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Finance Bill

I am delighted to follow my right hon. Friend the Member for Wokingham (Mr. Redwood). When it comes to Finance Bills, he is indeed primus inter pares. He spoke almost note-free for, I believe, 45 minutes. That shows the breadth and depth of the experience that he brings to the House, and I could not disagree with a word that he said. I used to be in business. Although I have now wound down my interests, I draw the House's attention to the Register of Members' Interests, which makes it clear that I retain a couple of interests from my previous life. I shall begin by reading the opening lines of the Bill, because they lay the foundation of what we are debating today. This, it is said, is a Bill to""Grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with finance."" I begin with that foundation because it is the Government's balance sheet that gives me—and, I think, the markets out there—the greatest concern. I want to say a little about borrowing and debt. When the Prime Minister became Chancellor, he made great play of two important rules: the golden rule and the sustainable investment rule. The first said "We must keep the debt-to-GDP ratio at about 40 per cent., which is an important benchmark." The second said "We must not invest and then borrow more; investment and borrowing must balance over the economic cycle." The Government and the former Chancellor, now Prime Minister, set great store by those rules for a long time. As we have heard today, the Prime Minister talked a huge amount about ending boom and bust. In fact, he thought, like Canute, that he alone could hold back the tide of the economic cycle, and end boom and bust. When history is written, however, it will show that the Prime Minister whom we have today led the biggest boom and the biggest bust that we shall have seen for nearly a century. It was only a year ago that we saw public-sector net debt at 2 per cent. of GDP. Twelve months later, we pick up the Red Book and note that the budget deficit will be around 12 per cent. of GDP. That is a 10 per cent. leap, and represents a huge change in what the Government were saying a mere 12 months ago. To make matters worse, in 1998 the Prime Minister said:""We are committed to steering a path of stability based on a stable monetary framework and sound public finances."" Today, that statement seems ridiculous to all of us. Again, when we pick up the Red Book, what do we see? We see that in 2013-14 the debt-to-GDP ratio in borrowing—on-balance-sheet borrowing, that is—will be 79 or 80 per cent. The Government keep repeating that that is within the realm of what we see in other G20 countries, but none of us are fooled. I have spent the first four years since entering Parliament trying to dig a little deeper. One of the things that scared me when Enron collapsed was the thought that occurred to me: "Gee, I wonder how much the Chancellor"—the Chancellor of the day—"has put off balance sheet." After I began digging, about two and a half years ago I wrote a paper for the Centre for Policy Studies called "Simply Red." That paper showed that for every £1 that the Chancellor was putting on balance sheet, he was putting £2 off balance sheet.