Balancing the Public Finances

Debate between Julian Knight and Mark Harper

Tuesday 11th July 2017 Westminster Hall

[Mr Harper]

My hon. Friend sets out clearly what has happened in the past, and I want to spend a little time on the challenges facing us in the future, but it is worth looking at the economic record. We did not make the decisions and get the success we have had easily; they were contested, and our political opponents challenged us every step of the way. But we have been successful, which gives us the credibility to talk about facing the challenges of the future.

When we came to power in 2010, the budget deficit was the equivalent of just under 10% of the size of the economy, at £150 billion a year. According to the most recent set of actual figures, we have reduced the cash deficit to £46 billion—down by 70%—and the deficit as a proportion of the size of the economy is down by 75% to 2.5%. That is a significant achievement, and it means that in this Parliament the size of our stock of national debt as a proportion of the size of the economy will start to fall. That is incredibly important for the future.

[Julian Knight (Solihull) (Con)]

I congratulate my right hon. Friend on securing this incredibly important debate. The impact is not simply one of taxes and of borrowing and spending, but of Government spending on personal finances, which has a massive impact because of interest rates and personal interest rates. If we let borrowing get out of control, interest rates in the real economy would rise. That is when we have repossessions, and that then is when we have a depression.

[Mr Harper]

My hon. Friend is absolutely right. If we let the public finances get out of control, interest rates would rise and hard-pressed families who are having to make difficult decisions would see the cost of their mortgages and other debts go up, which would not make their lives any easier at all.

Let us consider the impact of controlling the public finances on the real economy. If we look at growth, at how fast the economy has grown over the past seven years, we see that our economic performance among the G7 largest countries in the world has been second only to that of the United States. Interestingly, we have grown our economy at almost double the rate of our nearest neighbour, France. In 2014 and 2016 we were the fastest growing G7 country, and the joint fastest in 2015. That is an impressive record. I mention that because our political opponents often pretend that balancing the public finances has not worked, but in generating economic growth it absolutely has worked.

European Union (Notification of Withdrawal) Bill

Debate between Julian Knight and Mark Harper

Committee: 1st sitting: House of Commons
Monday 6th February 2017 Commons Chamber

[Mr Harper]

Let me just finish my point. We would have no ability to influence the rules that we would have to accept. Members who are talking about the EEA are simply trying to avoid the fact that we are going to be leaving the European Union; they are trying to remain in it by the back door.

[Julian Knight (Solihull) (Con)]

Will my right hon. Friend give way?

[Mr Harper]

Let me give way to the hon. Member for Ilford South (Mike Gapes), who I think was first on his feet, and then to my hon. Friend.

--- Later in debate ---

[Mr Harper]

Let me finish answering the point of the hon. Member for Ilford South and then I will of course take an intervention. I did promise to give way to my hon. Friend the Member for Solihull (Julian Knight) first, but I will then give way to the hon. Lady.

The two best options are either to be in the EU and accept everything that comes with that, but with the ability to shape the rules, or to leave and not be in the single market, not have free movement of people and not be subject to the European Court of Justice. Norway’s EEA model is poor, because it is subject to the free movement of people, it has to accept the jurisdiction of the Court and it has no right at all to influence any of the rules. It is up to the Norwegians what model they want to adopt, but it is not one that would work for us or that I would recommend to the House.

[Julian Knight]

I completely agree with my right hon. Friend. Constructs such as the EEA are effectively antechambers. They are entry points into the EU. It would be inappropriate, given our size and our economy, for a country such as ours that is exiting the EU to rest in something that is unsuitable.

[Mr Harper]

I could not have put it better myself. I will now give way to the hon. Lady.