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To make matters easier, in default of the civil servants doing any work on the framework for introducing feed-in tariffs, I have produced a document myself, which sets out exactly the sort of tariffs that would make viable the
introduction of feed-in tariffs on photovoltaics, biodigesters, solar thermal—the whole range of renewable technologies that we could and should be supporting. It will require someone to drive that through, and that, for me, is what is missing from the Budget: the willingness to drive aspirations into deliverable and measurable policy changes within a defined timetable. If we are to do that, it would be a great advantage to recognise the points that were recently made about where our current business-as-usual case would take us in UK energy accounts. The business-as-usual case will take us into a huge deficit in the balance of payments for the consumption of energy by 2020. That is on the conventional plan.
However, a fascinating report came out this week from Delta Energy and Environment which points out that a dramatic shift into UK renewables would not only see us delivering more than 15 per cent. of our energy requirements from renewables by 2020, but more importantly would see us with a £12.5 billion surplus on our energy account—primarily because the jobs and services would be delivered for ourselves, rather than our being dependent on external suppliers for our energy security. That is the direction in which we must drive our efforts.
The same applies to our existing housing. The reality of environmental transformation is not to be found in how many eco-homes we start to build after 2016. It is what we do with the 25 million properties that people live in today. If we want a jobs agenda that makes consistent sense with the environmental and training and skills agendas, we need something that will radically transform the quality of life of people in this country’s 25 million housing properties.
That is why I began my speech with a reference to Churchill’s wartime Budget statement. I suspect that, for the remainder of my lifetime, we will have to address crisis—mobilisation-style—Budgets to take us through one crisis after another. I say that not to scare people but simply to point out that the situation requires us to step up to the plate—to be big enough to govern our way through that transformation and those crises. It will require us to mobilise people in a way that we have not been used to doing for 20 years or more.
My pitch to the Prime Minister and to the House is that Gordon needs a carbon army. That carbon army should comprise many of the 2.1 million people who are out of work and hungry for meaningful, secure, long-term and transformational jobs. If we could harness the desire for work to structured plans for transformation, we would have a Budget that was the saving, not so much of this Government but of this society for future generations. We require Budgets that live more lightly and sustainably on the planet. Sadly, today’s Budget is several steps away from that. I urge Ministers to think again and find the courage to step in and act in transformational terms to save the ecological future of our society and our country. It is infinitely more important and urgent than the situation in which they found the courage to intervene to save a banking system that, some would argue, would have been better left to collapse.
We can survive in this society if we rebuild banks on the basis of securing people’s savings, not of guaranteeing speculative debts. We cannot survive as a society if we squander the ecological capital that our children and grandchildren will need to draw on if they are to survive and prosper.
6.2 pm
Mr. Ian Taylor (Esher and Walton) (Con): I, first, declare my entry in the Register of Members’ Interests—in case anyone thinks that my interests benefit from this Budget.
Our level of debt before the recession was so high that, now, we are less able than we would otherwise wish to react to the problems that we face. The current Prime Minister must regret the profligacy of the former Chancellor—the sadness, of course, being that they are the same person. In his new role, he suffers from the problem that we spent too easily money that we did not have. It is not just the banks that got us into trouble, but the Government’s expenditure, which was not related to the true state of even a successful economy. It means that, now, we probably have the fastest rising Government debt as a proportion of GDP of any advanced nation in the G20. The debt, which this country will continue to face over the next decade, will take an age to pay off. No wonder this document before me used to be called the Red Book.
Mr. Evans: The in-the-red book.
Mr. Taylor: It was in the red; now it is white. It pretty much says, “We’re putting up the white flag.” We are in a desperate state, and the Government need to admit that they have to take the blame. Having said that, I must say that, although we are in such a bad state to start with, some of the Government’s actions during the recession have been sensible. One thing that I give the Prime Minister credit for is his recognition that this is a global problem—although he got it the wrong way around: he said that he was here to save the world; actually, the world is here to save us. What I mean by that is that the globalised impact that has affected all the advanced countries of the world—and caused collateral damage, of course, in the less developed world—has shown that we cannot adjust an economy only by taking measures internally. We learned that during the banking crisis. I do not think that the American Government entirely understood what they were doing in allowing Lehman Brothers to collapse. They did not understand that the certificates securitised on the back of the mortgage industry not only involved Lehman Brothers in New York, but were spread—we still do not know how widely—around the world. Everybody in the world was therefore suddenly affected by the American Government’s decision.
In a different context, we have understood that it is no good having a currency that falls in value if there is nobody to buy our exports, which would normally have benefited from the situation. In a different context again, the German Government suddenly understood that although they had felt that their domestic economy was doing well, they forgot that their whole economy depended on their tremendous historic success in the export markets; other countries needed to reflate if the German economy was to survive.
The Government got it right in another way. In a recession, there is a temptation—an obligation, almost—on the private sector to save, or reduce its borrowing. If that is the case, it is essential that the Government do the opposite; otherwise, the recession will be deeper and longer. The Government stimulus was the right move. The criticism might be that they did not handle their
VAT reduction well. The timing was not good because all the Christmas sales were on at the same time, and it was difficult to get a 2.5 per cent. reduction on VAT of 17.5 per cent. across to the public at that stage. However, I suspect that the cut has now begun to stimulate the economy, as certain independent bodies have begun to say. That is a belated bonus.
The overall stimulus package was right, however. I disagree with what I think the hon. Member for Nottingham, South (Alan Simpson) was saying. Of course it was essential to protect the banking sector, because without it there would not have been ecological activities at any level—let alone the levels that he would like. How we protect the banking sector is a detailed matter, which Select Committees can investigate for weeks on end, but what I am saying is that the Government were right to introduce the stimulus package. That stimulus has been allied to the stimuli that have taken place in other countries. In the end, the stimulus in Germany turned out to represent a bigger percentage of GDP than our own. The American stimulus is an extremely important event. There are criticisms that it has gone too far, and Congress has ample ability to add in a few pork barrel opportunities, which will probably distort the package. Nevertheless, the overall thrust is right.
The collective effort of the world has been such that I think that we can now see the beginnings of the end of the worst of the recession—although sadly, as always, the bad news is still to come out. Unemployment in this country will rise towards 3 million because of the economy today, even though the country may see a turn in its overall economic prospects. Those prospects have changed because there has been collective action around the world, although it has been difficult. As long as the measures agreed are applied in practice, the G20, which is actually the “G28” in this sense, was rather effective.
There is a lesson to which we should pay attention in this country. It is that we are one member of the “G28”, but things are beginning to change in the world. Washington and Beijing regard the real determinants of how the global economy rebuilds as being down to the “G2”—China and America regard themselves as being the two that determine how it goes. Why is there not a G3? Because the European Union has not been as effective as it needs to be. It will not surprise some of my hon. Friends if I say that it is in the British national interest that the European Union is more effective, because by ourselves, however much we try, we will not make our voice heard within the G28 at the level at which we have traditionally thought that it would be heard. Our influence therefore has to be exerted through a collective role for the European Union in what would then genuinely become a G3 rather than just a G2.
With all that is happening, we have seen that the world economy has a chance of recovering. I would like to share some of the thoughts expressed by my right hon. Friend the Member for Haltemprice and Howden (David Davis) in what was an extremely good and quasi-philosophical speech. We have to accept that just hoping for recovery will not be sufficient, and that it is about time that we started to think about what sort of economy we really want. It must be open and global, yes—for the reasons I have stated, it is almost impossible for it not to be so. Certainly, the old capitalism based on
the individual and—to employ a word used by the hon. Member for Nottingham, South—avarice will not do. The public will not buy it: they want something more.
We have to be slightly humble in this country and try to work out what others have tried to formulate in different ways—a concept of social democracy and Christian democracy rolled together, where the reason for prosperity is that it means we can help each other and help people who are vulnerable. If that is the purpose of growth, profit and expansion, they are worth having and worth striving for. We want to rebuild the financial community, we want London to regain its status as a financial global centre, we want to build up business again to be profitable, and we want the banking community to start lending. That is not because we want to give people back their bonuses or give them the opportunity to make money and have bigger cars, but because it is the only way that we can have enough wealth to share with other people. That vision makes it absolutely crucial that we start to rebuild now. If we can provide that moral leadership, we can begin to influence not only people in this country but those in a wider sphere. That has been lacking in the debate so far. We have been agonising about this or that isolated issue, such as whether the automobile industry is going to recover. All those things are important, but they provide no context as to what we are trying to do.
I hope that the Government and my own party will try to put our current circumstances into context. There is a desperate hope that the Government have got their growth forecast figures right. For goodness’ sake, if they had made those forecasts as a public company, they would have been de-listed from the stock exchange and banned from ever being a director again. Somehow, we can get away with such forecasts in politics, but people cannot get away with it in business. We have to hope that growth returns, but if the public are to go through the pain of the almost inevitable increases in taxation as well as the impact of restraint in public expenditure over the next few years, they have to know what it is all for—why we are trying to rebuild this society and this economy, what we are trying to do as part of a structure, and why we are trying to help people who are most vulnerable. It is because without doing that, we will have instability in society.
Another vision is very important; it is, in a sense, a parallel vision to that of the hon. Member for Nottingham, South, but more general. It is about the importance of creating a society that is capable of solving some of the problems that we as individuals face, which means meeting the need to spend more money on science, research and innovation. That is partly because there is a competitive world economy, and if we do not do it in this country, other countries are doing it. President Obama has put an enormous amount of money into science and research in the US. His stimulus budget is about $22 billion. But what is required is not just sums of money but a vision. In the great depression, Roosevelt had that vision and launched a crusade to try to change the infrastructure, science and ecological environment of the south of the United States, with tremendously positive results, and galvanised people in the process. We have lost that in this country.
Today’s Budget picked off a few things that were honourable, admirable or whatever we want to call them, but they did not cohere. There was not the drive for ecological change for which the hon. Gentleman and I share a desire, with different emphases. There was no understanding that this is an opportunity to consider unleashing medical science to solve some of the big medical problems. The Cooksey report gives us guidelines as to how we might go about that. We could try to unlock some of the scientific problems that will determine the quality of life in this country.
In my own report to my party’s Front Benchers, I have proposed an innovative projects agency, which would start with £1 billion. It has some similarity with what the Government have started today, but it would be intended to take ideas beyond the point of discovery. We have huge admiration for our scientists who come up with brilliant ideas from basic research, but we are less good at pulling those ideas through into practical application. We cannot expect the private sector to do that by itself. There has to be collaboration in that grey area between discovery and proper application. The Government should be doing those things, and they should engage the public more in why they are being done. It is not about picking winners; it is about stimulating opportunities for the economy, which can then provide benefits for other people. I could go through a list of areas in which I would like that to take place. Last night I became the chairman of the all-party parliamentary and scientific committee, and I hope to make many more speeches in the House on these matters, so I shall not get down to specifics now.
At a time of real depression, when there has been a Budget that contained extremely depressing figures, we need an uplift. The Minister of State, Department for Environment, Food and Rural Affairs, is smiling, and that by itself is an uplift for me, but I think that the public will probably be a bit more demanding. They want not just some context to the pain that they are going through now—believe you me, even in my constituency in Surrey there are plenty of people in pain—but to know why they will have to bear the pain in the future. What are we really trying to do? What can we do to make society cohere so that it comes out of this stronger? Then they will understand why they might have to pay a top rate of tax of 50p in the pound. People are more generous-spirited if they know why something is being done. I did not get that from today’s Budget, and I wish that I had, because it is in the national interest that we should.
6.18 pm
Mr. Frank Field (Birkenhead) (Lab):
I shall speak very briefly, because others wish to get in. I shall focus on two aspects of the Budget. On the first part of the speech, Members on the Labour Benches were thrilled when the Chancellor said that even in times of extreme difficulties, we had different priorities from others and would ensure that the Budget was shaped in such a way as to protect the poorest. We are never happier than when the Government are ensuring that there is a wide, red sea between us and the other side. There was slight disappointment among many of us, if I put it gently, when the Chancellor did not go on to say what he was going to do about the 10p losers. I am sure that the Treasury Front-Bench team will not be too dispirited to know that some of us will return to that issue, to ensure
that that red sea is even wider than the Government envisaged in the Budget statement. However, all credit to the Government for saying that the worse the crisis, the more focused we must be on the poorest.
My second point is on a similar theme: no crisis, however horrible, should make us waste radical purposes. I have listened to Budget debates in the House for 30 years, yet I have never before felt the excitement, if that is the right word, that I experienced just before 1 o’clock, when the Chancellor announced the public borrowing for this year and next year—£175 billion this year and £173 billion next year. At that very moment, the country’s economic future, and much more besides, was cast on the waters of the money markets. If the Government are not successful in raising the record sums of money, we will clearly be in great difficulties. Hon. Members know—thank goodness, the figures have become common currency—that we are attempting proportionately to borrow more than any of our fellow G8 members. The times are therefore difficult for the Government and the country. Even in the early stages of trying to raise the debt, there has been some stickiness—I put it no more strongly—in the gilts market, where the Government have not always got their way in raising the money on the weekly basis that is required.
The Budget contains a table—C7—which gives urgency to my comments. The Chancellor was, thank goodness, as optimistic as ever about recovery, despite the fact that, compared with the time of the pre-Budget report, when we thought that unemployment would be about 1.4 million at the end of next year, he now believes that there will be 1 million more unemployed—approximately 2.5 million. According to the International Labour Organisation’s definition, the figure could be above 3 million. Not only constituents in Surrey feel the pain, but Members of Parliament will feel the pain of going into an election, if it is held in April or May next year, with unemployment at that level.
The Chancellor suggests in table C7 that, even after a considerable period of recovery, we will not get revenue to support expenditure—we will not get revenue to reach 38 per cent. of GDP—by 2013-14. Yet all of us are on the drug of wanting Governments to spend 45 or 50 per cent. of GDP. I am worried about how the Government will raise the funds, given that a Government who wished to squeeze the rich “until the pips squeak”, as Mr. Healey once said, did not get revenue above 37 per cent. of GDP. Much more than what the Budget outlined today is required.
We must not only think of effective ways in which to raise revenue, but think in a way in which we have never previously thought about how we cut—I use the word “cut”— public expenditure. It is not that I am not radical, but in those circumstances we might find ourselves being even more radical than we have been in the past.
I offer an illustration of that. I have lobbied the Government to adopt a pension reform that, in a sense, leads to a loss of interest in the huge ramifications with which we concern ourselves, and goes for a single objective of trying to guarantee a pension that, over time, lifts everybody out of poverty. It will obviously take time. It is about building an investment fund around the pay-as-you-go state scheme. At the moment, the Government are rejecting that reform and are committing us to a
programme that will add 5.5p to the standard rate of tax, spending more on their pensions reform, yet that will leave 40 per cent. of pensioners poor.
In this situation, radicals will say, “Surely we can begin to spend that money much more effectively,” which would mean something like the proposals that a number of us have put forward. That would not only secure the huge gain of committing the Government for the first time ever to ending pensioner poverty in times when we are cutting public expenditure, but for the first time ever open the debate in a civilised way about how we disengage from public sector pensions, including our own pension. We could safely say that we were closing all schemes to new members, because we would have in place a guarantee that nobody who is a citizen and does their bit will end up poor. We would then begin not only to save public expenditure on the Government’s pension proposals, but build big savings into our national accounts over time from the closure of all public sector schemes, including our own.
That would also begin to give us the vision that was talked about by the hon. Member for Esher and Walton (Mr. Taylor), whom I am pleased to follow. We need some sort of vision to engage, as my hon. Friend the Member for Nottingham, South (Alan Simpson) said, in a way that galvanises the population. As we try to get our expenditure down to what taxpayers are prepared to pay, we clearly need some vision of what the new state is going to be like, because it will have to do things differently.
I thank the Government for suggesting that our side is going to have as our priority protecting the poorest. We are going to put even more wind in their sails. I hope that we will do justice to the 10p losers before the Finance Bill is through, as we said we would. There are 3.8 million of them out there still waiting for us to deliver on that pledge, and that is quite a lot of constituents and voters.
In a sense, one’s whole empathy is with the Government, as they now try to grapple with what will be, for the rest of my lifetime, the central domestic political issue: how we begin to get the revenue that we can raise in taxes towards the level of what we can afford to spend. That will bring about a change in politics, which will not be just old-fashioned cuts politics and all the rest, but will open enormous opportunities for radical politics. I hope to be around for a few years yet to participate in that.
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