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As part of our long-term economic plan, the Government’s charter for budget responsibility was approved by Parliament on
In 2010, the budget deficit stood at 11.1% of GDP. This year, it is set to be down by two thirds at 3.9% of GDP, which is a remarkable achievement given the economic headwinds coming from outside the UK. Will my right hon. Friend tell the House what discussions he is having with other parties, in particular those on the shadow Front Bench, about how to reduce the budget deficit and turn it into a surplus, and are they proving to be helpful?
I thank my hon. Friend for his support for our budget reduction efforts. I have had no such discussions so far, nor any submissions from those on the Opposition Front Bench. I have, however, received a submission from Ed Balls’s former head of policy, Karim Palant, who said of the shadow Chancellor’s changing position on the charter:
“This kind of chaos less than a month into the job is the kind of blow even significant political figures struggle to recover from.”
I agree that we need to reduce the debt and the deficit, but with interest rates at record lows and the International Monetary Fund forecasting that public and private investment will fall from 30th to 31st in the OECD league table, should we not be taking advantage of low interest rates to invest in our creaking infrastructure, airport capacity, road and rail, and flood defences?
I welcome the hon. Lady’s support for deficit reduction. It is good to have her back. I must remind her, however, that in the last Parliament she voted against virtually every single deficit reduction measure the Government took. We have a big programme of infrastructure investment worth £100 billion over the course of this Parliament, which includes transport infrastructure and other measures that will help her constituents and people across the country.
“delivered robust growth, record high employment, a significant reduction in fiscal deficits, and increased financial sector resilience” is all good news that we should be welcoming? There is more to be done and I wonder whether he is looking forward to the pearls of wisdom that might come from the Opposition, now that they have the benefit of Mr Varoufakis.
The IMF has been clear in its endorsement of the charter for budget responsibility:
“The transparency of the new rule—with a focus on headline balances and a simple and well-defined escape clause in the event of very low growth—is welcome.”
It goes on to commend us on having the “appropriate level of flexibility” in the charter. In respect of any external advisers that are taken on by the Labour party, it would appear from this morning’s The Sun that Labour MPs are extremely unhappy—
Order. Sit down. It is a terrible waste of time—long-winded, boring and unnecessary.
“of having an economic plan that actually produces better results than were forecast”.—[Official Report,
Vol. 602, c. 1385.]
Since then, we have seen business investment fall, his export target recede into the distance, the trade deficit widen, manufacturing and construction enter recession, and the biggest productivity gap for a generation. Last week, to crown it all, the Chancellor told us the economy is smaller than we thought. I say to him that if his economic plan is now producing worse results than forecast, imposing more stealth taxes and cuts in the Budget will only—[Interruption.]
Thank you. We need a question mark. [Interruption.] Order, order. I said what I said because Ministers are responsible for answering for Government policy, not that of the Opposition. People who ask questions, be they from the Front or the Back Bench, must do so pithily. A pithy reply, Chief Secretary.
All forecasts at the moment still show the UK performing extremely well, with strong rates of growth compared with other G7 countries. The Chancellor was right to say over the weekend that we may need to undertake further reductions in spending because this country can afford only what it can afford. He went on to say:
“I’m absolutely determined that first and foremost in this uncertain time we have economic security. That’s what people rely on.”
Can we address one of the domestic threats to our economy? This week the former Governor of the Bank of England warned that bankers have not learned the lessons from 2008, and without reform of the financial system, another crisis is certain. Will the Chancellor take responsibility for the domestic vulnerabilities within our economy that have built up under his watch? Will he withdraw his proposals to water down the regulatory regime for senior bankers?
I remind the shadow Chancellor that, over the past five and a half years, this Government have been fixing the problems in our banking system, after the poor regulation and tripartite regime that we inherited from the previous Government. We have been taking action. On economic policy, I just have to look around at the Labour party and see what kind of reactions there are.
Sit down. This is about Government policy, and progress is slower than at previous Treasury questions. The Minister should try to stick to Government policy, upon which briefly he can, and should, speak.