Geoffrey Clifton-Brown welcomes the budget’s focus on reducing the deficit and welcomes the expectation of further new job creation and the increase in exports to Brazil, Russia, India and China.
Geoffrey Clifton-Brown (The Cotswolds) (Con): I am very pleased to catch your eye in this debate, Mr Speaker, and I ask you and the House to forgive me for breaking the usual convention in that I beg leave to leave the Chamber immediately after this speech because I have to chair a Committee upstairs. I would normally stay to listen to the following speaker.
I commend my right hon. Friend the Chancellor for his Budget, particularly for getting the macro-economic situation right. I would like to quote again from the Library note cited by my hon. Friend the Member for Hertsmere (Mr Clappison), who is no longer in his place. He quoted figures showing that the deficit is already down by a third and that net borrowing as a percentage of GDP is set to fall to 5% in 2015-16 and 2.2% in 2017-18. Those figures are taken from the Red Book. What is absolutely staggering is the fact that the last Labour Government inherited a figure from us of just 0.7% in 1997, which rose to a whopping 11.2%—this is contained in the Library note—in 2009-10. If there were ever any doubt about the fact that the last Labour Government—under the stewardship of the shadow Chancellor—were at the root of all our present economic problems, those figures would prove it to be the case. In absolute terms, our borrowing rose from £5.8 million a year to £158.9 million in the last year for which Labour was in office.
I believe that, surprisingly, the current employment situation shines a bright light on our economy. It was interesting to hear the Chancellor say this afternoon that the private sector was creating six jobs for every job lost in the public sector. We have already created more than 1 million jobs in the private sector in the two years since the last general election. It was also useful and, indeed, heartening to hear the Chancellor estimate that 600,000 jobs would be created in the next year alone. We are creating more jobs than France, the Netherlands, Japan and the United States, and we are outstripped only by Germany in this respect.
Lindsay Roy (Glenrothes) (Lab): It is welcome that there are additional jobs in the private sector, and we commend that, but has the hon. Gentleman any idea how many jobs have been lost in the private sector?
Geoffrey Clifton-Brown: I think someone is telling me that 400,000 jobs have been lost in the private sector. However, I am talking about net job creation, which amounts to just over 1 million. That is the important figure. Of course, in a dynamic economy some jobs will always be lost and some will be gained, but as long as more are being gained than lost, we are on the right side of the argument.
The Chancellor mentioned that the eurozone had contracted by 0.6% in the last quarter. That, of course, is one of the reasons why our economy is so difficult to repair. As the Red Book makes clear, 42% of our exports go to the eurozone and 16% go to the United States. Both the eurozone and the United States are experiencing little growth, and the economy of the eurozone is contracting. However, there are some bright spots. Between 2009 and 2012, our exports of goods to Brazil, Russia, India and China increased by 49%, 133%, 59% and 96% respectively. Last year, indeed, we were the only country in Europe that managed to increase its exports to China. The international markets have endorsed the Chancellor’s policy in the form of our 10-year bond yields, which, according to the table in the Red Book, would be virtually the lowest in the eurozone, outstripped only by those in Germany.
I am struck by the fact that, according to KPMG’s table, Britain is the best place in which to do business—better than Switzerland, the United States and France. However, I must issue a small caveat to my hon. Friend the Exchequer Secretary. I fear that we are in danger of losing some of our foreign direct investment, the inward investment that sustains 40% of our GDP. Until recently we were in a fortunate position, in that 70% of all the European corporate headquarters are based within 75 miles of Heathrow, but owing to our current indecision about where our major hub airport should be located, we are losing those corporate headquarters by the day. I think that we should persuade all parties to agree that whatever Sir Howard Davies comes up with in relation to the hub airport should be implemented as soon as possible after the next election, so that we do not lose that international place. Let me also say that, while I fully support High Speed 2, our most expensive engineering project ever, the route should not be designed in isolation from the location of our major hub airport.
I warmly welcome some of the factors that KPMG identifies as making Britain one of the best places in which to do business. I particularly welcome the Chancellor’s announcement today that all corporation tax, whether on large or small companies, is set to fall to 20%. I think that that is a huge achievement, and I think that it will continue to encourage companies to come to this country. I also welcome the fact that the first £2,000 of national insurance will be left in the pockets of the companies themselves. I welcome the fact that the small business rate will be continued and that the Chancellor is abolishing the fuel duty rise this autumn. All those are seen as welcome steps to encourage employment. I particularly welcome the fact that well over half a million new apprenticeships have been established this year, including 570 in my constituency—that is a 63% increase on the figure for the year before.
I welcome my right hon. Friend the Prime Minister’s initiative at the G8 and G20 to make sure that although we lower the rate of corporation tax, we require companies that make profits in a country to pay a reasonable rate of tax on the profits in that country. Our measure will help not only this country, but countries in the third world, which often have difficulty collecting corporation tax from big multinational companies on profits made in them. As the Chancellor said today, these rules—these international tax treaties—were written in the 1920s, and their updating is well overdue.
Let me deal with some more domestic issues. As chairman of the all-party group on wine and spirits, I welcome the Chancellor’s announcement that the beer duty will fall in this Budget. However, his announcement that the 2% alcohol escalator will continue will mean that wine duty will have increased by 50% since 2008, while the duty on spirits will have increased by 48%. The industry supports 2 million jobs, many of them for young people in the hospitality industry, and it contributes £16 billion-worth of duties. There are signs that that is beginning to decline because of the rise in the duty escalator. Alcohol consumption has fallen by 13% since 2004 because of the responsible measures the industry has taken. Until now, the duty on beer and wine per unit of alcohol has been broadly taxed the same. In 1983, the European Court of Justice warned the UK that it is illegal for the UK to tax wine and beer at different rates, because they are seen as competing products. There must now be a real risk of a legal challenge, and I ask the Exchequer Secretary to consider this matter seriously to see whether something can be done about it before the Finance Act is introduced.
In conclusion, there are many things to welcome in this Budget. For individuals who want to work hard and keep more of their own money, I warmly welcome the fact that anybody earning less than £10,000 will not pay tax. We are helping to people to buy their own house, and I have only one thing to warn the Exchequer Secretary about on that. As he and others will have realised, house prices in central London are rising very fast—they are literally increasing by the day—and I hope that these measures will not lead to a housing boom in London. We are also helping people with the cost of living, helping people with their pensions and their retirement, and helping people to keep their hard-earned life savings from being removed to pay for the cost of their elderly care. There is a huge amount to welcome in this Budget, but it has not been welcomed by the carping Labour party, which caused many of our economic problems in the first place.
As I explained at the end of my last email there has unfortunately been a delay in sending out this email, which would normally have been sent to you on Friday. However I am pleased to still have the opportunity to update you on a number of events that have taken place since my previous email.
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