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We have had a good debate about the impact of the emergency Budget on the growth of the British economy over the years to come. The contributions from my hon. Friends the Members for The Cotswolds (Geoffrey Clifton-Brown), for Bournemouth East (Mr Ellwood), for Bexleyheath and Crayford (Mr Evennett), for Reading West (Alok Sharma), for Brentford and Isleworth (Mary Macleod) and for Caithness, Sutherland and Easter Ross (John Thurso) were passionate and well informed. There were contributions from the hon. Members for Hemsworth (Jon Trickett), for Kingston upon Hull North (Diana R. Johnson), for Ogmore (Huw Irranca-Davies), for Penistone and Stocksbridge (Angela Smith), for Pontypridd (Owen Smith), for Derby North (Chris Williamson), for Strangford (Jim Shannon) and for Brighton, Pavilion (Caroline Lucas). The debate was thoughtful and informative.
I am pleased to see Stephen Timms in the Chamber-[Hon. Members: "Hear, hear."]
Some maiden speeches were made. There were three in yesterday's debate. My hon. Friends the Members for Dewsbury (Simon Reevell), for Bedford (Richard Fuller) and for South Northamptonshire (Andrea Leadsom) made excellent speeches about the impact the Budget will have on their constituencies and the challenges it will address. Today, we heard maiden speeches from my hon. Friends the Members for Harrogate and Knaresborough (Andrew Jones) and for Carlisle (John Stevenson).
My hon. Friend the Member for Harrogate and Knaresborough spoke about the challenges in Harrogate. He brings to the House extensive experience in business. As someone who has contributed to the coffers of his former employers, I know that Betty's is well known for selling fat rascals, but my hon. Friend does not appear to fit that description. I am sure that he will be a great champion for his community.
My hon. Friend the Member for Carlisle talked about the border relationship. Having been born in Scotland but now representing an English constituency, it is heartening to see that not only the coalition Government but Members on both sides of the House who might not be automatic England supporters have supported the English team in its victory today. My hon. Friend spoke well about the need to rebalance the economy, which is one of the big themes of the Budget. I am sure it will be as effective in Carlisle as in the country as a whole. He will make a great advocate for his constituency in the House.
The emergency Budget addresses the most urgent task facing our country and our economy: to put in place a credible plan to reduce the record deficit we have inherited. As a result of the mess that the last Government left behind, the Government have to borrow £1 for every £4 we spend, which is increasing the national debt by £3 billion each week. We cannot afford to let that go on at a time when fear about the sustainability of sovereign debt is the greatest risk to the recovery of European economies.
Failure to deal with the deficit is the greatest threat to growth. Failure to act now would mean higher interest rates hitting businesses, hitting families and hitting the cost of repaying the Government's debt. That would mean more business failures and sharper rises in unemployment, and would risk a catastrophic loss of confidence and the end of the recovery. The Budget takes action now to restore the confidence in the economy that is needed to underpin the recovery.
"The UK budget is supportive of the country's AAA rating and stable outlook because it is a key step towards reversing the significant deterioration in the government's financial position that occurred over the past two years...Successful implementation would return the government's finances to a more sustainable trend...the budget plan addresses the major concerns surrounding economic growth."
Rating agencies endorse the message behind my right hon. Friend's Budget-to tackle the deficit and ensure that there is a sound platform for economic growth in the future.
A number of Members on both sides of the House raised issues about the impact of the Budget on the most vulnerable in society. Yes, there have been some difficult decisions about taxes and benefits, but let us not forget the £2 billion extra that we have provided for poorer families in receipt of the child tax credit, the £2 billion extra that has gone into pension credit over the lifetime of this Parliament and the 800,000 people who have been taken out of the income tax bracket by the £1,000 increase in personal allowances. That is evidence in our Budget of the coalition's commitment to fairness, but we must also ensure that the economy is open for business.
We will open up Britain for business by creating a more competitive system for corporation tax, reducing the rate from 28% today to just 24% over four years. That will give us the lowest corporation tax of any major western economy, one of the most competitive rates in the G20 and the lowest rate that this country has ever known. However, the Budget is about supporting not just big businesses, but small businesses, too. We will cut the small companies tax rate by reversing the previous Government's plans to increase the rate next year to 22% and cutting it to 20% instead, thus benefiting some 850,000 companies. As well as supporting businesses with lower rates, we need to give businesses certainty about the future, so we have published alongside the Budget a five-year plan to fundamentally reform the corporation tax system, with lower rates, simpler rules and greater certainty. Even with our reforms to capital allowances, the manufacturing sector will still pay less corporation tax under the Budget proposals that we announced yesterday.
A number of hon. Members, including the hon. Member for Kingston upon Hull North, talked about the regional impact. A number of hon. Members whose constituencies are outside the greater south-east spoke in the debate, too. As the economy recovers, we must restore the balance not only between the public and private sectors, but across the different regions of Britain. As someone who was born and brought up in the north-east, I am acutely aware that the gap between the greater south-east and the rest of the country grew significantly under the last Government. Between 1998 and 2008, for every private sector job generated in the north and midlands, 10 were created in London and the south. The Budget sets out a new approach that empowers local leadership, generates local economic growth and promotes regional job creation. As well as creating a new regional growth fund worth £1 billion that will be focused on projects in the regions that will help to stimulate economic growth, we will shortly announce a new tax scheme to help to create new businesses in those regions where private sector growth is not strong enough.
For the next three years, anyone who sets up a new business outside London, the south-east and the eastern region will be exempt from up to £5,000 of employer national insurance contributions for each of their first 10 employees hired-up to £50,000 for new start-up businesses. That sends a tremendous signal to those businesses about the importance that they will play in reviving the economy and stimulating economic growth in the future. The Treasury estimates that some 400,000 businesses will benefit, thus ensuring all parts of our country benefit from a more balanced and sustainable economic future.
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