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Budget Resolutions and Economic Situation

I am delighted to take part in the Budget debate. Unlike a number of other hon. Members tonight, I hope that this will not be my valedictory speech, because I am standing at the election and intend to win. I intend to win on a slightly different programme from that on which other hon. Members are putting themselves forward. I am grateful that normal politics have returned and we are at least having a debate on aspects of the economy and economic growth that have perhaps been avoided for too long. My take on this, of course, is that the Budget falls against the background of a difficult and steep decline in our economic fortunes. The recession is here. Numerically, we might be just about climbing out the other side, but anyone who thinks that we are there and can put the flags out is, I think, completely optimistic and naive. I go around my local firms—people are always surprised when I say this, but Stroud is a centre of manufacturing and some 25 per cent. of our jobs are in that sector, which is much more than twice the national average and means that Stroud is as close to a valley town in the north-west as it is to the traditional south-west town, so I have some knowledge of manufacturing—and I would make three quick observations. First, the recovery is fragile and any attempt to jam on the brakes in terms of public spending has an impact on not only the public sector but the private sector. The two sectors are so inextricably linked that anything that effectively crunches the public sector will have a completely deleterious effect on the private sector. That matters, because the last thing that we want for those who work in both sectors is a rapid increase in unemployment. As we learned from the 1980s and 1990s, that is not a cost worth paying. More particularly, it leads to a cost that we have to pay through unemployment benefit and all the benefits that go with that. That is, I hope, a lesson that the Government have learned. Some of us take a position that it is wrong to cut, and it is certainly wrong to cut now and to cut some of the things that, sadly, the Front Benchers seem to be too intent on cutting in a race to the bottom. I have been struck by the words of Joseph Stiglitz and our own Danny Blanchflower—I tried to persuade my Government that he would be an excellent new representative of the Bank of England, because he has seen the recession both in terms of the causation and latterly in terms of what we need to do. I am aware that, as colleagues have mentioned, we have a budget deficit and that we have to do something about it, but some of the schemes end up cutting jobs in the public sector—the jobs of those who had no fault whatsoever in the financial collapse. Why should they be made to pay the consequences? Instead, we should be considering some of those vainglorious projects that Governments from my party and from other parties have too often seen as shibboleths but should be anything but. I offer Trident, ID cards, withdrawal from Iraq and Afghanistan as a starting point, if we are going to talk about budget deficit reduction. As much as I want to see some aspects of public spending reduced, I still think that we overdo and completely exaggerate the impact of the public debt situation. According to all the figures, Britain will remain in the middle of the Group of Seven if we carry through some of the changes that are being mooted. As I have said, I approach the matter from a completely different perspective. I think the most fascinating figures of all, which form a backcloth to all this, are those that show that until the 1970s, we spent roughly 5 per cent. per annum on gross domestic capital investment in the public sector, which went down to 0.9 per cent. in the '80s and '90s and which this Government have brought back up to 3.9 per cent. If we include the private finance initiatives—I have my disagreements with them—the figure is substantially higher than that. I am proud of that. We have rebuilt schools and health facilities, and we have put money into the social infrastructure of our country. Why should we destroy all that because of other people's faults? There is a way out of this recession. I make no apology for saying that I am an advocate of the green new deal. Let me make it very clear that that is not the Green party new deal, because many of the people who contributed to it are quite well-known Labour party people, as well as those of no party. Let me give in the time that I have left some of the ways in which I think we can grow sensibly, sustainably and even morally out of the problems that we made for ourselves. Of course, I am talking about investment in energy efficiency and microgeneration, the creation of thousands of green jobs, a windfall tax on the profits of the oil and gas companies, developing financial incentives for green investment and reducing energy use and changes to the UK's financial system, including a new way in which we calculate interest rates to advantage green investment in particular. We need to reconsider how we have treated financial institutions. I think that the Government are right to step in and help, if not to take over a number of the financial institutions, but I am exceedingly wary of having a Dutch auction in getting rid of them. Last but not least, there should be much more transparency in the way in which we demand financial reporting and a clamping down on tax havens. Of course, the one great cheer that came from the Government Benches when the Budget was announced was the announcement on what is now being called the ““Belize gambit””, whereby this Government, for the first time, have begun to get serious about tax evasion, tax avoidance, tax loopholes and tax havens. At face value, looking at the notion of tax information exchange agreements, we now have a sensible way forward. Sadly, there are problems with TIEAs. They are termed in a pretty amorphous way, and they are not easy to operate because it takes two to tango and although the British Government might be willing to disclose certain information, that does not necessarily mean that those with whom we might wish to tango will give us the information that we want. I hope that my right hon. Friend the Financial Secretary to the Treasury will say something about how we are going to raise billions of pounds from those who have made little or no contribution. It is about time that they made a proper contribution, but we need to clarify how TIEAs will function in practice. That will rely on issues to do with the identity of the person under investigation or examination; what information is sought; the tax purpose for which it is sought; the grounds for believing that the information requested is held within the jurisdiction of which a request is made; and—last but not least—to the extent known, the name and address of any person believed to be in possession of the requested information. So, it is a question of knowing who has the money and for what purpose, and then making sure that they are willing to disclose the true financial picture. We are not talking about going into foreign jurisdictions. We are talking about people who, it is claimed, are either domiciled or, to some extent, resident in this country, but who exploit tax havens far too readily and easily. There is a history of TIEAs not working terribly well, so I hope that my right hon. Friend will give me some good news about how we will operate a much more robust and rigorous attempt to drive down what many of us feel are the worst excesses of capitalism, whereby people do not pay anything like the right rate of tax in this country, even though they derive many benefits from this country. This is about fairness, justice and the reality of the world today. If my right hon. Friend wants any help, he will be pleased to know that I am presenting a Bill tomorrow—the tax and financial transparency Bill—that I hope the Government will take up. It looks very clearly at how they could take forward the measures that I have been talking about, and I hope that he will come and listen to me present the Bill tomorrow. It contains just the sort of thing that the Government are looking to find out about. It would release billions of pounds to the Exchequer from people who should be the most liable for the problems that they cause. To conclude, I very much hope for a proper debate not only on the Budget, but on the way in which we have got ourselves into an unholy mess, because of the way in which the financial sector has behaved. Let me give an example to show how serious the situation is. Today, when I visited a company that will remain nameless, it was made clear to me that it was in a parlous state, but that it had managed to see things through because of its ingenuity. That made me think about how interrelationships with the financial markets impact on ordinary manufacturing companies in this country. Two things had really hit that company. First, it had invested heavily in Iceland, from which it learned the awful lesson that those who pay higher rates of interest are not necessarily able, ultimately, to defend what they are doing. The second thing was the way in which foreign banks have shut down loans virtually overnight. That is why lending through British banks—