Future Government Spending

Dominic Raab Excerpts

Wednesday 4th March 2015 Commons Chamber

[Chris Leslie]

It is amazing how quiet Conservative Members are on that particular point.

[Mr Dominic Raab (Esher and Walton) (Con)]

Will the hon. Gentleman give way?

[Chris Leslie]

I will give way to the hon. Gentleman in a moment, because a particular part of my speech is dedicated to him.

On the “Today” programme this morning, the Chancellor of the Exchequer—for it was he—uttered the phrase:

“We’ve got on top of our debts and deficits.”

Those were the words—[Interruption.] If Government Members really believe that they have been reducing the national debt and that the deficit has been eradicated, they are either delusional or not feeling particularly well.

[Mr Raab]

I thank the hon. Gentleman for giving way; he is being very kind. He has blamed the biggest peacetime budget deficit, which we inherited from the previous Government, on the global economic crisis. Will he confirm that the Office for Budget Responsibility’s public finances database clearly shows that public spending rose by £267 billion between 1997 and 2009-10, and that 71% of that rise took place by 2006-07—well before the financial crisis? Will he confirm that that is true?

[Chris Leslie]

I wonder whether the hon. Gentleman was making those points before the last general election. If he can point to evidence that he was warning, “No, those spending plans are entirely wrong and we shouldn’t be spending on schools and hospitals in that way,” I will give way to him again. Did he warn us about those problems at the time?

[Mr Raab]

I thank the shadow Minister for giving way again, but I think the way interventions work is that we on this side ask the questions. My question is simple: was the OBR right or wrong about 71% of the deficit coming from spending before the recession?

[Chris Leslie]

The hon. Gentleman is misrepresenting the OBR’s views. It is clear, as the Institute for Fiscal Studies has said today, that the global banking crisis had a devastating effect not just on this country’s public finances, but across the world. Conspicuous by its absence from the hon. Gentleman’s comments was any evidence that he had said in the past that public expenditure plans were all wrong. The Chancellor of the Exchequer and the Prime Minister signed up to support all the previous Government’s proposals.

--- Later in debate ---

[Mr Gauke]

That position is supported by the IFS. The figure is £30 billion. Where is it coming from? The Labour party simply does not have an answer. If it is not prepared to accept the £30 billion figure, it will be borrowing more. If it does accept the £30 billion figure, where is it coming from? If it is not coming from spending, it must be coming from tax.

[Mr Raab]

Does the Minister recognise the figure given by Paul Johnson of the IFS in The Times on 13 January, when he said that Labour’s plans amounted to £170 billion more on the national debt by 2020, which is about a third higher than the entire NHS budget? That is what we are talking about.

[Mr Gauke]

If the Labour party will not meet our spending plans and is going to borrow more—it is giving itself more wriggle room, even though it has signed up to the charter, which commits it to £30 billion of fiscal consolidation—where is the money coming from?

--- Later in debate ---

[Mr Gauke]

I am not persuaded by the argument that if we borrow more we ultimately borrow less—I am afraid that is far too easy an answer.

The Government believe that those with the broadest shoulders should bear the biggest burden, and as the Institute for Fiscal Studies confirmed today, that is exactly what is happening. That is why the richest in our society now pay more in tax than at any point under the previous Government. The Labour party can lecture us all it likes about taxing the rich, but it was not on our watch that private equity managers paid a lower rate of tax than their cleaners. It was not on our watch that the wealthy could sidestep stamp duty, or that higher earners could disguise their remuneration as loans that were never repaid. Under our watch, however, every single Budget that we introduced raised revenues from the most well off in society.

[Mr Raab]

Will the Minister confirm that, although the motion talks about reversing our changes to income tax, the latest HMRC data show that someone who earns £10,000 to £15,000 a year will pay 54% less income tax than they did under Labour, while someone who earns £1 million to £2 million pays 14% more?

[Mr Gauke]

My hon. Friend raises an interesting point, and the big tax cut that this Government have delivered has been the huge increase in the personal allowance that has benefited millions of hard-working people up and down the country.