Amendment of the Law

Debate between Edward Leigh and Lord Lilley

Tuesday 29th March 2011 Commons Chamber

[Mr Peter Lilley (Hitchin and Harpenden) (Con)]

I congratulate my right hon. Friend the Chancellor on sticking to his plan to reduce the Budget deficit. Far from these cuts being too much, too deep, too soon, I believe that what he has proposed is the minimum over the longest credible period that we can reasonably expect will enable us to avoid the sort of financial crisis that has hit many neighbouring countries.

I want to address an illusion. The right hon. Member for Birmingham, Hodge Hill (Mr Byrne), whom it is normally a privilege to follow, based his speech on it, and it permeated the speech of the Leader of the Opposition at the weekend when he addressed the large rally on cuts. It is the illusion that we can have something for nothing. We live in a world of finite resources. If we spend more on one thing, we have to spend less on another. If we spend more now, we must expect to spend less—substantially less—in future, when we repay our debts with compound interest. The Opposition do not seem to realise that. I would be more than happy to engage in debate with either of them if when they advocated the restoration of spending in one area, they simultaneously spelt out the additional cut they intended to propose in another area of spending, but they never do so and the right hon. Member for Birmingham, Hodge Hill did not do so today. As long as hon. Members refuse to spell out alternative cuts to those that they reject, rational debate in this place is simply impossible.

Mr Deputy Speaker, I know that you are well aware that the ancient states of the Peloponnese resolved these problems by rules of debate that required those advocating increased spending on programmes that would require extra taxation or more borrowing to stand up in the public forum on a platform and argue their case with a noose around their neck. If they succeeded in persuading their fellow citizens of the need for increased spending and taxation, the noose was removed, but if they failed, the platform was removed. I understand that this healthy discipline meant that those states remained solvent for centuries on end.

[Mr Edward Leigh (Gainsborough) (Con)]

The slight problem with that is that if we had a similar system here, under whichever Government, there would be no Members of Parliament left.

[Mr Lilley]

That is slightly unworthy of a former Chairman of the Public Accounts Committee, who at least would remain, if in solitary glory.

A related illusion that the Opposition purvey is the call, frequently made by the Leader of the Opposition, for the Government to prepare a plan B in case the economic road gets rocky—a plan B would, by implication, involve higher spending and borrowing. Of course it is a bit rich for the Leader of the Opposition to ask for a plan B, given that he has not yet spelt out a plan A, but the reality is that if we abandon the plan set out by the Chancellor, we will get a plan B, but it will not come from the Opposition or from my right hon. Friend the Chancellor—it will come from the savers and pension funds whose money we would need to borrow to finance that increased borrowing. If we did bottle out of what we have proposed, they would demand deeper cuts over a shorter period and they would require us to pay a higher rate of interest. The net result would not just be deeper cuts in the public sector, as we have seen the markets impose on Portugal, Greece and Ireland; those higher interest rates would kill off and abort the recovery in the private sector on which we depend to create the jobs to take up the people not employed in the public sector. So it would be a disaster for this country if we were to go down that route.

The third illusion that some Labour Members purvey—perhaps the more honest elements among them—is the belief that we could avoid public spending cuts if we were prepared to put up taxation. But who would pay those higher taxes? Ultimately, taxes are always paid by individuals and if the squeezed middle are not going to pay them—they have been precluded from bearing a higher burden of taxation by the Leader of the Opposition —either the poor or the rich must do so. I would not put it beyond a party that sought to double the burden of taxation on the lowest paid by removing the 10p tax rate to seek extra revenues from the very poor, but that would not yield much money so Labour must look to the very rich for it. I just remind Labour Members that if they read the Red Book, they will see that the top 1% of income tax payers in the coming year are expected to pay no less than a quarter of the entire revenues of income tax—last year, the top 5% paid more than half of all income tax. We are reaching the point at which any further burden of taxation on those people would kill the goose that lays the golden eggs. In the words of my old friend, the sadly now deceased Lord Harris of High Cross, punitive taxes beyond a certain point do not redistribute income, they redistribute people. We have reached that point and we would go beyond it if we accepted the advice of the Opposition.

I urge my hon. Friends to support the Chancellor and my right hon. Friend the Secretary of State in what he is doing at the Department for Work and Pensions and to ignore the blandishments and illusions of the other side.