Lord Darling of Roulanish
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Economic Affairs and Work and Pensions
Lord Darling of Roulanish Excerpts(13 years, 11 months ago)
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Mr Alistair Darling (Edinburgh South West) (Lab)
I beg to move an amendment, at the end of the Question to add:
“endorse the successful steps taken by the previous administration to return the economy to growth, to keep people in their jobs and homes, and to support businesses; note the need for a clear plan to bring down the deficit; respectfully believe that securing the recovery and robust future growth should be central to that plan; further believe that such a plan must be fair and protect front line public services; therefore oppose your Government’s measures to cut the support provided by the Future Jobs Fund for tens of thousands of young people out of work, to damage growth in the regions by scaling back regional development agencies, and to cast uncertainty over support for key low carbon sectors like the nuclear supply chain and lower carbon vehicles; further note that a rebalanced British economy must be built as the UK emerges from the recession; and therefore urge your Government to reconsider the removal of investment allowances which support manufacturing businesses seeking to grow.”
I congratulate all those Members who have made their maiden speeches over the past few days, and commend the speeches that we will hear from new Members during the debate this afternoon.
Before I turn to what I suspect will be the main focus of the debate—the economy—I want to mention a number of Bills in the Gracious Speech on which the Chancellor might want to respond in the course of his speech, which will follow mine. The Government want to bring before the House several measures on which the Opposition can offer complete support or, I hope, can be constructive in their support. The first is the terrorist asset-freezing Bill. That piece of legislation is necessary as a result of a recent decision by the Supreme Court and we will certainly support the Government in getting it on the statute book as soon as possible. I am grateful for the co-operation I received when I was Chancellor from the then shadow Chancellor and his Liberal counterpart.
I appreciate what the Chancellor said a few moments ago about the Office for Budget Responsibility currently operating on an extra-statutory basis, but I hope that the principles on which it will operate—with as much openness and transparency as possible and with us being able to look at the deliberations of the budget responsibility committee and understand its reasoning before it reaches a recommendation—will be part of its practice now and will be in the legislation when it comes before the House. I welcome the fact that Sir Alan Budd, who has been appointed acting chairman of that office, has made it clear that he is willing to speak to all hon. Members. That is important, as the office will work only if it is seen to be non-partisan.
On Equitable Life, all of us know that the process has been long and drawn out. I think the Government may have already found that the process is not straightforward and that the ombudsman’s ruling was not as clear-cut as some people thought. We therefore commissioned Sir John Chadwick to investigate the matter, and I am glad to say that he will report in July. I had thought he was going to report at the end of May, which is what he had told us, but it may be that he has had further discussions with the Treasury. [Interruption.] The Chancellor is saying from a sedentary position that it was at his request. That is fine, but I wonder whether he will make provision for whatever Sir John recommends in his June Budget, or whether the fact that Sir John is reporting in July means we will have to wait for a further Budget to see what provision is being made.
On the financial services regulation Bill, we had many exchanges across the Floor of the House in the last Parliament on this matter, but I simply say to the Chancellor that it would be helpful if he could perhaps tell the House exactly what the coalition agreement is in relation to who has responsibility for regulation. We have read conflicting reports in the newspapers about whether the Financial Services Authority is to be brought within the responsibility of the Bank of England and whether it is the Governor or Lord Turner who is to be responsible for the regulation of the financial services industry. Other reports say that no decision has been made and the decision has been parked. It is important that we have some certainty about that, because the very nature of such things means it is inevitable that some problem may arise quickly. It is therefore important to know who is in charge, as we do not want the FSA and its staff to be concentrating more on their future than on what is happening in the financial services industry.
Keith Vaz (Leicester East) (Lab)
On the point about banking regulation, the shadow Chancellor will remember the closure of the Bank of Credit and Commerce International and the Bingham report. That report was commissioned by the previous Government and its conclusions mentioned an independent regulator. It is important that we look carefully at the issue of regulation and that we do not hand back to the Bank of England all the powers for regulation. In his conclusions, Lord Bingham recommended that that should not happen.
Mr Darling
My right hon. Friend will know that I have always had reservations about transferring responsibility for regulation to the Bank of England, as I am not sure that it is the best body to deal with it. Certainly, for much of the past 10 years, it has had a good and distinguished record on monetary policy, but I am not so sure whether it should have widespread responsibility for regulation.
My right hon. Friend is also right to draw attention to the Bingham report. The Chancellor will no doubt recall, or I am sure his officials will remind him, that Lord Bingham produced two reports—one was published and one was not. I strongly advise him to read the second, unpublished report, because it sheds considerable light on some of the problems that arose. Perhaps after such a length of time, it might be possible to reconsider whether that report should be published, because I think many of the people concerned would not be so badly affected.
Mr Darling
I think it was providing a response to a parliamentary question from my right hon. Friend that obliged me to read the report. I remember spending two days reading it and giving my decision. However, I do not have the benefit of the advice I received, which I now need to remind me why I refused his request at that time. All I can say is that I refused his request for entirely the right reasons but, 10 years later and in the spirit of freedom of information, I am not saying that it definitely should be looked at, but the present Chancellor or whoever is dealing with the issue should look at the matter and perhaps 10 years further on someone else looking at that report might reach a different conclusion. I reiterate, whatever decision I reached was right for the reasons I gave at the time.
May I also tell the Chancellor that it would be helpful if he took the opportunity to spell out the Government’s policy on the banks in which the Government have shareholdings—Northern Rock, Lloyds, the Royal Bank of Scotland—because that is a matter of interest, especially now that RBS is talking about disposing of its Williams & Glyn’s branches and others? I believe it is the view of both main political parties that there ought to be more competition in the system, so a clear statement on Government policy on how we do that would be helpful. We do not want to end up selling a tranche of banks to another big UK operator, because that would mean that we would not get the competition we want.
I was interested to re-read last Friday the Business, Innovations and Skills Secretary’s criticism of the banks’ failure to lend, but it is not entirely clear to me what the new Government are doing to increase bank lending. It would be useful to hear from the Chancellor, or at least one of his colleagues, in the fairly near future on that.
However, the main focus of today’s debate is, inevitably, the economy, as it was in Treasury questions for the past hour or so. Yesterday, predictably, the Prime Minister, as the Chancellor did today, sought to lay the blame for everything the new Government plan to do on the previous Government. There is nothing new in that: new Governments frequently blame their predecessors and it is the easiest thing in the world to do. It is equally unsurprising that the Prime Minister and the Chancellor should go around the country and other parts of the world and say, “The situation is much, much worse than we thought. It’s all terrible and we will have to do terrible things.” By a stroke of good fortune, they have the Liberal Democrats to front up some of the difficult decisions they must take.
Nadhim Zahawi (Stratford-on-Avon) (Con)
Did not the shadow Chief Secretary to the Treasury, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), rather than the new Government, reveal the desperate state in which the shadow Chancellor left the country’s finances?
Mr Darling
Forgive me if I have misunderstood the hon. Gentleman, but throughout the three years when I was Chancellor, I do not think that I ever, on any occasion, concealed from anyone the difficulties that we and other economies would face as a result of the deepest global downturn in the past century. There can be no doubt about that.
However, I should tell the hon. Gentleman and his colleagues that by 2008, it was clear that this country, and every other major developed country in the world, faced the catastrophic consequences of the failure of the banking system. Had we not taken action to stabilise the banking system—many of those decisions were opposed by the Conservatives—and to ensure that we supported our economy when private sector investment dried up and died away, we would have had a situation in which recession tipped into depression. That is why we took the action that we did. We were right to do so, and the Conservatives were wrong to oppose us. Our economy is now growing, and as I said earlier, unemployment is half that in the downturn of the 1990s, and borrowing is coming down, because of the action we took in 2008 and 2009. We took that action along with most developed countries.
Dr Coffey
Will the shadow Chancellor explain why, if he was so open about the state of the economy, he would not hold a comprehensive spending review, and why he would not publicise the impending debt payments of £70 billion that the people of this country must pay for his profligacy?
Mr Darling
First, I said on many occasions that the right thing to do was to hold a spending review this year, before the end of the current review period ran out. There is still a lot of uncertainty, as I shall explain later, and the hon. Lady would do well to remember that at present, while we are coming out of recovery, our growth is modest. I hope we will see recovery secured, but what is happening in continental Europe and other parts of the world shows that we are not out of the woods yet and there is still a lot of uncertainty around. On the hon. Lady’s main point, however—which I dare say her colleagues will make too—our borrowing and debt levels rose for exactly the same reason as they are rising in America, Japan, Italy, France, Germany and just about every other country in the world: because we went through the deepest global recession in modern times. The hon. Lady might also want to remember that until well into 2008 the Conservatives, far from condemning our spending, were supporting our spending plans. They are therefore in no position to say now that they were opposing all this in times past. That is simply not right.
Mr Darling
I will give way to my hon. Friend the Member for Huddersfield (Mr Sheerman), and then I shall make some progress.
Mr Sheerman
Will the shadow Chancellor join me in recommending Sam Brittan’s article in the Financial Times last week entitled “Now is the time to ask: ‘What crisis?’”? He is a Conservative and he supports the coalition Government, but he says that it does nobody any good to exaggerate the state of the British economy, which he believes is much stronger than that of most of our competitors.
Mr Darling
I think it is necessary for anyone charged with responsibility for the British economy to take a measured approach. If things are difficult, they have a duty to speak out, even when that causes them some problems, as I found out myself a couple of years ago. I think it is better that we do that, than not. Equally, however, it does no good to go running around saying the situation is absolutely terrible and dire, because sooner or later we may find that the markets call our bluff; we may find that one day they say, “Whatever you do, it isn’t enough.” I believe that that approach is as irresponsible as saying nothing about a difficult situation.
We must discuss these matters in a reasoned and rational manner, because while it is important that we identify the things that need to be put right, equally we must not give an impression counter to the fact that, fundamentally we have an economy that is coming through this period, that we can get through it and ensure that we have growth, which is absolutely critical in the future. Running around scaremongering and raising all sorts of fears could have the perverse effects of turning market sentiment against us, which we do not need, and of dampening consumer and investor confidence, which is simply not necessary.
Charlie Elphicke
The shadow Chancellor says that Government Members are scaremongering by pointing out that the Budget deficit is 13%. We are not scaremongering; we are scared, as the position is extremely serious. The recession was so deep in the first place because the right hon. Gentleman’s colleague, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown)—who has not been seen of late—ran things so badly that the money ran out, which meant that we were more exposed before the recession. The shadow Chancellor should therefore be apologising to the House for the mess that his right hon. Friend and the previous Government have left behind.
Mr Darling
No, I do not agree with that. I think the hon. Gentleman will find that an awful lot of things that went wrong in 2007 were a result of what went wrong in the banking system, not just here but in other parts of the world as well.
Rachel Reeves (Leeds West) (Lab)
Does the shadow Chancellor agree with this statement by the Governor of the Bank of England:
“I don’t think you can compare the UK with Greece. There are big differences”?
I suggest that not the least of the differences between our countries is that our debt-to-GDP ratio is about half that of Greece.
Mr Darling
The Governor was making a very fair point, as he does on many occasions. It is interesting that even in the past couple of days Government members—the Prime Minister yesterday, and one or two of his ministerial colleagues—are rowing back from direct comparisons with Greece because that may have been very convenient to them in opposition, but it might not be such a good idea now that they hold office.
Our economy is experiencing growth at present, and that is because of the action we took over the past couple of years. I do not intend, as the Chancellor said, to fight the last general election again or to go through everything that happened over the last two or three years—that is, perhaps, for another occasion—but I do say this about the action we took. The fiscal stimulus we put in place—the VAT reduction; the decision to bring forward capital spending; the measures we took to protect people’s jobs and ensure that if people were out of work for a short period we could get them back into work as quickly as possible; the time to pay scheme, which is still helping hundreds of thousands of businesses throughout the country; the car scrappage scheme; and the action we took internationally—have all come together to make sure we came through this recession. Interestingly, although the predominant position of the financial services industry in this country meant that it took us longer to come through into recovery than it took some other countries, Britain has had two quarters of growth whereas other countries, particularly those in continental Europe, have seen their growth slip back and, in some cases, they have slipped into recession. What that tells me is that had the previous Government not taken the action that they did over the past couple of years we would not now be in a position to say, “Yes, our economy is growing.” Equally, our action has meant that although our borrowing is still very high and needs to come down, it is coming down faster than many people believed, even a few months ago.
Andrew Bridgen (North West Leicestershire) (Con)
I wish to assure the shadow Chancellor that Conservative Members appreciate that the previous Government had to borrow money during the recession. What baffles us is why they borrowed money during the boom.
Mr Darling
I am grateful to the hon. Gentleman for accepting what is obvious: the fact that during a recession Governments do have to borrow in order to support their economies. However, I should remind him that during the earlier part of the previous decade the Conservative party supported our spending programmes, saying that they would stick to our spending levels. The Prime Minister, when he was Leader of the Opposition, said that as recently as 2008. The hon. Gentleman was not here during the previous Parliament, but I can assure him that I do not recall any Conservative standing up to say, “Don’t build a new school in my constituency. Don’t build more housing. Don’t open a new hospital.” Conservative Members were not saying that at all; they wanted more spending in just about every area. So the idea that the Conservative party was behaving in a way that would have meant that there was no borrowing and that the Conservatives would have behaved any differently is absolute nonsense. The hon. Gentleman just has to accept that.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
Does my right hon. Friend agree that some of the measures that have now contributed to the deficit were being demanded by manufacturing industry in order to sustain the corporate manufacturing base needed for us to grow out of recession, the car scrappage scheme being one case in point?
Mr Darling
I agree with my hon. Friend. The new Government will find that for every industrialist or manufacturer who says that public spending needs to be cut, in areas that benefit from such spending people take a rather different view. The car scrappage scheme is an example of that, and it made a huge difference to the car industry and the motor vehicle industry in general. As the hon. Member for North West Leicestershire (Andrew Bridgen) said, the action that we took did involve more borrowing and it does result in increasing debt. However, the point is that the cost of failing to act would have been far greater.
The Chancellor was talking about the international consensus. I know something about that, and I can tell hon. Members that over the past three years it was very much in favour of our continuing to support our economies; of course, as we come through to recovery we have to get the borrowing down. Nobody disputes that, and at least two of the parties that fought the previous election were absolutely clear about it—it was never clear what the third party was in favour of, and its position remains something of a mystery even today.
Stewart Hosie (Dundee East) (SNP)
The shadow Chancellor rightly says that there was an international consensus, and I supported many of the actions that he took. However, in this financial year, when recovery is not secure, why did he leave the economy without a fiscal stimulus? Ours is one of only two countries in the G20 without a fiscal stimulus, and I still believe it was absolutely necessary for us in order to secure recovery and prevent our slipping back into recession.
Mr Darling
What economists call the “automatic stabilisers” are still operating and are still supporting the economy. I have always been clear about this, and I believe that the deficit has to be reduced. One of the reasons why I wanted to halve it within a four-year period was that I wanted to get it down in a way that did not damage the economic or, indeed, the social fabric of the country while that was being done. Obviously I do not know what the new Government are going to come up with, but I suspect that they will not go too far before they start seeing that when they want to reduce expenditure quickly that sometimes has severely damaging consequences. We shall wait to see what happens, but I believe that that is a substantial risk.
Mr Darling
Before I leave this point I should say something further because a number of hon. Members mentioned our spending in the earlier part of our Government. It is not just about what we did during the recession; it is about the fact that over the relevant 10-year period, there was an unprecedented decade of growth such as this country had not seen before, as well as low interest rates, low inflation and falling unemployment. Gross domestic product per capita grew faster in this country than in any other G7 country even after one takes into account the effects of the financial crisis. The economic environment was one that this country had not had for many years. Of course, we had to deal with the effects of the banking crisis and the downturn that followed, which had a very severe effect on our public finances as well as other public finances.
Mr David Blunkett (Sheffield, Brightside and Hillsborough) (Lab)
My right hon. Friend did a phenomenal job as Chancellor of the Exchequer. The measures that he has just outlined and the success were considerable, but is it not also true that back in 2002 his Government, and my Government, finally paid off the second world war and post-war debt that was run up with the Americans in 1947? The final bonds were paid off not by the Conservatives in the 1950s, 1960s or 1980s, but by the Labour Government in 2002. [Interruption.] That is absolutely true.
Mr Darling
My right hon. Friend is right. No doubt there will be another occasion to revisit the lend-lease arrangements that the then Government entered into in the 1940s, although I commend to the House Lord Robert Skidelsky’s excellent third volume on Keynes, which deals with this matter quite extensively. Some people thought that we got a pretty bad deal in 1943, but there you are.
Mr Darling
I shall give way to the hon. Gentleman who I think used to advise the Chancellor at one point.
Matthew Hancock
The shadow Chancellor has mentioned the banking crisis several times. With hindsight, does he regret the system of banking regulation that was introduced in 1997, and recognise that it failed?
Mr Darling
No, I do not think that was the main problem. The system of regulation that we introduced in 1998 brought together about eight or nine different regulators—self-regulators, as the Conservative party used to be very keen on self-regulation. The problem in relation to the Financial Services Authority, the American regulators and most other regulators was that they simply did not understand the systemic risks that arose in the previous decade or the consequences of the failure of one bank for another. The system in this country was not the problem, but there was undoubtedly a failure on the part of regulators right across the world, including in our country. The FSA’s inquiry into what went wrong in Northern Rock demonstrated that the FSA had spotted problems in Northern Rock in February 2007 but had not taken action. I shall say this in the nicest possible way to the hon. Gentleman: he might want to have a word with one or two of the people who were running Northern Rock—members of his party—who might have had a better look at what they were supposed to have been doing when they were running that bank.
Claire Perry
I thank the shadow Chancellor for giving way. May I say that as a bystander, rather than a participant, in the last Parliament, I was always struck by his excellent manners? As a mother of three children, I am very hot on manners. In particular, when my children make a mess that I have to clear up, I encourage them to say sorry. Would the shadow Chancellor like to apologise to the Government and the people of Britain for the mess he has left for this Government to clean up?
Mr Darling
I am glad that I gave way to the hon. Lady for at least the first part of her intervention. I do not agree with her on the second part, but I should like to address that point now. It is true that our borrowing has risen very substantially—
Mr Darling
I shall not give way. I want to make some progress, because I know that many hon. Members want to make their maiden speeches, and I do not want to be blamed for not allowing them to do so. I might give way before I finish, but not just now.
As I was saying, borrowing has clearly increased, but that has to be put into perspective. Our deficit for this year is broadly similar to that of the US. All other major countries have had the same problem.
We went into the recession with the second-lowest level of debt of any of the G7 countries, but IMF projections for this year show that our debt is lower than that of France, Germany, Italy and Japan. Yes, we have to get our borrowing down and make sure that we start to bear down on debt, and I agree with everyone who says that it is far better to spend money on things other than debt interest. However, it is worth making the point—because it is one that the present Government never do make—that this problem does not affect our country alone. It has affected all countries, and certainly all the developed countries.
It is not a surprise that borrowing and debt went up, because our tax revenues fell dramatically in 2007 and 2008. Our spending on unemployment and social security went up because tax credits were there to help people who lost their jobs. Yes, that was increased expenditure but, if we had cut then, the risk was that we would turn a recession into a depression. That was a cost that I was certainly not willing to contemplate.
We made an active choice to allow borrowing to rise to support the economy. As I said, that policy was supported by the then Conservative Opposition right up until 2008. It was not as though they were saying anything different immediately before that, but I fundamentally disagree with the analysis that the Chancellor made when he was shadow Chancellor. He said:
“Even a modest dose of Keynesian spending”
was
“a cruise missile aimed at the heart of a recovery.”
He said that in 2008, when the banking system and the world economies were close to collapse. That seems to me to be complete nonsense. Of course we will have our arguments about how and at what rate we reduce our deficit, but I simply do not accept the argument that by implication he seems to be advancing—that somehow the previous Government should have been cutting spending just as we were going into a recession. I know of no other Government who were doing that.
Ian Lucas (Wrexham) (Lab)
The construction sector is one of the most important barometers of the national economy, and I was privileged to serve as construction Minister. If that spending by Government had not taken place in the last two years, would we not have had a massive increase in the level of unemployment in the construction industry? That would have opened up the horrific prospect of having 3.5 million people unemployed—a level that we reached twice under the Conservative party.
Mr Darling
That is indeed right, and many people in the construction industry say that an already difficult situation would have become much worse if we had not done what we did in 2008-09. Not many Conservatives or Liberals—we must include the two together—now stand up and say, “Actually, in retrospect, we shouldn’t have been supporting the construction industry.” I rather get the impression that they are telling local industries in their constituencies something entirely different.
Mr Darling
I will give way, for the last time, to the hon. Lady, whom I last met in a BBC studio. I got the distinct impression that she did not like Scottish accents, so I cannot resist.
Margot James
Will the shadow Chancellor clarify his party’s position on our proposed spending reductions? Before the general election, it was my distinct impression that the Labour party was planning public expenditure cuts of up to 25% across some Departments. In my constituency of Stourbridge, we were extremely concerned when the results of a freedom of information request on the NHS in the west midlands revealed plans for significant cuts to doctors, nurses and beds in our area. By anyone’s definition, they must be front-line services.
Mr Darling
I agree with that. If the hon. Lady is worried about spending cuts, she is going to have an interesting time over the next few months. I look forward to the exchanges that she has at future Question Times.
As I draw to a close—
Mr Darling
No, I am not going to give way. I want to draw attention to one of the biggest problems that I see in the future. I know that Governments in countries right across the world have to get their borrowing down and reduce their deficits. However, I am particularly worried that, if we do not have some countervailing pressure to support growth and measures to get growth in our economy, we run the risk of having many years of it merely bumping along the bottom, sometimes growing and sometimes not. That will inevitably mean that we will have higher unemployment and that aspirations and sentiment will be affected.
I see that especially in the EU at the present time. The EUROSTAT figures published last Friday went almost unreported in this country, but what is worrying is that we see that Germany’s growth in the first quarter of this year was 0.2%. We see France’s at 0.1%. We see Greece not surprisingly, back in recession. We know that Spain has unemployment of more than 20%. I am glad that the Chancellor enjoys going to ECOFIN so much, and long may he enjoy that. I am fascinated that the Conservatives now find so much succour in Europe. All I can say to him is that I worry that rather too many finance Ministries, yes want to get their deficit down, but are not concentrating on the structural reforms that are necessary within the EU or on measures to achieve growth in the future. That is a real threat.
It worries me that the present Administration here in the United Kingdom also fall into that camp. It is interesting that in the past six months the Prime Minister has made only one speech on growth. It flickered into life in November just before the CBI conference last year. We do not hear what measures the Government intend to put in place to get the rebalancing of the economy that we want to see—measures to encourage private sector investment to come back. It is not coming back yet in sufficient volume to take the place of the public sector investment that the Chancellor wants to take away. We have to have a clear, strategic look at this to make sure that we can get growth in this country as well as in the EU, which after all is our major export market.
Mr Darling
I knew that if I mentioned Europe this would happen, as sure as night follows day.
Mr Cash
I do not want to disappoint the shadow Chancellor, but I am much more interested in the reasons why, when he was Chancellor—despite the tissue of self-justification that we have just heard—he was never prepared to refer to the true level of debt. He said that no Conservative raised it, but a number of us raised the true level of debt from 2008 onwards. Does he deny that the true level, according to the Office for National Statistics, is £3.1 trillion and not the amount that he has been describing over the past few months?
Mr Darling
When comparing the judgments that we make about what is necessary fiscally, I do not think that bringing on to the main balance sheet PFI, Network Rail and everything else particularly helps. However, if that is the course of action that he has managed to persuade the Chancellor to take, we will look with great interest at the Budget in a couple of weeks. I just do not think that it is a particularly accurate or informative way of looking at the accounts. I have said that before to the hon. Gentleman.
Robert Halfon
Before the last election, in an interview with the BBC, the right hon. Gentleman said that he believed that the cuts needed to be more savage than anything Mrs. Thatcher had done. Does he still hold to that view?
Mr Darling
I think that the word “savage” was used by the Deputy Prime Minister, of whom the hon. Gentleman now finds himself a great admirer. It was not a word that I used.
It is important in the task that confronts the whole country and the Government that we do not get ourselves into a situation of almost competitive austerity, in which Governments and countries become blind to the need to secure growth. There is a substantial risk, as I have said for a long time, that if the Government take action prematurely without considering its consequences as a whole, they will choke off the recovery. We have to get borrowing down, but we also have to get growth and recovery firmly established.
Geraint Davies (Swansea West) (Lab/Co-op)
Will my right hon. Friend give way?
Mr Darling
No, I will not. If we are to maintain jobs and ensure that borrowing does indeed come down, we need to have growth. Policies to achieve that are notable by their absence both in this country and the rest of continental Europe. It is no use Government Members citing what happened in Canada and Sweden. Yes, Canada reduced its structural deficit, but it did so at a time when its next door neighbour, which happened to be the biggest economy in the world, was growing strongly. So the Canadians benefited from a strong US economy. Equally, when Sweden was going through its retrenchment, Europe was starting to grow again. So the comparisons are not entirely appropriate.
We must realise that we need to put in place policies that ensure growth, get our borrowing down and, critically, equip this country to compete in the markets that are going to be opened for it and take advantage of the opportunities that will be here.
As I said during the election campaign and have said since, I believe that the Conservative party remains a risk to the recovery. I believe too that no matter how they dress it up, and how they seek to blame other people, even if they use the Liberal Democrats to cover their true intentions, what they are about is ensuring that they cut exactly the same expenditure as they have always wanted to, and they are using this as an excuse for doing so.
I believe that action does need to be taken, but crucially I believe that we need to ensure that we secure the recovery, and I hope that this Government have got the sense to see that now, before it is too late.