Amendment of the Law

Debate between Stuart Bell and Jesse Norman

Wednesday 23rd March 2011 Commons Chamber

[Sir Stuart Bell]

I have seen that study. I have also seen the study by PricewaterhouseCoopers about the impact on the north-east of the various deficit reduction plans.

May I, without in the least way being sycophantic, congratulate the Leader of the Opposition? He made a short and precise speech but he hit every nail on the head that needed to be hit. Growth is down. Snow or no snow, we entered into zero growth in the last quarter. Where is growth going this year? It is at 1.7% for the year. How does that compare with Germany, where there is 3% growth?

[Jesse Norman (Hereford and South Herefordshire) (Con)]

Will the hon. Gentleman enlighten the House about when in any recovery from any major asset-based deflation growth has returned within even a five or seven-year period? One thinks of the 1930s, and there was no return to growth until the end of that decade, and of Japan, where there was no return to growth until the beginning of this decade. How can he possibly attribute the situation as regards growth to this Government in such a way?

[Sir Stuart Bell]

I am grateful to the hon. Gentleman for his point, because we have argued consistently—and so has the international community—that we had a financial crisis from 2008 and 2009 and that out of that financial crisis, without referring to tsunamis or earthquakes, there have been many aftershocks and it will take much time to get over that. I agree with that point but it was not us who said that we would raise growth last year—it was the Conservative Government. The hon. Member for Chichester made an excellent point when he said, quite rightly, that under a Labour Government we had 40% debt in relation to gross domestic product. My recollection is that for some years it was 37% and it was the financial crisis that pushed it up to where it was.

--- Later in debate ---

[Sir Stuart Bell]

We had no difficulty with the structural deficit because we believed in infrastructure projects. We believed in public-private initiatives and off-balance sheet finance, which was exactly the same as what the Germans were doing. At the time, it was thought a fine way of doing things and it is still a fine way of doing things. In my constituency, we got the first public-private initiative in the James Cook university hospital, so we have nothing to regret about what is now called the structural deficit. As I said earlier, the structural deficit is like any other, it is part and parcel of the fullest objective. The right hon. Member for Wokingham (Mr Redwood) was right to say that, while we are tackling that particular deficit, public expenditure in other areas is going up. We need to get the balance right, but that is not happening at the moment.

The Chancellor said that we had moved from fourth in the league of competitiveness to 12th and made a big thing about competitiveness, but he did not mention the eurozone, not surprisingly. He did not mention the conference tomorrow and the day after when the 17 members of the eurozone will get together to create a competitiveness pact. Why are they doing that? Because they wish to increase their growth and exports, and we are in competition with them. We are in competition with Germany and France and we will be in competition with those other countries.

The Chancellor talked about Greece, Portugal and Spain, but why does the fourth-largest economy in the world have to compare itself with Greece, which has a deficit of 150% against gross domestic product, not the 60% or 50% we are talking about? Why does our nation state have to be compared with a small country such as Greece? On that basis, we had £67 billion-worth of deficit reduction in one Budget. Today, the Chancellor was very gracious in saying that, now he has taken all that money out of the economy, he will not take any more out. He might have said, “I’ll do you all a favour: I’ve hit you on the head with one big hammer, so I’m not coming back with another.” How gracious of him to destabilise, within the space of nine months, our economy. That is what he has done and is continuing to do. He will certainly rebalance the economy—away from the welfare state, the public sector and the work force of our country—and he will weaken the fabric of our country. He will weaken the standard of living of all our people.

[Jesse Norman]

It is not the Chancellor who has associated our economy with those of Portugal, Ireland, Greece and Spain, but the international markets. When the Governor of the Bank of England was before the Treasury Committee two weeks ago, he and his team confirmed that without a package of fiscal austerity measures, this country would be borrowing in the international markets at a rate 3% higher than we currently are. That is the Bank’s official position and that is why those difficult measures have been taken.

[Sir Stuart Bell]

I am not going to go down the route that the shadow Chancellor of the Exchequer might have gone down at one stage of attacking or criticising the Governor of the Bank of England. That would not be appropriate for me. The advice that was given to the Government, when they came to government, was very severe and we were compared with Greece.

The hon. Member for Hereford and South Herefordshire (Jesse Norman) makes an interesting point. At what point in our history did we turn over our economy to the rating agencies instead of saying, “It’s only the rating agencies”. When the rating agencies call the Élysée palace, they have a fit of panic there, asking, “You’re not going to reduce our rating are you?” Why did we, as a nation state, give our economy over to a rating agency—to Fitch, Moody’s or Standard and Poor’s? Where was the Chancellor of the Exchequer who stood up and said, “No, I am not going to do that”? The rating agencies had accepted the Labour Government’s deficit reduction plan and were at ease with it. They were happy with the four-year programme and it was the current Government who fell back to the age of Lord Lamont and John Major, whom my right hon. Friend the Member for Doncaster North (Edward Miliband) has mentioned, and ideas such as, “If it’s not hurting it’s not working”.