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Amendment of the Law

Part of the debate – in the House of Commons at 3:13 pm on 20th March 2014.

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Photo of Chris Kelly Chris Kelly Conservative, Dudley South 3:13 pm, 20th March 2014

I welcome the Budget statement. It is a Budget that will help us build a resilient economy and is part of the Government’s long-term economic plan to put this country back on the path to sustained growth, a path that was deviated from by the Labour party with the debt-fuelled politics of the final decade of its time in office.

I commend my right hon. Friend the Chancellor who, since coming to office, has been proved right on all the big calls of the past four years. He correctly identified the problems and was right to set out a clear plan to address and then overcome them and equally right continually to stress that there was no alternative to plan A if Britain were to turn the corner. The deficit is down by a third, and in the coming year it will be down by a half. But it is still one of the highest in the world, so the Government are right to be taking action to bring it down further.

I will now deal with some of the detail of the Budget, but in the light of the number of Members who wish to speak, I will limit my remarks to three or four main areas. First, this was a Budget for savers. Social media has been awash with the hashtag #savingsupported, and with good reason. The reforms to individual savings accounts and raising the limit to £15,000 could benefit up to 513,000 ISA holders in the west midlands alone. Cutting the savings income tax to zero on up to £5,000 could benefit up to 131,000 savers in my region.

The Budget will help more of my constituents to save for a home, save for their retirement and save for their family. I welcome the additional support for savers, so that more people can provide a secure future for themselves and their families. Although we are getting on top of our debts as a nation, for many decades Britain has borrowed too much and saved too little. It is therefore right that hard-working people keep more of what they earn, and of what they save. Support for savers is, rightly, at the centre of the Budget.

The personal tax changes will also be widely welcomed in my area. The increase in the personal allowance in 2015-16 will lift 27,000 people out of income tax altogether, and 2,120,000 people will see an average real terms gain of £62. Again, these are west midlands numbers and the national figures are, of course, even more impressive.

The next area I want to deal with, after help for savers and cutting taxes, is the welcome news on pension flexibility, particularly with the fundamental reform of the taxation of defined contribution pensions. As Mr Heath has just said, from April 2015, the Government will legislate to remove all remaining tax restrictions on how to access defined contribution pension pots, which means that no one will have buy an annuity if they do not want to. Those who still want the certainty of an annuity, as many will, will be able to shop around for the best deal. There will be no punitive 55% tax rate for those who take more than their tax-free lump sum. It will still be possible to take 25% of the pension pot tax free on retirement, but what is taken above the tax-free lump sum will be taxed at normal marginal rates, not 55%, as at the moment. We will have a new guarantee, enforced in law, that everyone who retires on a DC scheme will be offered free, impartial, face-to-face advice. As economist Ros Altmann summarised:

“No more annuity will be required. No 55% tax charge, only marginal rates. Everyone will get access to face-to-face advice to make the right choice for themselves and their family.”

As the Secretary of State for Business, Innovation and Skills said earlier, we now know that manufacturing halved under Labour, with all bets effectively being on the City of London, and look where that got us. Now manufacturing is growing again, and jobs are being created in Dudley and the black country, and across the country. Week in, week out, I visit businesses, often in manufacturing or engineering, or connected to those industries, and the optimism I am finding is reflected in the figures, with 1.7 million new private sector jobs having been created since May 2010. Investment and exports are also up. But we have 20 years of catching up to do, so the Government are right to be backing businesses that invest and export. With the help of the British people, the Government are turning the economy around. The reward is economic security for the families of Britain. The Budget is part of the long-term economic plan—a plan that is delivering economic security for families in my constituency and throughout the country.