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Budget Resolutions and Economic Situation

Although I concede it may not be the likeliest circumstance to arise from the campaign and election, with balanced Parliaments a possibility, perhaps the hon. Member for Dundee, East (Stewart Hosie) will be taking up that role—or I understand that it might be the sainted presence on the Liberal Benches, the hon. Member for Twickenham (Dr. Cable). Unfortunately, it will not be my old friend the hon. Member for Thurrock (Andrew Mackinlay) since he, tragically in my view, has decided to forsake the House just when it needs him most to step in to that role. Any of these people, however, would be infinitely preferable to Tweedledum or Tweedledee, whom we might well get. Enough of this frippery, however; let us move on to the substance—if I can find it—of the Budget. When Members make their final speech in the House, it is traditional for them to refer back to their maiden speech—after all, it often contains the best lines we ever deliver here. In my maiden speech, I said—and I meant it—that my constituency of Banff and Buchan has""robust characters who work with their hands and get their faces dirty. They are involved in producing, making and catching things. They are people engaged in the manufacturing and primary sectors who are the real creators of wealth. If Government policy was orientated more to the primary and manufacturing sectors of industry, rather than to the rentier economy produced by the ""Conservative party, the long-term health and welfare of this country would be better served."—[Official Report, 29 June 1987; Vol. 118, c. 321.]" I believed that then and I believe it now, and I am astonished that the process over recent years has managed to make the rentier economy of Thatcher's Britain of the 1980s look like small beer, because it is clear that this Prime Minister, who once claimed to have abolished boom and bust, had pinned the foundations of that in a totally unsustainable fashion, and now we have landed in the largest bust since the great depression. When I was elected as a Member of Parliament back in 1987, the public sector's net worth—the value of public assets minus liabilities—stood at 74 per cent. of national income. By 1997, it had fallen to 15 per cent., and if we are to believe the forecasts in the Red Book—I should stress that "if"—in 2014-15 it will reach minus 5 per cent., which is the lowest level since records began. I suppose that boom and bust was abolished, therefore: certainly the boom bit has been abolished, and we have been left with the bust. What I cannot understand in this process is that in the equivalent debate last year, when I suggested that the detail of the Red Book would, indeed, show that there would be greater cuts than those of Margaret Thatcher in the early 1980s, there was a huge amount of irritation from those on the Labour Benches. Now, however, the Chancellor—if not the Schools Secretary—admits that, and when the Chief Secretary appeared on "Question Time" last Thursday night with me, he immediately confirmed the Chancellor's view when that direct question was put to him. This is a serious situation. I argued in the debate 12 months ago that until there is enough strength in the private sector, it is vital that fiscal stimulus is maintained. I am not alone in arguing that case. It is not only the right hon. Member for Oldham, West and Royton who agrees, but so too does the International Monetary Fund. We can both quote it in our favour, although that is not something we have done regularly over the years. None the less, the IMF argues that""one of the key lessons from experiences of similar crises is that a premature withdrawal of policy stimulus can be very costly, particularly if the financial system is weak."" We believed that that was the Prime Minister's position for much of the last year with his warnings that "recklessly and rapidly" withdrawing Government support would""risk driving our economy back into recession."" Also, the Chancellor argued in his Budget statement of this year:""To start cutting now risks derailing the recovery".—[Official Report, 24 March 2010; Vol. 508, c. 235.]" Therefore, just as I looked at the Red Book last year and identified a trend of public spending cuts greater than that of Margaret Thatcher in the early 1980s, chart 2.5 of this year's Red Book clearly shows that the UK's fiscal stance for 2010-11 is negative. Discretionary fiscal policy will act to tighten public spending and taxation relative to 2009-10. One analyst states that""despite all the warnings about withdrawal"" of""support too early, the fiscal stance is being tightened in 2010/11 by 1.1 per cent. of GDP.""