Pre-Budget Report

It is always a pleasure to follow the right hon. Member for Holborn and St. Pancras (Frank Dobson), if only because it reminds us how far the rest of us have moved on over the past couple of decades. I hope that he will forgive me if I do not return to fight the old battles, which he enjoys fighting even though he lost. I see no need to re-fight them, because we won. I have found that I can begin almost any speech on any subject, and I do, by reminding people of the slogan that Bill Clinton used to have above his desk to remind him of what was really important: "It's the economy, stupid." As we are focused on the economy today, we need another sign above our desks saying, "It's the deficit, stupid" and below that perhaps another one saying "It's public expenditure, stupid." Unless we focus on getting a grip of public expenditure and on eradicating the deficit more rapidly than the Government want, we will not get the economy of this country right. The supreme weakness of the pre-Budget report—some of us may have forgotten that we are supposed to be debating that today—is that it does not focus on those things. One has to get more than halfway through the overview at the front before there is even the coyest of mentions of the deficit:""The Pre-Budget report announces action to maintain the path of fiscal consolidation"." It goes on to say that the three measures that maintain the path of fiscal consolidation are all tax increases. That is how the Government see the priority of solving the deficit. The report refers to public expenditure only in the last sentence, when it mentions that the Government plan is to embed""in legislation through the Fiscal Responsibility Bill"" their measures to halve the deficit. The substitute for action, as far as the Government are concerned, is the deficit-reduction Bill. We debated that at length on Tuesday. I did not have a chance to participate then, so I hope I will be forgiven for saying now why I consider that Bill to be a mistake. First, it is obnoxious in principle to try to bind future Parliaments. That cannot be done in practice by passing a law, but time and again this Government try to bind future Parliaments by passing legislation that has a bearing on what future Governments must and must not do. Secondly, the Bill is a nonsense. It is not even legally enforceable. It is not even judiciable; it is one of those rare Bills that actually has a clause that effectively says that the courts may not take note of the law incorporated in it. It is imprudent, too, because it seeks to bind, albeit unenforceably, future Governments to follow a particular path when we cannot be sure what things will be like over the next four years—let alone the next eight or 10 years, as the Bill envisages. I think that we should probably pursue a fairly ambitious path, but it is foolish to try to lay down a law on what needs to be done in future. The Bill is also a displacement activity; it is a substitute for action because the Government want to avoid action and facing reality. What is most wrong with the Bill, however, is that it is a recipe for delay. St. Augustine said, "Make me chaste, O Lord, but not yet" and St. Alistair says, "Make me fiscally responsible, but not until 2011." At least St. Augustine saw himself ultimately becoming chaste, but the Chancellor and the Prime Minister are probably passing on the task of fiscal responsibility to their successors, rather than to themselves. I believe that it is better to act sooner than later, because there is a positive benefit in doing so. If we act sooner in taking steps to get the deficit under control, that will restore confidence; and with confidence, growth will come—and with growth, jobs will come, not least for our young people who are currently languishing on the dole queues at the very start of their careers. There is also danger in deferring action on the deficit in that every month we do so the risk increases of our having a sovereign debt crisis and a financial collapse. That would mean higher interest rates, which would not only make controlling the deficit less easy, but hit all those people with mortgages. One thing about this economic downturn is that at least there is a section of the community that is reasonably well off, and in some cases better off, because interest rates are low: the mortgage payers of this country. They face the greatest threat from this Government's refusal to tackle the deficit speedily and strongly, because it is their interest rates that will increase.