Debate on the Address

Debate between Clive Efford and John Redwood

Wednesday 27th May 2015 Commons Chamber

[John Redwood (Wokingham) (Con)]

I rise to speak for prosperity, not austerity; I speak for England as well as for more powers for Scotland; and I speak for greater democracy as we seek to wrestle power back from the bureaucratic tentacles of Brussels.

Austerity is what was given to this country in 2008-09. Then we had desperate austerity. We had deep recession and the biggest loss of national income than at any time since the second world war. We had families losing jobs, families losing bonuses, families having to take pay cuts. We saw austerity rampant. Since 2010, first the coalition and now the Government, led ably by my right hon. Friend the Prime Minister, are about restoring prosperity for the many, growth to our economy, the extra jobs we need, the higher pay and the better living standards that come from creating that world of opportunity.

We speak not just for prosperity but, yes, for aspiration. We speak for aspiration just as surely as some Opposition Members spoke for envy at the time of the general election. The electors told them that they did not want envy; they wanted aspiration. They do not mind other people doing well, as long as they too have a chance to do well. They are not jealous of people who go to good schools, but they want to go to a good school themselves, or send their children to one. They are not jealous of people who work hard and earn a lot of money, and want to keep a large amount of that money to spend on themselves, but they want the opportunity to do the same. I urge my right hon. Friend the Prime Minister and his colleague the Chancellor of the Exchequer to press on in supporting those very aims. Spreading prosperity ever more widely is what lifts us from austerity and banishes austerity from our land.

[Clive Efford (Eltham) (Lab)]

Before the banking crisis hit in 2008, the right hon. Gentleman was calling for less regulation of the banking system. Does he still hold that position?

[John Redwood]

If the hon. Gentleman cares to read the economic policy review that I submitted to my right hon. Friend the Chancellor of the Exchequer, he will see that it clearly warned of a banking crash. It said that Labour’s regulatory system—introduced by the hon. Gentleman’s party after the 1997 general election—was not requiring enough cash and capital to be held by the banks, and that that was causing enormous strains, which would go wrong. I saw it coming; he took it down. The Labour party changed the regulatory system, the regulators made a huge mistake, and the banking system powered the recession, which was also furthered by the mistaken budgetary policies pursued by Labour. I am very pleased to see that those who now wish to represent the Labour party as its leader have said sorry for the economic and regulatory mistakes that are made by the hon. Gentleman’s party

[Clive Efford]

rose—

[John Redwood]

If the hon. Gentleman wants to have another go, by all means let him do so.

[Clive Efford]

One of the myths that were put around was that the Labour Government maxed out on their credit card. Will the right hon. Gentleman confirm that before the banking crisis hit in 2008, debt as a proportion of the country’s GDP was lower than the level that we inherited in 1997?

[John Redwood]

What matters is the rate of change. The Labour Government were borrowing too much at a time when the economy was overheating and collecting a lot of tax revenue, and we have been trying to right that mistake ever since.

I think it would be helpful if, in this Parliament, we could have a more grown-up discussion about public spending and tax revenues than we were allowed in the last Parliament, because the meaning of austerity has shifted. It now has a narrower definition than the disaster that hit living standards and individual families in 2008. To the so-called progressive parties, austerity now means not increasing public spending as quickly as they think that it should be increased.

Let me remind the House what successive Red Books—Budget books—have told us about what happened between 2010 and 2015, and what they tell us will happen between 2015 and 2020, subject to the Chancellor’s Budget. It is very easy to remember. Between 2010 and 2015, the coalition Government increased total public spending by £1,000 per person per year, if the final year of those five years is compared with the starting point. The recently elected Conservative Government plan to do exactly the same: they wish to increase total public spending per head by £1,000 per person a year by the end of the current Parliament. That is not a huge rate of growth, but it is not an overall decline or a cut.

Because we inherited such an enormous deficit and could not continue to borrow on such a scale, we were—as a result of VAT increases and the general increase in revenue from some economic growth—charging people £2,000 a head more per year at the end of the last Parliament than the Labour Government did in their last year. This Parliament requires exactly the same increase, without any rate rises but coming from faster growth in the economy. The Red Book’s aim is that we should charge everyone £2,000 extra a year by the end of the Parliament than at the beginning. I think that that is a measured and sensible proposal to rescue us from enormous borrowing and a big debt hole, and I think it can work. I especially welcome the fact that, this time, it will require no tax rises.