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Fiscal Consolidation

Volume 587: debated on Tuesday 4 November 2014

The Government inherited the largest deficit since the second world war. Since then, we have made substantial progress in reducing the deficit. By the end of last year, borrowing had fallen by more than a third. The Government’s consolidation plans have been central to the reduction in the deficit. Indeed, by the end of last year, we had implemented 70% of the £126 billion of fiscal consolidation planned for the end of 2015-16.

Does the Chief Secretary to the Treasury agree that if we have a credible plan to reduce the deficit, we can credibly plan to protect spending on the NHS and cut taxes? As the Labour party’s announced fiscal rules would allow for an extra £166 billion-worth of borrowing over the next Parliament, there can be no credibility in its deficit plan and in its plan for this country’s economy.

I agree with my hon. Friend that Labour’s plans would put at serious risk the jobs and stability that this coalition Government have secured. There is a lesson in what he says for all parties in this House, because economic credibility is hard to win and easy to throw away. Any party that does not put forward a plan to sort out the economy or offers unfunded tax cuts to the British people will put its credibility at serious risk.

On the deficit, the Chancellor and the Chief Secretary to the Treasury have failed the test they set themselves, which is to close the deficit by the end of this Parliament. Worse than that, they have failed the test that my constituents set for them, which is to put money back in their pockets. That was said to me this week by a grandmother who is desperately worried about her grandson, as he is on a five-hour contract and unable to afford to take a day off work. What will the Chief Secretary do about that?

The first thing that we are doing is delivering on what we promised to do when we created this Government in the first place, which is to repair the deep damage that the hon. Lady has to admit was done to the economy under her party’s stewardship. We have now got the United Kingdom into a position in which we are creating more jobs than in the whole of the rest of the European Union combined, and we have the strongest growth rates in the developed world. She should welcome that as something that creates opportunities for young people.

This fiscal consolidation plan will be heavily influenced by the dramatic liberalisation of pensions announced in the Budget, which will be significantly influenced by the success or otherwise of the guidance guarantee that is now being legislated for. Does the Chief Secretary agree with Ros Altmann that the Financial Conduct Authority should ensure that people who do not receive or take the guidance in this new environment are at least asked proper questions about their circumstances, such as about their partner and their health?

I agree with my hon. Friend that the pensions reforms are a great liberalisation of the pensions system. We will give people, rightly, the opportunity to make use of the money that they have saved for their retirement as and when they choose. The guidance guarantee is enormously important. We have been working closely with organisations such as Citizens Advice to make sure that people have access to the guidance in the way that my hon. Friend has set out, and we need to deliver on that.

Has the Chief Secretary to the Treasury factored into his fiscal consolidation arithmetic the extra £1.7 billion contribution demanded by the EU? Does he accept that that payment is properly due under the formula agreed by the UK Government? When will it be paid, contrary to the answer given by the Chancellor?

The Office for Budget Responsibility takes into account forecasts for EU payments in its own forecasts. It did so at the time of the Budget and will do so again at the time of the autumn statement. A demand of this size in this manner is simply not acceptable, and we are absolutely right to do everything that we can to deal with the issue. That is what we in the coalition will ensure happens.