The Economy

It is a pleasure to participate in this important debate. I hope that the usual channels will recognise the demand for and interest in it and perhaps provide more time in future. I begin with a challenge to the Labour party about the observations made in the report by the Office for Budget Responsibility. I very much welcome the existence of that body and its report. If the Opposition accept the figures in the report, they must also pay heed to its analysis. I believe they have accepted the numbers, but not the reality behind them. The OBR does not predict a recession here in Britain, according to page 15 of the report, but there is a caveat that has been stressed by Members of all parties about what is going to happen in the eurozone. It is hoped that the right decisions will be made to bring confidence back to that area. The report provides three reasons why the OBR has had to provide an updated position. The first is rising commodity and food prices, the second is that the scale of the boom and bust under the last Government had a greater impact on the economy than previously thought, and the third is that the euro crisis has increased instability and uncertainty, which has affected household and business spending. There is also uncertainty about the liquidity of Europe's banks, which a number of Members have mentioned. There is an irony there, because in 2008-09 it was Governments who were bailing out the banks, but today the banks are called upon to buy bonds and bail out Governments. However, many banks across Europe are unable to do that. They are desperately trying to repair their exposure to the debt, and bond issuance across Europe is actually dropping. In the past six months, just €17 billion was traded, compared with €120 billion in the same period in the previous year. Big decisions need to be taken about the role of the European Central Bank, eurobonds and so on if we are to create the stability that is required. I am grateful that our Government are in a different position from others, because they acted to keep the deficit down, cut the size of the public sector and help the private sector to grow through active enterprise policies and a reduction in corporation tax. They also took difficult decisions about universities and tuition fees, to ensure that we remain competitive in the long term. I turn briefly, in the very short time that I have, to the economic growth figures as measured by GDP. The shadow Chancellor is keen on suggesting that the economy is flatlining. He uses funny gestures to say so—I wish he would stop them, because he looks a little bit like a cross between a lazy cricket umpire and Mr Tickle. I do not believe he understands the difference between the economy flatlining and growth. It is like the difference between velocity and acceleration—if someone jumps out of a plane, they fall at 9.98 metres per second squared. That number does not change, but as anyone who has done it knows, they do accelerate. It is the same with economic growth. The economy is growing year on year, as long as the figure is above zero. Labour need to recognise that. If they accept the figures in the OBR report, they must also accept that the outlook is that we can expect to see growth of up to 3% by 2015. If the Opposition say the economy is flatlining, are they saying that China's economy is flatlining with a growth level of 10%? Of course it is not; it is growing year on year. My final point is about the national debt and the responsibility that the last Government ignored. That is the public sector net borrowing requirement—the difference between what we raise in tax receipts and what we spend on all the Government Departments. In Labour's last year in office, the Government put £513 billion into the pot but took £670 billion out, leading to a deficit of £157 billion. That was just one year. In 2002, the books balanced and there was not a problem, but the year after they borrowed £19 billion, and then it went up to £30 billion. Year after year, they accumulated a massive debt, which led us to the position that we are in at the moment. It was not until this Government came to power that we said, ““Stop. We cannot keep adding to this debt crisis.”” By the time the election took place, we were perilously close to losing our triple A rating, and we inherited the highest structural deficit of any major economy in the world. I am very pleased that we have got a grip on the economy now. Many quotations have been given in the debate, and I will give one final one, from Margaret Thatcher, who said that sooner or later, every Labour Government run out of UK taxpayers' money to spend. That is clearly what happened under the last Government.