Only a few days to go: We’re raising £25,000 to keep TheyWorkForYou running and make sure people across the UK can hold their elected representatives to account.

Donate to our crowdfunder

Amendment of the Law

Part of the debate – in the House of Commons at 5:54 pm on 29th March 2010.

Alert me about debates like this

Photo of John Hutton John Hutton Labour, Barrow and Furness 5:54 pm, 29th March 2010

It is a great pleasure to follow Mr. Ancram and, indeed, my right hon. Friend Mr. Caborn. They are two fine Members of Parliament who have done a great job for their constituents and who command a great deal of respect on both sides of the House. The fact that they will not be here after the election will be a cause of great sadness for many who know those two fine, honourable Members well.

Let me begin my remarks by congratulating my right hon. Friend the Chancellor of the Exchequer not just on the manner in which he delivered the Budget statement, but on its content. He has had to bear a very heavy burden of responsibility in the discharge of his great office of state. He did not have long to think about how to share the proceeds of economic growth. Instead, he had to think very carefully about how our country would emerge in good shape from the deepest, most savage and severe recession of three generations. In trying to set that course, he has earned a lot of respect on both sides of the House. His instincts are sound and his judgments have been right. I think that is what history will say of him.

To borrow the medical metaphor that Mr. Browne used, the economy is at least now in the recovery position. Bearing in mind the stewardship argument that the right hon. and learned Gentleman has just deployed, it is incumbent on us not to do anything to jeopardise the economic recovery. That is the first and most important fact, principle or statement about the Budget. The flow of economic data is finally looking a bit more cheerful: unemployment is falling, inflation is falling and borrowing is down. Growth has returned to the economy. Those are all positive signs that there is now light at the end of what has been a very dark and long tunnel.

As I have said, our big job is not to jeopardise that recovery. I therefore welcome in particular what my right hon. Friend the Chancellor said in his statement about targeting further and additional help and support at businesses and wealth creators. That is the right thing to do with any discretionary additional spend that we have, because it will be on the decisions that those businesses-mainly small businesses-make in the next few years that prospects for substantial economic growth will depend. I therefore welcome the doubling of the investment allowance and the expansion of the entrepreneurs' relief from capital gains tax. I particularly welcome the extension of the time to pay scheme for business taxes. Many right hon. and hon. Members will know that that scheme has become an important source of credit for many businesses. I understand that it is benefiting nearly 200,000 companies. There is a danger, of which the Treasury and the Revenue will be aware, that the scheme could be abused, and we have to be alert to that danger, but it is a very important new initiative. I also welcome-I am sorry that Mrs. Spelman did not do the same-the extension of council tax reliefs for small businesses. All those small measures together form a very useful and helpful package.

I particularly welcome the focus that was evident in the Budget statement on the new policy of industrial activism. Many right hon. and hon. Members will probably assume the foetal position when anyone talks about a new industrial strategy, and I understand the nervousness that is felt about that policy, which is redolent of a bygone time when we got basically every judgment wrong and in the process wasted a huge amount of scarce public resources. However, I do not detect a likelihood of our repeating those failures; I do not think that will be the case.

When I was Secretary of State for Business, Enterprise and Regulatory Reform, it used to irritate me enormously to hear many commentators opine on the fact that Britain was somehow a post-industrial society. No, we are not. We are the fifth-largest economy in the world and a great trading and commercial power. We should aim to retain that position, but we have no prospect whatever of doing that if we do not, and we are not aware of the need to, support businesses, particularly the small companies that have the potential to be the great employers of the future. That should be our focus. We should keep capital allowances; it is a false economy to play fast and loose with that kind of business support. We should aim to remain a great industrial society. That is what I see in the economy and in my right hon. Friend's statement.

The new finance for growth investment corporation might also prove to be a useful development, and I note that Simon Walker says that it will be good news for British businesses. As many people will know, Simon is chief executive of the British Private Equity and Venture Capital Association.

I have to tell my Front-Bench colleagues in all honesty that it is probably just as well that I will not be here after the next election because I will take some persuading before I lend my support to the notion of the new credit adjudicator. It is hard to imagine how we could create a situation in which the banks are legally forced to lend. I do not understand that, and if we have learned one thing from the recession it is that we should all have a better appreciation of the level of risk, and we should let the banks decide what that is. I do not think that the proposal is a particularly good idea, and I hope that more work will be done on it.

I agreed with the remarks that were made about the need to cut the budget deficit. That is, by some distance, the biggest challenge faced by the House, and the new House of Commons will have the task of beginning to address it. We have started to identify the things that must change, and my right hon. Friend the Secretary of State for Communities and Local Government set out helpful measures that we could implement, such as tackling waste and inefficiency. It is probably common ground that the next comprehensive spending review will be the toughest for a generation; it will certainly need to be.

When Mr. Cameron said that the biggest challenge facing us in the next Parliament will be reducing the deficit, he was only half right, and the bit that he got wrong is the thing that worries me most. Yes, we must reduce the deficit, but we must do so in a way that does not jeopardise the recovery, compromise the quality of public services or lead to higher unemployment. I am afraid that everything that I have heard from the Conservative party suggests that if he forms a Government, the next House of Commons will make precisely those mistakes.

Obviously, I am the first to say that we must have the right balance between levels of taxation and spending, and given the economic conditions that we have been through, it is hardly surprising that we are not in balance-we are a considerable way away. However, we have been through extraordinary times that have called for vital additional public support for the economy, especially the banking sector. That is why I am worried about the 50 per cent. higher rate of income tax. Labour Members must emphasise that that is a temporary measure, because it is unhelpful and wrong to send people the signal that the state will claw back more than half their earnings. There is an argument that the rate can be justified in the short term, but it cannot be a defensible long-term position. There are no votes in it, and no moral high ground can be occupied by adopting a taxation policy with punitive elements.

When we announced the 1 per cent. increase in national insurance a year or so ago, we rightly emphasised that it would be a temporary measure, and we must get back to that argument. It would be bad to load the increase into the long term. We should not be putting a tax on jobs, and although there is an argument for the approach in the short term, it is not sustainable and we must get beyond it.

When one looks at all the numbers flying around in relation to the Conservative proposals set out today, one detects that there has been a huge dose of double counting. The arithmetic that has been set out to justify the changes does not stack up-it would blow up in our face-and would risk increasing the deficit, not reducing it. The Conservative party has picked up the bad habits that we learned in opposition, as the joy of opposition is being able to spend the same pound several times over. Those in government only get to spend that pound once, and the Conservative numbers do not add up. We can only spend the money once and my right hon. Friend the Chancellor has, essentially, already spent it.

I want to make two points before I shut up for the last time in this place. We have all heard the arguments about efficiencies in public services, and those of us who have held ministerial office have carried out the tough job of trying to extract them from spending Departments that do not like to give up any resource. Getting the savings out is always harder than anticipated. I think that there should be more outsourcing, and there will need to be a much tougher approach on procurement and streamlining back offices. That is common ground between both Front-Bench teams, which is fine, but it will be harder than people think. That is why I conclude that the only way we can be confident that we can reduce the public deficit as quickly as possible without compromising the quality of public services is fundamentally to change the basic delivery model for some of the public services.

For example, the health service consumes more than £120 billion of public resources, but we spend a large dollop of that money completely inefficiently by providing bad pathways of care, especially for people with long-term and chronic diseases. Those people end up being treated inappropriately in the most high-cost settings and they are not provided with especially good care. We must change all that, but it will be difficult and will require strong leadership from politicians. It fills me with regret that Conservative Members will go around the country saying that we cannot change this or that part of the health service, because it has to change if we are to save money without compromising quality and to deliver better outcomes for our constituents.

My final point relates to better regulation, which was not something for which I thought that I would have ministerial responsibility. The subject has disappointed many Ministers who, like me, have struggled with the brief, such as my right hon. Friend the Minister for Business, Innovation and Skills-a fine Minister who is currently sitting on the Front Bench. We and the previous Government passed legislation in that regard, but better regulation is not about legislation. This place can pass umpteen Bills, but they will not make a ha'p'orth of difference unless the Government change the culture of how they set about imposing new burdens on business. I am a fan of regulatory budgets, and I hope that the next Government-if they are a Labour Government, I hope that my Government will do this-will, for the first time, put a real cap on the additional cost burdens that we ask businesses, and especially small businesses, to accept in our pursuit of public policy goals. There must be a limit, and 19th-century regulatory approaches cannot meet the needs of a modern 21st-century economy, so we need to do more.

This is my last speech in the House of Commons. Many people will say, "Thank God for that." It has been a great honour to serve my constituents and I have had a fantastic time in doing so. Our constituents probably feel disappointed by all of us in this Parliament, so we owe it to them to do a job of work to rebuild their trust. This is a great country and we believe in some great things. I hope that Members of Parliament in the next House of Commons will stand up for those great values that have made Britain such a great country in the world.

Embed this video

Copy and paste this code on your website