Speech on the economy

It is a pleasure to follow the hon. Member for Islington South and Finsbury (Emily Thornberry). I agree with her on one point: everyone should pay tax, but more of that later.

May I pay tribute to those who made their maiden speeches, and welcome them to this place? I remember mine all too clearly; it is a nerve-wracking moment for all of us.

In the eight minutes that I have, I do not want to look back or play the blame game with the Opposition, other than to remind the country of their profligate years, but enough said: we have to look to the future and how we get ourselves out of this mess. Let me go back over some basic principles which, it seems to me—maybe I am getting this horribly wrong—many in the House have forgotten. Baroness Thatcher, a lady for whom I have huge respect and admiration, was brought up, as the House knows, in a grocer’s store. Her economic principles, like most of her principles, were very simple and on the whole they were sound: “You spend what you earn. You borrow too much and you go broke. Eating into capital is the road to ruin.” She believed in a light-touch, low-tax Government.

We had the chance to be radical when we came to power, but regrettably, linked to the Lib Dems as we are, that was never going to be a reality. Taxes, both business and personal, remain at punitive levels. They curtail incentive, reinvestment, aspiration and jobs. Employers’ national insurance contributions are a classic example. I run a business, albeit a small one, and pay nearly 15% for each person I employ. That is madness, and it is certainly not based on Conservative or free-marketeer principles. My advice to those on the Government Front Bench is to scrap employers’ national insurance contributions if they want to see unemployment fall and businesses thrive.

The deficit is down, which I welcome, but borrowing is rising, as we have heard, and state expenditure remains unacceptably high, with savings in real terms at negligible levels. So we print more and more money—it is called quantitative easing—tons of it, in fact, and down the plug it has gone. But at some stage it will spill over into the bath and we will start to spend it. Inflation will rise and interest rates will inevitably have to rise to combat it. At that stage, we will see pain on an unprecedented level in this country.

In the meantime, we pile more and more taxes on the better-off, who already face punitive rates, while those at the bottom are taken out of tax altogether. Why? The hon. Member for Islington South and Finsbury said that everyone should pay their taxes fairly. If we take those on the lower end out of tax altogether, what incentive do they have to put away their rubbish or to contribute to their fire or police service?

Sheila Gilmore (Edinburgh East) (Lab): The hon. Gentleman’s view of economics seems to miss the fact that when Governments invest, jobs are created, more money comes into the Treasury and less goes out by way of wasteful benefits. What has gone wrong in the last two and half years is that the Government have pulled the plug on investment, which now, rather belatedly, they are trying to put back in a small way. By the way, some people might not be paying income tax, but they are paying council tax towards the very services he has just mentioned.

Richard Drax: Unfortunately, the Government have invested; the hon. Lady is absolutely right. Governments, particularly during Labour’s 13 years in office, invested to such an extent that we are now in the mess we currently find ourselves in. It is not for Governments to play economics; it is for business men and women, entrepreneurs, small businesses and retailers to generate our economy. I hear again and again from people on all sides that the broadest shoulders should bear the biggest load and that we are all in it together. We are not, and we never will be, and we fool ourselves and do a disservice to those struggling to make ends meet if we think otherwise. Let us not forget that the better-off, whether businesses or individuals, play a useful role in our economy. Except for a few notable occasions, they pay tax. They create jobs and buy goods, which generates jobs, and in many cases they take their wealth responsibly and give back in countless ways, so let us stop killing the golden goose.

The simple fact is that we must cut state expenditure. The EU is a classic case. Some £51 million a day goes to that unaccountable, Soviet-style bureaucracy, the same EU that mislays €5.2 billion every year, according to the European Court of Auditors. Yet they want more, and we give it to them. We boast about giving 0.7% of our GDP in overseas aid. Do not get me wrong: I am all for charity, but charity should start in this country, particularly now that so many of our constituents are struggling. Let me give an analogy, the farming analogy, as I call it. If a third-world country needs to learn how to farm, we do not send it millions of pounds that go into the pockets of some genocidal maniac; we send a farmer and we teach them how to look after themselves. How many apprentices, nurses, doctors, hospitals and schools could be looked after if we had all the money that is going abroad?

Let us not forget the defence of our country and our armed services, which are being slashed to an unforgivable level. We have a bloated welfare bill; it has been discussed in this place again and again. Then there is the NHS, where all sides bury their heads in the sand. That bill will go on rising and rising to unaffordable levels. There may be—I am sure there is—another way, but no, we do not do that; we ring-fence it instead.

We need a country where the entrepreneur—the business man and woman—can fly free of red tape, punitive tax rates and burdensome regulations from the EU. In South Dorset, I have a young Marine who has set up a company called Ovik Solutions. He makes armoured vehicles based on old Land Rover chassis. Riot-proof and bomb-proof, they are currently serving in Northern Ireland—120 of them. One can see the white vehicles—they are his. The company is going from strength, from employing two people to 15. Ovik will provide British jobs, based on British engineering and ingenuity, in Britain. How ironic that its inspiration, Jaguar Land Rover, is now owned by India and production is moving to China.

What lessons have our Government learned? Here we are, on our knees, and what do we do? We appoint the right hon. Member for Twickenham (Vince Cable) as the Business Secretary. This man is no friend of business; he is a friend of those who say “Tax, and tax, and tax, and tax.” We do not need a man of that ilk in charge of our business.

Another crazy move, brought in by the Opposition when in government, involves our brewing industry. I am of course talking about the beer duty escalator—it is absolutely mad; jobs are going in their scores every year—and it is possible for no other reason than that people like to drink beer. This is a home-grown industry that we are singularly doing an awful lot to destroy.

What must we do? We must deregulate, we must lower taxes, and we must cut state expenditure. Yes, there will be pain—of course there will—but I am convinced that in the longer term, if the private sector is allowed to flourish, as it has done, much to this Government’s credit, with the creation of 1 million new jobs, then we, and it, will create the wealth and the jobs that we need.