amendment of the law

Debate between Kwasi Kwarteng and David Wright

Monday 25th March 2013 Commons Chamber

[Kwasi Kwarteng (Spelthorne) (Con)]

I am pleased to have the opportunity to contribute to this debate.

Last week’s Budget was a successful one politically. It worked because it identified that the cost of living affects all our constituents. I particularly welcome the fact that the Chancellor, by getting rid of the beer duty escalator and checking the fuel duty escalator put in by the previous Government, for example, recognised the rising cost of living for many of our constituents.

Before proceeding, I would like to refer to some of the remarks made by the right hon. Member for Edinburgh South West (Mr Darling), who, as we all know, was a prominent member of the previous Labour Government. He mentioned the fact that the OBR had consistently failed in its forecasts over the course of this Parliament. He also mentioned the fact that we are borrowing at record levels. That is all true. But what he did not mention, or make any apology for, was the share of responsibility that he and the previous Government must admit to in the creation of our largest peacetime deficit. People will look back on the period between 2001 and 2007 in this country as one of the most, if not the most, profligate and irresponsible periods in the management of our public finances.

[David Wright]

If that is the case, why did the Conservative party support the Labour Government’s spending plans throughout that period? The Conservatives stopped supporting the spending plans only just before the global financial crisis. Can the hon. Gentleman explain what action he would not have taken to save the banks?

[Kwasi Kwarteng]

I happen to be a balanced budget Conservative. Even at the time, before I was elected to this House, I completely disavowed any move to stick to Labour’s spending. I thought that it was a big mistake at the time and I am quite happy to say that in this House. I think that it was entirely a mistake to do what the Labour Government did and run deficits at a time when the economy was growing at 3%. It was absolute madness to run deficits at 3% of GDP when the economy itself was growing at 3%. Not even the most starry-eyed Keynesian has ever suggested that we should be running deficits while the economy was expanding. As a direct consequence of this irresponsible period, in 2010 we were left with the largest peacetime deficit and the highest deficit-to-GDP ratio of any of the OECD countries. That period of stewardship marks the ultimate disgrace of the Labour party in terms of managing the national economy. We have now reached the point where we are borrowing £100 billion a year and the national debt is going up, as people have mentioned. As a consequence of this high level of deficit financing, we are going to leave a national debt in years to come that is higher than it has been for generations.

What serious proposals have Labour Members come up with during this four-day debate? Their answer is simply to borrow more money and to spend more money. They would accelerate our downward path and we would end up, as one economic commentator has said, with Club Med levels of debt similar to those of Portugal and Greece—without, unfortunately, the good weather. That is what Labour Members are leading this country towards. Members of the public will be absolutely astounded that Labour Members have expressed not one shred of remorse, regret or acknowledgement. They live in a world in which they did nothing wrong. Everything has been blamed on the coalition Government, who have tried to clear up the appalling mess—[Interruption.] Labour Members are chuntering from sedentary positions. They do not like to hear the facts.

People up and down the country realise and acknowledge that the Labour Government were entirely irresponsible. What solutions have the Labour Members come up with? Absolutely none. It is embarrassing to listen to some of their speeches. They talk about more growth despite the fact that the eurozone is flat on its back. They talk about more investment despite the fact that we are borrowing more money than we ever have before. When one asks them where this money is going to come from, they repeat, “The bankers’ bonus tax”, as though that would pay for absolutely everything they wish for, although it has already been spent about 100 times. It is depressing to see Labour Members, who fancy themselves as the next Government—they are very confident, I notice—offering such poor, ill-thought-through and pathetic solutions to a grave national crisis. People watching this debate at home will be appalled, frankly, by the level of argument, contribution and solutions that Labour Members have contributed.

I welcome this Budget. In very difficult times, the Chancellor has identified weaknesses and has managed to alleviate some of the distress that we suffer.

Budget Resolutions and Economic Situation

Debate between Kwasi Kwarteng and David Wright

Thursday 24th June 2010 Commons Chamber

[Kwasi Kwarteng]

The hon. Gentleman will remember that the second rule was that

“public debt as a proportion of national income will be held over the economic cycle at a stable and prudent level.”

The then Chancellor concluded the 1997 report by stating:

“These rules will ensure that borrowing will be kept under firm control.”

Everyone applauded him. He was talking about prudence; he was the Iron Chancellor and very much the hero of the hour. In the same report, he referred to the recession of the early 1990s. His conclusion was that the public sector borrowing requirement rose to a peak at 7% of GDP and he said:

“The Government regards it as important that no similar risks should be taken with fiscal policy again.”

That was the position of the Labour party in 1997, and in 2006 Labour was repeating the same mantra and the same pie in the sky ideas. It was saying that

“public sector net debt is projected to remain low and stable over the forecast period”.

In 2007, it said:

“The Budget 2007 projections for the public finances are broadly in line with the 2006 Pre Budget Report”,

and so on.

[David Wright]

Will the hon. Gentleman outline what spending he would have cut between 1997 and 2007?

[Kwasi Kwarteng]

I am merely stating the very prudent rules that the former Chancellor and Prime Minister outlined. All the rules that he set in place in 1997—[Interruption.] The hon. Gentleman asked a question and I want to answer it. All those rules were ripped apart. The PSBR figure of 7% of GDP, which the then Chancellor had thought was a scandal, went up to 12%. According to the very rules that he set, we have failed and been found wanting. It is in that context that my right hon. Friend the Chancellor of the Exchequer introduced his bold and comprehensive Budget on Monday. It was only because we had to do this that the Budget was introduced to this House. It was not part of any ideology or master plan; it was an act of dire necessity.

I thought that the most interesting contribution in the debate was that of my right hon. Friend the Business Secretary, who recalled with a lot of emotion and understanding the experience of 1976. It was exactly that experience, when another Labour Government had bankrupted the country and had to go to the International Monetary Fund, that he was so anxious to avoid. It is in that spirit that the Budget has been introduced to the House and that is why I am very happy to commend this Budget and to go through the Aye Lobby to vote for it on Monday.