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Budget Resolutions and Economic Situation

I will give way later, but I want to make some progress first. We do not need to gaze into a crystal ball to see the effects of saying that public spending must fall as a proportion of national income, because that is precisely what we saw in the late 1980s and early 1990s, including under the stewardship of the right hon. and learned Member for Rushcliffe. By 1996–97, net public investment was just 0.7 per cent. of gross domestic product—£6.9 billion at today’s prices, compared with the £27.5 billion proposed for next year. That is the lesson of British economic history. It is public investment that gets cut when a squeeze in public spending happens, because that is where the easy and less noticeable cuts can be made. We end up paying for that in our economy, which will do badly in public infrastructure and basic education, as ours has done for many years. It is completely unclear to me how a small country such as ours—as opposed to the United States—can compete on that basis. That is why the right kind of public investment must be at the heart of our remaining competitive in the years ahead.