Global Economy

Jonathan Reynolds Excerpts

Thursday 11th August 2011 Commons Chamber

[Mr Osborne]

My hon. Friend is right. What we are able to provide in the Government debt market is the stability that is sadly lacking in other Government debt markets. All of us now need to rise to the challenge of removing the obstacles to growth; that will mean confronting some vested interests, pressure groups and, dare I say it, even, potentially, trade unions, but it is absolutely essential that this country wakes up to the competitive pressures of the modern world—the competitive pressures that countries such as China and Brazil present to us—and gets the private sector growing in a way that will create the sustainable jobs that were so lacking in the past 10 years.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

Last year, Government borrowing came in some £20 billion lower than was anticipated; this year, we learn that it will be some £46 billion higher than was forecast. Can the Chancellor give us an explanation?

[Mr Osborne]

As I have already explained, we have an independent Office for Budget Responsibility—[Interruption.] I am pretty tempted to say that the answer is that the previous Chancellor did not want to have to downgrade his borrowing forecast four weeks before the general election, so he kitchen-sinked the borrowing forecast a year before, to make sure that he was able to show a reduction just before the general election.

Oral Answers to Questions

Jonathan Reynolds Excerpts

Tuesday 21st June 2011 Commons Chamber

[Justine Greening]

I do not accept the premise of the hon. Gentleman’s question at all. As ever, what we have heard from the Opposition is a cheap political point-scoring jibe. They might be better advised to come up with an alternative plan for tackling the fiscal deficit. The hon. Gentleman had nothing to say to my response to him, which implied that it is the most well-off households in the country that are bearing the brunt of the fiscal consolidation.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

A year ago, when the Institute for Fiscal Studies analysis found that the Budget was a regressive one, the Treasury objected to that analysis on the basis that the IFS had not properly considered the incentives to economic growth that the Budget contained, but given that growth is now flatlining and seems to be frequently downgraded, is the Treasury willing to accept that the IFS analysis last year was entirely correct?

[Justine Greening]

The IFS analysis was very clear-cut that it was indeed the most well-off people in our country who were bearing the brunt of the fiscal consolidation measures. I draw the House’s attention to the need to look at the overall impact of not just the Budget 2010, but the spending review and the Budget this year. They show that the most well-off people in our country are bearing the brunt of the fiscal consolidation, whether that is measured in terms of their income or of their expenditure.

Regulatory and Banking Reform

Jonathan Reynolds Excerpts

Thursday 16th June 2011 Commons Chamber

[Mr Hoban]

My hon. Friend makes an important point about diversity in the financial system. One of the points that the Governor of the Bank of England made in his Mansion House speech last night was about the need to reduce the barriers of entry to the banking system in order to encourage more competitors to come forward. That is an excellent way in which we can promote choice and competition and get a better outcome for consumers, whether individuals or businesses.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I, like many hon. Friends, believe the Government’s decision to proceed so quickly with a sale process for Northern Rock shows that they are willing to miss a golden opportunity to learn the lessons of the financial crisis and diversify the UK banking sector. On remutualisation, will the Minister undertake to release all the advice he has received, information on all the meetings he has been to and all the rest of the paperwork, so that we can decide—Co-operative MPs such as myself, and other Members—whether remutualisation has been taken as seriously as it should have been?

[Mr Hoban]

The hon. Gentleman makes an important point. I reiterate what I said before. Yes, Northern Rock has been put up for sale. The purchaser could be a proprietary company or another mutual. An acquisition by another mutual could actually help strengthen the mutual sector. I have made it clear that as the sale process proceeds, we will compare the outcome with either an initial public offering or a stand-alone remutualisation. The challenge that those supporting a stand-alone remutualisation need to address is how we ensure that the taxpayer gets value for money from that.

Budget Resolutions and Economic Situation

Jonathan Reynolds Excerpts

Thursday 24th June 2010 Commons Chamber

[Sajid Javid (Bromsgrove) (Con)]

I pay tribute to those hon. Members who have made their maiden speeches today. My hon. Friends the Members for Staffordshire Moorlands (Karen Bradley), for Hendon (Mr Offord) and for Camborne and Redruth (George Eustice), and the hon. Member for Kingston upon Hull East (Karl Turner), all made excellent maiden speeches.

After 13 years of Budgets that were predicated on the mistaken notion that boom and bust had ended, it is hugely reassuring to see a Budget that restores some fiscal sanity. This Budget puts at the heart of our economic policy the restoration of our nation’s finances and the laying of foundations for stronger economic growth. In response to the hon. Member for Walsall South (Valerie Vaz), however, I must add that we do not know what the previous Government’s legacy is, because some costs of the past two or three years’ actions have yet to be borne—but will be unless this Government take preventive steps.

I shall not dwell on what has been bequeathed to us, but I must mention a few statistics that speak for themselves. The budget deficit is more than 11% of GDP, and the largest of all advanced nations; the visible national debt is 68% of GDP; and a record 28% of the adult working population—8 million people—are currently described as “economically inactive”. Despite all Labour’s efforts, no amount of spin can hide the truth of the abysmal inheritance that we have been given. Once again, it has been left to a Conservative-led Administration to clean up the mess of a former Labour Administration. As it says in the Budget, we have to start doing that by addressing this record peace-time deficit.

I am somewhat surprised that Labour Members continue to act as though we can keep living beyond our means, when only £3 in every £4 of Government spending is raised through general taxation. Only eight weeks or so ago, even the Labour leadership admitted during the election campaign that if they won the election they would have to carry out severe cuts as well. There were various estimates, but they averaged about 20% of real cuts in unprotected Departments over the course of the next Parliament. Notably, the then Chancellor of the Exchequer said in an interview that if he were re-elected he would have to make bigger and deeper cuts than Margaret Thatcher did in her time. Now, however, Labour Members act as though those cuts are not necessary and we are able to make a choice.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

It is not the reduction of the deficit that is the point of conflict between us but the scale and the speed of doing it. Doing it in the way that has been proposed risks pushing the economy back away from growth and into recession. In that situation, the deficit will increase, not decrease. Does the hon. Gentleman accept that point?

[Sajid Javid]

The hon. Gentleman’s own party said before the election that it expected to make very large, severe cuts, in the order of about 20% in real terms. Our Budget proposes cuts of about 25% in real terms in unprotected Departments. Is he really saying that the only thing bothering him is a difference of 5%? I have not heard anything from Labour Members in the past two or three days that remotely suggests how they would achieve the 20% cut that they have talked about.

James Carville, who was President Clinton’s political adviser, once famously said:

“I used to think if there was reincarnation, I wanted to come back as the President or the Pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everyone.”

Soon after that, President Clinton abandoned his plans to increase borrowing, recognising instead that, even at that time, he had no choice but to balance the budget. I have traded in the international bond markets for many years, and working on a trading floor I saw for myself just how severe the financial crisis was. There is no question but that we would have faced economic problems regardless of the actions that were taken by the previous Government, but their actions made things worse, and that is the key. The situation has been made worse by the huge amount of borrowing that we have taken on since that time.

--- Later in debate ---

[Toby Perkins]

Please accept my apologies, Mr Deputy Speaker. I shall make sure that I address you and hon. Members correctly in future.

It is right to talk about the choice that Labour made, which was to protect the jobs that people relied on and to prevent an extra 500,000 going on the dole. Labour’s choice was to protect the homes that people had saved up over their whole lives to be able to buy. Labour’s choice was to support industry and bring forward public spending projects to keep the construction industry working when the private sector was sitting on its hands. Labour knew that the price of salvaging those jobs, those homes and those businesses would be an increase in our deficit. We delivered a plan for the recovery, which is working, and a plan for reducing the deficit after the recovery had been secured in the following year. The hon. Member for Bromsgrove told us that we could not keep living beyond our means, but of course we already knew that; that is exactly what the shadow Chancellor was referring to in the previously attributed quote. He made it absolutely clear what our strategy was.

[Jonathan Reynolds]

Does my hon. Friend agree that there is something deeply disingenuous about the fact that the Conservative party supported our Government spending plans until 2008—before the economic crisis hit home? They believe that we are living beyond our means, but they supported our spending at the time.