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A woman rang the BBC and said she heard there was a hurricane on the way, well, if youre watching, dont worry, there isnt.
There was a hurricane then, and there is an economic hurricane now. The Prime Minister completely failed to foresee it. In his final Budget speech, in 2007, he said that borrowing in 2009 would be £30 billion. Instead, as we know, it is £175 billion. That is how accurate his last two-year forecast was.
My fear is that the Chancellor has retro-fitted his entire Budget assumptions. He has decided what level of debt he would like in 2011 and then calculated the growth rate necessary to achieve it. Does that growth rate include quantitative easing, to try to inflate it further? We have to hope the figures are more reliable than that. Whether or not that is included, we must hope that those predictions come true, but the omens are not auspicious. The Budget forecasts look like the sort of predictions that politicians make when they do not expect to be in office when the day for which they are forecasting arrives.
Mr. Hammond: I suspect that I know where the hon. Gentleman is heading, but has he not made the case for some form of independent statutory provision of such forecasts as a backdrop to the Budget? Any Chancellor should make forecasts in response to the real situation that the country faces rather than the fantasy situation that he wishes to paint.
Mr. Browne: I am all in favour of reliable official data, which are the backdrop against which we have to make all our calculations. My fear about the Conservative policy, as I understand it, is that a Government are elected to deliver their policies. Advisers advise, Ministers decide, as a former Conservative Minister once said. I would not want to see an elected Chancellor hamstrung by officials. The hon. Gentleman may say that that is not a potential consequence of his policy, and I hope that it would not be, but if an elected politician were not able to do what he or she saw fit, even with the assent of the House, because of obstacles put in their way by a quango, that would cause me concern.
Mr. Hammond: Let me reassure the hon. Gentleman that the only obstacle in the way of the Chancellor of the day would be that he would have to make his Budget against the backdrop of an objective set of fiscal projections, not a fantasy set of fiscal projections. If the hon. Gentleman regards that as being hamstrung, I do not share his view.
Mr. Browne: I have no doubt that the people in the Treasury feel that they are carrying out their work with a degree of objectivity. Perhaps one persons objectivity is not another persons, but the hon. Gentleman has made his point. The proposal sounds to me like the sort of policy that it is more typical of Opposition parties than of governing parties to devise, but it is not necessarily the worse for that.
Mr. Graham Stuart: I am grateful to the hon. Gentleman, who is being most generous in giving way. I would point to the Congressional Budget Office in the United States, which reports to Congress and provides objective information. In no way does it get in the way of elected politicians, but it does mean that they have to deal with real figures and not be tempted into manipulating them when they find themselves in the type of predicament that the Prime Minister is in now.
Mr. Browne: Absolutely. Let us not get too hung up on this issue, but I take the hon. Gentlemans point. There are potential benefits and lessons that we could learn, although all political systems are different. The Treasury Secretary is not an elected politician in the United Statesindeed, nobody in the United States Cabinet is, apart from the President and the Vice-Presidentbut I understand the hon. Gentlemans point.
The point that I was making before those interventions was that the Government have presided over extraordinary levels of debt, which we will be paying back until 2032, by the most reliable estimates. Many peoplethe mood in the country appears to suggest thisthink that the Government have run out of steam and served their time in office. The question then arises whether any other political parties have solutions and policies superior to those being put forward by the Government. I know that the Conservatives revel in our national misery and are running around celebrating their election win already, without anyone having yet cast a vote, but let us see whether their record justifies their confidence.
It believed its own demented propaganda about ending boom and bust.
He is exactly right: Labour did believe that demented propaganda. However, the Conservatives believe the same demented propaganda. Talking about the Iraq war vote, it is only now that they turn round and say, We were so convinced by the sincerity of Tony Blair. We feel very upset that hes let us down. After all, why else would the right hon. Member for Witney (Mr. Cameron), the hon. Member for Tatton (Mr. Osborne) and others have as their central policyuntil it collapsed in the past few monthsthat the Conservative party would share the proceeds of growth?
The only way we could share the proceeds of growth indefinitely is by believing that there would be a continual boom and no prospect of bust. If the Conservatives thought that there would be an economic cycle of boom and bust, they would have to say that they would share the proceeds of negative growth, and I have never heard a Conservative spokesman once mention that. What the Conservatives said was predicated on the assumption that growth would be permanent. In the debate on the Finance Bill exactly a year ago, I warned the Conservatives of the folly of matching Labours spending commitments. I said that simply, clearly and in black and white. I was ignored on that occasion, and told that it was an article of faith for the Conservatives to stick to the Labour partys spending commitments, but then, a few months ago, they came up with exactly the opposite policy, having heeded my warning.
Mr. Browne: The Scottish Nationalist Member tells me to keep it short when coming up with ways to try to balance the Budget. I am afraid that that will not do. It is all very saying that, but one day the taps will have to be turned down a little bit in Scotland. We cannot go on spending so far above our means. When the hon. Gentleman says, Keep it short, he is showing a complete lack [ Interruption. ] Perhaps I need to go through this again: we are borrowing £480 million every day, so just a few little [ Interruption. ] A Conservative-SNP coalition thinks that everything can be done by saving a bit of money on spin doctors, but I am afraid that the problem is much more serious and grown up than that.
Stewart Hosie: When I said, Keep it short, I meant the hon. Gentlemans speech. I look forward to hearing the explanation, and, yes, I know how much the debt is, but is he now committing his colleagues in the Scottish Parliament to voting for Labours spending cuts or is he prepared to continue to support his Front Benchers here, who believe that we need a fiscal stimulus and that we should not make cuts in the teeth of a recession?
I am not telling my colleagues in the Scottish Parliament anything. We have a system of devolution, which I thought the hon. Gentleman was in favour of, as far as it went, and they have to make their own decisions. The facts of the matter are that, on the
Governments optimistic assumptions, we are borrowing almost £500 million every single day. It is not good enough for either the SNP or the Conservative party to come up with a few little, piecemeal measuresthe scale of the problem is far more substantial. The reason the Labour party was able to sail the ship of state towards the rocks with its Budget was the pathetic me too-ism of the Conservative party, which has given Labour an alibi throughout the past year and a half.
Mr. Philip Hammond: The hon. Gentleman has just accused the Opposition of talking the economy down, but he keeps going on about this £175 billion. I am the last person to want to talk down the scale of the Governments debt problem, but when we come to address it in future fiscal policy will he acknowledge that a significant part of itin fact, the majorityis a cyclical deficit? If we are going to have a serious debate, we need to address the £50-odd billion of structural deficit that will survive the recovery.
Mr. Browne: There is both the cyclical deficit and the structural deficit. In time, the automatic stabilisers that people talk about so often will, I hopethis is what the Government say in their borrowing figuresaddress the cyclical element, but there is a need to address the structural shortfall as well, which is the whole purpose of the wisely worded motion that the right hon. Member for Birkenhead, my hon. Friend the Member for Twickenham and I have tabled.
Mr. Frank Field: May I remind the House of the figures that I gave earlier? The Government think that we will be back in growth. The National Institute of Economic and Social Research thinks that we will have tax revenues of 38 per cent. and expenditure of 48 per cent. The structural imbalance in our national accounts is so much greater than the cyclical.
I am pleased that there are members of the Conservative party who have woken up to the dangerous situation. I am not surprised that it took the Conservatives a while. After allthis is the point I was trying to make when I said they had given the Government the covering fire they neededit was the Conservative party leader who boasted that he was the heir to Blair, but it was the previous Prime Minister, Tony Blair, who presided over the situation in which we now find ourselves. My message to the Conservatives is extremely simple: we need a change of Government, not an imitation of this Government. If the Conservative party regards itself as the heir to Blair, our party will have to do better.
As we were sailing towards the ruinous position that we were in, did the Conservative party warn of the steps that needed to be taken? What was the Conservative leader saying? He was making speeches about sunshine winning the day and claiming that GDP was no longer important, because we ought to be concerned about GWB, which stood for general well-being. GDP was passé; the new Conservative party was not worried about growth. The leader of the Conservative party identified his main priority for retailers, whom we hear so much about, as being where they should locate chocolate oranges in their stores so as not to encourage obesity in their customers.
As unemployment rises towards 3 million, perhaps the leader of the Conservative party would like to revisit his view that GDP is all in the past. Perhaps he could talk to some of those unemployed people and tell them how old fashioned it is to want the economy to grow. Perhaps he should talk to some retailers, or the former staff of the boarded-up Woolworths stores around the country, about the Conservative partys big priority for retailers, which is not about giving them the opportunity to be competitive, but about politicians micro-managing the exact location of confectionery in stores.
Mr. Graham Stuart: I did not think it possible, but the hon. Gentleman is giving the Chief Secretary a run for her money in distorting and caricaturing the Conservative position. At no point did the Leader of the Opposition say that GDP was not important. He has always known the central importance of the economy, but he quite rightly wanted to show that Conservative Members have always been interested in wider social issues too, and in the countrys general well-being. I hope that the hon. Gentleman will not again caricature the Leader of the Opposition or the Conservative party in such an unfounded and unfair way.
Mr. Browne: On that precise point, I have been reading the Conservatives Quality of Life report, commissioned by the Leader of the Opposition and written by a Conservative candidate. It was designed to tell us what the Conservative party would do in government, and its message on the macro-economy was [ Interruption. ] Some Conservative Members may not have read the report. It attacked the Governments growth assumptions, but its author said
Mr. Ellwood: On a point of order, Mr. Deputy Speaker. I seek your guidance, but we have moved on to the Conservative partys Quality of Life report and we are supposed to be debating the Second Reading of the Finance Bill. Have we wandered off track?
ever increasing material gain can become not a gift but a burden.
It must be such a drag, darling, to have so much burdensome money. It is all very well the Conservatives brushing the author off as a joke, but he is a Conservative candidate who speaks for the party.
Mr. Browne: I will give way to someone who is less close to the leader of the Conservative party but who has been doing better more recently and who also, I hear, speaks for the Conservative party in this sphere.
Mr. Hammond: I am not sure what that was all about, but the hon. Gentleman knows that the document to which he has referred is not a Conservative party policy document but a discussion paper prepared by a group of people asked to submit ideas and proposals to the party leader. That is a how a serious opposition party goes about its business.
Mr. Browne: I observe only that the Conservative party says one thing to one group and another thing to another group, depending on who is listening. What about the Conservative partys report on economic competitiveness? It suggested
Mr. Browne: I am grateful for your guidance, Mr. Deputy Speaker. I will not dwell on the report, and I will drop the section of my speech in which I was going to talk about the Conservative proposals to abolish mortgage market regulation because I recognise that Conservative Members find that difficult. I will also drop the section devoted to the extra spending on the NHS of £28 billion every year that the Conservatives are promising, and on the subject of debt
Mr. Deputy Speaker: Order. The hon. Gentleman is in danger of making the Chair rather exasperated. He is trying to make his remarks tangential, but that is not really what we expect. Perhaps he will now address the Second Reading of the Finance Bill.
Mr. Browne: No, because I have been asked not to speak about the report that the right hon. Gentleman authored. No doubt he will have opportunities to speak about it later, but I want to speak about debt. I have said throughout that it is the theme of my speech, and it is a great concern for everyone in the country. My party is the only one to have spokenconsistently, perceptively, sensibly and in a measured wayabout the huge debt that we face, and our predictions have been accurate. In a debate in this very Chamber on the economy and the housing market initiated by the Liberal Democrats on 2 April 2008, we warned of the dangers ahead. In reply, the Exchequer Secretary to the Treasury said:
Our expectation, as set out in the Budget, is for sluggish or flat housing price growth this year. The Liberal Democrats do no one favours by scaremongering about 25 per cent. falls.[ Official Report, 2 April 2008; Vol. 474, c. 827.]
According to the motion, we are facing an extreme bubble in the housing market and the risk of recession, and we must act to prevent mass house repossessions... Fortunately for all of us, however, that colourful and lurid fiction has no real bearing on the macro-economic reality.[ Official Report, 2 April 2008; Vol. 474, c. 825.]
In other words, the Liberal Democrats called it right, and the Labour party called it emphatically wrong. On that occasion, I think that the Conservatives were not sure. Of course, if he did not share them himself, the Prime Minister could easily sack the Exchequer Secretary for making those assumptions. However, it is up to her to decide whether she is able to carry on in her post.
As Scottish National party Members and others noted, Britain needs some serious measures to weather the storm. The Conservative party is so hamstrung that it is unable to make the necessary suggestions. Indeed, if Conservative Members had had their way, the deficit would have been even bigger than it is [ Interruption. ] Does the hon. Member for Runnymede and Weybridge (Mr. Hammond) want me to give way?
Mr. Browne: Very well, but I remind the House what the Conservative shadow Chancellor was saying in 2001. The essential question is whether we saved enough money when the economy was growing to afford a recession of the current magnitude. The hon. Gentleman always talks about fixing the roof when the sun shines, and it is a crucial point. The economy was growing very strongly in 2001, and one would have thought that the Conservative shadow Chancellor of the day urged the Government to save more money. Instead, he said:
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