Budget Resolutions and Economic Situation

I will not, if the hon. Gentleman will forgive me. The Prime Minister is not just responsible for the massive public debt; he also bears a considerable burden of responsibility for the unsustainable increase in personal and corporate debt over the past decade. He encouraged the actions of those who were misled into borrowing more than they should. Given all that, I can well understand why the Chancellor backed off giving us a Jenkins-style Budget. In 1970, Roy Jenkins did tell the truth and tightened policy, but he lost the election. In his case, of course, at least he was doing that at a time when he did not simultaneously have to confirm that his Prime Minister was a broken reed. Of course, the boom and bust rhetoric has been abandoned. So, incidentally, has the word "stability". It was mentioned on average 11 times in every Budget speech that the Prime Minister made when he was Chancellor. In the past two Budget speeches—I listened carefully to this one—I did not hear the word mentioned once. Stability is out. Perhaps it was in there somewhere, but if so it passed me by. I have already said a few words about the Prime Minister's first two contributions to Britain's current dire economic predicament, the spending binge and the rhetoric of boom and bust. The Chancellor, who is a hapless man in some ways, has found his Department responsible for covering the Prime Minister's tracks for a third blunder that he made when he was Chancellor—the tearing up of the system of banking supervision that was in place in 1997 and its replacement with a new system, the tripartite arrangement, which failed its first test. Worse still, only a few weeks ago the Chancellor found himself having to try to justify the Prime Minister's imposition of another piece of rhetorical nonsense legislation, the so-called Fiscal Responsibility Act. In fact, it is worse than nonsense, as it would require the fiscal stabilisers to be set aside in the event of a double-dip recession. Tucked away in the fine print of the Red Book—I have been sitting here all afternoon, so I have had a chance to glance at it—is an attempt to reconstruct what looks like the code for fiscal stability, the same code that lies in a heap of rubble alongside the golden rule and the sustainable investment rule. Interestingly enough, it is relegated to a footnote on page 31, whereas in the old days there used to be a glossy publication accompanying the Red Book. That is a measure of the Government's loss of confidence in their own ability to make the case for stability. The second great task for any Budget to accomplish is to contribute to a programme for long-term prosperity—a growth agenda. I never believed that new Labour's economic strategy for growth was coherent, even when I used to hear it when Labour was in opposition. It has often seemed to consist of a long list of micro-measures, frequently altered and usually requiring higher spending and tax. Many have brought with them a higher regulatory burden, as the Institute of Directors has pointed out, and many have led to complex tax changes that are more distortive than they have been effective. The Chancellor added to that today when he announced £2.5 billion of so-called investment for industry. The extra money comes out of a slight improvement, which the Chancellor also announced today, in overall public finances since the pre-Budget report, but whatever the merits of the measures it seems highly irresponsible to use that small amount of extra room to start spending more. Surely the logical thing must have been—should have been—to use it to start reducing the deficit. Each individual spending measure could have some merit, but it looks as if this Budget, in any case, has just given us more of the same: meddling in the economy with taxpayers' money. The counterpart to the accumulation of all those tax rises in recent years, huge as they have been, is the increase in public spending, along with borrowing. The dramatic rises in spending have almost certainly reshaped the British economy—in my view, for the worse. Some measures may have been right, but cumulatively, when the dust has settled, it will be clear that they have reduced, not increased, the UK's long-run growth rate. Perniciously, much of that spending has been described as investment—an abuse of language. I very much hope that in the next few weeks, when we have, I hope, a new Government, we will get back to calling the salaries of teachers and doctors, for example, expenditure rather than investment. Honest language is a necessary counterpart to honest finance from the Treasury, as are honest statistics and forecasts, which I hope will come with the creation of an office for budget responsibility. I can well understand that setting out how to dismantle the Prime Minister's public expenditure empire has been too much for the Chancellor, and it has for another reason. Much of the spending has created its own interest groups. One has only to look, for example, at the growth of the quango state. Quangos are everywhere, and many have become state-funded lobby groups. They pervade British life and are powerful pressure groups, impeding any reductions in spending. They may be a way of buying votes and maintaining political support, but such spending does not amount to a strategy for public expenditure or growth in the long run.""New Labour was a strategy for winning power…not for dealing with Britain's fundamental problems, such as our inability to pay our way in the world, the pools of poverty and deprivation, and the widening social gaps… these were Labour's lucky years, with steady growth, a balance of payments cushioned by oil, the City pouring out money, the majority kept happy by rising house prices and living standards improved by accumulating debt. This ""fool's paradise conned New Labour into thinking that its policies…were working, when in fact all was bubble-blowing."" Those are not my words but those of the hon. Member for Great Grimsby (Mr. Mitchell), and you will find them, Mr. Deputy Speaker, on page 41 of The House Magazine. Nor has Labour delivered a strategy for success in its own terms—helping the poor and vulnerable in society. That should always be, and has always been, a central task for any responsible Government, and to be frank the record is very mixed. The right hon. Member for Birkenhead (Mr. Field) said that there has been a""steady increase in the numbers dependent on meanstested assistance… an increase in the number of families pushed onto meanstested assistance... and… more and more people are eligible for one form or another of meanstested relief." He said:""The tax burden of families"—" has risen—""faster than for other groups,"" and he concluded:""These failures cannot be explained away entirely by the collapse of the…Labour Government's economic strategy."" The interesting thing about those remarks is that the right hon. Gentleman did not write them a few weeks ago; he wrote those words in 1979 in a book entitled, "What Went Wrong", after Labour's last disastrous spell in office. History, of course, does not exactly repeat itself. Not all the poverty figures have deteriorated exactly as they did last time, and nor, as a matter of fact, are the industrial action on our streets today and Labour's vulnerability to the power of the unions owing to the extent to which it is dependent on them for funding, as serious as that was a quarter of a century ago. The similarities, however, are at least as strong as the contrasts. A misunderstanding about what creates and sustains growth, and complacency about growth and how to maintain it, have always been hallmarks of Labour Governments, including this one. Today, the Chancellor announced his forecast for growth, above trend—3 to 3.5 per cent. for 2011. It might happen, but it is well above the average of independent forecasts. I hope that it happens, but I cannot help feeling uneasy about relying on it, as he has. I cannot help sensing that those optimistic numbers have more to do with showing a plausible forecast for the reduction in the deficit than with confidence in the economy's resilience. Seven years ago, in a major publication on economic policy published by the Treasury, the Prime Minister wrote:""in 1997, as in 1944"—" he does not do things by half measures, does our Prime Minister—""a new paradigm"" was required with""far more effective mechanisms for crisis prevention"" and""far greater attention to financial stability"." The introduction of the same book reads:""No doubt in the years to come, as the UK economy experiences various shocks, it will be possible to assess the strengths and weaknesses of the new system"—" the one that he had just announced and was putting in place. Those years have come and gone. The weaknesses of Labour economic strategy have been brutally exposed and much damage has been done. We now need another Government, and a fresh team, to repair the damage.