Orders of the Day — Budget Resolutions and Economic Situation

Part of the debate – in the House of Commons at 7:41 pm on 7th July 1997.

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Photo of David Ruffley David Ruffley Conservative, Bury St Edmunds 7:41 pm, 7th July 1997

Thank you, Mr. Deputy Speaker, for allowing me to speak for the first time in this important debate on the Budget. I congratulate the hon. Member for Bury, South (Mr. Lewis) on his eloquent, knowledgeable and thoughtful maiden speech.

I am very conscious of the huge privilege that the electors of Bury St. Edmunds have bestowed on me. It is truly an honour to represent such a beautiful and historic part of Suffolk—a county which I have long felt was the true Garden of England.

Mine is a new constituency, resulting from boundary changes effected since 1992. One half of the constituency was formerly represented by my hon. Friend the Member for West Suffolk (Mr. Spring) and the other half by my hon. Friend the Member for Central Suffolk and Ipswich, North (Mr. Lord), who is in the Chair and whose elevation to the post of Deputy Speaker was widely and warmly celebrated in the county. My hon. Friends have advised me wisely and well over the months and I thank them for their many kindnesses. They did more than give me good advice, however; they also gave me some excellent parts of their former constituencies—for which I was enormously grateful on the evening of 1 May, as I had to sit through two nail-biting recounts.

I have learnt that Suffolk people are quiet but single-minded in their determination to ensure that their local interests are protected and advanced by hard-working, effective local Members of Parliament. My immediate predecessors have set very high standards in that regard and I shall do my best to emulate them.

With the indulgence of hon. Members, I should like briefly to describe the geography of my constituency. I seek not merely to follow a convention of the House, but to assist some of my constituents who are still not quite sure which constituency they live in, given the new, radically reshaped boundaries.

To the west is Bury St. Edmunds, a market town of true distinction. It is a veritable jewel in the crown in the county of Suffolk. It was once the county town and, morally, in many people's eyes, it still is. It retains its impressive 11th century layout together with remarkably unspoilt narrow streets and fine Georgian squares. Thomas Carlyle called it a prosperous, brisk town beautifully diversifying". That remains true today, as Bury boasts the largest sugar beet factory in the country and the largest malt extract manufacturer in the country. The highly successful independent brewery Greene King is also a major employer in the town. Its excellent product does not yet appear to be available in Bars in the Palace of Westminster, but I shall be working on that.

To the east of my constituency lies Needham Market, a growing settlement, and Stowmarket, a town once famous for its woollen industry and now known for the major businesses of ICI and Muntons.

To the north are the attractive villages of Redgrave, the Thornhams and Gislingham, which represent the most northern parts of Suffolk, bordering on Norfolk. To the south are the beautiful villages of the Bradfields, Felsham and Gedding, which form our border with south Suffolk.

My constituency is an attractive place for many reasons. That is why so many people choose not only to retire there, but to live and work there. The majority of us in Bury St. Edmunds share a common desire to preserve and conserve what is best in our environment and our way of life while, at the same time, being flexible enough to take advantage of economic developments that benefit the area. As the new millennium approaches, Bury St. Edmunds will meet the challenge of economic change.

The Budget purports to address the problems created by economic change. Perhaps almost all of us on both sides of the House agree that economic change is inescapable and that the notion, "Stop the world, I want to get off", is practically and intellectually unsustainable. It is simply not an option for a modern, mature, western industrialised democracy.

However, the Conservative response to dealing with economic change, such that increases in living standards and better public services are delivered, remains poles apart from that of the Government as outlined in the Budget. It is more in sorrow than in anger that I say that the Budget does not do enough to advance the values of free enterprise, thrift, personal responsibility and personal prosperity that are in sympathy with the real instincts of the British people.

The Budget was skilfully presented; there is no doubt about that. However, when a senior Member said to me that it was a cunning Budget and that the Chancellor was a cunning man, it put me in mind of the dictum of the first Viscount of St. Albans, Francis Bacon, who said,

Nothing doth more hurt in a state than that cunning men pass for wise. The Chancellor of the Exchequer is a cunning man, but I fear that he is not a wise man. He is not a wise man because he believes that he can take about £10 billion over three years from the corporate sector on advance corporation tax—and more with the windfall tax—without affecting investment levels or the standard of living of individuals. As my right hon. Friends the Members for South Norfolk (Mr. MacGregor) and for Fylde (Mr. Jack) said, the abolition of the dividend tax credit will affect companies and individuals, no matter how much it is argued to the contrary. Companies face a choice between contributing more to their pension schemes—reducing investment to pay for it—and cutting pension benefits for their employees. By the same token, individuals with personal pensions must either cut their living standards today to put more into their schemes than they would have to otherwise, or take the hit delivered by the Budget—lower living standards—when they draw their pensions in the future.

The ACT change will be a disincentive to investment in other ways. It will lead to a switch by investors in United Kingdom equities to foreign equities and, as my hon. Friend the Member for Havant (Mr. Willetts) has said, to a much less efficient market in capital. Let us not forget the windfall tax, which will reduce dividends and thus hit those in pension funds and other shareholders. It will exert upward pressure on utility prices and downward pressure on investment.

Those tax increases may not be all that visible, but they are certainly not painless, as I believe the public will recognise in due course. The other, more visible, tax increases in the Budget have already dismayed many of my constituents. The rise in petrol duty will hit rural dwellers who rely on their cars as their sole means of transport. Mortgage payers in my constituency will pay more as a result of the MIRAS change. People in Bury St. Edmunds do not understand why that is necessary to dampen down the housing boom, given that Suffolk is nowhere near experiencing such a boom.

The news on the spending side that there will be more funds for Suffolk schools and hospitals has raised expectations. Next year and the year after, I shall monitor the position to ensure that Suffolk receives its fair share of what money is available.

There was one disappointing omission from the Budget. Just before the Budget, I conducted a survey of several hundred small businesses. The majority of business men advised me in writing that a reduction in business rates was the best way of assisting them. For the sake of shops and other small and medium-sized businesses in Bury St. Edmunds, Stowmarket, Needham Market and other villages in my constituency, I ask the new Government to consider giving business rate relief on at least the first £1,000 of a business's rateable value, as we proposed in our general election manifesto. Given new Labour's track record of purloining the best bits of Tory economic policy, I confidently expect the Chancellor to include such a measure in his next Budget. Conservative Members will keep up the pressure on him to do so.

The more I study the Budget, the less economic justification I see for it. It would appear that the Chancellor has jacked up less visible taxes now in order to raise revenue that he will then use to cut more visible taxes with a fanfare of trumpets at some future date—say March 2001, if I may pick a date entirely at random.

Be that as it may, it is clear to Conservative Members that such economic success as the new Government can achieve will be due to the excellent economic circumstances that we bequeathed on leaving office.

My right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) was the brilliant architect of a lasting economic recovery, based on historically low inflation and low interest rates, falling borrowing and falling unemployment, and an improved balance-of-payments performance.

It is true that this remarkable inheritance was not appreciated at the last election and Conservative Members have some hard lessons to learn from that, but I give notice, in a friendly and, I hope, helpful way, that we shall put across a fresh and reinvigorated Tory economic argument next time. In the meantime, we shall be unstinting in our determination to lay bare the deficiencies in the Government's economic approach of which the British public need to be made aware.

I thank the House for its generous welcome and I thank hon. Members for listening to my views on the critical issue of the country's economic future.