Finance Bill

I want to look at three areas of this Finance Bill. The first is the economic impact of the fiscal conservatism contained therein, and particularly how, in tandem with the fiscal consolidation taking place across Europe, it threatens a double-dip recession not just here but Europe-wide. Secondly, I want to look at the social and labour market consequences of the double whammy of the VAT bombshell and the deep spending cuts. Thirdly, I shall focus on the political implications of the Liberal Democrats making the wrong choices by voting in favour of this Bill this evening. On the economic impact of the Bill, we see the pursuit of the Goldilocks economy—one in which neither too much nor too little is spent, but the spending is somehow just right. We all know that fairy tales are fine for little children, but it is a dangerous metaphor because it over-simplifies a complex economy still in a fragile state of recovery. How do we know that it is dangerous? Well, because the Office for Budget Responsibility tells us that growth will be lower and unemployment higher in future years, with 1.3 million jobs set to be lost over the next four years as a result of the measures in this Finance Bill. I tabled a parliamentary question a week or so ago about the contact between the Office for Budget Responsibility and the Treasury on 29 and 30 June and 1 July—and in the aftermath of those sticky Prime Minister's questions debates. So far, I have had no reply from the Economic Secretary. I would have thought that it was a fairly simple thing to look into officials' diaries, ministerial diaries and phone records and to give the House a reply on the important question of whether pressure was put on the Office for Budget Responsibility. The pre-eminent question raised by this Finance Bill, but left unanswered by the Treasury Bench, is: how does taking money out of the economy increase confidence, boost growth and secure the recovery? The answer is, quite simply, that it does not. There seems to be an insistence that Government spending is somehow crowding our private sector investment. That is ludicrous. The United Kingdom's output gap—the gap between what it produces and what it has the potential to produce—is somewhere between 4% and 6%, depending on whose estimate we accept. The Chancellor expects the private sector to take over demand from a shrinking public sector, but is silent on where that private demand will come from. It is clear from what has been said in the debate that there are no real answers to that question. The Government say that 2. 5 million jobs will be created—