The UK economy grew at an annualised rate of just 1.2% in the first three months of 2013, whilst the US economy grew at double the pace by 2.5%. I Have been urging the government to ask why, and to copy more of the policies that the USA has used to get better growth.
Some in the UK debate have been misleading the public into thinking the UK grew more slowly because we had more cuts in public spending. The opposite is true. Public spending in the US was cut at an annual rate of 4.1% in the first quarter of this year, whilst in the UK real public spending continued to rise.
The austerity in the UK has been visited on the private sector far more than the public sector. Private sector wages have gone up less quickly than public sector wages. Both Labour and the Coalition government increased tax rates on incomes, on energy and petrol, and the Coalition government added in VAT, Stamp Duty and Capital Gains tax increases as well. Many of my constituents have been dragged into the 40% tax band for the first time, taking a bigger chunk out of their incomes.
I think the government should do more to lift the austerity on the private sector. Selected tax rates should be brought down. The 40% tax threshold should be raised. Inflation needs to be controlled better. Savers need to be given a fairer return on their savings. Some of the lower tax rates will bring in more tax revenue. Raising the 40% tax threshold will probably reduce revenues, and should be balanced by charging more foreign governments in the EU for using our health services – as they charge us – and limiting the eligibility of newly arrived people from the rest of the EU to receive benefits.
I am still seeking more improvements from the banks. Local businesses and individuals are still rightly complaining about the difficulty of getting a bank loan, the high cost of many bank loans if you can get one, and crippling bureaucracy which surrounds more or less any financial transaction. The Chancellor has agreed to lend more money to the banks if they will lend it on. There are some signs that mortgage lending is at last on the rise, but small business lending needs more encouragement.
Parliament is having another of its all too frequent breaks from meeting at Westminster. Next week when we return for the new session, I will set out more of the details of what I think this Coalition government has to do to banish austerity from the private sector. The long Queen’s speech debate gives us MPs the opportunity to range more widely and set out some strategic priorities that we think the government should follow. In the words of Mr Crosby, the Prime Minister’s new adviser, they need to “get the barnacles off the boat”. That means stop doing some of the less important or really annoying things, and concentrate on what matters most. At the moment that is restoring family and individual prosperity. That in turn means government keeping its hands off more of my constituents’ hard earned money.