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Budget Resolutions and Economic Situation

I have read that the origin of the word ““swansong”” is the myth of the mute swan which, as it approached death, expressed itself with an extraordinary outpouring of noise in a very evocative way. I can only hope, for the sake of those who are left in the Chamber this evening, that comparisons between that and my speech will be somewhat limited. At some stage in their lives, all Members will have been asked why they entered politics. It is worth recalling what was happening in this country in the 1970s, when I started working. We were beset by terrible strikes, national bankruptcy and a massive brain drain, and I decided that I never wanted to see anything like that again. Sadly, however, as we heard in the Budget statement only last week, our economic situation is dire yet again. Strikes have returned, and our international reputation has been hugely diminished. The echo from an earlier time is there for all to hear. It is true that in the current economic crisis—although too many may have given up—unemployment has not, on the face of it, risen as fast as might have been expected, although of course it remains too high. That is largely due to the flexible arrangements introduced by past Conservative Governments. Nevertheless, 54,000 people still leave the labour market each quarter. Far too often, the reason is that they have simply become discouraged. They have given up on the belief that they will ever find jobs, and have joined the legions who are already receiving the various worklessness benefits dispensed by the Government. Who can blame them, given that over the three months to January the ranks of those who had already been out of work for more than a full year had risen by more than 60,000, to 687,000? It is truly incredible that, on top of all that, the Government are proposing yet another tax on jobs. The proposal to force employers and employees—including those on below-average incomes—to pay even more in national insurance contributions is a real economic and social misjudgment. We clearly have a jobs crisis on our hands, and the introduction of extra barriers to the creation of jobs makes no sense whatsoever. According to a report issued last week by Policy Exchange, the Treasury's own economic model suggests that a 2 per cent. rise in national insurance contributions could reduce GDP by a full 2 per cent. over three years. There is no point talking about job creation and then directly hitting the very businesses that could provide those jobs. That is simply crazy, and I therefore welcome the announcement made by my party this morning. The statistics on start-ups and business failures reveal part of the reason why our trade balance is so bad despite our massive currency depreciation, and why manufacturing has shrunk so dramatically in Britain. Nothing in the Budget really addressed that, and, inevitably, the business community has universally reacted negatively to the Budget overall. We have been in a recession on a ““first in, last out”” basis, according to any international comparison. Why has that happened, given that our fiscal stimulus has been smaller than those delivered in the American, French and German economies? Given that our actual budget deficit is so much larger than those of others, given that it costs so much more to insure our national debt, and given that people talk seriously about the threat to the sovereign credit rating of the United Kingdom, why would we not have been able to aid our economy as much as others even if we had chosen to do so? The reason is the Government's irresponsible spending at a time of strong worldwide growth. Why was the British economy driven into such a weak state that it was impossible for the Government to take measures that might have helped it? The Bank of England has printed as much money as it dared. With Government spending rising to 53 per cent. of GDP and £200 billion from quantitative easing flowing into our economy, we have two new and unwelcome national records to add to a growing list, both of which reflect the rapidity with which we have descended into the present financial maelstrom. Can anyone imagine circumstances in which, in each of the next two financial years, the Chancellor will be borrowing more money than the entire income tax take, and all that borrowing will be based on highly optimistic growth assumptions and the assumption that the markets will continue to allow us to borrow at historically high levels? All that was not enough to prevent the United Kingdom from suffering not only the worst recession in the G20, but the worst in living memory. The question that we must ask ourselves is ““Why?”” The true answer goes back to the year 2002, the year in which the then Chancellor of the Exchequer abandoned the prudent approach of the Administration who had preceded him and let rip. In the years that followed, the budget deficit did not fall below £30 billion annually. In the next five years, right in the middle of what the Governor of the Bank of England was calling the non-inflationary constant expansion or NICE decade, the Government borrowed £176 billion. The total irresponsibility of consistently leaving a gaping hole in the finances of the country broadly equal to the cost of the entire police and criminal justice system, in one of the most benign economic environments of all time, is the source of our present-day anguish. But then the Chancellor of the Exchequer had abolished the economic cycle, or so he absurdly said. The interest on the stock of debt that has built up is now £42 billion, £2 billion more than the entire defence budget, at a time when we are at war. The Institute for Fiscal Studies calculates that by 2014-15 debt interest payments will climb to £73.8 billion, equal to our defence and transport budgets. The proportion of debt interest payments on total tax revenues will be 10.6 per cent. at that stage. Under the present Government, we have seen a growth in the divide between different parts of the United Kingdom. Because of a number of funding formula changes, my constituency has experienced a string of NHS budgetary crises. The simple truth is that NHS spend in the Prime Minister's constituency is materially higher than that in my constituency. There is no rational explanation for that, and it certainly has precious little to do with health outcomes. My constituents have a real sense that the spending differentials relating to public services have little to do with need, but plenty to do with the political colour of the area in question. Rural England has become the poor relation of this urban-obsessed Government. The Government's overspending has resulted in a high cost to the British economy. We have fallen from 11th to 23rd in the league of corporation tax competitiveness. We have slipped from fourth to 84th in the World Economic Forum's global competitiveness report's rankings for the extent of tax burdens and evasion, and from fourth to 86th in its ranking for regulatory flexibility and efficiency of social programmes. That is part of the reason 1,440 private-sector workers lost their jobs each and every day last year, while the number of state employees rose by 126 day in, day out. The problem goes back to 1998, when the Government introduced the comprehensive spending review. It had been promised by the Prime Minister, but he has since abandoned it. We must ask ourselves why he was willing to continue the practice before the two previous elections but is unwilling to do so on this occasion, as a result of which specific spending impacts remain a mystery. In fact, the Government are so scared of spelling out to the nation the extent of the crisis—so terrified of admitting the true costs of a crisis of their creation—that they are determined to forgo a spending review, and we have had no honesty on the subject. One of the by-products of the collapse of our reputation abroad is how financial services regulation proposals have arisen in Brussels. For all its imperfections, the City of London is still the jewel in the crown of Europe, in that the range and depth of its financial expertise—and all the ancillary services—are unmatched anywhere else, yet, through neglect and sheer incompetence, this Government have had to witness the growth of EU financial services regulatory proposals that are clearly not in our interest. It is clear that one of the main reasons for that is the catastrophic failure of our tripartite regulatory system. When the financial crisis broke, the system that was in place was like an animal immobilised in fear by oncoming headlights. I have heard many times from those from other EU countries that Britain simply has no credibility or authority to determine European regulatory architecture because our own has been such a failure, and yet, incredibly, the Government have no plans to reform it. That matches their unwillingness to reform our public sector, where there is both a decline in productivity and a total unwillingness to reform the system. Especially when reflecting on this Budget and the events that have led up to it, I leave the House on a bittersweet note. Despite the hugely negative view of Parliament and parliamentary colleagues, I for one—I know this sentiment is widely shared—regard it as a huge privilege to have been a Member of the House of Commons and to have represented my constituents in this place. Yet just as I commenced my working life at a time of economic collapse, sadly, I leave this place now with history repeating itself. However, just as before it took a Conservative Government to pull this country back from the abyss, I confidently predict that that will be the case again, some 30 years on.