Fiscal Responsibility Bill

The hon. Gentleman refers to the Finance Ministers' meeting in Brussels at the beginning of December, which I most certainly attended, and the rules that pertain to countries in general. The Commission can make recommendations, but as we are not in the euro, we are not obliged to follow them. We have no plans to change our current policy on that issue. The measures that I have announced in the pre-Budget report and before are sensible and, at this stage and when there is still so much uncertainty as countries emerge from the global recession, it is sensible to reduce the deficit in a way that does not damage our economy. The recession has had a substantial impact on the public finances, here and in every country. With economies weakening, tax revenues have fallen. In this country, we have seen falls in corporation tax, especially from the financial services industry, but also in income tax. Higher unemployment inevitably and rightly means that more has to be spent supporting people and families. There has also been a cost to continuing to maintain and support the economy and stabilising the banking system. However, both sides of the House agree that stabilising the banking system was necessary. It was not an optional extra, because it would have been calamitous not to have done so. But there is a difference in our policies on support for the economy. Had we not maintained spending to support the economy, the pain and cost of the recession would have been far greater. I do not accept the argument of those who claim that we should have started to cut back on expenditure two years ago. That would have been extremely damaging to the economy and would have made it even more difficult for people. As we emerge from this global downturn, we need to cut our borrowing, as other countries are doing. To try to meet the fiscal rules put in place for the previous economic cycle would be perverse. Not to allow borrowing and the deficit to rise to help people and businesses would have meant greater pain and more job losses, as we saw in the recessions of the 1980s and 1990s, and would have meant increased costs in both human and economic terms.