Oral Answers to Questions

Lord Darling of Roulanish Excerpts

Tuesday 13th July 2010 Commons Chamber

[Danny Alexander]

Of course that matters, but what matters more than anything is the risks that this economy would have faced if we had stuck with the plans of the previous Government, which would have risked higher interest rates, lower growth and fewer jobs, and there would have been very big risks in the future.

[Mr Alistair Darling (Edinburgh South West) (Lab)]

I am glad that the Chief Secretary at least accepts the proposition put by the hon. Member for Louth and Horncastle (Sir Peter Tapsell).

We all agree that to get debt down, growth is essential. However, has the Chief Secretary noticed this morning’s remarks by Geoffrey Dicks, a member of the Office for Budget Responsibility, who said that his office had cut its forecasts for growth by 0.5% as a result of the Budget announcements two weeks ago, and went on to say that logically, as he put it, that increased the chances of our economy slipping back into recession?

[Danny Alexander]

He also made it clear that he did not think that that risk was a likely one. In the Budget—this is the important central judgment that the House needs to understand—we have faced up to the fact that if we had carried on with the plans of the previous Government, the big risk facing the economy would have been higher interest rates, fewer jobs, and a reduction in growth, and we would have faced the big risk that we have seen in other countries, which we need to ensure does not happen in this country. Our Budget has ensured that that risk is avoided; the previous Government would not have done that.

--- Later in debate ---

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

The assessment set out in the Red Book is that it is likely that two thirds will be passed on immediately and most of the rest will be passed on over the course of the next 12 months. In some cases retailers may bear some of the increase themselves, and we will obviously be studying the matter very closely.

[Mr Alistair Darling (Edinburgh South West) (Lab)]

Does the Chief Secretary, in the Chancellor’s absence, agree that the independence and credibility of the OBR are absolutely paramount? Sir Alan Budd said to the Treasury Committee this morning that the numbers he released two weeks ago

“were not an appropriate basis for attempting to estimate the effects of the June Budget on general government employment”,

and the Prime Minister was quite wrong to claim that they were. Would it not be better for the OBR to be more accountable to this House, with its appointments being subject to confirmation hearings by the Treasury Committee, and for its deliberations to be completely open and transparent? What we have at the moment is a good idea strangled at birth by the way in which this Government have been treating it.

[Danny Alexander]

The independence of the OBR is not in question. That was made clear by Alan Budd in his evidence to the Treasury Committee today. This is a good idea that was brought forward by this Government, and it will be established in legislation. I do not think it was even part of the former Chancellor’s secret plans before the election, alongside a rise in VAT, a cut in corporation tax and a cut in income tax. Those are measures he should be supporting in this Budget, because he came up with them in the first place.