Budget Resolutions

Lord Clarke of Nottingham Excerpts

1st reading: House of Commons
Thursday 1st November 2018 Commons Chamber

[Mr Kenneth Clarke (Rushcliffe) (Con)]

I have listened to many Budget speeches but when I listened to this year’s I was taken by surprise, in a rather cheering way. I came here expecting that we were going to hear how the Chancellor had solved the problem of raising some taxation to help pay for the very welcome £200 billion given to the NHS. I sat there listening to him deliver an excellent speech, cutting taxation and increasing public expenditure. It was an open and expansive Budget based on a courageous Budget judgment that I had not seen coming—I welcome that and wish it every success. It was of course based on spending all the unexpected surprise of the extra tax revenues that the Office for Budget Responsibility forecasts had produced—or had already delivered—and on spending everything anticipated in the forecasts in order to keep us on track to eliminate debt.

I welcome bold decisions, and I hope this one succeeds, but I am afraid I am going to express a little caution, as someone needs to, even in the Chamber of the House of Commons. I have seen many Budgets and the reaction is quite predictable: all my right hon. and hon. Friends have joined in welcoming every piece of good news, as I do. The money for health and social care was very much needed, and I welcome what has been done for small businesses and city centres—I could go on, but my seven minutes does not allow me to cover all the good news in the Budget. But somebody has to express caution, but I do not do so as a party pooper; I am not going in for all the gloom and foreboding of the Institute for Fiscal Studies and Standard & Poor’s, the rating agency. But as the Labour Opposition are in my personal opinion so completely useless on an occasion like this—all they do is greet an expansive and popular Budget by saying, “Oh, it’s nothing compared with the vast sums we would spend in future”—it is probably as well that we do express some caution.

All I would like is for my right hon. Friend the Chief Secretary, who I believe is going to wind up the debate, to reassure me that we are proceeding with some care. Many political judgments involve taking risks. Very few political judgments and policy judgments give an obvious answer, which is fine. A courageous Minister takes some of those risks, but they do have to be aware of them and to anticipate what they would do if they started to materialise, and I hope my right hon. Friend will be able to do that.

The reasons for my reservations are, simply expressed, that the very welcome news about the tax revenues recently may not last. We have had windfall revenues in the past, and nobody quite understands why we have these windfalls now, so I think a little caution is called for before we start anticipating that they are going to carry on in that way.

As for forecasts, I never spent the money in forecasts, because all economic forecasting, at any time, is extremely fallible and extremely difficult. I do not think I know of a time when it has been more impossible than now. I have only seven minutes, so I am not going to be able to dilate about Mr Trump’s trade wars, problems of Chinese debt, the emerging problems in many emerging markets, the reckless nature of the Italian Government they have elected and, above all, the uncertainty of Brexit, which dominates us. All this makes the task of economic forecasting almost impossible, so we should not spend the money it looks as though we might be getting without having at the back of our minds some idea of what we are going to do if it does not work out.

[Sir Edward Leigh (Gainsborough) (Con)]

My right hon. and learned Friend is right to pour cold water on economic forecasts. What did he think of the Treasury forecast before the referendum which warned that if we voted for Brexit, there would be an

“immediate and profound economic shock”?

[Mr Clarke]

The Treasury took some welcome measures to ease that shock, stepping in with an emergency cut in interest rates and expansionist measures to mitigate the problem. One problem with forecasting is timing. If we get a hard Brexit, I do not think my hon. Friend will be dismissing quite so lightly the forebodings of the Treasury. I agree that some of the leading figures in the remain campaign turned the whole thing into a bit of a farce by talking about Budgets putting up taxes and so on in two or three months’ time, but I did not echo that and nobody else did. Also, it was not as bad as most of the quite dishonest arguments being put forward by the leave campaign about the millions of Turks who were coming here, but I will leave that to one side.

The Brexit deal will have consequences for our immediate economic future. I want a soft Brexit, if we have to leave. I want no new barriers to our trade and investment and no new customs arrangements; I want regulatory convergence and open borders to continue with our major market, but we may not get there—no one knows. I have added in all the other uncertainties in the global economy at the moment. We are all being sustained by an American boom, which may be quite short lived, as these fiscally induced booms usually are. Recession is not impossible in the next two or three years, and we have to make sure, first, that we avoid it and, secondly, that we are prepared for the warning signals when they come.

So I hope I can be persuaded that the Chancellor has retained some firepower in case the economy risks going off, and I hope he will manage expectations. We are all enjoying this Budget, but the key public spending decisions are going to be in the public expenditure round in 2019 and 2020. Nobody should be led to expect that vast sums are necessarily going to be forthcoming then, and we need to manage expectations.

What slightly worried me were what I thought were presentational errors made in the run-up to this Budget. Had I been Chancellor, I would not have agreed that £200 billion for the health service should be announced on an inconsequential date a few months ago and then have been left with the Budget to explain how we pay for it. If we had put the two together, the health service spending would have been the highlight of this Budget, because it is a very welcome and very important decision. The public were braced to pay something towards it. The first reaction is that some other taxpayer should pay, but we could have given ourselves more firepower and maintained our direction on debt by raising some taxes towards it. But they are the only reservations I raise.

Budgets often are popular at first but they are forgotten by Christmas—even mine. What matters is where the economy is in two or three years’ time, and I hope the Chief Secretary will tell me that the Government have not lost sight of that.

Finance (No. 3) Bill

Lord Clarke of Nottingham Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 8th January 2019 Commons Chamber

[Mr Kenneth Clarke (Rushcliffe) (Con)]

With respect, it is quite right to concede that some of the fears being raised about no deal are grossly exaggerated, but the problems are quite real enough. If we leave with no deal, we will be the only developed country in the world that has no trade agreement at all with anybody and that is having to fall back on WTO rules, which are made to sound marvellous by the Brexiteers but which do not actually amount to very much. We will also be erecting new barriers to trade and investment around the borders of the United Kingdom, including along the Irish border, and that is bound to disadvantage our economy very seriously indeed.

[Jonathan Reynolds]

The Father of the House is as accurate as ever. Some colleagues are pursuing a dangerous argument that all our trading relationships with countries that are not in the EU are somehow currently under WTO terms, which is an absurd misconception. We have entered into trade agreements as a member of the EU that account for something like 16% of our goods exports.

Regardless of the significant impacts of a no-deal outcome, we could go further and say that to leave the EU having not secured a deal—an acrimonious departure —would damage our relationship with our most important trading partner for years to come and fundamentally undermine our credibility on the world stage. I cannot see how any serious-minded Member of this House could understand that that would not be of severe consequence for the United Kingdom, which is why it is so important that this House makes a clear statement today about the dangers of no deal.

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[Nick Boles (Grantham and Stamford) (Con)]

I will be very brief, not least because my right hon. Friends the Members for Loughborough (Nicky Morgan) and for West Dorset (Sir Oliver Letwin) have described much better than I ever could why I am going to support amendment 7, which I signed almost while it was hot off the presses before Christmas. The one point I want to address is the question that has been raised, and indeed the accusation that has been made, that in doing so I and other Conservative Members are breaking faith with our constituents and somehow breaking a manifesto commitment. I believe this to be utterly wrong, and also a rather disgraceful suggestion to make.

In the referendum campaign on our membership of the European Union, I supported and indeed voted remain. However, the argument of my colleagues who voted and campaigned for leave that I found most powerful and most emotionally impactful was that Parliament is sovereign and should take control of all the decisions that affect the lives of my constituents. That was the argument that the leave campaign made that I found the most difficult to resist and the most difficult to say was worth compromising for the sake of our membership of the European Union. It is therefore somewhat extraordinary that the very same people who made that argument so eloquently and effectively during the referendum campaign should somehow have the temerity to criticise me or other hon. and right hon. Members for doing what we believe is right in the interests of our constituents and in the national interest.

[Mr Kenneth Clarke]

I cannot think of a single leading Conservative Brexiteer who would have changed his opinions on membership of the EU in the slightest had the remain side won the referendum. They made it quite clear that they had no intention whatever of abandoning their long-held, quite sincere views, which they would have carried on arguing in this House and voting for. Does my hon. Friend share my view?

[Nick Boles]

The Father of the House is completely right. I have to say—I am sure the same is true of him—that I rather admire them for it. I admire my hon. Friend the Member for Stone (Sir William Cash) for making the same arguments passionately and with principle for 40 years—longer, practically, than many Members have been alive.

I want briefly to address the question of the Conservative manifesto commitment. I should point out that quite large chunks of the Conservative manifesto were junked by the Prime Minister during her own election campaign, so I do not know quite why we have elevated it to be a sort of Moses-style tablet. Nevertheless, it contained a sentence saying that we maintain that no deal is better than a bad deal. I agree, and I agreed then, in my hospital bed, when I agreed to stand as a candidate in the election, that that was the right position for the Government to take. As my right hon. Friend the Member for South Dorset (Sir Oliver Letwin)—West Dorset; apologies to the people of Dorset—explained, it was entirely right for the Government to want to prepare for no deal. Unfortunately, as he pointed out, they failed to do so.

However, what we did not say in that manifesto is that no deal is better than any deal; we said no deal is better than a bad deal. I remind my hon. Friends that we have a deal; it is a deal that the 27 nations of the European Union have agreed, that the Prime Minister, who recently won a confidence motion in the Conservative party, and her Cabinet have endorsed and advocate, and that, at the last count, about 200 Conservative Members, including myself, intend to support when the vote is finally put. It is simply not possible to suggest that by saying that I will not countenance no deal, I am breaking that manifesto commitment. We do not have a bad deal; we may have a deal that you, individually, do not like —not you, Mr Speaker, but individual hon. and right hon. Members—but nobody can claim that we do not have a deal that it is reasonable for Conservative Members to support. It is therefore reasonable for us to say that, at this late stage, with the Government having prepared as woefully as they have for no deal, we will on no account countenance a no-deal Brexit.

Finally, I join my right hon. Friend the Member for West Dorset in very clearly saying this: I will vote on any motion, on any amendment, on any piece of legislation, proposed by whomsoever in this House to ensure that we leave the European Union on 29 March with a deal or not at all.

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[Sir Oliver Letwin]

rose—

[Mr Kenneth Clarke]

rose—

[Robert Jenrick]

I will give way one last time, but I have only a couple of minutes.

[Mr Clarke]

I, too, extend my sympathies to my hon. Friend, who drew the short straw of responding to the debate. He is trying very eloquently to minimise the significance of the whole thing, but of course he realises there are big issues behind this. Can he tell us what contingency arrangements the Treasury has made for the fiscal impact of leaving with no deal, and its likely impact on our trade, our manufacturing industry and so on? He must concede that the published figures for future deficits, debts and so on will be made utterly meaningless if we leave with no deal, and a fiscal crisis will occur. Is the Chancellor planning the emergency Budget he will probably require?

[Robert Jenrick]

My right hon. and learned Friend and constituency neighbour tempts me to go into areas that I should not, but the Chancellor has said that we will be prepared and that we have fiscal room available—that was what he stated in the Budget, as certified by the Office for Budget Responsibility. My right hon. and learned Friend appears to be making the case for prudent preparations in case of a no-deal scenario, which is all that clause 89 seeks to achieve.