Government’s EU Exit Analysis

Debate between Alison McGovern and Andrew Bridgen

Wednesday 31st January 2018 Commons Chamber

[Alison McGovern (Wirral South) (Lab)]

It is a pleasure to be in this debate under your chairship, Madam Deputy Speaker. I normally find it a pleasure to debate the hon. Member for Dover (Charlie Elphicke), but being referred to as an “elite” by a representative of the Conservative party sticks in my craw. Coming from an ordinary background and having fought to get here to speak on the behalf of my constituents, who take all kinds of views on the economy, it pains me to be attacked and accused of being part of some kind of elite that is unconnected from my constituents. That is a disgraceful way to conduct this debate.

I want to make two simple points. The idea that all forecasts are wrong and that everything will be all right in the end is a myth. It is the easiest thing in the world to stand up here and say, “Blame the economists. Blame the forecasters. This is all crystal ball stuff,” and the Under-Secretary of State for Exiting the European Union, the hon. Member for Wycombe (Mr Baker), gave us an excellent example of that kind of nonsense yesterday. An economic forecast is a set of assumptions and a set of data for the current state of the world and then a long sum that allows us to make some conclusions about what particular circumstances might mean for GDP, employment and a range of other economic variables. It is just maths.

[Andrew Bridgen]

Has the hon. Lady ever heard the phrase “garbage in, garbage out”? If we use garbage figures and make garbage assumptions, we will get garbage out of the other end.

[Alison McGovern]

The hon. Gentleman just made my point for me. It is just maths. It is clear and transparent. There is a set of assumptions, a set of data and a set of conclusions. If he thinks that some of those assumptions or some of the data are garbage, it is up to him and those who agree with him to show their working. All that they have to do is do the maths better than the forecasters. We do not have to have a stupid row about whether forecasters get everything wrong all the time, with people saying that we should not believe them anyway. We just have to be transparent and show our working and then we can disagree honourably and openly, rather than making constant ad hominem attacks against people who are not here to defend themselves.

To be frank, I have criticised how economics has been conducted in the past, and I agree with some criticisms of the traditional assumptions made in economics, but this debate is not about that. This is about whether we ought to know about the economic consequences of the various options before the Government, and it is certain that we need Government economists to model various outcomes. The last person to have a massive pop at economic forecasting was our friend George Osborne. I remember well that he loved to tear a strip off the former Prime Minister Gordon Brown’s economic forecasts, thinking that it was a great old argument to accuse the then Labour Government of fiddling the figures. What did George Osborne do? He set up the Office for Budget Responsibility so that we would have independent forecasts, and I will return to that when I conclude my remarks.

I caution Members against making the kind of remarks that we heard earlier in this debate—that things will somehow be okay in the long run, and that short-term forecasts and estimates of the fall in GDP do not really matter because things will all work out in the end. All that will obviously be true if we wait long enough, but how long will we have to wait? I urge Government Members to consider not just the “it will be all right in the end” point of view, but the damage done in the meantime. The past shows us that we cannot just wait forever. If a regional economy is de-industrialised and damaged, we know how long it takes to recover. Economists call it hysteresis—the act of scarring. If a factory in a town is shut down, that town may never recover economically. That is why this is not just about the long term. Brexit has the capacity to exacerbate inequality severely and significantly, so we cannot accept that things will be all right in the end.

We need proper modelling of not just the global effect on GDP or the effect on employment, but of the effect of the Brexit proposals on each and every town in our country. The OBR has asked the Government on numerous occasions for a statement of policy so that it can make a forecast and model it. The spring statement is coming up, so I say to the Minister, as I said yesterday, that he should do the decent thing—do what George Osborne would have wanted—and give the OBR a statement of policy and let it be modelled. Then we can all see what the Government’s Brexit has in store for our country.