My Lords, when my noble friend Lord Colgrain asked me to follow his maiden speech, I had completely forgotten that he had not made one yet: quite a lot has been happening in Kensington recently.
Alastair Colgrain will make a fine Member of this House, as his maiden speech has proved, because he has that wide mixture of experience and skills that will enable him to thrive—not only experience as a financial services headhunter and farmer, but also early on as a policeman.
As a special constable, he told me that he was part of the line of coppers at the Trooping of the Colour, arm in arm holding back the crowds as they walked up the Mall to Buckingham Palace. I gather that two very young children, well trained by their parents that if they were lost they should find a policeman, toddled forward and grabbed Alastair by the knees. Holding tight to his trousers, they attempted to walk up the Mall, and were in danger of pulling down his police trousers, to the astonishment of the crowds and the amusement of his colleagues. His family motto is “Fac et Spera”—“Do and Hope”—an unusual motto for a banker, but perfect for this age of Brexit. We all welcome him.
“we must make anew the case for a market economy and for sound money”.
Unfortunately, he is right. Some young people have not yet got that point. Despite all the real-world evidence one could ever need, the results of the election and the recent campaigns on our streets show that there are still lots of people across the country who do not believe that free markets are a force for good. As well as making the case for free markets, it is also crucial that we do not react to the election result by simply turning on the taps, spending money we do not have. The budget deficit has come down from £152 billion in 2009 to £49 billion last year. That shows action was indeed taken by this Chancellor, and by his predecessor, to mend the broken public finances. However, it also shows that the job is not yet done. With more economic growth, we should be able to make further progress on this, and we should not be afraid to make the case for spending wisely. Public services need to be funded properly to ensure good quality, but we must also prioritise and save where we can.
Try as they might, no Government have taken more than 35% of GDP in tax in more than 50 years, according to the OBR. So if a Government want to massively increase taxes, we can conclude that people will take action. They can move elsewhere, or do less work. Calls for tax hikes to fund more spending are therefore misguided. We have probably hit the taxable capacity of this economy. We must remember that lower tax rates can actually bring in more revenue.
Corporation tax receipts are at record highs, tax rates having been continuously cut over the past few years. In fact, £56 billion came from corporation tax during the 2016-17 financial year. That was a 21% increase on the previous year. Let us not forget that in only 2008 the headline rate of corporation tax was 30% and it is now down to 19%. It is scheduled to be trimmed even more.
We know that much of the jobs growth has come from small firms and thriving entrepreneurs. It would be extremely damaging to hit those businesses with higher taxes. They would stop employing, stop striving and many may take their ideas and talents elsewhere. It is far easier to up sticks and relocate these days, and we should be encouraging entrepreneurship, not choking it.