vague promises, which might well turn out to be yet another ratchet with precious little reward.
The National Audit Office has warned the Government that they are creating a vicious cycle of deteriorating roads and higher long-term costs. A plague of potholes is making our road network less safe for all users, less green and more congested. The road network is a brake on, and not an agent of, jobs and growth. There is no movement on the cuts already set for local roads—that is good news on potholes but bad news for everyone else—but what about our trunk roads, which the Secretary of State mentioned? We need long-term strategic investment in the road network, and we also need to look at how we lever in that investment, but Britain’s drivers and cyclists will have little confidence after seeing Ministers tying themselves in knots in recent days.
Before the Prime Minister’s speech on infrastructure on Monday, those pesky anonymous briefers, who seem to be everywhere in this Government—good luck in trying to catch them, Mr Speaker—said that tolling would be considered only for brand new roads. However, in the speech, “new roads” became “new capacity”. We now know for certain that charging is being considered when improvements take place on existing roads because the Budget document confirms it. We are told that the shortlist of options include “widening some sections” of the A14,
“rationalising access to the route, and improving the route of the southern bypass for Huntingdon.”
In other words, the A14 will be not a new road, but the existing one with added tolling.
Britain’s motorists, already squeezed to breaking point, demand plain speaking from the Government, so I will give the Secretary of State another opportunity. Will she tell us what will constitute a capacity improvement on an existing road that could lead to tolling? Will that include an extra lane, a contra flow, a new slip road, a roundabout or a bollard? Motorists deserve to know what the Government have in mind.
As the A14 runs through my constituency and is rather a long way from Barrow, may I point out to the hon. Gentleman that adding extra capacity, even if it is tolled, will help all those who go on the free bit of the road, because they will be able to get home faster? That is why the proposal is supported locally, even if there is opportunistic opposition from Labour.
The hon. Gentleman seems to have more information about how the scheme will work than either me or the Secretary of State, who does not seem to know how exactly motorists will be clobbered with tolls.
Who, if anyone, will police tolls? Will contracts stipulate that tolls must be removed when improvements have been paid for? How will we avoid people being driven off the motorways and dual carriageways and back into the communities and road networks that the toll roads were built to relieve?
In addition to the fear of massively increased tolling, there could be a further, lasting sting in the tail for motorists from this Budget. Buried on page 70 of the Red Book are plans for what can be described only as a new stealth tax hike on motorists. The Government say they will consider reforming—by which they clearly mean “increasing”—vehicle excise duty. Ministers need to come clean on how much extra they plan to squeeze out of motorists through that new stealth tax increase. They also need to say what it will mean for motorists who behave responsibly and opt for fuel-efficient vehicles.
On a less testing note on the subject of sustainable road travel, let me say that the Opposition welcome the £15 million the Chancellor has found to help to make London’s roads safer for cyclists. The spate of injuries and deaths in the capital has been truly appalling, and the Opposition fully support the campaign, led by The Times, for significant change. As the Secretary of State will know, however, the Budget contained only this one-off grant for London—the fact that there is an upcoming mayoral election is a complete coincidence, I am sure. Labour has committed to reserving a portion of the roads budget to dedicated cycle facilities on roads across the country, not just in the capital. Will she make a similar commitment?
If transport on the ground is up in the air with the uncertainties created by the Government, transport in the air, aviation, remains at serious risk of being grounded—if Members follow me. On aviation capacity, the Government still do not know—and we still do not know after the Secretary of State’s speech—whether she is taking off or landing.
Well, you know. [Laughter.] I am here all week.
The Chancellor told us on Wednesday that the country must confront the lack of airport capacity in the south-east. He is right, but his words would carry more weight had the Government not spent the past two years dithering and delaying on producing any sort of aviation strategy. What did we actually get this week? We got not one but two further delays. First, the Chancellor announced that the strategy that the Department for Transport’s business plan told us to expect in March will now appear late this summer; and now the Secretary of State seems to have put back the date even further to this winter or next spring—more dithering, more delay, while competitor hubs in continental Europe get on with providing new capacity that could transform their economies.
I will not give way any more because I am running on and I want to give other Members time to speak.
The Government came to power with just one policy on aviation capacity—to abandon the Heathrow third runway. Since the election, the Government have come up with no practical thinking on alternatives. Instead, they seem to have outsourced their aviation strategy down the river to a Mayor who is more interested in trying to grab attention than in finding a plan that will work. That is no way to treat a vital economic driver that is critical to the country’s future growth.
As the Secretary of State is well aware, the plans for an airport in the Thames estuary are being met with a barrage of opposition from the area, including from her own party’s MPs and councillors. She would be even clearer on that if, like my hon. Friend the shadow Secretary of State, she had been to north Kent and talked to local people in the areas affected. The idea of building a new airport from scratch in the Thames estuary is a huge distraction from the real need for airport capacity here and now. It is obvious why so many people, but apparently not the Secretary of State, see an estuary airport as a complete non-starter—there is the impact on local communities, the destruction of internationally important habitats, the safety threat from explosive-laden wrecks, a liquefied petroleum gas terminal and a huge offshore wind farm.
Does my hon. Friend agree that the reason the Government have not yet come out explicitly on these issues is that they do not want to damage Boris’s chances in the mayoral election and undermine his fantasy island proposal? The reality is that this proposal is completely opposed by whole sectors not just in Kent but north of the River Thames, including in my constituency.
My hon. Friend makes a good point. Frankly, Britain deserves better.
The overwhelming majority of the aviation industry agrees that Heathrow would struggle to continue in its current form alongside an estuary airport, placing at least 140,000 jobs in west London and the M4 corridor under threat. I hope, then, that when the Secretary of State finally publishes her thinking, she will choose a sensible course based on providing additional capacity at existing airports, not a strategy based on a pie-in-the-sky estuary airport.
I will not at this stage, if the hon. Gentleman does not mind.
My hon. Friend the shadow Secretary of State is still waiting for a response to her letter offering cross-party talks on tackling capacity at existing airports. Perhaps the Secretary of State could pop her reply in a “get well soon” card and send it over with a nice bunch of grapes. I am running out of suggestions to make her agree to this proposal, which seems eminently sensible to Opposition Members. The aviation industry, businesses and passengers need certainty to guarantee investment, and we are offering to help her achieve that.
On the railways, we strongly welcome a number of the investment decisions made in the Budget, particularly the Secretary of State’s support for the vital northern hub project. I pay tribute to the hard work put in by colleagues on both sides of the House from across the north of England on ensuring that support for the hub transferred from the last Government to this one. We need clarity, however. In the Budget, the Chancellor announced £130 million of support for a £500 million project, but we need details of what remains to be funded.
Although that infrastructure investment, when it arrives, will be welcome, the Secretary of State knows that with no help on Wednesday for rail passengers struggling with fares that for some have already risen by up to 11% this year, there was nothing to reassure commuters that the next two years of RPI-plus-three increases will not be going ahead, and nothing to change the franchises about to be awarded by her Department that will allow for 15 years of fares increasing by up to 8% every year. All over the country, families are finding themselves paying more for their journey to work than for their rent or their mortgage. They will not welcome this inaction on fares. These sky-high increases price people out of jobs, stunt growth and discourage sustainable travel choices.
Britain’s bus users, too, who are already being hit by reduced services and rising fares, will have noticed that they warranted no mention at all in the Budget, and there was only a passing reference in the Secretary of State’s speech today to a paper to be produced later today. From next month, bus operators are being hit by a 20% cut in the bus service operators grant. In my constituency, like those of many hon. Members, that is threatening to lead to more services being taken off the road and a hike in fares for those who remain.
Buses are the backbone of our transport network and essential to ensuring that many people—especially young people—can access jobs and training. Labour is calling on bus companies to set up a free travel scheme for 16 to 18-year-olds in return for the financial support they receive. Let us compare that to the approach by Ministers, who seem content to wash their hands of the entire sector. When they could be helping tackle youth unemployment, they risk making a bad situation even worse.
At the end of his statement on Wednesday, the Chancellor boasted that he had
“not settled for a do-nothing Budget.”—[Official Report, 21 March 2012; Vol. 542, c. 807.]
But to motorists, businesses, and the millions who rely on public transport across the country, that is exactly what he has done. On rail fares, he has done nothing; on the crisis facing our buses, nothing; on aviation capacity, nothing; and on fuel costs, well, he has done something—he has made them even higher. In defending the Budget, the Secretary of State and her Ministers need to explain whether they do not understand or simply are not bothered about the damage they are doing to family budgets and the impact it is having on Britain’s ability to get moving again.
Like all Members, I am frequently visited by members of my community asking for many things that the Government can do to help their businesses or special interest groups. I have recently taken to asking them what they would do if they were Chancellor of the Exchequer for the day. I ask them to come up with three ideas, and invariably they come up with a whole load of ideas, and after a few minutes I have to say to them, “I’m terribly sorry, but you’re Chancellor for the day, not Father Christmas.” Once they have been told, people realise that when our back is against the wall, it is vital that any budget has to be balanced. Anybody who knows how to run a business knows that they simply cannot carry on borrowing to stimulate that business. Cuts have to happen, and it is important that we all share the burden of those cuts. Labour is keen to ask those on this side of the House how we will be affected by them and what our interest in them is.
That is a slightly wider point, but the fact is that when someone has run out of credit on their credit card, they can use the debt that they already have, but they cannot increase it.
Many of us on this side of the House have a vested interest in the cuts. I declare an interest, in that I shall be £2,450 a year worse off as a result of child tax credit cuts, but the other side of the coin has to involve stimulating economic growth. The problem is that the Chancellor does not have a volume knob on the economy that he can easily turn up. He has to use a number of different measures. There is no simpler way to generate quick economic growth than to import investment from overseas, but to do that we need to demonstrate that we are open for business and competitive. We need a tax regime that attracts inward investment. That is why I see the combination of the accelerated fall in corporation tax to 22% by April 2014 and the cut in the top rate of income tax to 45p as crucial to the opportunity that we offer to international companies and entrepreneurs looking to set up their businesses in the UK.
I cannot overstate the importance of that international competitiveness. Brintons carpets in my constituency has recently been reviewing its operations. It is absolutely committed to Kidderminster, but it has received overtures from the Portuguese Government, who are offering free loans and grants for it to move its carpet looms to Portugal to increase manufacturing there. This is a real threat to UK manufacturing and to my constituency, but that threat is significantly diminished when the corporation tax differential is increased to 7 percentage points. The top rate of income tax in Portugal is 46.5%. In other words, Brintons would have a 33% higher corporation tax bill by moving to Portugal. The managing director of Brintons assured me last night that this was absolutely a pro-business Budget.
Those two tax measures represent an important step towards achieving the relatively quick fix of attracting inward investment, and making it harder to justify leaving the country, but it is incredibly important that we support this with home-grown prosperity that will provide opportunities for local entrepreneurs. The Government have already introduced measures to help small and medium-sized enterprises, as well as announcing the business enterprise zones.
I must confess to being disappointed that my constituency was not granted such a zone, but it is a credit to the local enterprise partnership and Wyre Forest district council that the South Kidderminster business park continues to be a reality. We have just had a planning application submitted for a new development of 27 hectares of mixed use, including a 4 hectare employment development, retail, hotels, a restaurant and a café, care and crèche facilities, a railway halt for the Severn valley heritage railway, and up to 250 new homes. That planning application demonstrates a strong commitment to my constituency by a far-sighted investor, and follows on from two significant investments in local businesses— £36 million in Brintons carpets and £15 million in Sealine yachts—and precedes a further planning application to create a 250-room conference facility at the West Midlands Safari Park that will be the premier facility in the county. In addition, a brand new Premier Inn hotel is opening today in Kidderminster.
I am not trying to pretend that everything is entirely rosy, but it is important to balance negative news with all the positives, and there is a lot of positive news about. It is also worth remembering that unemployment, although too high in Wyre Forest, has remained flat since 2010, having doubled in the years between 2005 and 2010. A strong local will to make a difference is incredibly important and, if I may, I will use this opportunity to plug my jobs fair, which is being held in Kidderminster next Thursday. It will try to match those who are looking for jobs with businesses that are hoping to expand.
The key point, however, is that an enthusiasm to do well locally and to run with initiatives—from something as simple as a jobs fair to something as strategic as significant local investment—has to be balanced by support from the top. That can be illustrated by the fact that the recently announced Kidderminster college tie-up with Birmingham Metropolitan college to provide high-tech courses in the video, animation and gaming arena will benefit hugely from the announcement yesterday of tax reliefs in that industry. I should declare an interest as I am a governor of Kidderminster college. Cutting red tape for micro-businesses, giving research and development credits above the line, introducing measures to make the UK a centre for technology for Europe, and other measures will help to create opportunities for a whole raft of small businesses to start up and develop.
Mr Speaker, you will note that I am an enthusiast for this Budget. I am absolutely convinced of its pro-business credentials and I broadly welcome them, but I have one or two points that I would like to raise. I am pleased to see the Secretary of State for Transport in her place. The High Speed 2 project will certainly bring benefits to Birmingham, the main city of the west midlands and the second city of this country. I urge the Secretary of State to look into the possibility of building a new regional hub airport in Birmingham to reinforce the important link that HS2 will provide between Birmingham and London. A hub airport would certainly be of huge benefit to the economy of the west midlands, and indeed of the midlands as a whole.
I also want to sound a note of caution about the regionalisation of pay scales. I completely agree with the logic that the private sector will be unable to compete with the public sector on pay when the public sector pays as much as 18% more for equivalent jobs in the regions.
The areas in which public sector pay tends to be higher than that in the private sector also have extremely high unemployment. I am therefore puzzled by the idea that high public sector pay is preventing job vacancies from being filled, or that there are any such vacancies as a result of this so-called problem. That does not appear to be the case, given that there are so many people chasing each job.
Not all of it. Small businesses do not set their pay on a national basis. It makes complete sense that public sector pay should be treated likewise, and in the broadest sense I welcome the freeze on regional public sector pay awards, but I have one caveat. Moving public sector jobs around the country—especially in Government Departments such as vehicle licensing, which went to Swansea—brings cash to a local economy. That cash can provide economic activity and liquidity that supports jobs in the local private sector that might otherwise struggle. While the public sector regional pay adjustment is going on, I urge the Government to take careful note of what is going on locally, to ensure that the proper efforts to reduce the crowding-out of the private sector by the public sector do not unwittingly starve the private sector of much-needed local liquidity.
I also worry about the rising cost of fuel for our constituents. This is a huge burden on families and although the increase in tax-free allowances is welcome, the rising cost of fuel is an issue for rural and semi-rural constituencies such as mine. I welcome the help that the Government have given—we are 10p better off than we would otherwise have been—but there are two further issues to consider. The first is that fuel companies charge consumers what they can get away with locally. Prices in Kidderminster are around 5p dearer than they are in the constituency of my hon. Friend the Member for Bromsgrove (Sajid Javid), for example. On writing to the chief executives of Tesco, Sainsbury and Texaco, I was told that prices were set locally. When I contacted the local managers, they told me that the prices were set regionally. Whatever the method of price setting, the fuel companies are ripping off my constituents in Wyre Forest and I want them to stop.
When we compare the price of oil to pre-tax profits over the years, we see that the oil companies are simply not passing on extra profits to consumers. Indeed, they are making extra profits from consumers. Of course duty and VAT are part of the price of oil, as is the dollar-sterling exchange rate, but the underlying commodity price at the pump is the key component, and any means by which the Government could persuade the oil companies to pass on their profits to consumers would be gratefully received.
I am most grateful to you for calling me to speak in the Budget debate, Mr Speaker. I do not propose to retread old ground, and I shall confine my remarks to how the Budget will affect my constituents. The backdrop to my observations is the fact that unemployment has gone up by 12% since May 2010, according to the claimant count figures from the Office for National Statistics. The latest figures show that 1,811 people in my constituency were unemployed in February 2012. Those same statistics show that unemployment has risen for 15 of the past 21 months, and job losses have included 150 highly skilled jobs at Tetrapak.
A major supermarket is opening in Cefn Mawr in my constituency next Monday, and I welcome that. I welcome the fact that about 100 new jobs will be created, although most will be part time. What I do not welcome is the news that 11 people were chasing every single one of those job vacancies. That is the sort of economic climate people in my home area are facing. It is why it is living in cloud cuckoo land to think that our 41 local Remploy staff will wander straight out of the factory that the Government want to shut into a land of milk, honey and stable new jobs. That is deeply wrong, unjust and immoral, and if the Tory-Lib Dem double act in Westminster will not do anything to put it right, it is vital that they play ball and devolve it to a Labour Government in Wales who will.
What people in my home area know all too well is that we need more of the wealth that private sector jobs create. There is a strong work ethic in our area, which runs deep in our twin industrial and agricultural heritage. We do not expect something for nothing, and these strong cohesive communities are very cross—rightly so—when anyone says we do. This is why we are so concerned about unemployment, and why we know that however many courses people take, however much work experience they get and however many boxes are ticked, what really matters is how many real jobs are out there—jobs that create prosperity and purchasing power, jobs that are for personal fulfilment and challenge, jobs to promote well-being and cohesion in our communities.
Yes, purchasing power is vital in all this. What did construction companies think when the Government swooped up the VAT rates? Let us remember the VAT tax bombshell—I mean the real one that happened on 4 January 2011. The builders and tradesmen in small and medium-sized enterprises certainly remember it because it had a major effect on their businesses.
The Minister spoke about people with business experience, so I will provide her with an example. Mike Learmond, regional organiser for the North Wales and Chester Federation of Small Businesses, put it like this at the time:
“Small firms will be hit hard by the rise in VAT, as unlike big businesses they can’t absorb the increase. Thus small firms will have to pass the full cost on to customers, reduce stock levels or find cost savings elsewhere—potentially costing jobs and undermining the Government’s private sector led recovery.”
Well, 1,811 people in my constituency know exactly what he meant by that.
In a Westminster Hall debate on micro-businesses in January this year, I was most interested when a Conservative Member with clear expertise in this area, the hon. Member for Newton Abbot (Anne Marie Morris), made this very thoughtful point about VAT:
“We have on a number of occasions talked about the possibility of reducing rates for restoration and repair of houses, bringing the rate down to 5% rather than the full 20%. It seems to me that, given the pressure on the Government to increase the available housing stock, now is the time to look at that again.”—[Official Report, 25 January 2012; Vol. 539, c. 137WH.]
I agree with her totally and am heartened that my own party has pledged itself to a one-year VAT cut to 5% on home improvements, repairs and maintenance to help home owners and small businesses. In the interests of small and medium-sized businesses, enterprise and support for the work ethic, I am bitterly disappointed that the Chancellor has not used the opportunity of the Budget to do that, as he could have done.
On purchasing power, I am at a loss to understand quite how this Government’s apparent embrace of regional pay, which means pay cuts to my constituents and the people of Wales more widely, is supposed to create an environment in which private sector businesses will flourish. There is also, of course, a deeply moral issue. If a policeman or woman in my constituency is serving the public—whether it be in my constituency or elsewhere, as when they travelled down to London in vans to support the Met police during last summer’s riots—it is right that those servants of the public be paid the same rates. [Interruption.] I wonder whether there will be a real intervention. Perhaps not. In many ways, there will be rightful anger and disappointment at the missed opportunities of this Budget.
I had assumed that the hon. Lady would resume her seat if she had accepted my intervention. She might want to consider the fact that London police officers already receive London weighting, as do other public officials. I remind her, too, that it was her Government who introduced regionalised pay for the Court Service; the last Labour Government started it.
It is a great pity that the hon. Lady has been so interested in following the Conservative party’s crib sheet that she has not read about what happened. The circumstances were very different with the court system, and 50 local rates were reduced to five—it was totally different and it standardised the pay far more. [Interruption.] Oh dear, I fear that the hon. Lady will have to wait a little longer to be promoted to a Parliamentary Private Secretary.
As I was saying, I believe that there will be rightful anger and disappointment at the missed opportunities of this Budget. About 14,000 millionaires—we saw some of them on the Front Bench the other day; it looks as though the servants are on duty today—will be rubbing their hands with glee at the £40,000 tax cuts they are receiving, while small and medium-sized entrepreneurs, teachers, nurses, police, families and pensioners are collectively faced with a £3 billion stealth tax, and are adversely affected. The 1,811 unemployed people in Clwyd South will rightly feel let down this week by a Tory Government, aided and abetted by those spectacularly useless Orange Book Lib Dems. Let us hope that, even at this late hour, this Government will put working families and those who want to work ahead of their ultra-rich cronies.
I believe that this is a courageous Budget. It is innovative and ingenious, notable for the steady stewardship of the Chancellor of the Exchequer. We need to take a strategic overview. The recession from which we have emerged is a deleveraging recession, a paying down debt rather than a destocking recession, so some of the normal policy prescriptions on fiscal and monetary policy have proved useless in the face of that. That makes the imperatives of long-term reform of the public services, particularly education and welfare, tax cuts and supply-side reforms, including the reduction in taxes and the regulatory burden, even more important.
My hon. Friend is making a strong point about deregulation. I would point to paragraph 2.238 of the Red Book, which shows that the Government are committed to scrapping or improving 84% of health and safety regulation. Does my hon. Friend agree that this is the right approach—focusing on what is most risky as opposed to applying all sorts of regulations that are no longer necessary, valid or helpful?
My hon. Friend makes a very good point, which explains why this Budget has had consensus support and been viewed from a positive perspective by business organisations across the country.
We should be talking a paradigm that involves tax and spending, not just tax. There has been too much focus in the last few months on cutting or increasing taxes, when we should be talking about expenditure. Are we really asking the public to believe that a net 6.8% reduction in public expenditure over the comprehensive spending review period is enough to rebalance the economy when we saw a 53% real-terms growth in public expenditure between 2000 and 2010? We were spending £450 billion just 10 years ago on public services, and we are now spending £702 billion. Are we getting value for money for our constituents and our taxpayers?
Of course, Conservative Members will not let the electorate forget the disastrous and poisonous economic legacy left to us by the Labour party—to the extent that we have to pay £120 million a day in debt interest and are £47.6 billion a year in debt this year. As I said earlier to my right hon. Friend the Transport Secretary, had Labour remained in office, they would have had to borrow another £200 billion. They left us a structural debt in a period of economic growth. They left us a situation in which individual net borrowing doubled in just six years, while we have massive sectoral imbalances and a systemic dependency on debt. That was Labour’s legacy.
Labour Members still have no economic credibility; if they were a party with a cogent and coherent narrative on the economy, they would pledge to reinstate the 50p tax rate and reverse the policy on freezing age-related allowances. They do neither because they are opportunistic and they know that if they were elected to government, they would need the money.
My hon. Friend is absolutely right. The Labour party will not make progress with the electorate until it does two things: apologise for the debt millstone they left to our children and grandchildren, and develop a policy that is not written on the back of a fag packet.
I welcome the cut in corporation tax, which gives us the fourth lowest such tax rate in the G20. I welcome the reduction in the top rate of income tax from 50p to 45p, too, as the 50p rate was damaging competitiveness and not collecting the sums it should have collected, and was an impediment to entrepreneurial activity and business growth in our country.
Let us nail the myth about taking poorer working people out of tax. It is a Conservative policy, enunciated by Lord Forsyth in the tax commission in 2005, and restated by Lords Saatchi and Tebbit. It is a Conservative policy to boost people’s incomes because we trust them to spend their money wisely.
I also support the policy on age-related allowances. There is consensus on the issue of generational fairness—even the hon. Member for Pontypridd (Owen Smith) will agree with me about that—and this Government have a very good record on provision for pensioners, including the largest ever cash rise in the basic state pension from April this year, the uprating of the pension credit guarantee, and the help with fuel bills for poorer pensioners. We have a much better story to tell on that than the last Labour Government had, with their ridiculous and insulting 75p pension rise in 2000.
Does the hon. Gentleman agree, however, that the 4.7 million pensioners who will be impacted by the age-related allowances policy will not be pleased to learn that the House of Commons Library note on the Budget concludes that they will be between £80 and £280 worse off in real terms as a result of its provisions?
The independent Institute for Fiscal Studies disagrees profoundly with the hon. Gentleman, and believes that the proposals are both morally and financially right and progressive. The hon. Gentleman will therefore have to try again later.
I support the planning regime reforms and the liberalisation of the national planning policy framework. I was delighted to hear about the regional policy and the expansion of airports in the south-east as well. We are currently losing our competitive advantage to Schiphol, Frankfurt and Charles de Gaulle. I am delighted, too, that the Chancellor resisted the temptation to limit further tax relief on higher-rate pension contributions. That would have been an attack on thrift and prudence. We in Cambridgeshire are very pleased with the news about the A14 and the Get Britain Building and Growing Places funding. Moreover, I have been campaigning for quite some time for residential estate investment trusts for social housing, and the previous Government did nothing about that in 13 years.
It would be wrong to say that I am happy with every measure in the Budget. There were some missed opportunities and missed steps. Fuel duty is an issue that will return—as it would do for any Chancellor and Government. I understand why changes were not made this time, but my constituents’ petrol bills are hurting, and using a car is a necessity, not a luxury. Air passenger duty must be looked at again, too. It has increased 360% in the last seven years. Because of the major impact on transportation and tourism, I hope that the Chancellor will revisit that issue. I should declare an interest: Thomas Cook has a headquarters in my constituency.
The House will know that I had very serious concerns about the child benefit policy, but the Chancellor has listened and taken them on board. We have addressed the cliff-edge issue, although there is still the anomaly of the two earners as opposed to the one earner; we should regard that as a work in progress. My constituents are also asking why our European Union contribution has increased between the pre-Budget report and this Budget. It may be a function of reduced co-payment of funds for EU projects. If we are all in this together, however, that should include the European Union, so we must look at that issue.
I was very disappointed that, once again, the Budget did not contain a policy to recognise marriage in the tax system. For probably as little as £800 million—less than a third of the £3 billion we spent on taking people out of lower rate tax, in order to appease, as it were, our Liberal Democrat friends—we could have given a tax break to married couples with children under 3. I am sorry that that did not happen.
Things will be tough over the next few years. Restoring economic health after the 13 years of the last Labour Government—years of waste, profligacy and creating a client state—was never going to be easy. Once again, the job of getting the finances of this country straight and of building a great Britain and a strong economy falls to a Conservative Government, and I believe that this Chancellor has proved he is up to the task.
It is always a pleasure to follow the hon. Member for Peterborough (Mr Jackson), who has a particular perspective on things.
I want to focus on two themes: jobs and justice. The overall state of the economy is as follows: the Budget deficit is £121 billion; interest rates are 0.5%; and the Bank of England has undertaken £325 billion in quantitative easing. Yet the economy is in a depressed state, with GDP below its peak and its potential. The worst consequence of that is that 2.67 million people are unemployed, including 1,000 young people in my constituency.
What are the Government doing to tackle that? Given the fiscal squeeze on households, it is clear that what is needed is an increase in business investment and exports, but that is not what we are getting. According to the Office for Budget Responsibility forecasts, the increase in business investment has been pushed back from 2012 to 2013, and the unemployment peak has also been pushed back. In the north-east, the chamber of commerce says that investment is particularly weak. Shockingly, it has been negative since 2008, and the figure currently stands at minus 6.3. That means that, in contrast to what the hon. Member for Peterborough said, the capital stock is shrinking.
Why is investment so low, given that The Daily Telegraph tells us that corporate balance sheets are “brimming with cash” and the Bank of England reports that dividends are at record levels? It is because there is a lack of confidence. Have the Government done anything to strengthen business confidence? What little growth that is forecast will be fuelled by consumer borrowing. Although Government Members inveigh against household indebtedness, over the forecast period, that is predicted to rise from £1.5 trillion to £2 trillion.
The hon. Lady is an expert in Treasury and economic matters, so I was surprised that she stressed that confidence was so important, because does she truly think that the Labour alternative policy of borrowing more money would give businesses more confidence to invest?
The fact of the matter is that Ministers have overshot on their borrowing. Their borrowing is £147 billion higher than they were planning a year ago, and the credit rating agencies have put a watch on our creditworthiness. Government Members should not be quite so confident about where their Ministers are taking the British economy.
Turning to growth in the enterprise sector, there is to be a measly £25 million for aerodynamics and another measly £25 million for science, which is crucial to modernising our manufacturing. Under the last Labour Government, science spending rose by £1 billion; a £25-million investment will not get us anywhere.
Let us discuss what the Government are doing on corporation tax. They have trumpeted a cut in the main rate, but the reductions in the allowances mean that the net support to industry overall is £200 million. No wonder investment at home is so flat. Government Members claim that GlaxoSmithKline took its investment decisions in response to the Budget, but that is patently ridiculous. GSK has been planning its investments for the past two years, in response to the patent box changes announced by the previous Government before the general election. Everything this Government have done this time has been swamped by the cuts to capital allowances that they made in their first Budget, which took £1.5 billion from the private sector.
My hon. Friend is absolutely right. Government Members are completely unrealistic about what business needs and simply do not understand that what is needed is a co-operative approach between the public and the private sectors, and long-term investment. The North East Chamber of Commerce told us that its checklist for the Budget was an increase in capital allowances and the industrial buildings allowance; a reduction in employer national insurance contributions for young people; and more support for apprenticeships. None of that appeared in the Budget this week. The Government simply have no strategy for jobs or growth.
We have heard a lot from Government Members about the benefits of cutting the 50p rate, but even the Chancellor of the Exchequer does not have the gall to put cutting the top rate of tax into the “enterprise and growth” section of his Budget. The distribution effects of this Budget are shocking. It is grotesque to give a millionaire an extra £40,000 while cutting the tax credits of those on the minimum wage who work 16 hours a week by £4,000. That is a complete disgrace. As the Leader of the Opposition pointed out on Wednesday afternoon, 300,000 people will benefit from the cut in the 50p rate, by an average of £10,000, whereas only 4,000 people will pay the higher stamp duty on properties worth more than £25 million. The Chancellor’s estimate that the loss in revenue from cutting the 50p rate is £100 million is risible. It is absurd to suggest that £2.9 billion more tax will be collected because of behavioural changes—that would be an unprecedented impact on people’s behaviour.
Before I leave the issue of tax avoidance, I wish to discuss the great contribution to the Budget made by the Liberal Democrats. They seem pleased with securing a crackdown on tax avoidance in return for succumbing to the Tory desire for a cut in the 50p rate. In fact, the Institute for Fiscal Studies says this morning that there is less action on tackling tax avoidance in this Budget than there has been in previous years.
I am sorry, but I will not give way, as I have used up my intervention time.
If the Liberal Democrats look at the measures in the Red Book to combat tax avoidance, they will see that six of them will be legislated for in the 2013 Finance Bill instead of the 2012 Finance Bill. If they look at table 2.1 in the Red Book, they will see that the forestalling of the additional rate reduction and the cap on unlimited tax reliefs—that is the new phraseology for the tycoon tax—adds up to £2.4 billion this year. In other words, this coalition Government have given their wealthy friends one last chance to avoid tax, and that avoidance will be worth £2.4 billion. That is equivalent to all the cuts imposed in the June 2010 Budget on lone parents, on working parents and on the disabled.
I am conscious of the fact that our speeches are limited to seven minutes. I have so much to say in the Budget debate but, first, I shall just answer something that the hon. Member for Bishop Auckland (Helen Goodman) said. One moment she was talking about the importance, in her experience, of confidence in business and among those who do business, and I perfectly understand that, but the next moment she was pouring scorn on attempts to reduce the taxation for those people. I must ask her something, which she does not need to answer now but perhaps she will consider: what gives people confidence? They need lower interest rates, which they have got because of the prudent things that this coalition Government have done to reduce debt; they need stability and the possibility of obtaining funds for investment, and the Government have done such a lot on that; and, above all, they need to know that if they work hard to set up a business, with all the hassle and aggravation that mortgaging their house and creating jobs involves, and they are successful, they will keep the majority of what they earn. We must not forget that that is what growth is about and what confidence is about. We cannot therefore pour scorn on reducing this top rate of tax, which does not work, as has been empirically proven in the figures that have come out. People in business do all this grafting and striving to do what they do, and nothing knocks their confidence more than the fear that the majority—more than 50%, if employers’ national insurance is included—of what they earn will be taken away.
I am interested in the hon. Gentleman’s description of setting up a business. When my husband set up a business, he took a salary cut. I do not believe that what motivates people is just what they are going to earn and how much money they are going to put in their back pocket; it is about being confident that they can sell whatever it is they are selling and that there is a long-term market for what they are doing. The cuts in domestic consumption are what is killing business confidence in this country.
I thank the hon. Lady for those comments. I remind her that I said that the rate of taxation was one of a package of things that gives confidence. I have started and owned a business, and I did not draw a salary for two or three years as a result. I drove minicabs and ran a market stall at weekends in order to pay my way, so I know what it is like, as I have experience in that field. I do not feel it is appropriate to take lectures from people who perhaps have not done that themselves. I am talking not about the hon. Lady, but about many other people who have mentioned these things.
Should we not base our approach on evidence? Given that the evidence, supported by the Office for Budget Responsibility, shows that there are behavioural effects that lose revenue, does this not show why the Labour party got us into such a mess? That party ignores and is positively disdainful of the impact of taxes on people’s behaviour.
I absolutely agree with my hon. Friend. I hear a lot from people from all parts of the spectrum in my constituency, as other hon. Members do in theirs. In my judgment, people are very realistic, because they realise that the mess we got into was caused by chronic overspending and a budget that was completely out of control under the previous Administration. I believe that the polling on who got us into this mess is consistent on that point. So it is clear that no matter which party people are going to vote for in the future, they do not want this to happen again; they do not want overspending to take place and they do not believe that spending more money and borrowing more money is the solution to this country’s economic problems. This is the first time in my adult life, from reading the papers and taking part in politics, that I can recall this important lesson having got into the public’s consciousness. That is sensible, because people can relate to it in their own household earnings and the budgets that they make for themselves.
Let me move on to the growth area of the Budget. The focus is on economic growth and infrastructure and that is important because the future growth of this country is the most significant thing that the Budget is about. Rather than talking about—
Proceedings interrupted (Standing Order No. 11(4)).