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Confederation of British Industry
10. Mr. Barry Sheerman (Huddersfield): When he will next meet the CBI to discuss its reactions to his recent Budget and the assistance that it gives to the manufacturing sector. [116612]
The Chancellor of the Exchequer (Mr. Gordon Brown): I regularly meet with the Confederation of British Industry and other bodies. Our Budget measures for manufacturing include making permanent capital allowances, introducing a new research and development tax credit, introducing a regional venture capital investment fund of £1 billion, 100 per cent. capital allowances for new technology, the continuation of the lowest corporate tax rates for small businesses and large companies of any of the G7 countries and, of course, the maintenance of economic stability.
Mr. Sheerman: Is my right hon. Friend aware that businesses up and down the country are grateful not only for the Budget for business but for the three Budgets that he has introduced, which have been very good for our economy? Is he also aware that British business is responding by trying to reach higher levels of productivity, and is gradually succeeding? Businesses will also be very pleased at today's announcement that there will be no rise in interest rates, as they are still very concerned about the value of the pound against the euro.
Mr. Brown: The Government's policy is for stability and steady growth. That is achieved by having monetary and fiscal stability. I will continue to support the Bank of England in the decisions that it makes.
Manufacturing output is rising and productivity has risen by 5 per cent. Although I recognise the difficulties caused for manufacturing by the strength of the pound against the euro, the industry is not only responding but winning in many of our world markets.
Rev. Martin Smyth (Belfast, South):
I welcome the steps that have been taken to help industry, but will the Chancellor acknowledge that the textile industry in particular is under tremendous threat? Have there been any specific discussions with the Department of Trade and
Mr. Brown:
I understand the issue that the hon. Gentleman raises about the textile industry in Northern Ireland and the whole of mainland Britain. The measures that we have taken in the Budget, such as making permanent the 40 per cent. capital allowances, will be of benefit to textiles and other manufacturing industries. I know that that is what the CBI and other organisations, including the British Chambers of Commerce and the Institute of Directors, were pressing for, and it has been achieved under a Labour Government. I also know that for companies in the textile sector which are innovating and bringing forward new products and processes, the research and development tax credit--which will be worth £150 million and available even before profit is made from these inventions--will be of help. For companies which invest more, the regional venture capital investment funds will help Northern Ireland as well as mainland Britain.
Mrs. Rosemary McKenna (Cumbernauld and Kilsyth):
Does my right hon. Friend agree that while some sections of the textile industry are suffering, Scotland has very successful garment and fashion businesses? Does he also agree that although all the fiscal measures that he has introduced help the manufacturing sector, the manufacturing sector is also helped by the education and training that provides a skilled work force and a healthy community?
Mr. Brown:
Our policies for education, which are raising standards in schools, are essential for creating the modern skills base that industry needs. In addition, with the CBI, the Institute of Directors and the British Chambers of Commerce, we are launching a national enterprise campaign that will link businesses to schools. A thousand business ambassadors will help young people learn about commerce and business for the future.
On the future of business, my hon. Friend will welcome the fact that, whereas 1.2 million businesses were employing people when we came into power, there has been a 10 per cent. growth during our time in office. There are now 800,000 people in jobs who were not in jobs in 1997. We are continuing to pursue a policy of employment opportunity for all. Economic stability is our policy--we will not allow Britain to return to the boom and bust of the Tory years.
Mr. Richard Ottaway (Croydon, South):
Will the Chancellor take the CBI's advice on IR35? Four weeks ago, the Paymaster General criticised the Conservative party for standing up against the IR35 stealth tax on Britain's high-taxed, high-tech entrepreneurs, but has the Chancellor read the report in Tuesday's Evening Standard, headlined: "Tax climbdown on way as IT experts quit UK"? Will he confirm that he is under pressure from the e-commerce tsar, Mr. Allan, and from the Minister for Small Business and E-Commerce, to change his stance by easing up on IR35? It is not only the Conservative party that says that he is wrong--his own party thinks so too.
Mr. Brown:
No, we are not under pressure from either of the people mentioned by the hon. Gentleman,
We published our measures on IR35 last April, and they were followed by a discussion period and a consultation document. We made our decision last summer, and it was the right decision. Everyone should pay a fair rate of tax, and there should be no tax avoidance. It is about time the Opposition supported fair tax.
14. Mr. Tam Dalyell (Linlithgow):
What has been the total sum paid from the Contingency Fund for the Gulf War operations. [116616]
The Chief Secretary to the Treasury (Mr. Andrew Smith):
No advances have been made from the contingencies fund this year in respect of Gulf war operations. I can also confirm that there have been no claims during the current financial year on the Departmental expenditure limit reserve in respect of operations in the Gulf. Any on-going Gulf related expenditure is met from within the Ministry of Defence's budget.
Mr. Dalyell:
Has the Chief Secretary any figures for the annual cost of our Iraq commitment?
Mr. Smith:
I do. As a direct result of operations in the Gulf since the conflict began in 1990, the estimates were as follows: for 1999-2000, £30 million; for 1997-98, £16 million; and for 1996-97, £6 million. The total since 1990 is £580 million, and I shall give my hon. Friend the details for the other years.
15. Dr. Stephen Ladyman (South Thanet):
If he will make a statement on measures in his Budget to boost seaside arcade businesses and support the amusement machine industry. [116617]
The Financial Secretary to the Treasury (Mr. Stephen Timms):
The Budget introduced a package of reform for amusement machine licence duty, which will reduce tax revenue in the first year and be neutral in the longer term. It targets extra help on seaside arcades. A new exemption from duty for 10p small prize amusement machines has been particularly welcomed by those concerned about seaside tourism.
Dr. Ladyman:
Sober-suited business men seldom dance in the streets, but one or two in my constituency came close to doing so on Budget night because it is home to seaside arcades, suppliers of amusement machines and the world's two leading manufacturers, whose businesses were secured by what the Government did. Will my hon. Friend build on the good will thus created by ensuring that he meets at least annually with trade organisations for the industry so that they may discuss future opportunities for revenue raising and identify weaknesses in the industry so that we may continue to support it?
Mr. Timms:
I have, of course, met representatives of the industry, and should be happy to do so again in the run-up to future Budgets if representations are made to me. My hon. Friend is absolutely right to say that our changes have been particularly welcome at the seaside and to manufacturers of machines. The gain is for machines with non-cash prizes, which are popular at the seaside, rather than for cash-prize machines. As we often do, we listened to representations from the industry and acted on them. I am pleased to hear that people are dancing in the streets as a result.
Mr. Edward Davey (Kingston and Surbiton):
The Liberal Democrats are pleased with the concession for small prize machines--a proposal tabled during progress on last year's Finance Bill by my hon. Friend the Member for Twickenham (Dr. Cable) and me. I am glad that the Government have accepted another Liberal Democrat idea, which will help British Legion branches, working men's clubs and even Conservative clubs. Given the number of pensioners who use such clubs and such machines, will the hon. Gentleman make representations to the Chancellor to improve pensioners' incomes rather than persisting with this month's measly 75p increase?
Mr. Timms:
The changes we are introducing are good news for machines in social clubs as well. I pay tribute to all my hon. Friends who have made representations on behalf of seaside tourism in particular.
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