Financial Crisis

Part of the debate – in the House of Commons at 3:56 pm on 20 January 2009.

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Photo of Philip Hammond Philip Hammond Shadow Chief Secretary to the Treasury 3:56, 20 January 2009

My right hon. Friend anticipates what I was about to say. There is no recognition of the conflict with the principles and objectives of the Lisbon agenda that arises from the flow of damaging regulation. The Government's response broadly consists of agreeing, as they have done before, with the objectives of the Lisbon agenda, but they need to focus on the problem of the continuing flow of regulatory burdens. The British Chambers of Commerce estimates that 70 per cent. of the cost burden imposed on business since 1998 flows from European Union regulations. If the Lisbon agenda is to be effective, the European Union has to address that issue.

I want to focus on the second part of the package, which is described in the Commission's paper as

"a major injection of purchasing power," equivalent to 1.5 per cent. of GDP. Of course, as the Minister said, that is overwhelmingly a commitment to exhort the member states, not direct Community spend. The Government have seized on that part of the EU proposal to seek to justify their fiscal stimulus package, and the VAT cut in particular, which is now widely perceived to have failed. There is a legitimate debate about— [ Interruption. ] The measure is widely perceived to have failed, but if the Minister wants to take issue with me on that, I am sure that I can dig out numerous quotations.