Budget Resolutions and Economic Situation

Debate between Lord Redwood and Angus Brendan MacNeil

Wednesday 18th March 2015 Commons Chamber

[Mr MacNeil]

The right hon. Gentleman is giving an impression of a growing state, when what is happening in real terms is clear from page 112 of the Red Book—that, as a percentage of GDP, this Chancellor and his party are cutting the state by 13%, which will affect the poorest in society most. That is the legacy of a Tory Government.

[Mr Redwood]

I am giving the cash numbers, which are clearly set out on page 111. If the hon. Gentleman is patient, I will come on to deal with the argument about real terms and the percentage of the economy.

Let us start with cash. The £60 billion increase in the annual spend at the end of the period is a big increase, and if we can keep inflation of costs down, it could provide a real increase. We had these arguments at the beginning of the last Parliament. When I quoted the cash figures, people said it would amount to a real decline, yet we have had a real increase, with the last two years seeing real increases in total general public spending, as I indicated in a recent intervention and as this Red Book makes very clear. If the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) reads it he will see the real increases in general Government current spending over the last couple of years. Those have been affordable and the lower rate of inflation is helping.

If we look at public spending as a percentage of GDP, we see that, yes, it will fall, but that is extremely good news, because it means people will be able to keep more of the money they earn from their productive activities and as the economy is growing we can have better public services.

One of the cruellest myths being put around by the Opposition at the moment is that if we took public spending to 35% of GDP, we would be cutting it to 1930s levels. That is complete nonsense: for most of the 1930s, public spending as a percentage of GDP was well below 35% in any case, but I recently looked at the numbers and found that, in real terms, public spending this year is nine times the level of real public spending in the early 1930s—nine times in real terms.

[Mr Redwood]

To make the point, the Chancellor has said that he will spend a little bit more in the last year of the period so that we reach exactly the percentage of GDP that Labour thought appropriate in 2000. We cannot say that because we are spending the same percentage of GDP we have cut spending or that it is down in real terms. If we have a healthy, growing economy, public spending is well up in real terms, as is the general size of the economy. We should welcome that. What we want is growth in the economy, so that we can have affordable growth in the range and quality of public services. That is exactly what this illustrates. I hope that Labour Members will stop trying to con people into believing that if we ended up with 35% of GDP—1% lower than the Chancellor intends—we would somehow have 1930s levels of public services. It is so absurd that I cannot believe that they even dare to repeat such nonsense day by day.

What we want from this Budget, and what I think it helps to deliver, is more growth. It is great news that we now have such good employment figures, which show record highs. It is good news that unemployment is reducing and good news that youth unemployment in particular is reducing.

What has happened over these five years is quite remarkable if we consider two important background points. The first is the state of the banks inherited in 2010. This House has never really understood or grappled with the magnitude of what happened to the banking system under Labour, or the magnitude of the changes between 2008 and today, particularly with respect to RBS and HBOS. If we had asked most economic forecasters what would happen to the UK economy if we took about £1 trillion of assets off the balance sheets of two leading banks, they would probably have forecast that the economy would crash in a remarkable way. What is fantastic for our country is that after the initial crash over which Labour presided in 2008-09, we have managed to get the economy back to growth while mending the banks and going through the extraordinary shrinking on the banking balance sheets. [Interruption.]

I find it remarkable that Labour Members will not listen to what I am saying. They lived through this dreadful experience and their regulators allowed the banks to over-expand their balance sheets, when many of us were saying that it was going too far. [Interruption.] Indeed, we did. We constantly said that regulation was too lax. I remember writing in the report of the economic policy review undertaken by the Conservative Opposition that, while in some areas there was far too much regulation, the regulation of the things that really mattered—cash and capital—was far too lax, and needed to be tightened. However, the Labour Government and their regulators then made the worse mistake of over-tightening in a hurry, and precipitated a major crash. Labour needs to learn from that. Indeed, we all need to learn from it, because we do not want it to happen again. We need to understand why there was such a big crash in output and in people’s living standards and real incomes, and why it took time, between 2008 and 2013, for growth to resume. The reason was that the banking system was so badly damaged that, obviously, it took time to get it back into shape.

As the Chancellor said himself, there was another reason for our problems. In 2011 there was an extremely unpleasant euro crisis, which had an impact on Britain because we live by foreign trade as well as by our domestic activities. We had to shelter ourselves from the worst of that. We are now in the process of orientating our trade much more strongly towards Asia and the Americas, the growing parts of the world, and away from the European area, which is mired in recession and is still experiencing enormous difficulties. It decided to create a single currency without creating a single country to back it and love it, and is having to live with awful strains and stresses as a result.

As we meet today, this Budget is an important event. It is certainly a very important event politically in the United Kingdom. However, a far more important set of events is taking place on the continent, where hectic negotiations are taking place between Greece, Germany and the rest over whether Greece can stay in the euro. It is not easy to see a happy outcome in either direction from those very pained discussions, but are we not glad that we are not having to live with that awful experience in this country, thanks to some of us who urged very strongly that we should stay out of the euro? [Interruption.]

The hon. Member for Bishop Auckland (Helen Goodman) thinks it is funny that Greece has a youth unemployment rate of 50%, but I do not. I think it is a disgrace. I also do not think it is funny that several countries on the continent have a general unemployment rate of 25%. That is quite unacceptable, and the Labour party would rightly condemn it every day of the week if it were happening here, but it is not happening here because we ran our own economic policy, and we have done a much better job that they did on the continent.

[Mr MacNeil]

Does the right hon. Gentleman accept that most of the problems of the European Central Bank are to do with a fixation on inflation—a fixation that he shares?

[Mr Redwood]

I have no fixation on inflation, but neither do I think that runaway inflation creates prosperity. It is necessary to manage inflation, and to manage growth, and to have an economy that can expand. I am very pleased that this Budget helps to create and preserve the expansion that is now under way in the United Kingdom. I think it is good news that it contains measures to promote more home ownership and saving, and I think it is good news that it contains measures that will help enterprise and business to promote more jobs, because what we want are more jobs and better-paid jobs.

I was pleased to hear the Chancellor say that most jobs now are full time, and that many are highly skilled. That is what the country needs: more skills, more opportunity, and the chance for individuals to train, work and educate themselves well so that they can get better-paid jobs. That is what we all want in the House. It is sometimes suggested that the Conservatives do not want it, and I find that regrettable. We want it as much as anyone else. We want more jobs, better-paid jobs, and more skilled jobs. We know that we have to earn our money, and we want to create opportunities for people to earn theirs.

The Budget contains some sensible judgments on how much the country can afford in increased public spending. I think that £60 billion is a perfectly good judgment of the amount of extra public spending that will be possible by the end of the next Parliament. It also contains a judgment on how we can finally get rid of the deficit and start to cut the debt. I find it a bit odd that Labour has been telling us that too much was cut in this Parliament, and is now saying that the deficit is too high. I have news for Labour. You have to cut if you want to lower a deficit; it does not just magic away. The question is, how do you get that judgment right?

Debate on the Address

Debate between Lord Redwood and Angus Brendan MacNeil

Wednesday 4th June 2014 Commons Chamber

[Mr Redwood]

That is quite right. The point has been made before. Lower taxes on enterprise and effort are generally a good thing. We want people to keep more of the money they make or earn when they set up businesses or get good or better jobs, and we also want to make sure that the Government do not deter employers from creating more jobs by over-taxing work.

I am pleased that the Gracious Speech refers to the need for more and better roads. In the past 15 years, our road building has fallen well behind what needs to be done to support the economic recovery and to promote industry, commerce and more jobs around the country. I look forward to seeing the detailed proposals.

What I primarily wish to do this afternoon is to speak for England. [Interruption.] I am glad that at least two hon. Members agree with that proposition. We speak too little for England in this House of Commons; yet a majority of us are English Members of Parliament.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

I heartily encourage this movement from the right hon. Gentleman. Let us hope he can do more and more of it post-March 2016, when Scotland becomes independent.

[Mr Redwood]

I will have to disappoint the hon. Gentleman. The Gracious Speech of course invites us to talk about this matter by referring to the possibility of more extensive devolution of powers to Scotland—in the likely event that Scotland votes to stay in the Union, which many of us want to see—and of the extension of powers to Wales. However, the Gracious Speech makes no mention of extending devolved powers to England, and we cannot carry on with lop-sided devolution without considering the business of England.

As many hon. Members will know, I believe in being economical when it comes to public expenditure on the business of politics and government. I do not want a new expensive building and a whole lot of new English MPs down the road, in the way that Scotland has for its Scottish Parliament. This sacred plot has been the site of the English Parliament for many centuries. This Union building is now for the Union Parliament—built for an empire and a great Union—but it could again be the site of the English Parliament under the United Kingdom Parliament. Like me, I am sure that many colleagues who understand the need for value for money for taxpayers would be happy to do both jobs. We would be prepared to come here under your skilful guidance, Mr Speaker, to talk with our Scottish, Welsh and Northern Irish colleagues on all the matters of the Union, and to come here on other occasions to deal with the business of England without their help, guidance and certainly their votes. I think that there would be justice in that.

--- Later in debate ---

[Mr Redwood]

I am grateful to the Prime Minister for his courtesy. He has been courteous to stay as long as he has given that he has such pressing engagements. He illustrates the point that I wish to move on to, which is how much Brussels dominates our proceedings and our government, but I will first complete my Scottish point.

The most likely need that we will face after the Scottish referendum is the need to look at the question of lop-sided devolution. I would be happy to extend more powers to the devolved Scottish Parliament, but I want to be a voice for England and I do not think that we can carry on doing that without England having a settlement as well.

In the less likely event that the Scottish nationalists get their wish and there is a vote for independence, I will be one of the first to congratulate the Scots and help them in any way towards a smooth transition. However, I will want them to be genuinely independent. I will not want us to pretend that there is some kind of special relationship that is rather like a federal system. If people wish to be independent, they should be independent.

In that event, I propose that the House of Commons should immediately pass legislation saying two important things. The first is that the 2015 general election will not apply in Scotland and the current Members of the Westminster Parliament from Scotland should continue for as long as it takes to complete the process of separating the countries. There would be no point in having the expense and nonsense of a general election in a country that was leaving the Union. The second thing, which the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) might like less, is that the Scottish MPs should play no part in any discussions about non-Scottish business in this place and no part in forming the response of the rest of the United Kingdom to their wish to be independent.

[Mr MacNeil]

I am grateful to the right hon. Gentleman for allowing me to intervene again. I agree with him wholeheartedly on that point. In the SNP we have a self-denying ordinance of not taking part on English issues and non-Scottish issues because we believe, and I am sure the right hon. Gentleman is demonstrating this, that England is as good as France and Germany and can run itself amply, without any help at all from the Scots.

[Mr Redwood]

Very good. I shall now move on and speak for the United Kingdom. The hon. Gentleman might find that we are back here together still arguing about these matters after the referendum, but I hope he will accept the verdict of that referendum, as I will do, because we cannot go on arguing about this.

[Mr Redwood]

Indeed. I am a Member of Parliament of the United Kingdom Parliament, and proud to be so. I would like my country to stay together, but I do not want people in it who are not keen to be in it. If a democratic process is gone through and we discover that a part of the United Kingdom wishes to leave, as democrats, we must realise that that is the answer. We cannot keep on pulling up the plant to see where the roots are. I hope the referendum will be a one-off and that it will settle the issue for a considerable time.

[Mr MacNeil]

indicated assent.

[Mr Redwood]

I am glad to see the Scottish nationalists agreeing.

I come on to talk about the United Kingdom and its relationship with the European Union. We have today again witnessed a very important ceremony in this House. That ceremony is designed to remind us all of the battles and struggles of our forebears to ensure that this House of Commons had the power to limit the Crown—had the power to make the authority of government in this country accountable to this House of Commons—and a very moving and important ceremony it is. But we have a new struggle on our hands, equally important though not one, fortunately, for which we will need muskets and musket balls. We will need words, actions and independent thinking.

Our struggle is that this once great and sovereign House of Commons now is not sovereign or great in so many fields because the European Union has powers to instruct, overrule and command. There is a particular case that I would like the Government to consider in this next year in the legislative programme. The case is that of the human rights convention and the list of human rights therein. It was a Labour Government, when signing us up to the treaty of Lisbon, who expressly said in their motion on the treaty and in the Act of Parliament that they put through on the back of it that we were not going to consolidate all of the convention on human rights—that this House and this country would make up its own mind on human rights. That was reflected in the legislation that we passed—an act of sovereign legislative activity to say that we did not want it all dictated from the European Union.

What has now happened under a European Court judgment is that the European convention on human rights is being absorbed into the corpus of European law and will become an instruction on this House, against the wishes of Labour and against the wishes of the rest of us in the House at the time. I think the House should now move an amendment to the European Communities Act 1972 expressly ruling out that grab of power by the European Court of Justice on this issue, reflecting the words of the treaty we signed and reflecting the words of the legislation that this House passed. Unless this House is prepared to do this at some point on some important issue, this House is in no sense sovereign any more. We can claim to be sovereign only because all the powers of the European Union today are technically the result of our passage of the 1972 Act, but if we are never going to amend or revisit that Act, those powers have gone and we are completely under treaty and ECJ law.

Another area that we may need to look at is the promise by Governments of all persuasions that matters relating to taxation and social security would remain national issues, because they involve the money of our taxpayers and the money going to people in our country who most need help. Surely this Parliament should control our taxation, and our expenditure of substantial sums of it on benefits.