Budget Resolutions and Economic Situation

Debate between Lord McCrea of Magherafelt and Cookstown and Brooks Newmark

Wednesday 18th March 2015 Commons Chamber

[Mr Newmark]

My hon. Friend and the hon. Member for East Antrim are both right. The hon. Gentleman’s point was that at the beginning things were a little slower than he would have liked for his constituents, but as he said—this is my point—recoveries are never linear. In the past five years, we have seen slower growth than we would have liked, but we have far more accelerated growth through 2014-15, and certainly beyond to 2016-17 and 2018-19. That is good news.

In 2010, in Labour’s great recession, we faced economic meltdown. As UK plc, we were literally teetering on the brink of bankruptcy. What we needed at that time was an emergency Budget. The Chancellor, working with our coalition partners—I give credit to the Lib Dems—came up with a long-term economic plan. In producing that long-term economic plan, we had to deal with one important issue: the structural deficit. The deficit, which was running at roughly 10.2% of GDP, needed to be dealt with. We particularly needed to deal not just with the general deficit but with the structural deficit, which was an enormous problem in terms of our ability to achieve sustainable borrowing.

That was the challenge posed by the right hon. Member for Wentworth and Dearne (John Healey). He wanted an unsustainable deficit of 10%-plus. Perhaps he meant 12%; perhaps he wanted more borrowing. I do not know what direction of travel he would have liked to take, but if we had gone in that direction, we would have been in France’s position today.

[Dr William McCrea (South Antrim) (DUP)]

Does the hon. Gentleman accept that in Northern Ireland the construction industry is still having difficulties? Many of our major construction companies and the people working for them are having to come to the mainland to get contracts rather than staying in Northern Ireland. We need to encourage that industry.

[Mr Newmark]

The hon. Gentleman makes a good point. In introducing things such as the increased investment allowance—it was £25,000 and went up to £250,000—the Government have done a lot to help to turbo-charge investment. I shall come to the rate of investment and investment growth a little later in my speech.

The important thing was that we dealt with the deficit up front and brought it down by more than 50%. It is now trailing at around 5%. Do we have further to go? Absolutely, but bringing it down from 10.2% was very important.

The important thing about bringing down the deficit and dealing with the structural deficit was bringing back market confidence. Doing so allowed us to maintain low interest rates. Confidence means low interest rates. It is not just a matter of the Bank of England’s confidence in setting them—there is a worldwide market out there. Low interest rates mean low mortgage rates and low business rates for small businesses. All those things were important in helping to create growth in the UK.