Charter for Budget Responsibility

Debate between Jeremy Quin and James Cartlidge

Wednesday 20th July 2016 Commons Chamber

[James Cartlidge]

I will repeat the point. I think that monetary policy comes first in the present circumstances. I think that the Governor of the Bank of England is a very reassuring force in these times. He issued those warnings about Brexit because he was asked to state his opinion, and he stated it as honestly and transparently as he could. Once Brexit was the result—and it was a shock, as I think everyone concedes, even those who wanted Brexit passionately—he was a very reassuring presence for the Government.

As for fiscal policy, Opposition Members have mentioned measures such as huge amounts of investment. This may be only my personal view, but I would always emphasise that it is private sector investment that we should seek to drive, and a key part of that is the credibility of the Government’s overall stance.

[Jeremy Quin]

We hear calls for a fiscal stimulus, and I recall that there were similar calls during the financial crisis. People demand shovel-ready infrastructure projects, saying, “Let’s spend the money,” but such things always take time. The idea that a magic tap can be turned on and immediately flood the economy with a fiscal stimulus is illusory, and that is why people turn to monetary policy first. There are those who get excited and say that we need the ability to change now, but I think that that is a delusion.

[James Cartlidge]

I agree with my hon. Friend, but I would make one point about shovel-ready projects. We have quite an advanced business plan for a Sudbury bypass. If the Government decide to go down the Keynesian route of looking for shovel-ready schemes, we are ready in South Suffolk, and we are waiting for the bypass for which we have been campaigning for many decades.

There is an aspect of the charter for budget responsibility that has not yet been mentioned during today’s timely debate. The charter states:

“The Treasury’s objectives for fiscal policy are to: ensure sustainable public finances that support confidence in the economy, promote intergenerational fairness, and ensure the effectiveness of wider Government policy”.

The phrase “promote intergenerational fairness” strikes me as incredibly important. I hope that my Whip will show me some intergenerational fairness, and allow me a couple more minutes. I will not be long.

We have had a Conservative leadership election, and we are still having a Labour leadership election, but, as far as I am aware, no one has debated the following facts. Our national debt stands at £1.65 trillion; according to the Institute of Economic Affairs, our liabilities amount to £5 trillion; and it is estimated that, by 2062, all pensioner benefits will cost £491 billion. I was going to say a lot more about that, and there is a lot more that needs to be debated, but I am getting the hint.

The Economy

Debate between Jeremy Quin and James Cartlidge

Wednesday 18th November 2015 Commons Chamber

[James Cartlidge]

Ultimately, my hon. Friend is talking about the importance of investment. It is necessary to reduce the deficit, and therefore eventually the long-term debt, in order to build an economic policy that is credible to outside investors and gives them the confidence to invest in this country. That is the key reason.

[Jeremy Quin]

I thank my hon. Friend, who is absolutely right. He is not the only wise person to make such remarks; the head of the CBI did so only recently. That fiscal rule gives companies the confidence they need that they can invest in this country and will continue to see long-term progress being delivered by this country.

The hon. Member for Dundee East (Stewart Hosie) talked about the need to have export-led growth. One of the problems we have with our balance of trade—I mentioned it in an intervention on the hon. Member for Hayes and Harlington—is that we are growing while our major markets are shrinking or teetering on the edge of recession. That is the sad aspect of the position we are in. While I am delighted that we have one of the best rates of growth of any country in the G7, it would be a lot easier if the whole of Europe were growing at the same pace. Whereas other countries are taking strong dividends out of this country from the investments they have made—dividends have gone up by 30% in the UK economy since 2010—we are not getting the same capital returns from the investments that we are making overseas. Nor are they in a position to buy the goods that we are manufacturing. There are many good stories to be told about our export business, particularly in the automotive sector, but if our customers cannot afford to buy our goods, that will inevitably come through in the statistics.

The answer is that we should be investing more and expending more effort on the growth markets of the world. I have to say to the hon. Member for Dundee East, and to other hon. Members, that we see the growth in China and in India, and we know how important they are. One would have needed the sleeping prowess of a Rip Van Winkle not to have noticed the efforts that the Government are making in India and in China to ensure that we are opening up those markets for our exports in future. I oppose the motion.