Charter for Budget Responsibility

Jonathan Reynolds Excerpts

Wednesday 14th October 2015 Commons Chamber

[John McDonnell]

I am sorry for being so ungallant to the hon. and learned Lady and I apologise to her for that, but I have explained three times already.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

We are getting to the crux of this debate, which is that this fiscal charter is intellectually moronic. It essentially commits this House to never borrowing to invest, even when the cost-benefit analysis of that investment is such that the country would benefit greatly. That is why it has not one serious economist backing it, other than the self-styled experts on the Government Benches.

[John McDonnell]

I could not have said it better myself. Can we move on?

The Chancellor may not appreciate these economic points, but I believe many of his advisers do. That is why there is a sizeable get-out clause for the charter rules not to apply outside normal times when there is a significant negative shock to the UK economy. Not only are the social consequences of this programme devastating, but the scale of the cuts we are witnessing represents a false economy. They jeopardise the long-term economic prosperity of our country. It is a false economy to cut adult social care when the burden is shifted on to hospitals and accident and emergency departments. It is a false economy to pursue an ideological sell-off of council housing eventually to put up the rents and eventually increase housing benefit. It is a false economy, ironically, that when this Government came to office there were 70,000 people at HMRC and within the next year that is planned to fall to 52,000—a cut of more than 25% in the number of tax-collecting staff, when HMRC says that tax evasion is as high as £10 billion a year. But the worst—

--- Later in debate ---

[Mike Wood (Dudley South) (Con)]

It is sometimes said that the definition of insanity is doing something over and over again and expecting a different result. On 7 May, the voters decided that it would be insane to let another Labour Government repeat the mistakes that the previous Labour Government made, which, at the very least, seriously worsened the recession. They borrowed too much in order to spend too much.

The public recognise what Labour Front Benchers seek to deny: that we cannot safeguard people’s jobs and mortgages without a secure and stable economy; that we cannot go on spending far more than we earn for long without getting into a lot of trouble; and that there is absolutely nothing progressive about saddling our children and grandchildren with enormous debts over which they have no say.

That is why this evening’s vote is a basic test of Labour’s economic credibility. It is not a test of the shadow Chancellor—those results are already in and they do not look good. It is a test for the remaining moderate Members on the Labour Benches: those Members who say that they have listened to what the voters said so clearly in May and learned from it; those Members who agree with the reported comments of my friend and constituent, the hon. Member for Dudley North (Ian Austin), who is not in his place, that it is time that the hon. Member for Islington North (Jeremy Corbyn) started acting like the Leader of the Opposition, rather than a student union president; and even those Members—perhaps there are some—who remember why Tony Blair is still the only Labour leader in my lifetime to win a general election. If they fail that test, they will be failing to support this self-evidently sensible and moderate measure.

[Jonathan Reynolds]

The hon. Gentleman will be aware from his research for his speech that no Conservative Government in history have ever hit the target being presented to Parliament tonight. None of those historical Conservative Governments ran surpluses according to this fiscal charter. Were the Governments of Harold Macmillan and Margaret Thatcher not economically credible?

[Mike Wood]

I am not sure that even needs dignifying with a response. We fought the election on having a balanced budget by 2019-20, as announced in the Budget, and a system with a fiscal mandate that puts us in line with many of the most successful economies around the world.