ECONOMIC STABILITY UNDER BLAIR[QQ] Our country’s prosperity is dependent on the success of our businesses – strong, profitable companies generate the wealth and jobs so essential to our future. Labour has provided the environment for companies to succeed.
Labour inherited an economy with many weaknesses. We took action to lock in low inflation and to cut government debt; entrenching in law the golden rule – that over the economic cycle the government should only borrow to invest.
We made the Bank of England independent to ensure that interest rates decisions are taken in the best long-term interests of the economy.
As a result the deficit has been eliminated and inflation is at its lowest level for 30 years.
We introduced strong competition laws to stimulate innovation. We started to tackle standards in schools and introduced the New Deal to get the long term unemployed back to work.
Business investment is at its highest level for 40 years; productivity is up and inward investment is at record levels.
OECD figures show we have lower income taxes, business taxes and VAT rates than any other European economy. Corporation tax is at its lowest ever level and capital gains tax has been cut.
The economic stability Labour has achieved now allows us to build for the future on firm foundations; to reverse the legacy of under-investment. For every pound of public expenditure just 17p goes to fund debt interest, unemployment benefit and social security spending, compared to 42p under the Tories.
But there is a lot more work to do. We need to raise growth and close the productivity gap with our international competitors. We need to remove obstacles to enterprise and entrepreneurship in all parts of the country, to increase competition and raise educational standards for all.
These are priorities for a second term.
The alternative is a return to boom and bust with a Tory government.
The Tories who say they will cut taxes, cut spending and at the same time will not cut any public service. Any accountant knows this is just nonsense.
Labour will take no risks with the economy. We shall maintain the policies necessary to deliver the economic stability that is so important to business.
– Stephen Byers is the secretary of state for trade and industry
… ONLY THE TORIES CUT RED TAPE
Governments do not have any money beyond what they extract from businesses and their employees in taxation. So unless the government looks after the wealth-producing sector of the economy it will eventually fail in its public expenditure plans.
My worry is that the government is now committed to increasing public expenditure by 3.4% a year over the next three years, but the economy is set to grow at only around 2.25%. This probably means more stealth taxes to come, but this hits the competitiveness and profitability of businesses, so the government is slowly strangling the goose that lays its golden eggs.
The CBI estimates that the extra tax and regulatory burden on British business now exceeds #32bn over this parliament. So the pro-business rhetoric of the government has not been matched in practice.
Extra red tape and government regulation are squeezing the entrepreneurial life out of this country. It is particularly damaging to small businesses which are often run by people with little time or inclination to engage in lengthy consultation exercises with central government.
The government says it is aware of the problem and has even announced plans for a deregulation bill, though it will not be enacted before the general election.
Meanwhile, the regulatory juggernaut rolls on, fuelled particularly by the EU. Last year, parliament passed a staggering 3,600 new regulations, up on 1999 which itself was a record year.
We must stop this regulatory tide. I propose that new regulations are accompanied by a ‘sunset clause’ which ensures that they lapse after a certain period unless parliament positively decides to renew them.
Combined with independent assessment of costs and benefits, this should concentrate the minds of MPs and civil servants.
On tax, we can start by abandoning a new energy tax, the so-called climate change levy, which is due to come into effect in April. It will be paid by all businesses and is an unwelcome burden when energy prices are rising anyway.
It is a clumsy and damaging way of responding to the threat of climate change, which is far better tackled in other ways. We will abolish this tax.
– Rt Hon David Heathcoat-Amory MP shadow secretary of state for trade and industry.
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