Government's Management of the Economy

Kevin Hollinrake Excerpts

Tuesday 23rd February 2021 Commons Chamber

[Kevin Hollinrake (Thirsk and Malton) (Con) [V]]

I find this a somewhat surprising choice for an Opposition day debate, in that the Opposition—by anybody’s judgment, really—have a terrible record on the economy, and the shadow Chancellor gave no indication as to why it would be different this time. The motion says that

“the last decade of UK economic policy weakened the foundations of this country’s economy”.

That just makes no sense. Labour Members seem to point to the global financial crisis as the reason for the disastrous end to their management of the economy, yet that is a rewriting of history.

The reality is that in 1997 the then Chancellor, Ken Clarke, passed on a Goldilocks economy to Tony Blair and Gordon Brown. The Labour Government, to get elected, had said that they would continue with our spending plans, and they did—for four years. After that, of course, they reverted to type and started to spend. For seven years, there was a growing deficit. It was a much bigger deficit than we had last year with the rise of this crisis; that was in the good times. Huge issues—not all caused by the Labour Government—then left a £153 billion annual deficit.

The shadow Chancellor said that she was somewhat surprised that the debt had grown over the last decade. Well, what did she expect and what alternatives might she have put forward? It takes time to get that kind of deficit down, unless the Government hugely cut spending or massively put up taxes; yet she offered no solutions, just criticism. Anybody can stand on the sidelines and criticise. What I expected to hear from the shadow Chancellor was some indication of what a Labour Government would actually do, how they would manage these problems, and how they would manage future tax or spending policy. The only indication we have is a recent article in the New Statesman, which says that the shadow Chancellor’s fiscal approach will be “strikingly similar” to that of her predecessor, the right hon. Member for Hayes and Harlington (John McDonnell). Not many people will be reassured by that.

The reality is that even pre-covid, this country was facing some huge problems. Owing to our demographics—our ageing population and the smaller number of children per household—the debt is going to fall on fewer and fewer people. The debt is going to grow if we do not change our tax policy to—would you believe it—314% of GDP by 2060. We need an honest conversation about taxation, and we need to do things differently. We need to look differently at the funding of things such as social care, healthcare and pensions. I particularly recommend looking at an adult social care premium to pay for social care. We need sensible, honest economics.