Fiscal Responsibility Bill

The hon. Gentleman makes an excellent point. That is exactly right. We do not accept the argument that declaratory legislation in these circumstances is of value, or that the Bill adds something to the credibility of the UK's fiscal position, but if we were to be sympathetic to the Government and accept those points, we would discover a difficulty, because the Government have set themselves a target that does not get to the heart of the issue—the structural deficit. The point that the hon. Member for Southport made when he raised the bank bail-out issue might be regarded as a reductio ad absurdum argument, but it was helpful. If there is a crisis, the targets do not apply. That is the Chancellor's position. However, that does not quite answer the question, "What would happen if there was something not of the scale of the bank bail-out that we saw a couple of years ago, but a substantial slowing of the economy and, perhaps, a recession?" Clearly, the targets would become much harder to hit. Unemployment would go up and tax receipts would fall; and, if we look at borrowing as a percentage of GDP, we find that GDP falls so the percentage of borrowing would go up. The Opposition recognise the need for automatic stabilisers—our argument has never been about that—but I find it hard to see how anyone who has argued consistently, as the Government have, for a discretionary fiscal stimulus when the economy slows down, can support this Bill on reading it, because the targets are focused on public sector net borrowing, not on the structural or cyclically adjusted element. Of course, that argument works the other way, too. If the economy exceeds the Government's growth expectations—admittedly, that is fairly unlikely given that their expectations are somewhat greater than that of most independent forecasters—those targets may well be met either without imposing significant discipline at all or, certainly, by imposing much less than the Government have in mind. The focus must be not on public sector net borrowing, but on the structural element. I read the Chancellor's lengthy interview in the Financial Times at the weekend, and the full transcript was placed on the paper's website. There was an interesting section on whether the Chancellor had tried to remove the Prime Minister over the past few weeks, but the interview focused primarily on matters of fiscal responsibility. The Chancellor referred three times to getting the structural deficit down, but interestingly at no point in that lengthy interview did he refer to the Bill—suggesting that it is not exactly at the heart of his strategy to restore credibility to the public finances. Even the Chancellor does not appear to believe in it. The Bill is so discredited that he does not pray it in aid during a lengthy interview.