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Budget Resolutions and Economic Situation

It is a pleasure to respond to today's Budget debate on behalf of the Government. I shall begin by responding to the speeches of Back-Bench Members, some of whom were making their last speech in the Chamber as they will be retiring at the forthcoming general election. My right hon. Friend the Member for Rother Valley (Mr. Barron) made a powerful speech in which he talked about the importance of investment in schools in his community and in infrastructure. He has seen the great difference that has made, yet in the years before Labour came to power such investment just was not there and his area was forgotten about. He rightly pointed out that Building Schools for the Future is a programme for the future, and it will continue to provide much-needed investment in our schools infrastructure. He also spoke very eloquently about the changes he has seen in the coalfield communities in and around his constituency, and I particularly noted his points about Orgreave and the advanced manufacturing plant that is now located there. My right hon. Friend also made some valid points about the role of Government intervention both in his constituency and more generally, and I am disappointed that it appears that regional development agencies have become a political football. A rational and dispassionate analysis of the situation leads to the obvious conclusion that there are some things that can be done at the local level and others that need to be done at the Westminster and Whitehall level, but that there is also a gap, so there is a valid case for RDAs and the work they do. The Conservative party should have a serious think about its planning policy because it would put future economic growth in jeopardy by putting barriers in the way of the strategically important investments that the UK will need to make. I want to pay tribute to the hon. Member for Macclesfield (Sir Nicholas Winterton), who is retiring after almost 39 years in this House. As has been said, he began his parliamentary career before the hon. Member for South-West Hertfordshire (Mr. Gauke) was born—and the shadow Chancellor, too. I think I must have been a secondary school pupil when the hon. Member for Macclesfield first entered this House. As always, he spoke with great passion about manufacturing industry and I, as an MP for a west midlands seat, share that passion. I do not, however, share his concerns about international ownership of companies that are major employers in the United Kingdom. In modern-day manufacturing, companies, including some of our biggest companies, have a very diverse share base. The hon. Gentleman mentioned AstraZeneca, and it is a case in point. I am sure he will have welcomed the Chancellor's comments about not going back to the interventionism of the past, but no return to the hands-off approach of the free marketeers either. I believe an active industrial policy to support manufacturing is what is needed. That is not to say that we do not need to do more to improve the service sector, but it is inconceivable that the United Kingdom can have a strong future without a vibrant manufacturing base. I have always respected the views held by my hon. Friends the Members for Luton, North (Kelvin Hopkins) and for Leyton and Wanstead (Harry Cohen), although I have found it very difficult to agree with them on most occasions. In fact, it is one of the ironies of this place that I have probably agreed more with Opposition Front-Bench Members than with them over the last 15 years that I have been a Member of this House. However, my hon. Friend the Member for Luton, North is absolutely right to point to the value of the new industrial activism that has been espoused by Lord Mandelson. A number of us have been arguing strongly for that for a long time. I am glad that it is now more recognised within government. My hon. Friend said that we ought to be following Germany's example more, but if he reads the detail of the Budget and what we are saying in response to the Hauser review, he will see that we are following the model of Fraunhofer's that has been introduced there. In fact, although our proposals on UK finance for growth and the green investment are not the same as this—one would not expect them to be—they share some similarities with the Kreditanstalt für Wiederaufbau, which Germany has had for many years. The hon. Member for Sevenoaks (Mr. Fallon) is always worth listening to, but I still think he is on the wrong side of the argument on how we should tackle the deficit. We maintain strongly that making cuts now would put the recovery in danger, and we do not believe it is right to do that. However, he made some good points about the costs of employment, and it is right that any future Government should look at those and when the time is appropriate, and the economy can afford it, should look to reduce national insurance. The judgment we made in increasing national insurance from April 2011 was that we need to do that as part of our plans for fiscal consolidation, and we believe it is the fair thing to do. He also made important points about private equity. If he were to read page 53—I think that is the right page—of the Budget document, he would see that we wish to re-examine venture capital trusts and the eligibility limits for investments that are made. He also ought to welcome what we are doing through the growth capital fund and UK Finance for Growth too. The hon. Member for Uxbridge (Mr. Randall) talked with the great knowledge that comes from his background in business. Like him, I have a business background, so I understand why he feels so strongly about it. I agree with the points he made about the status of engineers. I dimly remember something from my education days about selective employment tax, to which he referred. My hon. Friend the Member for Glasgow, North-East (Mr. Bain) paid full tribute to serving Members of this House. He may be a new Member, but he made a very mature contribution to his first Budget debate speech, and I know that that will augur well for his future. The hon. Member for Leominster (Bill Wiggin) made a stout defence of the cider industry in his constituency, and it is right that he wishes to press for the interests of his constituents, whom he feels may be affected. If he looks at some of the fine detail that has been announced, he might obtain some greater assurances. He also talked about rural broadband, to which the Government are very much committed. We remain fully committed to the universal service commitment by 2012, and to the roll-out of next-generation broadband. The hon. Member for Broxbourne (Mr. Walker) talked about the problems of his local further education college and the legacy of mismanagement by the Learning and Skills Council. I must say that that is one of the more horrifying examples of mismanagement that I have come across in my time as a Minister. Like him, and in contrast to the hon. Members for Stone (Mr. Cash) and for Bournemouth, East (Mr. Ellwood), I am hugely positive about the future of this country. It is unusual for somebody in the position of the hon. Member for Broxbourne on the Conservative Benches to be talking the country up, but it is refreshing that he wants to do so. Perhaps the fact that he has not gone further towards the Opposition Front Bench is because he is too nice, not because he was too nasty—he claimed that he was—when he came into this place. The hon. Members for Stone and for Bournemouth, East both talked about levels of debt and the UK's credit rating. They will be very aware that all the credit rating agencies judge that the UK has the highest possible credit rating, and Moody's has said that we have a resilient triple A sovereign rating. Right across this House there must be common agreement that it is important that the UK takes every action it needs to maintain its sovereign triple A credit rating. The hon. Member for Bournemouth, East also talked passionately about tourism. I agree with many of the points he made about its importance, but I suspect that we disagree on some of the practical policy measures. However, tourism is an important sector for the UK economy, and it is right and proper that we should continue to stress its importance. The hon. Member for Christchurch (Mr. Chope) talked about sleight of hand in the Government's freezing of personal allowances. The hon. Member for Bournemouth, East, also said that this was a political Budget and that we would not have this sort of Budget if there were not a general election coming, but I do not think the Conservatives would be creating so much fuss about the indexation of personal allowances if it were not for the forthcoming general election. The idea that that is a stealth tax is completely disingenuous. Each year, personal allowances go up in line with inflation, and the uprating figure that is used is that for the previous September. As inflation was negative last September, at minus 1.4 per cent., those allowances could, in theory, have been cut, but we chose instead to freeze them, and we announced that in the pre-Budget report. In the past 12 years, personal allowances have been indexed in nine years, frozen in one year, when the personal allowance was used to help to pay for increases in health spending, and over-indexed in two years. If there were not a general election in the offing, the Conservative party would not be making anything whatever of this issue, because it is simply the normal thing to do.