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Mr Osborne: We will be making an announcement on the civil list in due course, but if the hon. Gentleman is looking for cost savings, perhaps early retirement is something that he could consider. [ Interruption. ]
Mr James Clappison (Hertsmere) (Con): Does not part of the contribution to the EU budget result from the surrender of the UK rebate in 2005 by the previous Government, which will cost taxpayers in this country up to £9 billion over six years and was given in return for nothing? Should we not add that to the Chief Secretary's list of waste by the previous Government?
Mr Osborne: My hon. Friend is absolutely right. The former Prime Minister Tony Blair gave away the UK's budget rebate in return for absolutely nothing. We were promised at the time that it would give us leverage over CAP reform, which never arrived, and I am afraid that that is just one of the many decisions that the previous Government got wrong.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP): Growth throughout the UK economy has often been geographically uneven. Has the Chancellor considered what help a rural fuel derogation might bring to the highlands and, in particular, the islands of Scotland; and can I volunteer my own constituency, Na h-Eileanan an Iar, for any pilot project?
Danny Alexander: The Government are well aware of the benefits that a rural fuel derogation might bring to remote parts of the economy. We are examining that issue, which is contained in the coalition agreement, and we note the hon. Gentleman's interests from his own constituency.
Robert Halfon (Harlow) (Con): Under the previous Government, unemployment in Harlow was the highest in west Essex. Do the Government agree that a low-tax, low-debt economy is the best way to bring jobs back to Harlow?
My hon. Friend is absolutely right that the ambition of a low-debt, low-tax economy is one to which people who care about the long-term economic future of this country should aspire. The key challenge, of course, is getting there, and that means dealing with the 11% budget deficit.
Geraint Davies (Swansea West) (Lab/Co-op): The right hon. Gentleman will know that the budget deficit at the time of the Budget was £22 billion less than was predicted four months earlier in the pre-Budget report, showing that the major engine for reducing the deficit is economic growth. Will he give an undertaking that the cuts that he intends to make will not cut the capacity for economic growth in Britain, thereby increasing the deficit?
May I congratulate the hon. Gentleman on his return to the House, as we both served on the Public Accounts Committee when I first arrived in the House? I make this point: he makes an original observation
that somehow the British budget deficit is low, when, actually, of course, it is an 11% budget deficit and we are borrowing £156 billion- [ Interruption. ]
I make this point to the hon. Member for Swansea West (Geraint Davies). The serious observation that he makes about investment in productive economic assets is one that is reflected in the document that the Treasury produced this afternoon.
Roger Williams (Brecon and Radnorshire) (LD): A Select Committee in the other place found that reform of the Barnett formula could lead to a reduction in the budget deficit. In terms of the imperative of achieving that, will not the Treasury team look once again at that Select Committee report?
Danny Alexander: I am happy to look at the report, but as I said in answer to earlier questions, we made it clear in the coalition programme for government that, although we recognise those concerns, the priority must be to address the budget deficit, and that is what we are going to do.
Matthew Hancock (West Suffolk) (Con): Is the Chancellor aware of the recent Institute for Fiscal Studies report which showed that, going into the recession, the budget deficit in the UK was already one of the highest in the developed world?
Huw Irranca-Davies (Ogmore) (Lab): Everybody is assuming that the budget cuts are based on the Canadian model, which itself was based on 3% growth and not least on strong growth in the American economy. I want to ask the Chancellor something in all seriousness. If there is not equivalent strong growth globally and within the eurozone, will that not mean that we get all the pain and none of the gain?
There does seem to be collective amnesia on the Labour Benches. They were in government for 13 years, they ran up the largest budget deficit in the European Union and they handed over office to us after an election in the middle of a eurozone crisis. The threat to the British economy is what will happen if we do not
deal with this budget deficit. Let me say to the hon. Gentleman and all Labour Members that until they have their own proposals to deal with the problem that they have bequeathed the new Government, they are not going to be taken seriously.
Alec Shelbrooke (Elmet and Rothwell) (Con): I ask my right hon. Friend the Chancellor to outline to the House exactly what not tackling the deficit would mean for my constituents in Elmet and Rothwell and for their mortgages.
Mr Osborne: Unfortunately, my hon. Friend would have to tell his constituents that interest rates would start to rise and international investor confidence would be lost. Today, one of the credit rating agencies has published a report that makes the observation that the UK's deficit reduction plan is particularly weak. That is the situation that we have inherited, and we are going to put it right.
Danny Alexander: A range of announcements will be made in the Budget across a whole range of issues, but as the Chancellor has said repeatedly, one of the key tests of measures is fairness, to ensure that we do not repeat the mistakes of the previous Government in allowing inequality to widen and in missing child poverty targets.
Gordon Birtwistle (Burnley) (LD): Does my right hon. Friend intend to continue using the very expensive PFI funding for future capital investment in the NHS? The most expensive to date has been in Wythenshawe hospital, where the NHS will pay back 16 times the original capital value. More prudent borrowing in the past would have delivered the investment without adding to the deficit.
Mr Osborne: The hon. Gentleman makes a very good observation about the hidden costs of PFI liabilities. After the Office for Budget Responsibility creates an independent set of national economic forecasts, it will go on to look at PFI liabilities. The deficit and national debt that we have been talking about are, of course, only half the story; there is the hidden iceberg of the PFI liabilities that the Labour party ran up over 13 years as well.
Mr Alistair Darling (Edinburgh South West) (Lab): On a point of order, Mr Speaker. Yesterday, the Prime Minister said that the coming spending review was going to change our whole way of life and that today the Chancellor and Chief Secretary would publish a framework for this year's spending review. I am not seeking to reopen your decision in relation to my request for an urgent question, and I would normally have expected a statement in the House from the Chancellor in relation to what I took to be an important document. I understand that his argument is that he will be able to speak in the Queen's Speech debate; the problem is that because of the order of speakers, he speaks after me. In fairness to him, he did offer to let me have a copy of the document at 2 o'clock, but sadly it did not get to me until I was just walking into the Chamber.
Given what you said on your re-election, Mr Speaker, I really think that it would be far better, especially on matters as important as this, if the Chancellor, as well as other Ministers, were prepared to come to the House and defend the decisions that they are taking. As it is, I have had a quick look through the document, and there does not seem to be very much substance in it at all, which may be why the Chancellor decided not to give a statement. But the principle is an important one.
Mr Speaker: I am grateful to the right hon. Gentleman for his point of order. If I were uncharitable, I would think that he was in some sense seeking to continue an earlier debate-but I am not, so I assume that he is not. My judgment is that the matter in question, which is extremely important, can be debated very fully today. However, I trust that any major announcement to be made in due course, on this or any other matter, will be made first in the House.
Before I announce the results, I would like to take this opportunity to thank, on behalf of the whole House, the two temporary Deputy Speakers who have helped to chair the House during the Queen's Speech debate. The hon. Member for York Central (Hugh Bayley) has brought to the House his experience of chairing Public Bill Committees, and he has done so with great care and good sense. Sir Alan Haselhurst was a newcomer to the Chair 13 years ago, when Betty Boothroyd was Speaker. He has served as Chairman of Ways and Means with distinction through three Parliaments, guiding the House in the Chamber and helping its work behind the scenes. I particularly thank him for all his wise counsel to me during my first year as Speaker. I know that the House will benefit from his judgment and commitment in other ways in this Parliament.
This also gives me the opportunity to pay tribute in the House to Sir Michael Lord and Sylvia Heal, who retired from the House at the general election having served the House so well as Deputy Speakers from 1997 and 2000 respectively. The standard set by these three Deputy Speakers in their combined service in the Chair of some 36 years will be an inspiration to their successors elected today.
I will now announce the result of the ballot held today for the election of Deputy Speakers. Mr Lindsay Hoyle was elected Chairman of Ways and Means. Mr Nigel Evans was elected First Deputy Chairman of Ways and Means. Dawn Primarolo was elected Second Deputy Chairman of Ways and Means. They will take up their posts tomorrow. I congratulate those elected, and I look forward to working with them.
That an humble Address be presented to Her Majesty, as follows:
Most Gracious Sovereign,
We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.
Mr Speaker: I inform the House that I have selected the amendment in the name of the Leader of the Opposition. Standing Order No. 33 provides that on the last day of the debate on the motion for an Address to Her Majesty, the House may also vote on a second amendment selected by the Speaker. I have selected the amendment in the name of Angus Robertson for that purpose. The vote on that amendment will take place at the end of the debate after the amendment in the name of the Leader of the Opposition has been disposed of.
"endorse the successful steps taken by the previous administration to return the economy to growth, to keep people in their jobs and homes, and to support businesses; note the need for a clear plan to bring down the deficit; respectfully believe that securing the recovery and robust future growth should be central to that plan; further believe that such a plan must be fair and protect front line public services; therefore oppose your Government's measures to cut the support provided by the Future Jobs Fund for tens of thousands of young people out of work, to damage growth in the regions by scaling back regional development agencies, and to cast uncertainty over support for key low carbon sectors like the nuclear supply chain and lower carbon vehicles; further note that a rebalanced British economy must be built as the UK emerges from the recession; and therefore urge your Government to reconsider the removal of investment allowances which support manufacturing businesses seeking to grow."
Before I turn to what I suspect will be the main focus of the debate-the economy-I want to mention a number of Bills in the Gracious Speech on which the Chancellor might want to respond in the course of his speech, which will follow mine. The Government want to bring before the House several measures on which the Opposition can offer complete support or, I hope, can be constructive in their support. The first is the terrorist asset-freezing Bill. That piece of legislation is necessary as a result of a recent decision by the Supreme Court and we will certainly support the Government in getting it on the statute book as soon as possible. I am grateful for the co-operation I received when I was Chancellor from the then shadow Chancellor and his Liberal counterpart.
I appreciate what the Chancellor said a few moments ago about the Office for Budget Responsibility currently operating on an extra-statutory basis, but I hope that the principles on which it will operate-with as much openness and transparency as possible and with us being able to look at the deliberations of the budget responsibility committee and understand its reasoning before it reaches a recommendation-will be part of its practice now and will be in the legislation when it comes before the House. I welcome the fact that Sir Alan Budd, who has been appointed acting chairman of that office, has made it clear that he is willing to speak to all hon. Members. That is important, as the office will work only if it is seen to be non-partisan.
On Equitable Life, all of us know that the process has been long and drawn out. I think the Government may have already found that the process is not straightforward and that the ombudsman's ruling was not as clear-cut as some people thought. We therefore commissioned Sir John Chadwick to investigate the matter, and I am glad to say that he will report in July. I had thought he was going to report at the end of May, which is what he had told us, but it may be that he has had further discussions with the Treasury. [Interruption.] The Chancellor is saying from a sedentary position that it was at his request. That is fine, but I wonder whether he will make provision for whatever Sir John recommends in his June Budget, or whether the fact that Sir John is reporting in July means we will have to wait for a further Budget to see what provision is being made.
On the financial services regulation Bill, we had many exchanges across the Floor of the House in the last Parliament on this matter, but I simply say to the Chancellor that it would be helpful if he could perhaps tell the House exactly what the coalition agreement is in relation to who has responsibility for regulation. We have read conflicting reports in the newspapers about whether the Financial Services Authority is to be brought within the responsibility of the Bank of England and whether it is the Governor or Lord Turner who is to be responsible for the regulation of the financial services industry. Other reports say that no decision has been made and the decision has been parked. It is important that we have some certainty about that, because the very nature of such things means it is inevitable that some problem may arise quickly. It is therefore important to know who is in charge, as we do not want the FSA and its staff to be concentrating more on their future than on what is happening in the financial services industry.
Keith Vaz (Leicester East) (Lab): On the point about banking regulation, the shadow Chancellor will remember the closure of the Bank of Credit and Commerce International and the Bingham report. That report was commissioned by the previous Government and its conclusions mentioned an independent regulator. It is important that we look carefully at the issue of regulation and that we do not hand back to the Bank of England all the powers for regulation. In his conclusions, Lord Bingham recommended that that should not happen.
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