Budget Statement

My Lords, I am pleased to speak in this debate and pay tribute to the Chancellor of the Exchequer for another successful Budget. Under this Government our economy is on the mend. The problems inherited from the previous Government were greater than we had imagined, but slowly things are turning around. This Government are striving to be the most pro-growth in living memory. However, tough decisions are needed to reduce the deficit, heal our economy and keep interest rates low. Our economy needs to be more resilient and balanced. This is the only way in which to secure a better future for Britain and our well-being.

We are indeed on the way to growth, and this Budget was the next step. It was a positive Budget, one looking not only to solve the problems of the past but to secure a better future. The Budget will also indicate that people can be trusted with their own money. More money in the pockets of working people often means more money in the hands of business, through consumer spending. It is welcome that the personal allowance will rise to £10,500 in 2015-16. I ask my noble friend the Minister if there is scope to increase it further.

Much has also been made of the ways in which this Budget will benefit pensioners. People work hard throughout their lives and it is only reasonable that they expect flexibility from, and a good return on, their savings. There will be no obligation to buy an annuity if savers do not want to do so. As someone who has been actively involved in the arrangement of pensions, I can say that some people were not happy with the restrictions on their pension funds when the time came for their retirement. I therefore welcome the revised arrangements. I am pleased to note that everyone who retires on these schemes will now be offered free, impartial and face-to-face advice. Financial education has been insufficient in this country for far too long. While I wholeheartedly support people having the freedom to do what they wish with their money, it is important that we make sure that they are in a position to make wise choices. With this in mind I ask the Government: what is being done to ensure that advice is offered not only to those who are about to retire but to younger people who must learn the importance of saving for later in life?

Manufacturing declined massively under the previous Government and is enjoying something of a renaissance under this Government, but still the growth is not enough. We must not rely purely on financial services but begin to make things again and reactivate our manufacturing capabilities. I was born and brought up in a colony where nearly everything we had was of good quality and was made in Britain. We had British-made cars, clothes, household appliances, bicycles and food products—the list goes on. The Empire is now gone but the British people have the ability to be great again in manufacturing.

On many occasions in your Lordship’s House, I have stressed the importance for us to place a greater focus on trade, in particular our exports. In January, our trade deficit was estimated to be £2.6 billion. Our deficit on goods continues to be partly offset by our surplus in services, but we cannot allow this to go on. The continued efforts of UK Trade & Investment must be acknowledged. I applaud the Chancellor for expanding the resources available to it and going through it. Doubling the amount of lending available to exporters and cutting the interest rates on this lending will be welcomed from across the board. The Chancellor was clear that we will have the most competitive export finance in Europe. Our exporters need the confidence that Government understand the crucial role that exporters play and are willing to support them at every turn. I know that a great deal of progress has been made over the past couple of years, not least in recent months.

It was encouraging that the Business Secretary visited the United Arab Emirates on a trade mission back in January and launched a UKTI Gulf investment team. I visit UAE frequently because I own properties in Dubai. The economy of that city is indeed lifting, and we should make use of the opportunities that are now opening to outsiders. I was also very pleased to see the Trade Minister open British business centres in Slovakia and Hungary earlier this month. The drive to boost our trade with central and eastern Europe is most welcome. However, this is not enough.

We need to look in more depth at opportunities with countries such as Brazil, India and China, where export prospects are greatest. A report last month from the manufacturers’ organisation EEF found that emerging markets now account for half of manufacturers’ priority targets. In particular, Brazil has become a top priority, with one-third of companies planning to increase exports there. It is very important that our Government fully realise this potential and capitalise upon it swiftly and assertively. They must develop strategies to target these markets rather than react to potential opportunities.

The report also found that there is a lack of awareness among manufacturers of the support available to them. This further confirms my already-held view that we need to market the services of UKTI more effectively. In particular, I should like to see a much more concerted effort on expanding our trading links with Africa. I know Africa as I was born and brought up there. I am visiting Kenya, Tanzania and Zanzibar in three weeks’ time.

A recent report from the World Bank forecasts that sub-Saharan Africa will grow by 5.3% this year. There are several African countries where growth exceeds 7% per year. Countries such as Ghana, Ethiopia, Mozambique, Kenya, Uganda and Tanzania are seeing increased consumer spending and need further investment in telecommunications and education. We have historic ties with some of these countries. We must act now and connect our businesses at home with the overseas markets of the future. I should be grateful if my noble friend the Minister could inform the House of any further plans to focus on these lucrative emerging economies.

Of course, none of these ventures will even be possible if we fail to nurture the talent and innovation of our young people. That is why I applaud the announcement to extend further the apprenticeship programme, supporting 100,000 more through extra grants to businesses. As someone who has been involved in training in my own business—financial services—I appreciate the training of our young in every field to ensure our growth and well-being.

The Federation of Small Businesses welcomed both the reduction in corporation tax and the doubling of the annual investment allowance for small firms. However, it cited as problems poor communication and the fact that firms often do not take advantage of government schemes simply because they do not know about them. This is a problem that has been mentioned in relation to business and exports many times. I ask the Government for clarification on what is being done to improve the way in which their policies are communicated to SMEs and others who can benefit from them. I also ask the Minister whether he believes that the Government will meet their exports targets. If the growth in exports continues to be slow, what plan do the Government have to deal with this?

Finally, the people who are paying 45% tax are often entrepreneurs and businessmen, who create jobs and generate revenue for the country. They should not be penalised and I feel that consideration should be given to reducing their tax rate from 45% to 40%. I would appreciate my noble friend’s comments on this point.

I believe that this was for the most part a good Budget. The Government are on course, as is our economy. However, I shall be grateful if, in his closing remarks, my noble friend is able to answer some of the points that I have raised.

Updated: 12/05/2014 — 11:49 AM