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Budget Resolutions and Economic Situation

I entirely agree. It was the Housing Finance Act 1972 that set us in this direction. I opposed it at the time, as a councillor. We also need green energy projects. We must invest much more in alternative forms of energy which do not pollute or create greenhouse gases. We will experience a serious crisis within a few years; we are approaching peak oil. As for savings, the hon. Member for North Southwark and Bermondsey (Simon Hughes) mentioned Trident. I simply do not believe that we need Trident: as I said earlier, I think that it is being retained for reasons of political machismo. Savings could also be made by abolishing ID cards. However, I do not want to go on about savings too much, because I do not think that we should be looking to them for extra cash. I think that we should try to collect a little more of the tax that is owed to the Treasury every year. We should try to collect some of that £120 billion. It has been suggested that if we do not address our deficit, the returns on long-term gilts could rise, because those from whom we borrow will be worried about our future economy. If we had a strong economy, the return on gilts would fall, because people would feel more confident. If we flatten our economy by cutting, increasing unemployment and driving ourselves back into a recession or even a depression, people will be much more worried about the economy than they will be if we spend now, when we need to. If we ensure that the economy is strong, the return on gilts and long-term interest rates will fall. That is what is happening in Germany. When Angela Merkel returned to power she embarked on a targeted reflationary strategy, which is why German long-term interest rates are lower than ours. I think that we should follow the German example in this respect, although not in all respects. The Germans have got certain things right, such as manufacturing. Cutting unemployment is the key to success. We want reflation, not deflation. As for reducing the deficit, we will do that in the longer term. The process will be largely automatic, but if we need to address a structural deficit we can do so by collecting more taxes—by means of tax changes, but closing the tax gap would be my priority. I think that we have the potential to build a strong economy for the future. I think we have finally recognised that the era of neo-liberalism—the era of globalisation and laissez-faire capitalism—has failed. It has brought us to the brink of catastrophe. I am sad to say that Members on all three Front Benches have supported that strategy for many years. I remember saying in my maiden speech that I had come here to oppose neo-liberalism, and I do not regret saying it. I think I was right then, 13 years ago, and I think I am right now. In a sense, the fact that we have looked over a chasm has proved my point. Countries must return to more managed economies. I do not mean strategically controlled, publicly owned economies, but I think that countries should choose their own interest rates, fiscal policies and exchange rates, and intervene when it is necessary to ensure that their economies work, retain their strength and, indeed, become stronger. When we have achieved that, we can co-ordinate reflation between the countries of the world, and we can all grow together and become stronger together. That is the way forward, not the lunacy of the last 30 years.