Amendment of the Law

Debate between Helen Goodman and Robert Syms

Wednesday 23rd March 2011 Commons Chamber

[Mr Syms]

It was nothing to do with light-touch regulation; in fact, we needed more competent regulation. The Financial Services Authority was not up to the job, and the Bank of England would have done a better one.

The key thing is that we now have a great imbalance in our economy. Over the long term, Britain has always tended to have public spending of about 40% of GDP, taxation of about 40% of GDP, and a national debt of about 40% of GDP. We have always managed to grow and export, and to be a fairly successful economy. We now have to yank public spending and the deficit back to those sorts of levels. As was pointed out earlier in the debate, even after five or six years, we will only be back down to where we were towards the end of the Labour Government when we had to go into deficit to deal with the difficult economic situation.

I think that the Government’s response is sensible. It is planned over five or six years, and is gradual. For all the talk of expenditure cuts, the expenditure cuts will be gradual over that period. The plan, as the Chancellor set out today, is for the economy to grow. That should generate more tax revenue. The difficulty, of course, is that we will have to raise taxation, as can be seen in the plans, to help balance the budget. I hope that that is more of a short term, rather than a medium to long term thing, because we need to build incentives back into the British economy.

[Helen Goodman]

On that point, has the hon. Gentleman not noticed that table 2.1 on page 42 of the Red Book shows that, over that period, personal tax allowances will increase substantially, because the switch to CPI and the changes to national insurance outweigh significantly—by several hundred million pounds—the increase in personal allowances that the Chancellor made? This is a tax-raising Budget, not a neutral Budget as he said.

[Mr Syms]

The key fact is that the Government whom the hon. Lady supported left us with massive debts. There is no honest or honourable way in which we can deal with that problem, other than taking tough decisions, which will involve many of our constituents paying considerably more money. Over the next five years, unfortunately, more money will come in through taxation. There is no way around that. That is the legacy that Labour has left us. If we want to be responsible, to get the economy back into balance and to have long-term economic growth, we have no choice but to take tough measures.