Budget Resolutions and Economic Situation

Edward Leigh Excerpts

Friday 20th March 2015 Commons Chamber

[Sir Edward Leigh (Gainsborough) (Con)]

It is a great pleasure to be the last Back Bencher to speak in this debate and to follow my hon. Friend the Member for South Thanet (Laura Sandys). Ann Treneman, the sketch writer for The Times, described her as one of the few eminently sane Members of the House. I am still looking forward to a sketch writer describing me that way—one lives in hope.

I am the last Back Bencher to speak, and I sometimes think that I am the last Thatcherite standing. I have spoken in most of the 32 Budget debates in my time in Parliament. I have some bad news for you, Madam Deputy Speaker: I hope that this is not my valedictory speech, but you at least will not have to hear me again, and that will be a great solace to you. I am standing for election again and hope that the good people of Gainsborough will re-elect me. I will be standing on the same platform on which I have stood at all the previous election. It is a pretty simple message—speaking up for a strong Budget and a well-defended country—and it is worth repeating.

My predecessor in Gainsborough had quite a relaxed view of campaigning in the constituency. Having ridden for a couple of hours in the morning, he would return to the White Hart hotel in Lincoln for a large breakfast before pondering his sole press release of the entire campaign, which he used to deliver on a certain day to the editor of the Market Rasen Mail. At one general election—perhaps it was his last—when he went to deliver the press release the editor was out, so my predecessor, Sir Marcus Kimball, said he would come back tomorrow. When he came back the next day, the editor said, “Don’t worry about a new press release; I’ll just use the one from the previous general election.”

In a sense, times do not change, because the same themes come back again and again. I apologise if sometimes I weary the House with the same themes in these Budget debates, but they are two incredibly important ones that need emphasising again and again. The first is the need for tax simplification, and I shall say a bit about that in a moment.

The second theme is budgetary and fiscal responsibility. I said earlier that I may be the last Thatcherite left standing; in fact, I sometimes think that I am the last Gladstonian Liberal in this place. I believe that if Governments restricted themselves to avoiding foreign entanglements, or foreign wars—I have, I think, voted against every single one that has come up during my time in Parliament—and attempting to balance the budget, that would do more for human happiness than virtually anything else they could do. Balancing the budget is the first duty of government. It has to be said again and again that we are still borrowing £93 billion every year.

After five years of austerity from this Government that has been roundly criticised by Labour Members, we are still spending £93 billion more than we earn every year. When we came to power, the figure was £141 billion a year. That was completely unsustainable five years ago, and it is still unsustainable. The national debt stands at a staggering £1.5 trillion. One can criticise the present Government, but at least, without getting involved in clichés, they have a long-term economic plan to try to ensure that by next year, or the year after, that massive debt as a proportion of GDP at last starts to decline in cash terms by the end of the next Parliament.

These are not just figures. This is a matter of desperate importance to everybody in the country. Debt on that scale is simply unsustainable, and any incoming Government —I say this to my Labour friends—must have some sort of plan for dealing with it. Yesterday I intervened on the shadow Chancellor, who gave a good, knockabout speech. He portrayed himself as a minor Shakespearean poet and it was all quite good fun. It was extraordinary, however, that he spent very little time outlining how he was going to reduce the deficit. Perhaps we have been too complacent in making these arguments to the British public. When we argue that we have halved the deficit, perhaps some members of the public say, “Well, problem solved. If our debt is halved, does that mean we’ve already arrived at the end?” No, it does not—it means that we were borrowing £141 billion a year and we are now borrowing £93 billion a year. Perhaps this has given the Labour party an opportunity to relax the public mood on deficit reduction.

What are the plans of the Labour Opposition to reduce the deficit as they prepare, they hope, for government? When we questioned the shadow Chancellor yesterday, he said he was going to prevent more free schools opening, abolish police and crime commissioners, and try to get more efficiency savings in the NHS. Is that really a plan that holds water? Can we really believe that it will solve the problem that I have been emphasising in the past few minutes? I do not think so. Labour Members are very proud of the fact that they dramatically increased spending on the national health service and on education, but the problem with dramatically increasing spending on the national health service was that they dramatically reduced productivity in the national health service. There is nothing to suggest that if one increases spending on the NHS by more, roughly, than the real rate of inflation, one will avoid, once again a massive reduction in productivity.

The Labour party must ask itself this question: how it is going to balance the books? I believe that, fundamentally, it is the central economic questions that decide general elections. I do not think that they are decided solely on the basis of what has been said during the latest television debate on television. What is important is how much confidence the public have in those who are charged with the public finances. I know that we are about to hear a speech from the shadow Treasury spokesman, but so far I have waited in vain for proof that the Labour Opposition are ready for government, and ready to deal with the budget deficit.

I have said enough about that subject, but I think it is one to which we must continually return. If we are fortunate enough to be re-elected in 47 days’ time, we must not let up for a moment. However unpopular and difficult it is and whatever the pressures, we must sustain our absolute determination to start reducing the total national debt, in cash terms, by the end of the next Parliament.

I suspect—although no one quite knows—that if the Labour party is to fulfil its proper and understandable ambition to spend more on education or the national health service, it may have to borrow an additional amount of up to £30 billion a year. In good times, that is sustainable, but what happens if there is another downturn? What happens if the cost of borrowing rises, as it inevitably will? It will all have to be paid for. That is the central argument of the campaign, and the Labour party must deal with it.

Let me now say a little about tax simplification. I know that it is hard when there has been a recession; I know that the Chancellor has had to struggle with the difficult campaign to attempt to start reducing the deficit; I know that every type of tax simplification is extraordinarily costly, in both monetary and political terms; and I understand the difficulties that the Chancellor had three years ago when he tried to simplify VAT. I know all those things. Nevertheless, tax simplification, along with a flattening of the system, is right in the context of entrepreneurship and efficiency. It may not be politically apparent every year—Chancellors obviously want to present popular Budgets—but in terms of financial orthodoxy and the right way to manage the Government’s finances, tax simplification makes sense.

We have already been given a bit of tax simplification. We are to see the end of the tax return, the creation of online tax accounts, a new personal savings allowance, and the phasing out of class 2 national insurance contributions for self-employed people. They are all good steps, but they are only the first steps. I hope that, if the Chancellor is fortunate enough to be back in his job in 50 days’ time—and I pray that he will be, for the reasons that I gave earlier—he will make not just dealing with the public finances but simplifying taxes his guiding light for the next Parliament. We still have one of the longest tax codes in the world; I believe that it is the longest after India’s.

Labour portrays itself, quite rightly—why shouldn’t it?—as the party of the labourers, but it does not help the people who labour for profitable companies if we increase taxes on those companies, because that puts pressure on them to reduce the number of people they employ. What I have been talking about today is not some airy-fairy, ideological point that has been made just for the sake of it, but an attempt to help ordinary hard-working people in jobs, to help those people to keep their jobs, to make companies profitable, and to enable the country to have confidence in itself. That is why I shall be proud to be standing as a Conservative Member in 47 days’ time, and why I shall be praying that my right hon. Friend is back in his job as Chancellor of the Exchequer.