Budget Resolutions

Debate between John Redwood and Edward Leigh

Wednesday 11th March 2020 Commons Chamber

[John Redwood (Wokingham) (Con)]

I have declared my business interests in the Register of Members’ Financial Interests, although I am of course not speaking for them.

I congratulate the hon. Member for Ilford South (Sam Tarry) on an excellent maiden speech. He was warm and informative about his predecessor, who was much respected on both sides of the House. He rightly drew attention to injustices and problems which he has a passion to solve. I would just like to reassure him that there is no monopoly on wishing to solve those problems on his side of the House. That is what we are all here to do.

It is a great pleasure, for the first time in about five years, for me to be able to welcome the actions of the Bank of England today. It is a pleasure to see the Bank of England and the Treasury co-ordinating their work, and doing things that are massively in the public interest. For the past five years, it has been my miserable task to be the one voice in this House pointing out that the Bank of England has consistently got its economic forecasts wrong and that it had made a number of very bad decisions. I have been particularly critical of the way it decided to tighten monetary policy and slow the economy from spring 2017 onwards, culminating in the very ill-judged decision it made at the end of last year to increase the counter-cyclical capital buffers, which meant denying loans to businesses that wanted to expand or to solvent people who wanted to buy a new car or a new home. It was a very bad policy and it is wonderful news today that the Bank of England, with its new Governor, has started off on a much better basis and has cancelled those counter-cyclical buffers. It is the single biggest amount of money we are talking about in this debate. As the Bank of England itself calculates, it means up to £190 billion more is now available for good projects, for business requirements and for individuals who want to borrow for big ticket items. Of course, banks must still be prudent and sensible in the way they advance that money, but the previous controls were too tight. Against the background of world downturn, it is very important that that firepower is made available.

Just to reinforce the position and to deal with the special problems that the virus is now likely to create, the Bank of England also put forward a new medium-term lending scheme for the banks, so they can get access to large sums of money—up to £100 billion in total—at the new very low rate of 0.25% to lend on to medium and small-sized enterprises. Again, that was something I was very keen for it to put forward. I am delighted that it has returned to this idea. It is much needed, I fear, because we already see the virus having a very negative impact on certain businesses, most obviously in aviation and other transport, but now also in events and some other tourism-related activities where we see the pinch already being established by the virus. If, as we fear, it spreads more, that is going to get rather worse, so I welcome the double set of actions by the Bank of England. I am not sure that 50 basis points off the interest rate makes very much difference. It is not something I would have done myself, but I can see that it was well intentioned and it sends a very clear signal that borrowing should not only be available but cheap in these very extraordinary times.

I also welcome the fiscal stance the Government have adopted in the Budget. If anything, it is on the prudent side of what one might have expected in the current circumstances. Some of my colleagues will find that curious coming from me, a former hawk, on how much this country can afford to spend and borrow. However, in these circumstances, and against the massive monetary and fiscal tightening we have experienced for some three years and the very noticeable slowdown or faltering of the world economy, it is obviously sensible to have a fiscal stimulus. The £18 billion underlying stimulus is definitely at the bottom end of the kind of range that many people were thinking about.

On top of that, there is the £12 billion package which the Government have wisely put forward. They stated that if the virus problem gets worse there will be more. I hope it will be the case that the virus problem does not get that bad and we do not need to spend the £12 billion or anything like it, but I am pleased the £12 billion is there by way of additional resource for the health service should the need arise and as additional money available particularly for the business sector, which, in certain circumstances, if we have anything like the experiences of some other countries abroad have now had, would need cash injections. I am very pleased that thanks to the Bank of England it will not just be a question of lending at cheap rates through the commercial banks, but that in some cases, particularly in hospitality and tourism-related areas that are already being fairly badly hit, it will be a reduction in their bills.

I listened carefully to the very long address by the SNP spokesman, the right hon. Member for Ross, Skye and Lochaber (Ian Blackford). I cannot see how that party’s VAT proposal would help, because VAT is turnover-driven and we are talking about businesses that lose much or all of their turnover, so it would not deal with the problem. The Government have a much better answer: to take a cost that businesses cannot get out of quickly or avoid—their property cost—and say that the Government should not be charging them for using property when no money is coming in, because there is no turnover as they have lost their customers. I agree with the Government.

[Sir Edward Leigh (Gainsborough) (Con)]

I was not allowed to intervene on the leader of the SNP, but surely any sensible person would come to the conclusion that when faced with an existential threat to our country, such as the coronavirus, we are much better dealing with this together, as a United Kingdom, than as separate nations.

[John Redwood]

My right hon. Friend and I think that, but more importantly, that is what the Scottish people voted for just a few years ago, when we very wisely and democratically said, “Yes, let the Scottish people decide.” They did decide and I wish their elected representatives here would understand the result of the referendum and remember that their colleagues told us at the time, when asking for it, that it would be a once-in-a-generation matter. While I am a democrat who thinks that these things occasionally need exploring, we cannot explore them every five years. These are fundamental things that are very disruptive if we keep going into them. I had to wait many years to get an EU referendum—rather longer than I wanted—but I do not think we should have one every five years. That would be quite inappropriate.

To go back to the Budget judgment, I was interested to see that quite substantial increases in spending, which we need in health, education and police, for example, have been relatively easily accommodated. It is good to see already in the first-year figures—for 2020-21— £4.6 billion of Brexit savings coming through. It is very good to see that there will be another £10 billion on top of that by the end of the forecast period, so the Brexit bonus is available and is beginning to come into these figures.

It was also good to see the £6.6 billion of interest cost reduction, thanks to the quite substantial falls in interest rates that had occurred before this month. The point that I was making to my right hon. Friend the Member for Bromsgrove (Sajid Javid) is that those savings would be considerably bigger if we forecast them at today’s interest rates, because interest rates for Government borrowing have fallen even further. He countered and said, “Yes, but you still have to be very careful because you can’t necessarily assume that that will go on into the future.” The bad news is that interest rates are going to stay low for a bit, but the good news is that the Government can borrow for 30 years for practically nothing, so now is surely a very good time to lock those interest rates in so that the future interest rate programme is very cheap, as well as the present one. It is something the Government need to think about. I know they have issues about how long they fund, but this is surely a time to move in the direction of longer funding so that we lock the very low rates in.

Parliamentary Buildings (Restoration and Renewal) Bill

Debate between John Redwood and Edward Leigh

3rd reading: House of Commons & Report stage: House of Commons
Wednesday 19th June 2019 Commons Chamber

[Sir Edward Leigh]

Value for money is what the PAC and the NAO are about. That was a very good intervention.

I hope the Minister can convince us that his No. 1 concern is safety—this is a world heritage site and we do not want it burning down or flooding—but the No. 2 consideration must be value for money. That is what worries me—again, without going into past grief—about many of the present plans. We have heard about architectural significance from my hon. Friend the Member for East Worthing and Shoreham, and I am worried about the proposal to demolish Richmond House. It is an important modern building that has won architectural awards, but I am worried not just that we might be knocking down a listed building but that this would again create an opportunity for waste. I will always look for the cheapest option, and I have been arguing that if we have to leave the Chamber—I accept the decision of the House that we will leave for a time—we should use the courtyards to build a temporary Chamber rather than knocking down large parts of Richmond House.

Unfortunately, we have told the Delivery Authority that there has to be an exact replica of where we are standing, with the same size Chamber, the same height and the same width in the Division Lobbies. I am not sure that that is entirely necessary—[Interruption.] The hon. Member for Rhondda (Chris Bryant) is shaking his head. If I am wrong, I am wrong, but I am saying that if we can have a cheaper option with a narrower temporary Chamber that can be used for other purposes afterwards, and if we have to have electronic voting and not go through wide Division Lobbies, we should consider all those options. This is not a matter for today, but it all comes down to value for money, and it is important that we highlight these matters in these debates.

[John Redwood]

New clause 1 seems to imply, in answer to a question I was asking earlier, that the Comptroller and Auditor General would have a duty to examine policy value for money with regard to how much work is done, the timing of the work, whether we need to move, and so forth. Does my right hon. Friend agree that it is absolutely fundamental that that should be part of the process, because the way in which the most money is likely to be wasted is through policy error rather than through contractors slightly overdoing a contract?

[Sir Edward Leigh]

Yes; my right hon. Friend has made a worthwhile intervention, and perhaps I have been too unfair on contractors. My experience of public sector contracts over the years is not so much the importance of those in the private sector who work for us, as that it is our fault for treating these projects like a Christmas tree. We have our own prejudices and policies, we constantly change personnel, and we add things on to the Christmas tree. The private sector—either correctly or incorrectly, depending on the way we feel—then takes the opportunity to charge us more and more. We have to grip this now.

I am slightly worried about amendment 9, and perhaps the Minister, and my right hon. Friend the Member for Derbyshire Dales (Sir Patrick McLoughlin) who tabled the amendment, can reassure me that there is nothing in it that takes away the democratic right of us in this Chamber to elect the members of the Sponsor Body and to dismiss them if necessary.

European Union (Withdrawal) Bill

Debate between John Redwood and Edward Leigh

Tuesday 12th June 2018 Commons Chamber

[Sir Edward Leigh]

I agree with the hon. Member for Glenrothes (Peter Grant) that we should use the language of respect. I, for one—and many of my colleagues, I am sure—would never use words such as “traitor”. We all accept that there are very different views in this place, but this is not the EU negotiating Bill. It is not a Bill designed from its inception to give the Government guidance about what sort of deal we should have. I thought—this has been explained to us many times by the Government—that this Bill was simply to try to transform and transfer, in an orderly way, EU laws into our legal system. That was what I understood the Bill to be; it is not an EU negotiating Bill.

I said earlier that we should use the language of respect. I know that it is not in order to call any Member “disingenuous”, but I think that it is in order to call an argument disingenuous, and I do so now. I respect the House of Lords. I understand that it is not elected. I understand that it should try to improve legislation. I serve on the Procedure Committee, and when the Committee considered these matters, there was a detailed debate on the sifting committee and I could understand how the House of Lords can try to improve how we deal with legislation. That seems entirely sensible and credible, but many of us suspect that these amendments, particularly Lords amendment 19, are designed not to improve the legislation or to improve the sifting process by which we transfer these laws, but to frustrate the whole process.

[John Redwood]

My hon. Friend will remember that we had many hours of debate and decisive votes before we sent the article 50 letter. That was the point when Parliament made up its mind to back the referendum. We cannot keep chopping and changing.

[Sir Edward Leigh]

I agree with that. As I was saying, although it is perfectly in order for the other place to try to improve legislation, when it seeks to frustrate it, I think that Members of the elected House should start to get worried. Lords amendment 19 is very clear in saying:

“Her Majesty’s Government may implement a withdrawal agreement only if Parliament has approved the withdrawal agreement and any transitional measures…Her Majesty’s Government must follow any direction in relation to the negotiations under Article 50”

and so on. What would be the result of that amendment? I say to colleagues that we are not just acting in a vacuum. What would be the result if we fail to overturn this amendment from the other place?

Transparency and Accountability (European Union)

Debate between John Redwood and Edward Leigh

1st reading: House of Commons
Tuesday 3rd May 2016 Commons Chamber

[Sir Edward Leigh (Gainsborough) (Con)]

We are a week from Parliament being prorogued prior to the Queen’s Speech. If we entered some kind of green dreamland, with the Opposition and the Government agreeing to accept the Bill and it becoming law—of course, we all know that that is not going to happen—do you know what I think would be the result, Mr Deputy Speaker? I think the effect on the European Union would be “nul points”—absolute zero.

We could have as many Select Committees as we like. My hon. Friend the Member for Stone (Sir William Cash) has spent a lifetime on Select Committees scrutinising the European Union. It is true that we already summon the Prime Minister to our Chamber after European Council meetings and he spends two hours answering our questions, but how much difference does that make? We could also summon him to appear before such meetings. We could do all the things that the hon. Member for Brighton, Pavilion (Caroline Lucas) wants—and nothing would change.

What is the structure of the European Union? It is a unique construct in terms of democracy and world history. We have a Parliament representing the people of the EU that has no ability to initiate legislation, which can be initiated only by an unaccountable bureaucracy— the Commission. In what Parliament or nation is that replicated?

What of the Council of Ministers? I have served, with my right hon. Friend the Member for Wokingham (John Redwood), on the Council. Were we—or is it now —concerned overtly about what was being discussed by deputies in the various national Parliaments? No. It is all done by making deals through the night.

[John Redwood (Wokingham) (Con)]

Is not the Bill simply putting a colourful and pretty ribbon on the tail of a very hungry tiger, the EU, that will go on eating up our powers, taking our taxes and forcing up taxes on green products?

[Sir Edward Leigh]

Absolutely. There is one way in which we can genuinely reform the EU. The Prime Minister tells us that we should remain in a reformed EU. Is there a single hon. Member on either side of this argument, or on either side of the House, who believes that the Prime Minister has reformed the EU? Despite his best efforts, no one believes that. Everyone knows that the negotiation was, to all intents and purposes, a sham to enable him to come back to the British people and try to convince them that this unreformed and unreformable body had indeed been reformed. Everyone in Europe knows that it is unreformed and unreformable, because of the very structure that I have talked about.

The fundamental problem is that we can have as many Select Committees as we like, and summon Ministers here as often as possible, but this Parliament is not supreme. That was the fundamental dilemma that our predecessors, the Labour Government in 1948 and the Conservative Government in 1957, were faced with. They were very happy to try to create European free trade—more free trade in iron and steel in 1948, and more free trade in 1957—but it was made clear to them by Mr Schuman, Mr Monnet and others that this was a project that would inevitably lead to federation. That is what it is about—it is, in the terms of the book by Hugo Young, this blessed plot. The people of Europe are not being consulted. The European construct is designed to ensure that the deals and the progress towards European federation are made in secret. When I was Chairman of the Public Accounts Committee, we went to the European Court of Auditors. The accounts have never been signed off. The EU is a body riddled not only with waste and incompetence, but with corruption.

Even if the Bill were to become law, it would achieve nothing, but there is one way in which we can achieve something. I simply pose a question: if one of the most important countries in the European Union were to vote to leave it, what would happen? We would not be talking about some little ten-minute rule Bill that would be ignored by the rest of the European Union, even if it became law. Do we not think that there would be a most profound electric shock through the whole system? Do we not think that our leaders in Europe might then sit down for a moment, ponder the fate of their construct and say that it should be designed to achieve what the European peoples want, which is peace and friendship?

Peace and friendship have, fundamentally, been created by NATO—at this point, I commend to Members an excellent article by my right hon. Friend the Member for New Forest East (Dr Lewis) making that precise point. NATO is a construct that we can indeed emulate because it is not a supranational body. It is a treaty-based body, but it does not impose its laws or supremacy on the peoples of Europe.

What the peoples of Europe want is what our own people really want: free trade. If we were to take this historic opportunity in June, I do not think for a moment that the world would fall in—it is moving towards European free trade. The very worst thing that could happen would be that we would have most favoured nation status and would have to pay tariffs of 5% on most of our exports to the European Union, but that is not going to happen anyway, because there is a massive balance of trade surplus against us. A deal can be constructed, based on free trade.

Much more important than what we think or want, however, is what might be created in the rest of Europe: a Europe of nation states; a Europe that was the original vision of General de Gaulle; a Europe where national Parliaments have genuine powers, and a genuine veto; a genuinely democratic Europe. That is our challenge, and there are millions of people in this country who will seize that challenge and vote for freedom in the referendum in June.

Question put (Standing Order No. 23) and agreed to.

Ordered,

That Caroline Lucas, Mr Pat McFadden, Tim Farron, Mr Graham Allen, Stephen Gethins, Stephen Kinnock, Hywel Williams, Greg Mulholland and Ms Margaret Ritchie present the Bill.

Caroline Lucas accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 13 May, and to be printed (Bill 171).

Housing And Planning Bill (Ways and Means)

Resolved,

That, for the purposes of any Act resulting from the Housing and Planning Bill, it is expedient to authorise the payment of sums into the Consolidated Fund.—(Brandon Lewis.)

HOUSING AND PLANNING BILL (PROGRAMME) (NO. 3)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Housing and Planning Bill for the purpose of supplementing the Orders of 2 November 2015 (Housing and Planning Bill (Programme)) and 5 January 2016 (Housing and Planning Bill (Programme) (No. 2)):

Consideration of Lords Amendments

(1) Proceedings on consideration of Lords Amendments shall (so far as not previously concluded) be brought to an end at the moment of interruption.

(2) The proceedings shall be taken in the order shown in the first column of the following Table.

(3) The proceedings shall (so far as not previously concluded) be brought to a conclusion at the times specified in the second column of the Table.

Scotland Bill

Debate between John Redwood and Edward Leigh

Monday 15th June 2015 Commons Chamber

[John Redwood (Wokingham) (Con)]

Does my hon. Friend agree that there will not now be the automatic application of the Barnett formula to solve all the many money issues between Scotland and the rest of the United Kingdom, but there has to be a fundamental renegotiation of the block grant and an attribution to Scotland of revenues by some formula? In practice, the whole financial settlement is in the melting pot anyway, so it will be very interesting to see how the SNP respond to his proposed further development.

[Sir Edward Leigh]

Absolutely; we are a united kingdom. For instance, Lincolnshire gets more money in its educational grant because of the sparsity factor. All these things can be worked out in a constructive manner between the United Kingdom Government and the Scottish Government so that there is a fair support mechanism based on need that takes account of issues such as declining oil revenues, the sparsity factor that I mentioned, declining heavy industries, or an ageing population. The grant should be determined by these matters, not by some ageing formula based on what the United Kingdom spends.

--- Later in debate ---

[Sir Edward Leigh]

I will make a bit more progress, because I want to get to my hon. Friend the Member for North East Somerset (Mr Rees-Mogg). He has been very patient, and I will get to him eventually.

Like then, everything is different now. What will happen if Smith stays? Can we sustain a permanent settlement that prevents Scotland from setting the initial threshold for income tax or from changing universal credit? What will happen when the Scottish Conservative party promises in its election manifesto to cut taxation? How credible will that be if it affects the block grant available from the United Kingdom? All these issues have to be discussed.

Under the Smith proposals, universal credit will remain a reserved matter. Holyrood will be able to vary the frequency of payments and the way it is paid, while the power to vary the remaining elements of universal credit remain reserved, but I would ask why. I have read the Smith commission. Why?

[John Redwood]

Universal credit has been reserved because if Scotland decided to make it more generous, the issue would arise of how it would pay for that. What we find with fiscal independence is that we have to delegate both sides of the equation—the raising of the money and the spending of it—and then it can decide how much it wants to spend.

[Sir Edward Leigh]

Full fiscal autonomy results in full responsibility. That is what real Parliaments do.

Responsibility for bereavement allowance, bereavement payment, child benefit, guardian’s allowance, maternity allowance, statutory maternity pay, statutory sick pay and widowed parent’s allowance will all remain reserved and administered by the Department for Work and Pensions. Why? The Smith commission further proposes a complex system for sharing responsibility for income tax. Why? That is all affected by an oscillating block grant. As I have said, how can SNP Members promise lower taxes in an election or higher spending unless they are masters of their own fate?

What are the objections to full home rule? What are the real objections to full fiscal autonomy, apart from the fact that we appointed a Lord Smith—with lots of no doubt very worthy people—to produce a report, which has been overtaken by events? We are told that full fiscal autonomy will result in tax competition within the Union. What is wrong with that? That is what keeps the American states vibrant and competitive with one another and continually innovating. Do we not insist that our taxes in Britain compete with those of Europe? We are told that tax competition would create downward pressure on taxes. Well, I am sorry about that. Why should the Scottish Parliament not be able to lower or raise air passenger duty? It can do whatever it likes. I know it has had that power and it will be allowed it under Smith, but if that power is allowed, why not powers for other things?

On Second Reading, my hon. Friend the Member for North East Somerset said that a single currency requires fiscal and monetary union, with the implication that that is proved by the Greek experience. Surely he is not suggesting that the Scots are Greeks, or that the Scottish economy is as different from England’s as Germany’s is from Greece’s. No; Scotland can thrive with full fiscal autonomy because Scotland has the will and the skills to do so. It has universities, research, manufacturing, logistics, light manufacturing, oil and gas, food and drink and a flourishing creative sector. [Hon. Members: “Hooray!”] Vote for my new clause.

Debate on the Address

Debate between John Redwood and Edward Leigh

Tuesday 25th May 2010 Commons Chamber

[Mr John Redwood (Wokingham) (Con)]

I should like to express my gratitude to the voters of Wokingham for renewing their confidence in me and returning me to the House. It is particularly comforting that I got more than half the vote at a time when the idea of the alternative vote is in the wind. I am sure that colleagues will think long and hard about that as they look at their own electoral positions as well as the national interest.

During the general election campaign, my electors—I am sure like those in many other constituencies—expressed their deep sorrow that the Equitable Life victims had not yet been compensated. It is extremely good news to see a Conservative pledge—and perhaps it is also a Lib Dem pledge—honoured immediately in the Queen’s Speech. The compensation is the victims’ due, owing to the bad regulation of that business, and the pledge is that it will now be paid more promptly. We look forward to the statement that is to be made.

An even larger number of my electors in Wokingham were extremely worried about the impact of the very large amount of new housing that the former Government and their regional planning authority were imposing on my constituency. I argued long, and I hope clearly, that, were a Conservative Government to be elected, they should sweep away the regional housing targets and the regional planning system. I argued that the unitary Wokingham borough council should be allowed to make more of its own planning decisions, and my hope was that the new Government would allow the council to come to a wiser judgment about how many new homes should be made available.

Some new homes must be made available, but we must avoid building on floodplains or in back gardens. We must avoid the town cramming and all the other unpleasant features of the last 13 years that my electors had come to dislike. Again, therefore, it is very good news that the coalition has come together and that it has promised in this Queen’s Speech that there will be early action to deal with such matters.

Many of my voters were also extremely worried by the lack of progress by the Environment Agency and the relevant ministry in tackling problems of flooding. These problems have been made particularly acute in my constituency by the over-building in inappropriate places that has been determined by Government inspectors in recent years. I have seen the tragic sight of new homes being completely flooded six months after they were built and sold because they were put in the wrong place by a Government inspector who did not seem to understand the nature of a floodplain. I look forward to the planning system helping with that, but I shall also be calling on my colleagues who are now Ministers to see what else we can do to right the wrongs caused by homes being built in places without adequate flood defences.

I wish to concentrate on the central thrust of the Gracious Speech—the issue of the deficit. “There is no money left”: how kind it was of an outgoing Labour Minister to make that clear. What better independent authentication of all that we said in the general election could we want than that note from the outgoing Chief Secretary to the Treasury? He should know, although I do not quite understand his taste in jokes: none of the rest of us thinks that his remark is at all funny. It is poignant and sad, and it sums up the tragic end of the long Labour Government.

From what we have heard so far in this short debate, there are still Labour Members who do not seem to be able to distinguish between the deficit and the debt. We have already heard one say that he does not think that it is right to start paying down £6 billion of the debt this early. However, we are not talking about paying down—or paying off—£6 billion of the debt. We are talking about trying to stop the debt from going up by quite as much. We are talking about a debt that, on the outgoing Labour Government’s figures, is rising by £150 billion or £160 billion a year. So far, we have come up with a welcome but modest proposal to start to reverse the trend that is our ever-climbing deficit.

We meet as a new Parliament in very difficult and dangerous times, and I think that people have high hopes of us. I think that it was good that there was some democratic renewal in the election: more people wanted to vote, and they took the election seriously and wanted to express an opinion. However, Parliament must understand—as those of us who were in the previous one surely do—that we are on probation. It is up to us to prove to the public that this Parliament can be so much better than the last one, and that we can tackle the serious issues in a sensible way.

Of course, there must be robust debate and challenge to the Executive—and I suspect that that must come not only from those on the Opposition Benches. Of course, there will be periods of humour and light-hearted relief, and the speeches made at the start of this debate were notably good and humorous. However, we must restore the trust of the British people and ensure that they feel proud of their Parliament again. To do that, this Parliament must engage more actively with the Executive, thank and reward them when they get something right and make sure that they understand when they get something wrong. We must press and press the Executive until they get things right, for the sake of the wider public good and the wider national interest.

The country has very warm feelings towards the coalition. I welcome the coalition, as it was the only way we could go forward, given the nature of the election result. It is not for us to criticise the electorate for the judgment they made. Each individual made his or her judgment for good reasons, in good conscience. It is up to us to make the best of the result that they have produced. Looking at the arithmetic, even sensible Labour Members would agree that the only conceivable way of offering this country some stable government for a reasonable period was for the Liberal Democrats and the Conservatives to find how many things they could agree about, and to agree to disagree about the other things and not to highlight them for a period while we offer stable government.

I am sure that Labour Members will play endless games suggesting that a Liberal Democrat said one thing and a Conservative said another before the election, but they should move on. It is not interesting. We all know that—we were fighting each other in an election. We still disagree about some fundamental issues—we have been open and honest about that—and that has not suddenly changed. But what we agree about is very important. We agree that this country is in a huge mess. We agree that this country needs stable government to start to turn it round, and we agree that the only conceivable combination that has the numbers to work is the Liberal Democrats and the Conservatives working together. We also agree that the prime task is to start to tackle the deficit before it overwhelms us.

Many Labour Members still think that it is wrong to reduce public spending to reduce the deficit. Some of them mistakenly tell us that if we cut public spending—by £6.2 billion, to pluck a recent figure out of the air—it will take £6.2 billion out of the economy and will therefore help to collapse the economy further. The Labour party should understand that every £1 that is spent and borrowed by the Government has to come from the private sector. We are not printing money any more—that was the Labour idea for a year and even they agree that we cannot continue to do that. So every £1 that we need to borrow this year has to come from the private sector—from a company or individual who will lend it to the Government, but if they lend it to the Government, they cannot spend it or use it themselves. So it is not taking money out of the economy: it is just saying that we need a better balance in the economy.

If we do not get a private sector-led recovery, we will not cure the deficit, we will not prop up and develop the public services, and we will not have the increase in the tax revenues that we need to make a success of our large and expensive public sector. The only way out of this deficit crisis is a strong, private sector-led recovery.

[Mr Edward Leigh (Gainsborough) (Con)]

My right hon. Friend has spent many years in the private sector. Having also studied efficiency savings in the public sector, does he agree that £6 billion—or 1%—is just a start, and that huge gains could possibly be made, especially in IT projects and the general management of Whitehall?

[Mr Redwood]

I entirely agree. I have in the past been actively involved in British industry, and 3% per annum efficiency gains is a normal target. It is not done by undermining the product, reducing its quality or providing the customer with a worse service: it is done while giving customers a better service and raising the quality of the product, through technology, training and energising and motivating the work force through reward and incentive. We need to do that in the public sector now, on a large scale, because we have had 10 wasted years in which the Government made no progress and put too much money in without asking for enough back—doing too little for too much. We now need to create a public sector that does more for less in the important areas such as health and education, and does less for less in areas such as ID cards and the authoritarian state that Labour introduced.

We are meeting at a time of grave crisis for our European neighbours in the euro area. As one who campaigned strenuously and volubly against the United Kingdom joining the euro, I take no great pleasure in saying that all the things that we thought could go wrong with the euro are now unfortunately doing so, even without this country. I am very proud of all those who joined us in that campaign and kept sterling out. It is the one thing that the Government most recently ejected from office got right—they managed to stay out of the euro. That was a very sensible judgment on which I always congratulated them and backed them at the time. Had Britain gone into the euro, the state of British public finances and the different nature of the British economy and its founder currency, sterling, would by now have shattered the euro. Our great contribution to euroland unity was keeping our currency out, and I think that I could now find many German and French people and experts who would agree that we have made their problem a lot easier by not being in the euro.

When we used to say, “Beware of Greece! That is why we need to control our deficit”, the previous Government were always keen to tell us, “Oh, but Greece is in a totally different position.” Well they were wrong in this sense: if we do the figures properly, we see that total borrowing in Greece, in relation to its economy, is no bigger than total borrowing by the UK Government in relation to our economy. Colleagues have set out endlessly that the true debt and liability of the state in Britain is £3 trillion, not just under £1 trillion, as the previous Government used to say. Furthermore, our deficit is every bit as big as Greece’s, as we know from the awful figures that we have seen. So in that sense, we are just like Greece, and if the markets have got to the point with Greece where they are saying, “We will not carry on lending you money, because we think that you have over-borrowed”, we could get to that point in the United Kingdom too. It is that argument that has brought several Liberal Democrats round to our way of thinking, which is that we need urgent action. During the election we saw the Greek crisis being enacted at the same time as we were talking to electors, making it clear how dangerous the situation was.