Multiannual Financial Framework

Debate between Nadhim Zahawi and Chris Leslie

Wednesday 31st October 2012 Commons Chamber

[Chris Leslie]

I want to address the motion and the amendment, if I may. The Government’s motion, for all its rhetoric, has such meagre ambitions. [Interruption.] It is true. The motion implies that the House should be content with business as usual, but that just will not do. A real-terms reduction is possible, but it requires persuasive diplomacy, careful alliance building and, above all, leadership.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

The hon. Gentleman mentions careful alliance building. As we have heard, two years ago the Prime Minister did exactly that, with Germany, France and the Netherlands backing him to deliver a no real-terms increase. If the Prime Minister has to exercise the veto at the November meeting, will the hon. Gentleman support it? On 29 October, the hon. Gentleman said the opposite by saying that he thought we could avoid a veto, so will he now back it?

[Chris Leslie]

I hope that we can do better for Britain.

[Nadhim Zahawi]

Yes or no?

[Chris Leslie]

If the hon. Gentleman calms down, I will explain. No one should be fooled into thinking that a veto is cost-free. The hon. Gentleman and all other hon. Members should know that the way in which European Union rules work means that last year’s budget will be cut and pasted and become the new budget for 2014, plus the inflationary increase. In other words, if the Prime Minister flounces off again, an extra £310 million will go from the Exchequer to the 2014 budget. That is a fact and we need a negotiation strategy that is going to work.

Budget Resolutions and Economic Situation

Debate between Nadhim Zahawi and Chris Leslie

Tuesday 22nd June 2010 Commons Chamber

[Chris Leslie]

Let me make a little progress first.

The notion that the debt is solely Government-authored debt has to be rebutted. The problem was not so much about excessive public spending as about tax receipts being drastically reduced because of the recession that came as a consequence of the credit crunch. That is the reality of the situation. The Conservatives try to promulgate the notion that the situation is far worse than expected, but the statistics show that the borrowing requirement is not as difficult as it was a few months ago and that the receipts we now gain from revenues are recovering better than expected.

The notion that debt is out of control was rebutted quite well in today’s edition of The Independent by Sean O’Grady, the economics editor, who illustrated very well that Britain is not Greece. The right hon. Member for Wokingham talked about the difference between euroland and our particular predicament. Although we have difficulties, we also have our own currency and some flexibility. We are not trapped in that currency zone, we have a more diversified economy than others in those areas and our debt has a longer maturity—it is not as short as in other countries. Our national debt might, unfortunately, peak at around the 75% mark, but that is very far from the levels that other countries are talking about.

There is a concentration solely on deficit, rather than on debt, but debt should be the issue at hand as that is the best way of comparing, historically, where we are. At the end of the second world war, Britain had a debt ratio of about 262% of gross domestic product, but the Labour Administration were able to establish a welfare state even with those levels. There is this notion that we are in a dreadful predicament, but the Conservatives have to concoct that urgency and talk about emergencies. There is absolutely no consensus either in the House or among economists more generally that the severity and the austerity that the Government have introduced in the Budget is on a necessary scale.

[Nadhim Zahawi]

The hon. Gentleman speaks as though his Government were not going to introduce any cuts. Is he telling the House that if Labour were on the Government side, they would do nothing about this? As my right hon. Friend the Member for Wokingham (Mr Redwood) has mentioned, Labour suggested during the election that there would be cuts of £40 billion but gave no further detail. Is the hon. Gentleman suggesting that everything was rosy in the garden before and that we should continue as we were?

[Chris Leslie]

No, we have to be mature and grown-up about these issues. It is important to recognise that the best way to address our deficit is to have a pro-growth strategy, because it will be through growth that we generate receipts, so that we can make improvements. If we have to restrain public expenditure, doing so in such a short space of time, with such severity, is an exceptionally risky strategy. In Sweden, and even in Canada—countries the Conservatives keep citing—such changes were made over 10 or 15 years. Yes, they rebalanced and consolidated, but for the Government to do so with such fervour betrays what is really going on in the Conservative party. Ideologically, the Conservatives secretly enjoy the cutting back of public expenditure. They hate state expenditure—they absolutely loathe it. They take a certain kind of masochistic relish in scaling back public expenditure.