Chris Leslie
Main Page: Chris Leslie (The Independent Group for Change - Nottingham East)Department Debates - View all Chris Leslie's debates with the HM Treasury
Charter for Budget Responsibility
Chris Leslie Excerpts(9 years, 9 months ago)
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Chris Leslie (Nottingham East) (Lab/Co-op)
It is worth recapping at the end of this debate why we are here and why we are having this debate at all. We are still talking about the deficit because the Chancellor of the Exchequer has failed to fulfil his promise to get rid of that level of borrowing—the difference between our expenditure and our income as a nation. This charter, of course, is a device designed to distract from the Chancellor’s failure, making out as though the Tories still have a plan as they originally set out. As my hon. Friend the Member for Glasgow North East (Mr Bain) correctly pointed out, this debate was also supposed to provide a party political opportunity to smear the Opposition and to set up the Conservatives’ election tactics.
Pete Wishart (Perth and North Perthshire) (SNP)
Will the hon. Gentleman give way?
Chris Leslie
No, I will not give way to the hon. Gentleman.
The trouble for the Chancellor is that this debate gives us an opportunity to draw attention to his colossal failure to fulfil his promise to tackle the deficit. In his eagerness to trip up the Opposition, he has caught himself in a series of contradictions and entangled himself in his own spin.
We should remember that it was only nine months ago that this charter was changed. It keeps changing because the Government desperately have to pretend that they have a grip on things and that they are somehow on top of the deficit issue. The deficit after the next general election, however, is predicted to be a massive £76 billion. Revenues have collapsed over the lifetime of this Parliament, and we have seen rising tax credits and rising levels of housing benefit to subsidise low pay and the high-rent economy that the Chancellor has been fashioning. The Government now find themselves with an extra £200 billion-worth of borrowing over what they originally set out.
The Tories love to talk tough. They publish their documents—[Interruption.] I am delighted to see the Chancellor back in his place. He loves to bang that Dispatch Box and was getting very shouty and loud in his earlier contributions, but the reality is that his strategy has failed. The Chancellor and the Chief Secretary do not have a clue about what they are doing.
The debate was revealing, however, and I would like to ask the Chancellor about it. He said in his opening remarks that his deficit plan had not gone any slower than he had planned. I have taken the opportunity to look at the Hansard record of what the Chancellor said. He said:
“What we have done is cut the deficit by a half. We have neither gone faster than we said we were going to go, nor gone slower than we said we were going to go.”
The Chancellor has got himself into a terrible muddle if he thinks that he did not promise to eradicate the deficit back in 2010. The Prime Minister himself said:
“In five years’ time, we will have balanced the books.”
That was the Prime Minister’s solemn promise to the country.
The Chancellor did become a little bit over-excited. Perhaps he found this rather a difficult occasion, given that the situation was blowing up in his face. Not only did he get into a tangle thinking that he had not changed his deficit reduction plan, but he got into a terrible muddle with the charter. That is quite embarrassing for the Prime Minister in particular. At 3.30 pm on 15 December, the Prime Minister said in a speech that targeting the current budget deficit would be
“a great, black, ominous cloud”
—that it would be a total disaster—but by 4.30 pm, the Chancellor had tabled a Charter for Budget Responsibility that actually supports a current budget process, which is, of course, the correct strategy.
Perhaps the Chancellor needs to be reminded what he said originally, in his 2010 Budget speech. He said that the mandate was current—[Interruption.] Does the Chancellor want to deny that he said, back in 2010, that the mandate was
“current, to protect… productive public investment”?—[Official Report, 22 June 2010; Vol. 512, c. 167.]
If so, let him correct the record now from the Dispatch Box. He will not do that, however, because he knows that targeting the current budget is the right thing to do.
At no point does the Charter for Budget Responsibility commit itself to a fixed deadline for 2017-18. The Treasury would like to pretend that it does, but it does not. Instead, it goes for a “rolling horizon” and year 3 of a five-year rolling forecast. The Chancellor needs to understand properly what that means; he did not quite get it earlier. It means that the target moves forward by a year each year. Perhaps the Chancellor does know that. Perhaps he did this because he wanted to wriggle out of any responsibility to which he might be held now, ahead of the approaching general election. However, if he feels that this is somehow a firm commitment to 2017-18, he is wrong. Labour Members believe that we shall need to get the current budget into surplus as soon as possible in the next Parliament, and nothing in the charter is inconsistent with that view. The Chancellor, incidentally, did not really talk about the charter at all.
Chris Leslie
No, I will not. We have only a few minutes left, and I must give the current Chief Secretary to the Treasury a chance to reply to some of my questions.
The Chancellor referred to an “aim” rather than a “target”. I should be grateful if the Chief Secretary could explain why he chose to allow the language in the charter to move away from the idea of a target and towards the idea of an aim.
It is not enough for the Government to explain in the charter how they will measure progress. They need to explain how they will make progress, and that requires a balanced and fair plan. Ministers simply do not understand that the health of the economy and rising living standards are a vital pillar in the process of tackling the deficit and securing healthier public finances. If only wages and living standards rose at the historic average level during the next Parliament, there would be an additional £12 billion in tax revenues.
Cuts alone do not cut it. We have seen where that road leads: it leads to failure. We need a balanced approach across the three routes to improvement in public finances. Yes, we need sensible reductions in public spending, but we also need fairer tax choices—which means not giving away £3 billion to the richest 1% in society—and, crucially, we need rising living standards and sustained growth. The Government have lost revenues of nearly £100 billion over the current Parliament, and if we repeat that, we will lose £100 billion again. Any proposals in our manifesto will be fully funded, and the IFS has said that we are taking “the most cautious approach”.
Before I end my speech, I want to ask the Chief Secretary two more questions.
Chris Leslie
No, I will not, because I do not have time.
First, I want to ask the Chief Secretary about whether we can have an elevated level of debate and discourse ahead of the general election. Does he agree that it would be preferable for the OBR to audit and validate the costings of the manifesto proposals of the main political parties properly? My understanding is that the Chief Secretary agrees with that, but I want to get on the record and make clear his view on that.
My second question for the Chief Secretary is about what happens after deficit eradication and the Chancellor’s lurch to the right—his wish to return to what the OBR has called the public expenditure situation of the late 1930s, when we did not have a national health service, there were only 1 million cars on the road and children left school at 14. We know that the Conservatives want to wage war on the public services, but the Chief Secretary signed off the spending assumptions in the official projections. We know from Robert Chote, chairman of the OBR, that these projections, all the way to 2020, were
“signed off by the quad”,
and so far as I understand it the Chief Secretary is a member of the quad, so why did he agree to allow the official projections to take that lurch to the right—to go down that particularly ideological route? [Interruption.] The Chancellor might give him some clues, but I want him to answer for himself. If it was a genuine mistake and he did not spot it, he should just say so and we will accept that; or did he for some reason actually think that, yes, he does want to go down that far right-wing position? If that is the case, did he get scared when he saw the public reaction to it? I want to get a sense from him of what is happening.
Going down to that consistent 35% of GDP or national income has severe consequences for our public services. The Government must realise that we need a sensible, moderate approach to tackling the deficit. The focus must be on eradicating the current budget deficit. That is what the charter says, but we will take a fairer and more balanced approach to clearing the deficit. Where the Government have failed during this Parliament, we will succeed in the next.
Danny Alexander
Each Government have to account for their own economic policy in their own way. I am proud that we have put in place a plan that has got the deficit down by half and, more importantly, got us the best economic growth in the European Union and the strongest record of job creation—Opposition parties are notoriously silent about that.
Let us put this matter into some sort of context. While we have been busy cutting the deficit, the shadow Chancellor and the Leader of the Opposition have spent their time marching their troops up and down the hill of deficit denial. If their votes today are to have any credibility, they will have to march them down that hill again. We have still not heard one word of acknowledgement for their role in the crash of 2008, let alone a word of apology.
By the end of this Parliament the Government will have halved the deficit as a percentage of GDP. That has meant facing up to reality and taking difficult decisions. This has been a process during which Labour voted against every measure that we have had to introduce to rescue the economy. There have been scores of votes on deficit reduction and, you guessed it, the Opposition voted against every one. So I say this to Labour: “Supporting this motion does not restore your credibility on the deficit. You have said your aim is to push out the time scale as far as possible. You are perfectly happy to borrow tens of billions of pounds more. That will mean more debt, more interest payments and the pain of rebalancing the books dragging on for years to come.”
Numerous contributions have been made to this debate, and I thank those who have spoken from the Conservative and Liberal Democrat Benches. We heard a wise contribution from the right hon. and learned Member for Rushcliffe (Mr Clarke), and excellent contributions from my hon. Friend the Member for Redcar (Ian Swales) and from the hon. Members for Hexham (Guy Opperman) and for Ipswich (Ben Gummer), in particular.
However, some Conservative Members have criticised me in this debate for the views I have taken on Conservative plans beyond 2017-18—the shadow Chief Secretary asked me about this, too. Let me send a note of warning to some of my Conservative colleagues. We formed the coalition to tackle the deficit in a timely manner. That is why we agree that the structural deficit must be eliminated by the end of 2017-18 and debt must fall as a share of GDP. Hitting that 2017-18 target will require further consolidation to the tune of some £30 billion, and to say that we can reach that figure by spending reductions alone, with some £12 billion coming from cuts to welfare, would be grossly unfair. It would hurt millions of families who are trying hard to make a success of their lives. Tax on the wealthy should and must play a significant part in how we finish the job in the next Parliament. But our real concern, and where we differ, is on what happens after that mandate is met. As a country we should not be wedded to austerity for austerity’s sake. People in this country supported our coalition approach because it has been necessary and successful in turning the economy around, but they will not support an ideological drive for an ever smaller state.
Chris Leslie
I will. Why then did Robert Chote say that these assumptions were
“signed off by the ‘quad’”?
Did the Chief Secretary sign them off? Was it a mistake or is he now trying to “reverse ferret” out of it? Which is it?
Danny Alexander
It is a neutral assumption about the public finances that does not reflect the policies of the Liberal Democrats. I was just in the middle of describing those things, because people want to see some light at the end of the tunnel. They do not want a Dickensian world of decimated public services. I do not see any need for tens of billions of pounds of further cuts beyond 2017-18. If it happens, the reality for many people would be grim. Going too far or too slowly will not offer that light at the end of the tunnel.