Savers

Part of Opposition Day — [1st Allotted Day] – in the House of Commons at 4:27 pm on 21 January 2009.

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Photo of Philip Hammond Philip Hammond Shadow Chief Secretary to the Treasury 4:27, 21 January 2009

If the right hon. Gentleman will tell me which Departments are going to take the hit of his £5 billion reduction in 2010-11— [Interruption.] Well, he is telling the House that he can make those cuts without any reductions in front-line services. Let us suggest a few things that might be done. We could scrap some of the failing IT projects; we could stop hiring agency staff at £200 an hour; to tick the head-count reduction boxes, we could cut down on some of the consultants used in the civil service. Perhaps we could scrap the £62,000 dinners and ask the Health Secretary, who thinks that £1 million is small beer, whether he can come up with some ideas to help the right hon. Gentleman with his problem in 2010-11.

In order to deal with the Chief Secretary's claim that what we have announced represents a fiscal contraction, I want to cite what was said by Professor Christina Romer, the chair of President Obama's council of economic advisers. She found that the multiplier effect of tax cuts on the economy is as large as three, while the consensus multiplier from Government spending is about one. Our tax cuts will stimulate more spending and more growth than the additional £5 billion of Government spending would if it remained as Government spending.

Households everywhere are tightening their belts and businesses have had to make themselves more efficient and leaner in order to survive, so the Government must do the same. Indeed, as I have already said, the Government have committed themselves to reducing the growth of public expenditure by an additional £5 billion in 2010-11, and they say that they can achieve it without any cuts in public services. If it can be done in 2010-11—after a general election—why cannot it be done in 2009-10? The Government need to show the same sense of urgency that families and businesses are having to show to respond to this crisis in the real world. I commend that policy initiative to the Government. After all, the Prime Minister is on the record as saying that he would like to do something to help savers. I urge the Government to implement this policy in the 2009 Budget.

The Government can be as dismissive of our policy as they like at this stage, but my hon. Friends will remember that they were dismissive when we suggested the national loan guarantee scheme, but they adopted it. They were dismissive when we said that the preference shares to the banks were over-priced, but they have swapped them for ordinary shares without a guaranteed payment. They were dismissive when we said that the terms of the inter-bank credit guarantees were wrong, but they subsequently slashed the price. They said that our plan to provide tax breaks to employers who create jobs lacked credibility, but now they have done precisely what we proposed. They have adopted our proposals for the national loans guarantee scheme; they have adopted our proposals on financial incentives to employers; they have adopted our recommendations for changing the terms of the preference shares; and they have adopted our proposals on the inter-bank guarantees.

All that is not bad for a do-nothing party. The truth is that we are the do something effective party. Most, if not all, of the Government's effective interventions have been based on previously announced Conservative policy initiatives. [Interruption.] Government Ministers dare to suggest that we revel in the difficulties facing the economy, but let me tell— [Interruption.]