Budget Responsibility and National Audit Bill [Lords]

Andrew Bridgen Excerpts

Tuesday 22nd March 2011 Commons Chamber

I shall conclude by making two further points, the first of which relates to the myths about this country’s level of deficit and national debt.

[Andrew Bridgen (North West Leicestershire) (Con)]

I welcome the fact that the OBR is in place. Does the hon. Gentleman think that if it had been formed back in 1997, it would have advised the Labour Government against increasing the national debt by a stonking £74.9 billion in the boom years between 1997 and 2004?

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[John Mann]

We, like other countries in the western world, are losing manufacturing jobs because of our refusal to deal with Chinese imports and the consumer myth of buying ever cheaper from China. The inherent trade imbalances and problems that accrue as a result will come back to haunt us, and while I know that the Government will want to allocate time to discuss that vital subject in the near future, it is slightly outside our present debate.

The hon. Gentleman is partly right and partly wrong. While it would be wrong to discuss policy issues relating to the economy now, if the statistics had been broken down at that time to allow his assessment to be made more accurately, it is rational to assume that the situation could have been debated more regularly and in a more informed way. That might have had a positive impact for Opposition Members such as him as well as Labour Back Benchers. Indeed, such information might also have informed the previous Government’s policy making, which explains why amendment 1 is in the Government’s favour.

We need to know about job creation and what jobs are available not only in London and the south-east, but in other parts of the United Kingdom. I have talked about immigration, but there is an equally vital factor for economic and social policy: the blurring, albeit for rational reasons, of retirement age. We have to consider early retirement, late retirement and the retirement age itself, as well as the vital question of pensions. Some employers in areas such as mine have deliberately targeted getting the over-60s back into employment. That is perfectly rational, and it is good for those people, for the social economy and, perhaps, for the economy overall. We need the information, however; not because that is a bad thing, but because we need to know whether the new jobs in our regions and constituencies are getting those people who are deemed to be retired into the labour market, as opposed to people who are not working—whether they want to work or not. If we are to crack the problem of those who choose not to work, or who are incapable of getting work—again, the rational employer goes for the person with work history—such understanding will be vital to our economic and social policy. I put it to hon. Members that the rational employer is far more likely to employ a 67-year-old with an excellent work history who is re-entering the labour market, perhaps in a part-time job, than a 57-year-old who has been unemployed for 10 years.

The decisions taken by employers and those individuals who wish to re-enter the labour market are not necessarily matters for us, but the consequences of their decisions are important to us, and especially to economic policy making. An understanding of the precise breakdown of new jobs and job losses is fundamental to economic policy making. Several of the economic assumptions that can be made about consumer behaviour, pensioners and wage demands flow from such analysis. That is why, as a slight aside, it would be foolhardy not to give the Treasury Committee a role in all five OBR appointments, because such a role would ensure that if a Chancellor were so foolish as to skew the appointment process towards people with a certain mindset or from a certain discipline in economics, as opposed to trying to achieve a balance, that Chancellor could be corrected through appropriate cross-party decision making. I am talking about any Chancellor—the present one, whoever replaces him in future reshuffles and our Chancellor, when we are in power. It is vital that there is an evidence base that stands independent of the Government so that we can all decide how to vote on the various measures that the Government bring forward. How can we possibly make an informed decision otherwise, except by political instinct, which is important but insufficient compared with having all the information?

I am therefore puzzled by why the Government are not leaping to thank my hon. Friend the Member for Nottingham East for tabling the amendment. Labour Members might see the fact that his approach would help out such a Tory Government as somewhat treacherous, but this is clearly the new politics. It is coalition gone mad when a Labour Front Bencher is putting forward a proposal that would help Conservative Back Benchers, the handful—a tiny number—of Liberals who are anywhere near government and the Government themselves.

Let me give another example about policy making. Who knows what will be determined about petrol policy tomorrow, but that is a good example of something that should be covered by the OBR’s analysis. We need to know what has happened, including in the past, so that we can assess the impact of VAT on petrol, as well as on petrol duty, and the changes to petrol duty itself. The Chancellor might decide not to cut the price of petrol and yet not to increase it further, even though the price paid by drivers such as myself has gone up by ten quid since he became Chancellor. If he decides not to increase the price further, we will need to see a breakdown of the relevant information. We could go back through history, although I can guarantee that such a consideration will not be in the report that the OBR produces tomorrow. I could assist the office, however, because I have statistics that demonstrate that 70% of the existing tax on petrol was brought in by Conservative Chancellors since 1973. One might ask why Conservative Chancellors pick on the motorist to such an extent, but that is a debate for tomorrow rather than today, although I know that you, Mr Deputy Speaker, and others in the rural community will want to know why that is the case.

The point, in the context of the amendment, is that we must know precisely what is going on. I imagine that Conservative Back Benchers would be shocked to find out that Conservative Chancellors are responsible, as of today, for 70% of the tax on petrol. If the OBR had the mandate, however, those statistics could be laid out for us at every Budget and the pressure would be on. The pressure would, of course, be on Labour if the reverse had been the case and Labour Chancellors such as my right hon. Friends the Members for Kirkcaldy and Cowdenbeath (Mr Brown) and for Edinburgh South West (Mr Darling) had been responsible for the rise.

[Andrew Bridgen]

I applaud the hon. Gentleman’s honesty in saying that Conservative Chancellors are responsible, because there is no doubt that Labour Chancellors have been extremely irresponsible. [Interruption.]

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[Geraint Davies]

I am grateful for your guidance, Mr Deputy Speaker, because I would not want to be tempted in the least. I will resist temptation.

The focus of the amendment is very much on the important area of growth. As I have mentioned, the important opportunity is to refocus our entrepreneurial activity on export-driven growth. For example, in the Budget tomorrow the Chancellor might announce tax breaks for investment in small and medium-sized enterprises, which I would welcome. I do not think that he will, because he does not particularly care about SMEs; he will just say something about not giving mothers and fathers rights to see their children. The fact is that, with regard to the engines of growth, the liquidity has been taken out by the banks, which are just rebalancing their balance sheets. They should be pressurised into providing the fuel to allow the entrepreneurial engine to move forward, because so many companies have full balance sheets but no cash flow because the banks are letting them down.

It would also be a good idea to have a tax break for investment in SMEs in order to push things forward, as that way people could put in their own money and it would produce a better rate of return from the point of view of the business and venture capitalists. I do not think for one moment that the Chancellor will announce such a tax break—he does not have the imagination—but if he did, that could be factored into the growth figures for the OBR, because obviously the money we would spend on the tax break would be recovered from business growth, particularly if it was targeted at export-driven, high-quality manufacturing.

[Andrew Bridgen]

Will the hon. Gentleman give way?

[Geraint Davies]

I will give way to the man with the badge.

[Andrew Bridgen]

Does the hon. Gentleman believe that the OBR, had it existed before the financial crisis, would have been able to tell the previous Government that much of the growth they were claiming was actually a mirage? That growth was driven by a Government who were spending more than they were gaining in taxes and so creating a deficit. To pick up on a point made by the hon. Member for Bassetlaw (John Mann), they were also exporting manufacturing jobs to the far east and importing cheap goods, which was having a deflationary effect on our economy, allowing interest rates to be kept artificially low and feeding a housing bubble that was getting ever bigger. When it burst, that was when it all happened.

[Geraint Davies]

I am glad that the hon. Gentleman is wearing a badge saying that he has a GCSE in economics, but I doubt it.

On a serious point, I have already accepted that prior to the financial crisis there was a marginal deficit to be confronted, and it was going to be confronted through growth initiatives. We have since had the financial crisis, and the important thing now is to move forward with ideas for investing in growth. Clearly, there are big questions on tax and spend and where those will be deployed. Many new ideas might emerge in the Budget, such as a windfall tax on the energy giants, whose profit margins have suddenly increased by 38% because they did not adjust their prices when costs changed and so ripped off Britain’s consumers. That is obviously a legacy of the previous Conservative Government’s privatisation and the lack of controls.

There is money available to invest in growth and services and to close the deficit gap. The point about the amendment is that we must put growth centre stage, as that will enable us to move forward in a balanced way, rather than in the narrowly defined way that the Government prescribe. With those thoughts, I will give other Members the chance to make their own unique contributions.