Last Updated: 16 January 2011
Created: 16 January 2011
As we enter 2011, we are seeing the economy come out of the danger zone, but we still have much to do and we face many challenges to get our fragile economy back on track. It is only through decisive action that we will see a strong, long-term return to growth.
The primary concern when we came to power was to avoid a double dip recession following the two years of contraction under Labour. A return to growth was secured in 2010; a significant, if modest, step forward. It is absolutely right and proper we tackle the deficit, bringing us back from the brink of bankruptcy, with the former Government having racked up £1 trillion in debt. This is vital for several reasons. Firstly, so we can remain in control of our economy, unlike Ireland and Greece where they have been overwhelmed by their levels of debt. Secondly, we are spending £120 million per day to simply cover the debt interest; money that would be better spent on improving public services or reducing the tax burden. The plan to tackle the deficit involves a combination of 80% savings and 20% tax rises. This week’s rise in VAT from 17.5% to 20%, which will raise £13bn per year, was one of these measures. We felt this was a fairer move than hiking either income tax or national insurance, which would have been, in effect, a tax on jobs. The Conservatives don’t want to increase taxes, in fact we want to try and lower taxes in this country. As the economy recovers, we can achieve this goal.
The housing market remains challenging, so we scrapped the unnecessary and costly Home Information Pack scheme immediately. The availability of credit, especially to first time buyers, has impacted on the number of house sales. I regularly meet with banks to discuss this issue, and as the banking sector has stabilised we should see a much-needed improvement. On a positive note, despite the recession we have seen repossessions remain relatively low thanks to a combination of the low interest rates and a more constructive approach to helping those in difficultly from the banking system.
Unemployment figures will be closely scrutinised. To tackle unemployment we have brought forward a number of measures and incentives to help Britain once again become business friendly. We are also rightly increasing the number of apprenticeships, and we have just announced plans to help unemployed people start up their own businesses. The New Enterprise Allowance projects, offering start-up loans and weekly allowances, could create 40,000 new businesses by 2013. And as we enter 2011, that’s now just two years away!