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It is obviously not a good thing to accumulate unsustainably high levels of debt and that is why the Government laid down their golden rule, which the hon. Gentleman cited and which the Government are following, contrary to what he was saying.
When I intervened, the hon. Gentleman chided me for trying to excuse what he claims are current lapses by referring to the activities of the previous Government, but while listening to the debate I could not help reflecting on the very first Finance Bill debate I ever sat through. That was in 1988, when the Government were coasting on the massive economic consumer boom of the mid-1980s, as the hon. Gentleman will recall because he, too, was a Member then. I well remember the then Chancellor, Nigel Lawson, boasting at the Dispatch Box that he was increasing public spending, reducing public borrowing and, of course, slashing taxation—that was the infamous Finance Bill that cut the top rate to 40 per cent. He was able to do all those things at the same time because he could take advantage of the buoyancy of the economy, but all he achieved was a still further stoking of the consumer boom, leaving himself with no resources to deal with the eventual downturn and crash. With that crash came the crash of his reputation as Chancellor. If the hon. Gentleman is looking for examples of fiscal policy out of control, that one is much more real and telling.
It is worth reflecting on that example, because the lesson that I draw from it is that the true test of a Government and a Chancellor is not how generous they are in the economic good times—how well they spend money when the economy is growing and tax revenues are buoyant—but how well they manage the inevitable periods of slowdown and slow growth. I have no doubt that the Chancellor has passed that test over the last two or three years, better than any Chancellor I can recall and probably better than any Chancellor of the past 100 years.
The Chancellor passed the test because his approach is the very opposite of that adopted by the last Government, and notably by the ill-starred Nigel Lawson.
The Chancellor's approach has been to hoard and hang on to public resources when, as the hon. Member for Grantham and Stamford was saying, the private sector is booming—as it was when we came to office in 1997, when the Chancellor earned his reputation as the Iron Chancellor—thus enabling those resources to be released when the economy is slowing down and there could a danger of dipping into recession. The hon. Gentleman referred to the theory underpinning that approach, which, in the old days of the 1960s and 1970s, used to be called Keynesianism. It used to be a very fashionable economic theory, but it has rather fallen out of date now. The irony is that this is the first Government ever to apply successfully a Keynesian approach to the smoothing of economic cycles.
By contrast, so far as I can judge, all the other Governments since the war—to be even-handed, I include Labour as well as Tory Governments—have ended up doing precisely the reverse. They tended to increase Government spending, as Nigel Lawson did, when tax revenues were buoyant, but were then forced to cut or slash spending when economic times got harder. By doing that, they ended up exaggerating the booms and busts in the economic cycle, rather than smoothing them out and ensuring stability.
Conservative Front-Bench Members, as well as the hon. Member for Grantham and Stamford, have made a great case about the Government's borrowing in the past couple of years. In previous debates, Members have asked why the Government ended up borrowing more if the economy has been engaged in a record run of growth. The answer, of course, is that we have enjoyed a record run of economic growth precisely because the Government have been able to borrow more at the appropriate stage in the economic cycle.
The Government have borrowed to increase investment, to increase employment in the public sector and, yes, to increase public sector wages, about which Mr. Laws appeared to complain. I do not complain about that because such increases in the rewards for people who work in the public sector were long overdue.