Budget Resolutions and Economic Situation — House of Commons, 2016-03-22
Topic: Macroeconomics
Patrick Bosco McFadden (Labour, Centre-left): For six years now, we have had Budgets made on the basis of targets and rules announced by the Chancellor, which have then informed the Government’s spending choices. Each time, the Chancellor has set out his targets as an iron necessity, suggesting that any deviation from them meant that those guilty of the deviation could not be trusted with the public finances, yet time after time, the deviation has been his. The traps he has fallen into have been traps of his own making The Chancellor began in the last Parliament by telling us that he would eliminate the deficit within five years. He failed to do so. His strategy of austerity was so successful that he announced it would be necessary to carry it on for two Parliaments, rather than just for the intended one. Instead of eliminating the deficit, he roughly halved it. That was the same pace of deficit reduction that Labour had asked for, but which he dismissed at the time as irresponsible profligacy Then, in this Parliament, there were three rules. First, there was a welfare cap designed to show how tough the Chancellor was on welfare. It lasted barely six months after the election. He was forced to break it, in his U-turn on tax credit cuts in the autumn statement, by the justified anger at his hitting the working poor who were trying to do the right thing by themselves and their families. His second fiscal rule involved a pledge to reduce debt year on year. Another fiscal rule made, another one broken. The Office for Budget Responsibility’s verdict is: "The Budget measures make little difference to net debt in 2015-16, so we expect that target still to be missed." That leaves only his target for a surplus in 2019-20, which the OBR rates his chances of meeting as no better than 50:50 This was supposed to be a Budget that did not frighten the horses, yet it has fallen apart in a matter of days. Whatever the motivations of the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith), he has exposed the reality of the approach of the Chancellor and the Prime Minister to Budget-making: make up a rule, then pick on the same group of low-income people to pay for it time after time. The right hon. Gentleman has described the measure as "unfair" and "divisive", but perhaps his most damning statement is that he believes the Chancellor targets the non-pension part of the Department for Work and Pensions budget because it relates largely to a group of people who do not vote Conservative The Chancellor says that we are all in this together, but we cannot all be in it together if the Budget is a series of tax giveaways on thresholds for higher earners, capital gains tax cuts and other measures that, in the main, go to the better-off while disabled people are expected to take a £4 billion hit. The cuts to the disabled have been abandoned, at least for now, but the bigger impact involves not just one spending measure. The Prime Minister and the Chancellor prided themselves on fashioning a one nation compassionate Conservatism, but that claim has now been turned to dust by this Chancellor’s Budget. This is not a reformed Conservative party; it is the same old Conservative party, rewarding those it thinks will vote for it and punishing those it thinks will not. It is not just one spending measure that has been killed; it is the whole project of one nation compassionate Conservatism.