Queen's Speech Debate: The Economy and Business, Innovation and Skills
Philip Dunne calls on the Government to scrap the revaluation of business rates due to come into force next April.
Mr. Philip Dunne (Ludlow) (Con): I am grateful for this opportunity to come in at the end of our response to the Gracious Speech. I would like to concentrate on two features. First, it seems incredible that the Queen's Speech was virtually devoid of any mention of the state of the public finances. I appreciate that the pre-Budget report is only two weeks away, but there was precious little mention of the finances, with the exception of the suggestion of a fiscal responsibility Bill. However, I give as little credence to that measure as do the professional commentators who have chosen to speak on the subject.
In a press release this month, the Institute for Fiscal Studies stated that
"it is far from clear why investors and voters should be any more impressed by this [the Fiscal Responsibility Act] than they were by the Code for Fiscal Stability, which was enshrined in statute with much fanfare in 1998... Yet by early 2007, well before the current crisis-the Financial Times' annual survey of City and academic economists found that 'almost none use the Chancellor's fiscal rules any more as an indication of the health of the public finances.'".
That was before the public finances got into today's dire state.
We find ourselves in an economy in which £1 in every £4 spent by the Government is borrowed, and I suspect that we will establish in two weeks that the Government's estimates for borrowing have been massively overshot. The Government told us at the time of the Budget-hon. Members have referred to this figure-that we will be borrowing £175 billion in the current year. Last week, however, on the back of the announcement of the September monthly borrowing figures, the IFS indicated that public debt could exceed that figure by a further £42 billion this year. We could be looking, therefore, at a figure of £217 billion of public debt. The figures are almost incomprehensible and impossible for us to get our minds around, yet the Government seem to be oblivious to the fact that it is happening. All they have said is, "Well, we'll set up a law to prevent it from happening again," without introducing any credible measures for doing so.
It is not just people on the Opposition Benches and external economists commenting on such matters in this country who are saying those things. Other significant figures around the world are concerned about that approach to the deficit. I shall give one more quote. This is someone quoted in The Times on 18 November:
"I think it is important though to recognise that if we keep on adding to the debt, even in the midst of this recovery, that at some point, people could lose confidence in the...economy in a way that could actually lead to a double-dip recession".
That was President Obama speaking about the US economy, which has already started to emerge from recession, unlike our own.
President Obama is right to point to those concerns. However, they are particularly pertinent in the case of our economy because we are faced with the worst underlying, structural debt of any of the major OECD economies. As my hon. Friend the shadow Chancellor said earlier, that is giving rise to serious questions about whether the Government can maintain our credit rating, which is so fundamental to future projections for servicing this monumental debt with which we are now saddled. Some credit rating agencies have warned that we are starting to appear on their watch lists. The Government need to be immensely careful about that.
In the remaining minute before the winding-up speeches, I want to refer to one of the burdens that the Government are imposing on small businesses, which will be the engine of our economic recovery. It is the revaluation of business rates, which is due to come into force next April. By picking a revaluation at the peak of commercial rental valuations in April 2008, the Government, if they proceed with the revaluation-I sincerely hope that they will think again and follow the example of the Northern Ireland Executive and scrap it, as we have urged them to do-will lock businesses into historic high rating valuation methods for the next five years.
Although there will be some winners, there will be many significant losers. What it means to people in rural areas such as the one that I represent is shown in a message that I received from the proprietor of a filling station with the only general store in my local village. He is faced with a rating bill increase from £4,650 to £26,000 a year-a 459 per cent. increase. It takes him over the threshold for transitional relief and he therefore has no prospect of any relief on that. I urge the Minister to think again carefully about introducing the rating revaluation at such a critical time for the British economy.