The Economy

David T C Davies Excerpts

Wednesday 18th November 2015 Commons Chamber

[John McDonnell]

We have raised this matter time and again. I think that Members on both sides of the House found it incongruous that, at the same time as the Chancellor was seeking to cut working families’ tax credits, he was reducing inheritance tax for the wealthiest families in our country. People saw that as being basically unfair.

There is much that we hope the Chancellor will address in next week’s statement. We agree that we must continuously bear down on the deficit and debt, but that has to be done with realistic good judgment and fairness. I say that the judgment must be realistic because it will undermine confidence in government if we go through another comprehensive spending review like the one in 2010, when the Chancellor announced that he would eliminate the cyclically adjusted current deficit in the five-year period—that is, by this year—whereas he has cleared only half of it. In the last financial year, the current budget deficit stood at a massive £44 billion. I also remember the Chancellor saying in 2010 that he would reduce the debt to 69% of GDP. It now stands at over 80%.

The mistakes of the last CSR should not be repeated in this one. Our fiscal rules must be realistic, achievable and fair. The Chancellor’s rules, for all the revisions in recent weeks, have been none of those things.

[David T. C. Davies (Monmouth) (Con)]

The hon. Gentleman and his colleagues have criticised the Government on many occasions for cutting too fast. Is he now suggesting that we should have cut faster? If so, we will be more than happy to co-operate with him.

[John McDonnell]

I would be happy to have that co-operation at any stage. What we said to the Chancellor five years ago was that he was going too fast and that he should have been investing in growth, which would have enabled us to reduce the deficit. He promised to reduce the deficit and debt in five years, but he is going to do it in 10. That is a doubling of the target.

--- Later in debate ---

[David T. C. Davies (Monmouth) (Con)]

In the light of the disgraceful and shocking attacks in Paris, there have been calls from our constituents and from Members for the Government to spend more money on policing and security. Those calls are perfectly understandable. As someone who has spent nine years working as a special constable in the United Kingdom, I have enormous respect for the work of the police and for the role that they play in combating terrorism. None the less, it would be a huge mistake to think that we can increase our security on the back of borrowed money. The lessons of history tell us, over and again, that that would be a mistake.

Let us look back at a few examples in recent history. A nation that has an unsound economy is unable to project itself militarily, to guarantee its own existence and to guarantee the security of its borders. Suez is perhaps seen as the last military defeat for the United Kingdom. However, it was not a military defeat at all, but an economic defeat. We were unable to continue in Suez—I make no comment as to whether we were right or wrong to be there—because our nation, already mired in debt as a result of the second world war, could not secure further borrowing from the IMF, as the Americans were threatening to devalue our economy.

The history of the DDR— Deutsche Demokratische Republik—is something that has always been of interest to me, because of my wife’s eastern European nationality. The writing was on the wall for the Communist bloc and for East Germany in the early 1980s, although nobody saw it coming, when the East Germans had to go off and negotiate emergency borrowing from their competitors and their apparent enemy, West Germany. Anyone could have seen what was eventually going to happen as a result of that.

A few years ago, when I was on the Council of Europe with my hon. Friend the Member for Hornchurch and Upminster (Dame Angela Watkinson), I went to visit Greece and was shocked by the state of the economy and the impact that it had had on its border control. It has lost complete and utter control of its borders, because its economy is in ruins. I am sure that I do not need to remind the Government of that. It is vital that we continue in the direction that we are going to reduce our dependency on borrowed money. When we came into power, we were borrowing £160 billion. As we know, that figure is down to about £70 billion. It is still too high but it is going in the right direction. I very much hope that, despite the challenges that we face, we will be able to protect police funding to as great an extent as possible.

I very much welcome the Government’s announcement that there will be thousands of extra people recruited into the intelligence agencies. I know that the Government understand the pressures that the police are under and that they will be looking at how we can get more police officers on the streets without spending extra money. I am talking about cutting bureaucracy around things such as the stop and search forms. I would be very happy to give a few suggestions of my own as well.

The fact of the matter is that our long-term economic plan is not just about raising living standards for people in this country or controlling inflation and increasing growth, but about underpinning the long-term security of everyone in this nation.