The Economy

Neil Carmichael Excerpts

Thursday 4th June 2015 Commons Chamber

[Mr Clarke]

I look forward to a little party political debate with the right hon. Gentleman again. As I have said, what decided the election was the coalition Government’s extraordinary record. It was a particular tribute to my right hon. Friend the Chancellor, closely assisted, as he said, by Danny Alexander, the former Member for Inverness, Nairn, Badenoch and Strathspey, who was an excellent Chief Secretary, in getting the affairs of the nation back in order and steering us to some of the most successful economic results in the western developed world, which is what we have now.

What concerns us now, in this Parliament, is what judgment the public and history will make of this Government when they look back in five years’ time, or whenever. That will crucially depend on whether we finish the job and deliver the modern, more balanced, competitive economy that will give our children and grandchildren greater security and a better quality of life. That is the task we have set ourselves, and it is not going to be easy.

At the moment we are all enjoying the hubris of victory, as far as my party is concerned, or the relief of being back here just opposing, as far as the Opposition parties are concerned. On the surface the task looks easy, because at the moment our economy is growing more strongly than almost any other in the western world, employment is soaring because of our flexible labour market, which we should keep that way, our inflation is low, and real pay is at last beginning to rise as the benefits of recovery get through to every level of society. However, it would be a false assumption to think that it is plain sailing from now on, that everything will continue in that way and that the risks have vanished domestically and abroad, so we can take easy measures to reward those who voted for us. The world is not like that.

I take encouragement from what I took to be the Chancellor’s message. He has announced a July Budget, because he wants to take the opportunity while the economy is growing to take some of the tough and difficult decisions that the Government still have to take. I certainly encourage him to do so. In my part of the world—Nottinghamshire, Derbyshire, the east midlands—the people who voted for us knew that there were still tough and difficult decisions to take. They were not seduced by the speeches of those whose only examples of what they intended to do were ways of spending money or rather short-term popular things. The sooner we get on with tackling the underlying problems—including, as my right hon. Friend the Chancellor has reassuringly just confirmed, the debt and the deficit—the better we will be able to get on with all the other things that need to be done, which will enable our economy steadily to get back on to a stronger and more secure footing.

[Neil Carmichael (Stroud) (Con)]

Will my right hon. and learned Friend give way?

[Mr Clarke]

I will, but this is the last time I will do so, because a lot of other Members want to speak.

[Neil Carmichael]

I thank my right hon. and learned Friend. Does he agree that one of the key tasks is to keep up the pressure to improve our skills agenda, so that we can ensure that our young people continue to contribute to a productive economy and increase our capacity to develop, innovate, research and develop and manufacture?

[Mr Clarke]

My hon. Friend anticipates some of the points I wish to make. I agree with everything he has just said. Tackling the deficit and debt, together with what he has just described and the other measures that we have committed ourselves to, is a genuinely one nation Conservative approach. Ever since I became active in politics, I have declared myself a one nation Conservative. The phrase has moved in and out of fashion a little in my time, but I have remained boringly consistent. In my view, it means free market economics combined with a social conscience, as well as a forceful internationalism that looks after Britain’s interests in the world and helps to spread our values.

On the economic front, the combination of fiscal discipline and economic competence, with measures such as taking the very lowest-paid out of tax altogether, easing the tax burden on the lower-paid, not taking people on ordinary incomes into higher rates of tax that should affect only the very wealthy, and the right to buy from those giant landlords the housing associations, which should be unlocking their resources to invest in more new social housing, gives the right one nation balance to the proposals we have put forward. As I have said, it is important that we get on with it, because this Session of Parliament is probably the best time to get some of the most formidable challenges out of the way and under our belt.

If I am sounding a little foreboding about what could go wrong, I should say that I do not foresee anything going wrong, but we will be lucky if no global shocks hit us. We have had five years of growth since 2010, with only a minor blip—not a recession—in 2012, and 10 years of uninterrupted growth would be pretty well a post-war miracle. It does not happen in the real world. We are doing better than any other western European nation, but that is based on the fact that we devalued by 25% when we had the crash—that has done us a bit of good, but not a great deal—and on a US recovery that is now looking rather feeble, as it was stimulated by quantitative easing, which is a dangerous thing. Our own recovery is not forcefully strong, and it was based on quantitative easing when that was necessary. Of course, we rely on interest rates, and they are the lowest they have been for 300 years, which is good for indebted countries.