Pre-Budget Report

This opportunity to debate the pre-Budget report is an excellent innovation. It should have produced an interesting debate—indeed, a compelling one—on the state of the economy, but all that it has produced is a lot of sterile platitudes about the interests of finance, which caused the recession in the first place, through risk-taking and excessive lending, as against the concerns that we on the Labour Benches have been trying to express about jobs, employment, production and the real economy of this country. Nowhere was that contrast more typified than in the speech by the hon. Member for West Suffolk (Mr. Spring), who has just sat down. What he was saying, essentially, is that the problem is confidence. How do we get confidence? Only by returning a Conservative Government. How do we return a Conservative Government? By creating such a state of fear, alarm, panic, depression, horror and misery about this country's economic prospects that we just have to have one. That is a political strategy of knocking Britain and knocking our financial future. Frankly, it is damaging to the economy and to the jobs and the real people out there, and it is unworthy of the Opposition. What we should be debating is how to keep the economy going at a high level in the face of a recession that has been produced by the irresponsibility of the financial sector. This pre-Budget report is a difficult one, because it is difficult to predict the future, as the right hon. Member for Hitchin and Harpenden (Mr. Lilley) said. Indeed, we cannot predict the future—he went on to predict it in the gloomiest possible terms, but his essential point was that we cannot predict it. We are probably out of the recession now, in the technical sense of several quarters of negative growth, but its effects will linger on, in more closures, more unemployment and more economic difficulties. That is what we must combat. We cannot know now how long we will have to do that; therefore, it is difficult to make firm assumptions about the economic future in the pre-Budget report. The other problem with the pre-Budget report is that, because the Government feel obliged to look at the prospects for debt repayment and cutting the deficit, it predicts action in those areas. That has the result of moving the debate on to Conservative ground and the ground of a financial sector concerned with deficits and borrowing. However, in a recession, deficits and borrowing are not the problem; they are the solution. They are the only way of keeping the economy going at an effective level. In opposing deficits and borrowing, as they have done consistently for the past year, the Tories are preaching a system of economics that is not pre-Keynesian, but pre-Cro-Magnon. In my view—it is a personal view, but it is echoed by several Members who have spoken, or are yet to speak, on the Government Benches—the big problem in the economy is this. Although we have provided it with a stimulus, which has undoubtedly saved about 500,000 jobs—if we had not given the economy that stimulus, unemployment would now be at Tory levels, which they achieved twice in their period of government—that is not enough. The stimulus has to continue—indeed, we need a bigger stimulus—because that is the only way that we will get back to growth. The only way to deal with deficits and borrowing is through economic growth. With economic growth, those problems fade away. Let us look at the amount of debt that the incoming Labour Government paid off in the first three years of their existence, in a very powerful performance. That happened because of growth. With growth now, we can achieve the same results. That is why we must stimulate the economy, to get back to the level of growth that will pay off those debts as quickly as possible. That is the crucial issue: not moaning about debt and creating imaginary threats to our credit rating to frighten the City into supporting the Conservative party financially, which is essentially what the Opposition have done, but getting back to growth as soon as possible. In the light of that, it is disappointing that the pre-Budget report does not envisage a stronger building performance, or a bigger spend on housing. The big expansion in housing was the main means of recovering the economy in the 1930s, before we moved on to the stimulus from rearmament. The housing drive in this country built many houses. I am sorry to say that this Government's performance on housing has been pathetic. The house-building rate is lower than it was in the 1950s; it is back at the 1920s level.