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Budget Resolutions and Economic Situation

Well, because—[Interruption.] It is not a U-turn at all: one cannot infer from my views on spirits that I have opposite views on cider. I have just made it clear that I regard cider as an important industry—not just in the west country, but it has a particular strength in the west country—and that it is an important part of the heritage of many parts of western England. Considering that the amount of money that will be raised by the Government's tax measure is so minute compared with the scale of our budget deficit, and given that the hurt and offence that it has caused is so disproportionately large, the Government would be well advised to reconsider. Let me turn to the three main themes that I wish to address. I start with the recession, which ought to be—and is—of concern to us all, although I sometimes think that people in this House, and perhaps the wider public, underestimate the scale of the recession that we have just gone through. Last year—2009—was the worst peacetime year for the British economy in terms of growth since 1921. Our economy shrank by almost 5 per cent. last year, and, as part of the international downturn, this country has been in a truly precarious position. I invite the House to think of our economy as a sickly and frail patient lying in the operating theatre in a hospital. In those circumstances, my party and I believe that the Government were right to try to administer all the different treatments at their disposal to ensure that the patient survived the severe shock to its system that it had suffered. The Government tried quantitative easing as part of their contribution. They also tried, and continue to try, extremely low interest rates—only 0.5 per cent., and they have been at that level for a sustained period. We have also had a devaluation of the pound. Far less emphasis has been given to the relative value of the pound compared with other major currencies than would have been given a generation ago, but there has been a severe devaluation of our currency. We have also had, in different forms, the fiscal stimulus, and we have debated in this House whether that stimulus has had as much of the desired impact as we would like. Nevertheless, it has contributed to trying to keep the ailing patient in some form of health. We are still in an extremely precarious position, however, and we should not assume that that we are safely out of the woods just because the economy grew by an anaemic, minute amount in the last quarter of last year. We cannot turn the life support machine off until we are absolutely certain that the patient is alive, and at the moment, we do not have that certainty. I hope, and believe, that the economy will not dip back into recession later this year, but that remains a possibility. The growth figures in the Budget—even the ones that were revised down—are still optimistic, according to many assessments. We should therefore not assume that we are out of the woods. This is a challenge for the Conservatives, because the timing of deficit reduction is of paramount importance, and there are risks attached to cutting too soon, as well as to cutting too late.