Who do you think you could do business with?
David Cameron and David Davis answer readers’ questions in our exclusive online debate as the Conservative leadership contenders battle for the support of British business.
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Why should business support the Tory party?
Joseph Gabriel
The Conservative Party needs to work to persuade businesses that we deserve their support. But I hope that by showing that we are a party that embraces competitiveness, wants to reform public services and continue to improve the supply side of the economy, understands the impact of damaging labour market regulations and the importance of a flexible labour market, and is willing to stand up to costly regulation from Brussels, we will earn that support.
I’ve worked in business and I know we can’t go on as we are. We need a change of direction: less tax, spending no more than the country can afford and a real determination to take a scythe to the thicket of unnecessary and costly regulation.
With countries across the globe aggressively cutting tax rates, with massive competition from a range of countries from India and China to Eastern Europe, there is no alternative but to compete by reversing Gordon Brown’s suicidal high-tax, high-spend approach.
That is why I have put forward my “growth rule” which would allow me to cut taxes by £38bn.
Gordon Brown is widely perceived to be the most successful chancellor of the post-war era. What could you offer to differentiate your party from Labour with this in mind? And how would you set about rescuing the Tories’ economic reputation after the failed monetary experiment of the 1980s and the consequent mass unemployment? Not to mention the debacle of the ERM
David Smith
To restore the Conservative Party’s reputation for economic competence, we need to ensure that our economic strategy is credible and broadly based. We need far more to our economic strategy than just tax cuts. We need to engage in the economic debate more broadly: for example on skills and innovation, and on business investment, which is currently the lowest it has been since records began in the 1960s.
We differ from Brown because as well as locking in stability, we know that we need an economic policy that promotes economic growth in the long term. Many of Gordon Brown’s policies, of over-regulation, more means testing, complexity in the tax system, and lack of control in public spending harm the long run growth potential of the economy. We are just starting to see the impact of these policies – we have fallen from 4th to 13th in the international league of competitiveness, and our productivity has fallen to its lowest for a generation. So I would differentiate myself from Brown by trying to realise our economic potential as a nation, instead of taking it for granted.
We can’t keep spending more than we earn, so I would introduce a new “growth rule” which would set the level of increase in public spending at 1 per cent lower than the growth rate of the economy. This would allow me to reduce taxes by up to £38 billion, which would in turn inspire growth to pay for the things we all want. I will also tackle Brown’s pensions crisis by bringing his £5 billion a year theft to an end.
What would Mr Davis and Mr Cameron like to see in the pre-Budget report?
Emma Jones
Brown needs to get public spending under control. He is borrowing more than he planned, and most experts agree that taxes are going to have to go up to pay for it. By spending billions of pounds on unreformed public services, he has weakened the public finances without getting the improvements in education and health that we so desperately need.
And I would like to see Brown start to tackle the problems of our low skills base and poor transport infrastructure. Then can we rise to the challenges of globalisation and take advantage of the opportunities that the modern world brings.
Given the increased importance of intellectual works in our global economy, how will you address upcoming issues such as EU copyright revision and the relationship between innovation and property protection highlighted by peer-to-peer filesharing, podcasting and other new technologies?
Rudi Moffitt
Patents and copyright are important to encourage innovation and new talent, whatever the industry – whether it’s music or IT. So we must balance the need to encourage and reward innovators with the need to allow new developments to be spread. But whatever the balance we must ensure that the law is practical and implemented properly, otherwise we end up with complexity and confusion that are unhelpful to everyone.
Do Messrs Cameron and Davis think getting business back on track for the nuclear industry is the best option to reduce greenhouse gas emissions?
Melissa Knowles
I believe that, by harnessing the power of markets and technology, we can make carbon reduction wholly compatible with energy security and economic growth. But this has to mean a coherent approach to energy, transport, housing, planning and agriculture. It also has to mean a consistent policy framework pursued in the long term interests of the country over several decades. That is why I believe we have to have a cross-party consensus on a new statutory framework with specific year-by-year requirements for carbon reduction and independent monitoring.
Would you commit to tax cuts?
Alexandra Loughlin
At the moment, the overall tax burden in the UK is at its highest level for 25 years. The average family is now paying £5,000 a year more in Labour’s stealth taxes than in 1997 – a punitive back-door increase equivalent to 16.5 per cent extra on the basic rate of income tax.
And while countries across the world are aggressively cutting taxes, Britain is still putting them up. I have said that I will introduce a new “growth rule” – a sensible proposition that says public spending should increase by one per cent less than the trend rate of growth of the economy.
That would still allow for higher spending on schools and hospitals. But it would also return money to the taxpayer. By the end of the first term of a Conservative government under my leadership, taxes would be cut by £38 billion.
Where do the candidates stand on raising the pension age to 67?
Peter Francis
That means that we should not rule out considering raising the pension age to 67, over time, because we are much healthier later in life than our parents and grandparents were in the 1940s when that age was set. It would be a difficult decision to make, but may be an important part of making proposals to improve our incomes in retirement.
Do the Conservatives think that giving well-off people tax advantages to invest in second homes (through self-invested personal pensions) makes sense given the widespread view that the government should be helping first time buyers instead?
M Walch
The government are also proposing a new tax on housing development, which would only make affordability problems still worse. Instead we should be promoting the use of shared equity to help the thousands of families who want to get that first step a step the housing ladder.
I also think we need to think more carefully about housing in general. I believe we should be looking to provide more of it in our cities and urban centres, rather than simply building thousands of new homes on the greenbelt as John Prescott proposes. We need to inspire an urban revival, rather than encouraging young people to flee from our cities, so we must find ways of providing more affordable housing on brownfield sites.
How do you intend to resolve the growing public sector pension liability, given the significant strength and influence of the public sector unions?
Andy Cowan
Rising longevity is clearly good news, even though it does have some difficult implications. But I don’t see how it can be fair to ask some workers to retire at least half a decade later than others who may be doing exactly the same job. Those who work in the public sector include some of the most important people in the country – our teachers, doctors, and policemen. We need to ensure that we resolve this issue fairly.
I also think it’s unhealthy for the public sector to be growing at a rate that is so much faster than the private. That too needs to be addressed. We need a Conservative Government to take the difficult decisions that are necessary to deal with this problem, rather than a Labour Government which says the case for raising the public sector retirement age to 65 is “irrefutable” one day, then changes its mind and does a deal with the unions just two days later.
How do you see the relationship between British businesses and their counterparts in the rest of Europe developing as the EU’s influence grows?
Siew Hua Seah
The urgency is rooted in economics. Over the past twenty years, China has been growing at an annual rate of 9.5 per cent and India of 6 per cent. The world has never seen the simultaneous economic take-off of two nations that together account for a third of the world’s population. Today the West’s manufacturing, tomorrow the West’s services, will bear the brunt of their ferocious challenge. And unless there are radical reforms by governments to deregulate, and by companies to innovate, Europe will fail.
So British business has a role to play - alongside the British government - in arguing for a free-trade, low regulation Europe - yet under this government Britain is one of only three European countries where the tax burden will increase both this year and next. We need a partnership between business and government to shape a Europe that is in the interests of British business and the British people.
The biggest problem in British politics is Europe. Is it possible to get a straight answer from either candidate on whether Britain will ever adopt a more constructive partnership with our trading neighbours without threats of renegotiation. And if it became obvious that the pound was dead-weight for the health of the British economy would you have the honesty to admit that the euro was a more secure proposition for British industry? That is assuming that British industry is something worth saving rather than picking up the pieces.
Richard Bond
The alternative is a one-size-fits-all monetary policy that has to be set according to the needs of many different countries – that may be experiencing different conditions to our own. By having our own currency we can maintain the stability and low inflation that are crucial for the success of British industry – both high-skilled manufacturing industry, where we can compete with the best in the world, and the service industries where we are often world leaders.
I have set out a very constructive position on the question of Europe. With the failure of the constitution, the time is ripe for a new model for Europe - a model which would allow Britain to promote its own national interests. My vision of Europe is a pragmatic one which consists of free cooperation between independent European nations, collaborating where that makes sense, imposing their own priorities where universal agreement is impossible - within the framework of a lightly regulated Single Market to which all must subscribe.
The homogenised, one size fits all ethos of the EU with its absurd directives, unwarranted interference and bloated bureaucracy have time and again proved incompatible with our national interests. It is therefore vital to create a structure in which it is possible for member states to choose to take back powers to their own countries.
Economic performance in Wales is the worst of any region in the UK despite the level of government assistance over the years - the welsh assembly government in my opinion is an expensive talking shop - what are both your views?
K Wilton
David Cameron: The Welsh economy is not only important in itself but also a crucial part of the UK economy as a whole. That’s why we need a broad economic policy that supports the Welsh economy as much as the rest of Britain.
Ireland has shown how a small, open economy can develop dramatically by attracting companies and allowing them to expand. Average income in Ireland is now higher than in the UK. We must learn from their example. Government assistance must help rather than hinder the wider economy, and promote investment and competitiveness, like the tax measures within Enterprise Zones do. That way new businesses and international employers can replace the old industries that used to power the Welsh economy and bring jobs and prosperity too.
David Davis: It does seem that what applies to England applies twice-over in Wales. The Labour leadership in the Welsh Assembly Government is even less reconstructed than Labour in Westminster. We see that in the economy and in the public services too. There is no better place to look to see how increased spending doesn’t necessarily produce the results we want.
That’s why we need a Tory revival in Wales to make the case for a low tax, low regulation economy and for a new approach to running the public services. Nick Bourne and his colleagues are already making that case effectively. I want to work with them to implement the kind of policies I’ve been talking about in my campaign - policies that will enable people to keep more of the money they earn, that will free business to create the wealth on which we all depend, and that will give everyone the kind of choice in public services that are currently only open to the privileged few.
