Budget Resolutions and Economic Situation — House of Commons, 2015-03-18
Topic: Macroeconomics
Mark Robert Timothy Garnier (Conservative, Centre-right): It is a great pleasure to follow the hon. Member for Wrexham (Ian Lucas). He made a passionate speech—the one thing I have learned is that Opposition Members feel very passionately about everything they talk about—but it does not mean that he was right. I wish to pick up on two issues, one of which is his reference to Conservatives being a high-tax party and the second is his reference to the fact that the promise to reduce the budget deficit by now has not been met. I look back to 2010 when I and many other Members were first elected to this place. We were listening to the Chancellor, who said that the budget deficit would be reduced to nothing by 2015 and that we would start to see the net debt reducing as a percentage of GDP. We cannot turn away from the fact that, although we were expecting a zero budget deficit by next year, that will not happen. But every single prediction that was made in 2010 was based on what was known at the time, on what was going on in the global economy and in our own economy and on a whole number of other different factors, all of which contribute to the great melting pot that is fiscal and economic forecasting What nobody could have understood at the time was the absolutely colossal problems that we would have in the eurozone and in Europe. When a country’s biggest trading partner has massive economic problems—we are seeing economic decline in Europe at the moment—it is inevitable that it will not reach its economic and fiscal targets. What is an extraordinary achievement is that, despite the fact that we are still seeing Government net borrowing going up, we have got to the stage where the economy is growing at such a rate, according to the OBR, that net borrowing as a percentage of GDP will peak this year at 80.4% and decline by 2020 to 71.4%. Finally, we are in a position in which we are reducing public sector net debt as a percentage of GDP. That is incredibly important because at the moment this Government—and the next Government and many Governments after that—are spending revenues not raised in this Parliament but that will have to be raised in 20, 30, 40 and 50 years’ time. It is our children, grandchildren and our great grandchildren who will have to pay down that debt I did not get elected to spend the money of future generations. I want to spend this generation’s money—this set of taxpayers’ money. However, when this Government came to power, there were a huge number of problems. There was a fragmented banking system. I am not somebody who will necessarily say that the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) was wrong to bail out the banks. I know that many people say that it was a rash thing to do—I said that at the time—but in retrospect, I can see that it was the right thing to do. We could not allow our banking system to collapse, so the decision was right. However, it was also necessary to reform the banking system completely, and this Government have done an enormous amount of work to do that. Credit conditions are improving and we have seen a big change in the financial regulatory system. That is all about ensuring that we remain one of the world’s pre-eminent banking centres and, much more importantly, that we get finance to the small and medium-sized enterprises, businesses and households that need it Ultimately, the Chancellor has achieved an extraordinary level of economic success over the past five years, and that is the result of a number of different factors. One of those factors, of course, is the reduction in corporation tax, which will fall to 20% next year. As a result, many companies around the world now view the UK as a tax haven, as evidenced by Pfizer’s AstraZeneca bid, and that is attracting a huge amount of inward investment. The net result has been over 750,000 new businesses created in the UK and 2.2 million new private sector jobs However, there are a number of issues that we have to be incredibly careful about. One of the most pernicious problems built up in the bubble years before the financial crisis—I bang on about this—was the colossal increase in household debt, which went from about £400 billion in 1997 to about £1.45 trillion in 2008. That was a huge increase of household gearing from around 100% to 170%. It has since come down to about 140%, and I am pleased that the OBR has predicted that the increase, which will happen, will not take it to the same level What does that mean for our constituents? Over the next few weeks we will all be knocking on our constituents’ doors ahead of the general election. They will open their doors and show us a glimmer of their lives. We will see the television flickering in the background, and there will probably be a couple of kids not doing their homework when they should be. What we know is that as a result of those bubble years the average household can rely on only six days of savings should one or both of those people lose their jobs The economy is still incredibly fragile. It is in a really dangerous place. If we do not stick to our plans and try to continue to grow jobs, we will end up jeopardising the jobs that we have grown. It is so important to get this absolutely right. When we look at our constituencies, as we will all be doing, particularly after this Budget, we will see that in the vast majority of cases unemployment has dropped. Unemployment in my patch has dropped from 2,300 to 999 today, which is a good thing, but we still have below-average wages and a higher than average number of part-time jobs That is why now is not the time to get the bunting out, although an enormous amount had been achieved. Now is absolutely the time to make sure that we do not deviate from the plan that has been proved right in the vast majority of cases over the past five years and that can finally finish the process of restoring this country to economic soundness and fiscal probity.