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Budget Resolutions and Economic Situation

The main Opposition speech today came not from their Front Bench but from the former Chancellor, the right hon. and learned Member for Rushcliffe (Mr. Clarke). He was at his most recklessly expansive, making Cassandra-like prophecies of doom. Many of his comments, however, were a bit rich coming from him. He said that the reduction in the growth of spending in future had not been made clear. In fact, it has been announced repeatedly that, after 2008, there will be a slowdown in the growth of spending after an unprecedented surge of spending over many years. He talked of fiscal drag, but fiscal drag has been used by all Chancellors, not least the right hon. and learned Gentleman. The right hon. and learned Gentleman said that spending Departments would have to make significant cuts in future years without knowing where the money would come from, but efficiency savings were imposed year after year after year by Tory Governments without Departments having any idea of where the savings were to be made. He referred to low growth of 1.8 per cent. What he did not say, of course, is that that follows an unprecedented and unbroken run of high growth for eight years previously. He made several comparisons with 1992, saying that the level of this or that was lower than it had been then. I remind the House that 1992 is a very significant date: during that year, the Tory Government was unceremoniously pitched out of the exchange rate mechanism. The right hon. and learned Gentleman said that he did not know how the economy would bounce back. None of us can know, but we have heard the same thing time and again, and on each occasion the pessimism has turned out to be unjustified. After all that rumbustious, knockabout criticism, which I suppose we are meant to enjoy, the only remedy that the right hon. and learned Gentleman could come up with was his proposition that we did indeed need improvements in productivity and investment. Of course we all agree on that, but it is exactly what this Government have been doing for years, not least in the Budget. Let me now turn to a slightly more sober assessment of the Budget—