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Budget Resolutions and Economic Situation

This has been an enjoyable debate. Listening to the valedictory speeches from a number of well-respected Members has been a great experience. In particular, because I served under him in Northern Ireland Affairs Committee, I want to refer especially to the help that the hon. Member for South Staffordshire (Sir Patrick Cormack) has been to me as a new Member of the House, and the enjoyable time that I had under his chairmanship. Some Members are leaving public life altogether. The right hon. Member for Banff and Buchan (Mr. Salmond) is now going to run part of the Celtic fringe of this great United Kingdom, and I wish him well in that. The debate started off with an exchange between the Secretary of State for Children, Schools and Families, who probably would like to be the Chancellor, and the shadow Business Secretary, whom many on the Opposition Benches might wish was the shadow Chancellor. But the one thing that became clear during the early exchanges in this debate was that this Budget is not the real Budget; it is a phony Budget. As the debate has developed, we have heard people talk about the hard choices that lie ahead and the difficult decisions that have to be made, but none of those difficult decisions has been made in this Budget; it is quite modest. Indeed, it contains about £1.4 billion of new measures, as opposed to the £5 billion of new measures that were in last year's Budget. Coming from Northern Ireland, I welcome some measures, such as the delayed increase in fuel duty, which in my constituency, with its large rural area, will be welcomed by those who cannot avoid using private transport and do not have the option of public transport. The fuel duty increase would have been a huge imposition on them. Doing away with stamp duty for the first-time buyers of houses worth less than £250,000 will also be welcomed in Northern Ireland, where house prices ran well ahead of first-time buyers' ability to enter the housing market. With almost 20 per cent. of people in Northern Ireland in fuel poverty, the additional winter fuel allowance will be welcomed, too. The Northern Ireland Executive will benefit by about £12.1 million in Barnett consequentials, and, even though that money will be offset by additional efficiency savings of almost £122 million this year, it will nevertheless be welcomed. However, we all recognise, and have recognised during this debate, the need to reduce public borrowing. Although the Chancellor has made much of the fact that borrowing is £11 billion less than he expected, it has nevertheless increased by £20 billion since last year, and our total borrowing is now 12.6 per cent. of GDP, with interest payments amounting to the same as that which we spend on defence. We know that that situation is unsustainable, and, as the hon. Member for Gainsborough (Mr. Leigh), the Chairman of the Public Accounts Committee, has pointed out, we need to be honest with people. We cannot pretend, as some Members have done, and say that after the second world war we had a huge debt and waited until 2002 to pay it all off. We do not have that luxury, given the financial situation and how the banking system and financial markets will view the deficit, so we need a degree of candour with the electorate. We need also to tell the electorate that the issue will not be dealt with just by efficiencies; there will be cuts to front-line services, and we will need to look at some things that we do in the public sector and whether we should continue to do them. I hope that this does not sound contradictory, but I welcome the fact that, although we are at least now considering how we reduce the deficit, the Chancellor has not jumped in to take action and make swingeing cuts. Whether they are as deep as the cuts that Mrs. Thatcher introduced in the 1980s, or more modest, when I look at the issue from the perspective of Northern Ireland, I think that this would have been the wrong time to make them. Northern Ireland is still not out of the recession, and, while there has been a gradual upturn in other parts of the United Kingdom, unemployment is still increasing in Northern Ireland, house prices are still falling and the purchasing managers index, which shows the orders that are coming through for businesses, has fallen in Northern Ireland while it has increased elsewhere in the country. Although we will have to face the deficit, there are nevertheless good grounds for saying that the reductions should not be introduced immediately. There has been some debate about whether there is any connection between spending now and the recovery. I would argue, after looking at some public sector infrastructure projects in Northern Ireland, that spending now gives us better value for money. Construction costs are down by 20 per cent. Because of the state of the construction industry, we can get six schools for every five that we purchased before, or we can get extra miles of road. Indeed, were it not for public investment in Northern Ireland, the construction industry, which now has about 53 per cent. of its work coming from the public sector, would have even greater levels of unemployment than it has at present. In the past year, there has been a reduction of more than 7,000 in jobs in the construction industry, but that could have been far worse without continued public spending. I recognise, however, that that cannot go on for ever. I also accept that Northern Ireland cannot be exempt from what happens in the rest of the United Kingdom. Two things are essential. First, we must have a greater degree of certainty about what is going to happen with the level of cuts and reductions. That has not been the case to date. Departments need to plan ahead to see how they can deal with the reductions that are going to be made. Those reductions cannot suddenly be parachuted in—some preparations must be made.