Fiscal Responsibility Bill

I do not want to go over the history of the Royal Bank of Scotland, but I do not believe that the hon. Gentleman's suggestion is right; we are not making the mistakes that RBS made, but have taken the action that was necessary to ensure financial stability in the UK economy and to help protect jobs, consumers and savers. I believe that this was fundamentally the right thing to do. On the speed of consolidation, it is a difficult assessment to make and there is a clear difference of political opinion between us. Our judgment, as the Chancellor made clear, is that taking steps to reduce the deficit while securing group growth—that is what the clause requires—is the right approach to take. In turn, growth will make it easier to lower the deficit and pay back debt, which is also required by the clause. Our judgment is that tightening fiscal policy too quickly in 2010-11 would present risks, and it is not just the Government who think that. The Governor of the Bank of England has said:""It is certainly true that if you eliminate the debt too aggressively, it will have an adverse consequence."" The managing director of the IMF agrees, in saying:""Unwinding the stimulus too soon runs a real risk of derailing the recovery, with potentially significant implications for growth and employment."" Our judgment is, as I said, that acting too quickly in 2010-11 would present risks to the economy, but the economy will be in a better place to support a more rapid tightening in 2011-12.