Finance (No. 2) Bill

I draw the House's attention to the Register of Members' Financial Interests. I am aware, as the Government and Opposition Front Benchers have said, that this is primarily a dry and technical Bill, and I shall address one particular area later in my remarks. However, it is important to set out the macro-economic climate and conditions if we are to provide a context for the Bill and for next Wednesday's statement. The contribution from the hon. Member for Wallasey (Ms Eagle), the shadow Minister, was perplexing. While wanting to congratulate her on her promotion, and on the fact that she clearly has a grasp of economic issues, I note the sense of complete denial about the serious situation in which we as a country find ourselves. It is quite clear that, with the previous Government having doubled the national debt, the coalition's very difficult inheritance, including the biggest deficit in the G20 and the payment of more in interest than the police, defence and transport budgets combined, emphasises the need to address the fiscal and structural deficit problem. The Treasury Front Benchers, the Chancellor and his colleagues, are absolutely right to dismiss the Opposition's complaints. Why would anyone listen to a strategy from the very people who created the problem in the first place? I shall pick out one aspect of what the hon. Lady said, because it is something that the country needs to understand. The structural deficit, and the amount of money that the previous Government borrowed and this coalition Government have inherited, are not down to the banking crisis. The economic indicators update, which the Library provides, states very clearly:"““The Government borrowed £155.6 billion in 2009/10 (11.1% of GDP)””—" staggering numbers. Secondly, it states:"““The OBR's Budget forecast for borrowing in 2010/11 is £149 billion. The OBR forecast that government debt will be £932 billion in 2010/11.””" And, it makes the third point:"““These figures exclude the effect of government intervention in the banking industry.””" That completely destroys the hon. Lady's main focus and the point that she tried to make. However, the issue is not just about the irresponsible and unsustainable Government expenditure that took place prior to the general election. I do not want to describe myself as a particularly visionary or prescient individual, but I point out to the House a question at Prime Minister's Question Time that I asked the then Prime Minister, Tony Blair, on 25 May 2005. I shall not read it out, because it would be tedious for the House to hear it again, but I asked him what he would do to rein in the dramatically deteriorating fiscal deficit. Inevitably, as ever with Tony Blair, one did not receive a particularly comprehensive or detailed reply, but Treasury Benchers are absolutely right to focus on reining in the growing fiscal deficit. It is quite clear, from the previous statement by the Secretary of State for Work and Pensions, my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith), that the welfare budget was completely out of control, and from the initial findings of Sir Philip Green's review of Government expenditure, that many procurement procedures are completely out of control. There was sloppy governance, and that needs to be addressed. People may ask, ““Why is it important if the Government don't get a grip on spending.”” If there is no such grip, there will be no or slower growth; if there is no growth, there will be no sustained recovery; and if there is no sustained recovery, there will be no wealth or job creation. It is no coincidence that since June's emergency Budget, the credit rating of the UK's risk has dissipated and yields on Government gilts and bonds have fallen significantly. It means that some confidence is returning to the markets—specifically because of the Government's and Chancellor's announcements back in June. They announced, first, some fiscal consolidation and, then, a promise of some control over public expenditure. The dangers of not doing anything are considerable: sovereign debt credit downgrades; interests rate rises; additional debt interest that should be spent on investment in reformed public services; and the potential explosion of Government bond yields, as we have seen elsewhere in Europe. We need to challenge the myth, which we heard from the Opposition Front Benchers today, that fiscal consolidation and public expenditure contraction automatically lead to economic slowdown; they do not necessarily. I hope and think that we will have, in the technical jargon, an expansionary fiscal consolidation. There are two facets to that. First, if we control public expenditure, we get greater consumer confidence as people revise down future tax burdens, something that the coalition in time need to deliver. That will encourage further consumer expenditure, and I very much hope that such control will be permanent, not temporary.