The Economy

I begin by welcoming the Chancellor to one of the debates that we have been having in the House of Commons on the economy, even if he chose to speak for only about half an hour on it. As always with the right hon. Gentleman, the most interesting parts of his speech were the bits that he left out. I notice that he did not repeat his pre-Budget prediction that the British economy would start growing in 12 weeks. I notice that he did not repeat his prediction that the Budget deficit would be a mere 8 per cent. of national income this year, because he knows that it will be higher. I see that he did not even try to mount a credible defence of the VAT cut, which cost £12 billion—he mentioned it in passing. Perhaps that is because Labour MPs are queuing up to say that it should be scrapped. I could not help noticing that there was no reference to the grand global bargain, even though the Prime Minister is supposed to sign that in a couple of days. A whole Government White Paper was produced by the Treasury on the grand global bargain, yet it does not even make it into the speech from the Chancellor of the Exchequer two days before it is supposed to be signed at the G20. Were it not for my hon. Friends' interventions, the Chancellor's speech would not have mentioned the Prime Minister's ambitions for a second fiscal stimulus or the fact that the Governor of the Bank of England has put the kibosh on that. Listening to the Chancellor, one would never know that the Government's entire economic argument that they have advanced against their opponents had collapsed in that defining moment when Mervyn King said that the country could not afford to borrow more for a second fiscal stimulus. We heard the rehearsed lines on my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke). Let me say this about the former Chancellor and inheritance. He left this country with a golden economic legacy, whereas the present Chancellor will leave the worst inheritance any Government have left since the second world war. The right hon. Gentleman had a dig at me and at my right hon. and learned Friend. I read the interview with the Secretary of State for Children, Schools and Families in which he openly pitched for the Chancellor's job, and I hear all the briefings from Downing street that the Chancellor is to be moved in the next couple of months. Frankly, by the time of the next election I am a bit more likely to be in my job than the Chancellor is to be in his. The Chancellor did talk about the G20. I shall come to considerable areas of disagreement, but there is some common ground on the G20. We welcome the fact that the summit is happening and that it is to take place here in London. We hold out real hope that substantial achievements can be made, provided that the Prime Minister resists the temptation that he always has—to fight his domestic battles and look for political dividing lines. Skilfully chaired, the meeting on Thursday could achieve a real breakthrough on free trade, for example. By "breakthrough", I do not mean warm words in the communiqué about how we will resist protectionism and not turn inwards; we had exactly those words in the communiqué signed in Washington at the last G20. Since then, as the Chancellor well knows, 17 of the 20 leaders who attended the conference have increased protectionism, 47 new protectionist measures have been introduced, the Indians have increased agricultural tariffs, the US Congress has passed "buy American" clauses, the French Government have boasted about the jobs that France is taking from eastern Europe and our own ludicrous Prime Minister has gone around repeating the slogan about British jobs for British workers, even though not a single member of his Government will repeat it alongside him. Meanwhile, world trade is contracting for the first time in 30 years and the engine of global growth, on which we have come to depend, is spluttering to a halt. Completing the Doha round this spring would send not only a massive boost to the world economy, but a massive message to the world of confidence in our future. The G20 also looks likely to agree a substantial increase in resources for the International Monetary Fund. We welcome that, although I am disappointed that the Chancellor does not think that IMF reform should be on the agenda; I would have thought that, with China, India and Brazil attending the G20, this is a moment when we could get some real reform.