The Chancellor of the Exchequer will next month, deliver what will probably be the most important Budget speech of the decade.

 

What does the panel think the Chancellor should do to get us out of the recession and into recovery?

 

Jenny Randerson, Welsh Liberal Democrat

 

This is the most difficult budget speech for many decades. There are a number of key issues which need addressing:

• Public mood reference large bonuses and tax avoidance schemes operated by banks - a good deal of public support exists for plugging loopholes that allow this.
• Measures to help small businesses, especially as business rates are likely to go up and the rate relief threshold needs to be increased.
• Bring forward spending on infrastructure such as road schemes, school and hospital building.

 

David Davies, Conservative

 

It is difficult to us to have an economic policy without actually knowing exactly what is owed, government needs to open up the books to see their full liabilities.To solve the problem we would stress the need for:

• Better regulation of banks
• Gently reduce the size of the public sector as there is a lot of waste in this sector and the public sector lack the discipline of the private sector.
• Cut National Insurance by 1 per cent.

 

Wayne David, Labour

 

The nature of the global economy means that isolation is not an option. The Government is leading the way on the international response to the crisis. We would therefore recommend:

• Greater regulation of the banking system.
• Continue our active intervention within the economy which necessitates further borrowing to stimulate the economy.

 

John Walker, FSB Policy Chairman

 

Small businesses will be responsible for creating the jobs and banks need to make the loans available to help businesses achieve this. We would also advocate the following measures:

• The Enterprise Finance Guarantee Scheme needs to be up and runnning
• Petrol Duty Increase should be deferred
• VAT increase issue - if it goes up to 17.5% that will be a tax increase. The VAT reduction should continue for some time.

 

In just over two weeks, the Government will again raise the fuel duty by two pence a litre. At the same time business rates are set to rise by 5.2 per cent.

 

This increase in costs will affect every business. Does the panel think that these two policies should be reversed?

 

John Walker, FSB Policy Chairman

 

Yes the fuel duty should be reversed and ref Business Rates we continue to fail to see why these rates rise above the level of inflation.

 

Wayne David, Labour

 

Fuel duty needs to be relooked at as an issue, though fuel prices have come down. The FSB has identified that some £400 million is available in rate relief and methods of promoting rate relief needs to be considered.

 

David Davies, Conservative

 

The answer is yes it needs to be done and properly funded this could be a far more effective than the VAT cut.

 

Jenny Randerson, Liberal Democrat

 

These are the last things that the Government should be doing.

• Exemption from empty property rates should be more generous. Relief needs to be offered to businesses that are above the current threshold of £15,000 per annum.
• Increases in fuel duty should be held off and greater investment should be made in improving the road and rail infrastructure.

 

Mike Cherry from Staffordshire and West Midlands asked, "Given that the official unemployment figure has now passed the two million mark, does the panel agree that it is time for the Government to introduce a wage subsidy similar to that of the 1970s and 1980s, to keep people in jobs, rather than on benefits?"

 

Wayne David MP, Labour

 

Felt that there was a lot to be said for the idea and he felt that it should be investigated. 

 

Jenny Randerson AM, Lib Dem

 

Said that the subsidy that is available in Wales had saved a large number of jobs, but that it was only available to larger businesses and was very bureaucratic, so probably was not suitable in its current form for SMEs.  As a Liberal, she said that she was in favour of free trade and an active market, so it should not be something introduced for the longer term.

 

David Davies MP, Conservative

 

Did not like the idea.  He felt that the public sector and the private sector needed to become much more balanced again.  He felt that there needed to be an urgent review of the welfare system to make it more difficult for people to live in the long term on benefits.  He also said that a much more controlled system of immigration could help to reduce unemployment. 

 

John Walker, FSB Policy Chairman

 

Said it was unusual for the FSB to be working with the trade unions on this type of issue, but these were unusual economic times and we need to look at all options to protect employment. 

Ash Farag from Northern Ireland asked 'With the banks being so slow to give money to viable small businesses, does the panel think that it is time to turn our Post Offices into Post Banks?'

 

John Walker, FSB Policy Chairman

 

Expressed FSB support for the Post Bank proposal that was recently announced. There is frustration with the current banking system and post banks will add to an existing network and help support post offices where they were previously uneconomic.

 

David Davies MP, Conservative 

 

Said that he had always been for the existing post office bank accounts and that the government should give its full support to the new Post Banks initiative.

 

Jenny Randerson AM, Lib Dem 

 

Pointed out that Vince Cable had proposed a similar package of measures around Royal Mail a few years ago and was pleased that it would help support post offices in small communities.

 

Wayne David MP, Labour

 

Outlined that the Post Bank was a good proposal which enjoyed cross party support but that it should be part of a wider mosaic of measures which address issues within the banking system and bring back personal, face to face and local banking.

 

David Neath from Warwickshire asked 'What does the panel think of the indecent interest rates charged by credit card companies and should they be forced to reduce these interest rates?

 

Wayne David MP, Labour

 

Denounced the current situation as disgraceful and more effective regulation was needed in addition to socially responsible banking.  It would be possible to learn from decentralised banks in Germany in order to construct a new system.

 

David Davies MP, Conservative

 

Said that it was down to the government to put pressure on the FSA for them to withdraw licences from banks that indulged in such practices, until they lower their rates.

 

Jenny Randerson AM, Lib Dem 

 

Expressed concern about the level of personal debt and the weight of advertising that lies behind this.

 

John Walker, FSB Policy Chairman

 

Also weighed in on the huge current debts levels and the fact that 28% interest is highly unfair and is happening in practice. There should be pressure on banks to act as cartels of interest rates are beginning to develop.

 

 

Janet Jones from South Wales asked, "As road users pay well over £40 billion a year in taxes, are tolls on roads and bridges fair?"

 

Jenny Randerson AM, Lib Dem

 

Spoke about the bridge over the Severn and how important it was to the Welsh economy.  She thought that it was silly in the 21st century that the only payment method was cash.  She thought that modern technology should be used in order to pre pay or use credit cards.  She also highlighted the cost to business of the toll, which is considerable.  Finally she raised the issue of using tolls as an alternative way to pay for road maintenance.

 

David Davies MP, Conservative

 

Argued that the economy was a much bigger problem at the moment than the environment and so road charging should not be introduced at present as it is an extra economic burden on business.  He was absolutely opposed to road tolls.

 

Wayne David MP, Labour

 

Said that tolls are a fact of life and they provide a useful source of income for the Government, for transport improvements among other things.  He was also supportive of calls to use modern technology, rather than just having a cash payment as the only option to cross the Severn Bridge.

 

John Walker, FSB Policy Chairman

 

Said that the FSB had a long established position which was opposed to road charging.  He highlighted the increased costs to business because of tolls.  He was not opposed to tolled roads as an alternative, but only where there is a free alternative.  He raised the referendums in Edinburgh and Manchester where local people had been asked to vote on various forms of road charging and they had been rejected.  He also pointed out that in Scotland the Scottish Government had abolished bridge tolls and where there is a political will, such policies can be introduced.   

 

Mary Webb from Wiltshire and Somerset asked "With 2012 fast approaching, does the panel think it is wise for the Government to cut funding to 'Visit Britain'?"

 

Wayne David MP, Labour

 

Said the UK, including Wales, needs to promote itself to visitors from abroad and resources are required to do so. We need to capitalise on the value of the pound which makes the country an attractive place to visit. He knew that the Welsh Assembly had increased their tourism budget by £2.2 million.

 

David Davies MP, Conservative

 

Said that he wondered just how effective public sector bodies like Visit Britain were. If reductions in funding led to tax cuts for business then he would be in favour of such reductions. Having said that tourism is good for the economy and should be encouraged.

 

Jenny Randerson AM, Liberal Democrat

 

Said that she was concerned about London 2012 as few Welsh small busineses had managed to get contracts. In addition many heritage and leisure attractions in Wales had seen reductions in Lottery funding. We need to be attracting more visitors to the UK so any funding reductions seem counter intuiative to that.

 

John Walker, FSB Policy Chairman

 

Agreed with most of what the previous speakers had said. Tourism was very important to the UK economy and needs support and encouragement.

 

Derek Williamson from Surrey & West Sussex asked "Will MPs lead the way by getting rid of their very own lucrative inflation proof pensions and switching to money purchase pensions similar to those earned by most small businesses?"

 

John Hunphreys asked for one word answers!

 

David Davies MP, Conservative

 

Yes!

 

Jenny Randerson AM, Liberal Democrat

 

Said that everyone needs to rethink the way in which pensions are funded, so yes.

 

Wayne David MP, Labour

 

Yes, MPs' pensions are unsustainable.

 

Mr Hoss Youssefi from Greater London asked "Does the panel think that we should follow the example of US law makers and introduce a 90 per cent tax on bonuses?"

 

David Davies MP,Conservative

 

Said that he published his expenses in full and he believed the public sector should follow suit, including those banks that are now in public ownership. He wasn't sure about a 90 per cent tax but would consider it.

 

Jenny Randerson AM, Liberal Democrat

 

Said that she opposed the idea because the banks shouldn't be paying such high levels of bonuses in the first place. The bonus culture had driven the way in which the banks operated and the risks they took were based on the bonuses that they expected to be paid if the risk paid off. She also believed that all public companies should publish the salaries of all those who earnt more than the Prime Minister.

 

Wayne David MP, Labour

 

Felt that the bonuses that had been paid out in the past were obscene with no moral justification. He questioned the banking culture that had led to these bonuses. He also felt that the trade unions needed to look at the way they negotiated pay settlements featuring bonus related deals.

 

David Wait from Notts & Derby asked "Does the panel think that the media has contributed to the current economic crisis?"

 

John Walker, FSB Policy Chairman

 

Said the FSB was very concerned about some of the business surveys that had been reported in the media and appeared to be talking the economy down. Unfortunately the media seems to prefer to promote bad rather than good news. However thay can help put pressure on politicians to change or adopt policies. We need to try and avoid damaging the economy when reporting stories.

 

Jenny Randerson AM, Liberal Democrat

 

said that many years ago successive Chancellor of the Exchequer recognised the power the media could exert by going into purdah before their Budget announcement. There was a strong argument that they had helped talk the price of houses down but in reality the levels of house prices were bound to collapse at some point.

 

Wayne David MP, Labour

 

Said that it was tempting to say the media was bound to focus on bad news stories and perhaps they then became a self fulfiling prophecy. However bad the media appeared to be though it was important to defend the freedom of speech and democracy.

 

David Davies MP, Conservative

 

Felt that we needed to accept there had been a huge inflated bubble in the property and equity markets which was bound to burst and that we would have ended up in the same position anyway. We can't blame the media for everything and politicians needed to accept their share of responsibility as well.

 

John Humphrey said that he believed it was dangerous to regard the media as cheerleaders for anybody except during wartime.

 

Nigel Hiller from Exeter asked "Barack Obama is in London on the 2 April for the G20 Summit. If the panel had the opportunity to spend five minutes with America's 44th President what would they say to him?"

 

John Walker, FSB Policy Chairman

 

Said that he would tell him that the UK would benefit from having a small business administration in the UK in the same way that they have in the USA.

 

Jenny Randerson AM, Liberal Democrat

 

Said that she would tell him to resist protectionism.

 

Wayne David MP, Labour

 

Agreed on protectionism but would also tell him to display confidence and self belief in what he is doing.

 

David Davies MP, Conservative

 

Said that he would tell him that he admired what he was doing and that he would have voted for him. He needs to stop pretending that there is a special relationship between our two countries. Finally he should talk to Iran and Syria to avoid more damaging wars in the Middle East.