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Economic Recovery

The hon. Gentleman, who is my colleague on the Treasury Committee, tempts me into a debate for which I do not have time. Suffice it to say that I believe it possible to construct institutions in this country that can compete very effectively internationally. I think Glass-Steagall is old language. "Narrow bank" is also difficult language, but such banks would have a separation of functions and would be more commercially viable. I would start—I encourage the Treasury to think about this—by taking Bank of Scotland out of the Lloyds group and putting competition into Scotland by making it independent. I suspect that Europe may well ask the Treasury to do that anyway. On my second point—restoring growth—the Government have given us a blizzard of schemes throughout the recession, ranging from the rank failures of the automotive assistance scheme and the credit insurance scheme, through to the enterprise finance guarantee scheme, which is muddling along, and up to some quite good schemes such as scrappage. However, the characteristics of the schemes have been headlines and public relations, with money not effectively getting out to the companies that need it. I reiterate what I said on Monday: the single biggest factor in rejuvenating the economy—the one thing that businesses in my constituency have cited as a real help to them—is the devaluation of the currency and the fact that we are now that much more competitive in our exports. That is of course nothing to do with the Government and carries its own risks in the future. We have seen the first minuscule shoots of hope appearing, but there is a real danger of a double dip. I remember the recession in the early 1980s, when the brakes went back on in 1981. That was too soon, and we went back into recession. It would therefore be wrong to end the fiscal stimulus too early. There is a balance of risk, but there is a larger risk in ending the financial stimulus too early than in ending it too late. The deficit problem is worse than it was in the 1940s, when we came out of the second world war. The deficit then was larger, but it was mostly dealt with by being inflated away, and that is not an option that is open to us this time. It is clear that cuts, and quite large cuts, are needed in public spending, but there is a difference between cuts in public spending that have a direct impact on front-line services and cuts in expenditure planned for the future, such as ID cards—an expenditure that we do not need to make. My hon. Friends have suggested that the Trident programme is another area for cuts.