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6.41 pm
Mr. Nigel Evans (Ribble Valley): It is always goodto follow the hon. Member for Huddersfield(Mr. Sheerman). It is a little known fact that he taught me politics at Swansea university. His influence is demonstrated by the fact that I am standing here and he is sitting over there. It is good to be here after an excellent weekend, in which the socialists were kicked out of Australia and Spain. As I cannot believe that the good people of Australia and Spain are more intelligent than the good people of Britain, no doubt that trend will continue here after the next election.
As my hon. Friend the Member for Carshalton and Wallington (Mr. Forman) said in his excellent speech, it is a shame that so few Members are here for today's important debate. It represents a useful opportunity to reflect on the Government's policies and--if we can
wrestle them from Opposition Members--those of the Opposition to ensure that Britain continues on the successful route that it has followed for the past 16 years.
The debate gives me the opportunity to dwell on the fact that we have experienced 15 consecutive quarters of growth. We are selling more abroad than ever before and we export more per head than Japan. Who would have envisaged that 15 or 16 years ago? Inward investment in Britain was a record in 1994-95, with 434 new projects creating some 36,000 new jobs and securing more than 51,000 existing jobs. Britain attracts 40 per cent. of investment from the United States and Japan. We are second only to the United States as a beneficiary of inward investment.
I find it difficult to understand the xenophobic approach of those who say that it is dreadful that foreign companies have bought into British industry. I do not consider that to be a problem, so long as there is free interchange between industries. If British investors can invest abroad, it is only right that foreign investors should be able to invest in Britain.
I should also mention the standard of living in Britain. A married couple on average earnings with two children have seen their income and quality of life increase by more than 40 per cent. in real terms since 1979. It is the Government's stated aim to double the living standards of people in Britain in the next 25 years. Our policy is not boom and bust, but sustained economic development that will benefit everyone.
We need to develop policies that will help British businesses. The Opposition are not content that the red flag should fly above Parliament and the House of Commons; they also want it flying above Buckingham palace. The Leader of the Opposition should get a grip on some of his colleagues and tell them to start concentrating on the issues that concern the British people and the policies that they want, which certainly do not involve the abolition of the monarchy. He should tell his red rebels to concentrate on the issues that the Government are confronting.
We need to consider how we can help our businesses, particularly small businesses. I am vice chairman of the Small Business Bureau. More than 345,000 new businesses were created in the last nine months of 1995. They look to the Government to cut red tape so that bureaucracy--whether it is from Europe, Whitehall or the town hall--is restricted to that which is necessary, and to ensure that Britain remains as competitive as possible. We are competing not only with the rest of Europe, but with the Asian tiger economies, which are expanding significantly and which we ignore at our peril. We must ensure that Britain is economically viable and can compete with those new, strong economies.
I am extremely interested in deregulation and I was on the Standing Committee that considered the Deregulation and Contracting Out Act 1994. Those in industry who are following the debate or who will avidly read Hansard tomorrow and may be aware of any rules or regulations that they believe are not essential or are hampering their businesses should bring them to the notice of the Department of Trade and Industry so that, if possible, they can be scrapped. The last thing that businesses want is on-costs produced by rules and regulations that are of no benefit to employees or customers. We should scrap unnecessary rules and regulations as quickly as possible.
Mr. Jim Cunningham (Coventry, South-East):
Given what the hon. Gentleman has just said, does he agree that the Government should take another look at the business rate, particularly its effect on the small shopkeeper?
Mr. Evans:
I remember not so long ago, when we had not the unified business rate but the old rating system.I was a county councillor and business men used to troop into West Glamorgan county council offices and plead with councillors to restrain their spending so that costs would not be heaped on businesses that operated on tight margins. As it was a good, socialist-run county council, the councillors listened carefully and ignored them. Up went the costs and the businesses were penalised. The unified business rate is a massive improvement on the old rates. At least businesses can now predict their rates instead of being at the whim and pleasure of socialist local authorities.
So that our businesses remain competitive, we need to ensure that inflation remains low. We have heard much about inflation today. It is easy to forget past inflation levels, but I shall say more about that later. We welcome the fact that inflation is approaching 2.8 per cent. and that it has been at a sustainable level for so long. We need competitive, low interest rates and they are now running at 6.25 per cent. The 0.25 per cent cut on 18 January was extremely welcome and I look forward to further cuts when possible. That will help businesses, particularly those that must borrow money to reinvest in their companies to remain competitive.
There is a knock-on effect also on mortgage rates. The Chancellor mentioned the families who have benefited to the tune of £150 per month since 1990. Much of that money will find its way back into the economy. Low, competitive interest rates coupled with low mortgage rates will boost the country's economy.
Inheritance tax reform was vital to allow small family businesses to retain money to spend as they choose. The threshold for inheritance tax was increased from £154,000 to £200,000 in the Budget and I hope that the tax will soon be scrapped completely. Families have enough to contend with when they lose someone near and dear to them without the added misery of inheritance tax. I hope that capital gains tax will be re-examined too.
Strikes are an important aspect of business welfare, and they are now at their lowest level in more than 100 years. That is extremely welcome. Low income tax is also vital. A new rate of 20 per cent. has been introduced and the higher rate of income tax has been reduced from 83 per cent. to 40 per cent. Some hon. Members may remember when income tax was 83 per cent. and 98 per cent. of annual income: we must never forget those days.
Corporation tax has been reduced from 52 per cent. to 33 per cent. It has decreased from 40 per cent. to 25 per cent. for smaller companies--and it will drop further to 24 per cent. later this year. Those moves are very welcome. When the Chancellor announced the1p reduction in the basic rate of income tax, the Liberals--none of whom is in the Chamber--voted against that measure and Labour Members sat on their hands, as they do on many issues these days. We must reduce income tax to the lowest level possible and allow people to retain and to spend their own money.
The Government's stated intention is to reduce expenditure to below 40 per cent. of gross domestic product. That aim must not be confused with reducing
expenditure on essential services, because that will not occur. That expenditure will be met by examining present expenditure patterns and through economic growth. This year's Budget announced increased expenditure for education of £878 million and for health of £1.3 billion.
The Government announced that 5,000 extra police officers will be on the beat and that 10,000 closed circuit television cameras will be installed. We are spending money on essential services while cutting, as a result of growth, the amount that we spend as a percentage of GDP. We must create the conditions that allow businesses to flourish and to expand. Industry must be able to invest confidently in the British economy, sure in the knowledge of seeing a return on that investment.
Businesses must be extremely worried about the threat posed by a future Labour Government. I shall refer to some important issues on which we are not receiving straight answers from the Opposition. The first is the social chapter and the on-costs and extra bureaucracy that businesses would have to bear if we signed up to it. We read in the newspapers that the Labour party is rethinking some of the clauses in the social chapter. Labour Members may like to comment on that during the debate. Is Labour prepared to sign up to everything in the social chapter?I get the impression that the Opposition are so wedded to everything that comes out of Brussels these days that they are prepared to sign the social chapter to make it look as though they are very communautaire.
Mr. James Couchman (Gillingham):
Perhaps my hon. Friend heard the interview with the hon. Member for Streatham (Mr. Hill) on the radio this afternoon, in which he said that the social chapter is about terms and conditions of work. However, the hon. Member for Livingston (Mr. Cook) says that the social chapter contains only one condition about works councils. It is very curious that those two hon. Members do not glean the same story from the same hymn sheet.
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