Category: Debates

John Redwood (Wokingham) (Con): I think that the Committee wants to implement the spirit and the letter of Smith, and I look forward to hearing the Secretary of State’s response to the detailed arguments advanced by the hon. Member for Banff and Buchan (Dr Whiteford). I think, however, that when we are dealing with a matter as potentially wide-ranging as universal credit, we also need to think about the money, and about how far it is possible to operate a very different welfare system in different parts of a country such as the United Kingdom. What we have seen in the unfolding and dreadful Greek crisis is that, if a country belongs to a currency union but has not brought its benefits system into line, and if there is no proper system of sharing revenues and expenditures throughout the eurozone, that becomes extremely damaging, as it has for the poor Greeks.

Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP): I am sure the right hon. Gentleman is not suggesting that there is an in-line benefits system across Europe. The real problem is austerity. The Greeks were told five years ago that, if they followed austerity measures, their problems would end, but their problems have not ended. They have become worse, because austerity makes things worse. It is nothing to do with welfare; it is to do with austerity.

John Redwood: I think that welfare has quite a lot to do with austerity, and I think that we agree. I think that the policies that have been forced on Greece have been too austere. It is quite wrong to make the Greeks cut public spending when they cannot expand their money supply, expand credit or expand the private sector to create the jobs that they clearly need to create in order to make some success out of the cuts imposed on the public sector.

When, after 2010, we conducted policy as a coalition to bring about recovery in Britain—including Scotland—it worked very well, and it was private sector led. We were able to do that because we had a full range of powers over interest rates, money creation, credit and banking, which a nation that has joined a currency union does not have. That is the Greek tragedy. The Greeks are able to carry out only the public sector part of the EU fix, which is the bit that is austere. They are not able to carry out the private sector-led recovery.

Of course, we are not here to talk about Greece; we are here to talk about our currency union. However, I wanted to make that point because, whereas Greece is having to move away from a position in which it shared only currency and is now discovering that it needs to share a great many other policies with the European Union in order to achieve success, in Scotland things are going in the opposite direction.

We have a currency union—a perfectly good currency union, which is supported on all sides. I believe that Members of the SNP are great fans of the currency union and do not wish Scotland to have an independent currency, but they need to consider this: if they do not want proper independence in the sense of having their own currency, and if the currency is to work in the way in which it has worked in the past, there will have to be some basic standards of welfare that are common across the country, and there will have to be agreed systems of transferring money from rich areas to poor ones. There are rich towns and cities in both Scotland and in England. The rule of our system is that those in areas of high income or relative success pay more tax, and those in, say, towns or counties with a lot of poverty benefit from big transfers.

Mr MacNeil: I almost feel sorry for interrupting the right hon. Gentleman when he is advancing a good argument for the redistribution of wealth through taxation, and has also admitted that austerity is not a good idea. However, I think that the mention of Greece is erroneous. If we are talking about an optimal currency zone, a better parallel would be Germany and the Netherlands. The independence that those countries have from each other is welcomed by SNP Members. I hope that the right hon. Gentleman will go a little further than the enlightened remarks that he has made so far, and will agree with us that Scotland and England should be as independent from each other as Germany and the Netherlands.

John Redwood: I am not prepared to go that far. I think that there can be problems in the euro currency zone between Germany and the Netherlands, because they do not have the full range of common policies that they may need. At present, it appears that the Dutch and German economies are sufficiently synchronised for the arrangement not to cause problems in the Netherlands, but that is clearly not true of Portugal, Spain, Ireland or Greece. The fact that there are more countries that it does not fit than countries that it does fit implies that there is something wrong with the fundamental architecture of the euro. That is why I am anxious for us to bear it in mind, when we are debating the issue of how much welfare discretion there should be, that a common welfare system is normally one of the characteristics of successful currency unions.

Yes, I do believe in redistribution. We all believe in redistribution. We believe that, in a civilised country such as ours, we should tax the rich more and give money to those who need support. We have arguments about how much the amounts should be and about the conditions, but we all believe in transfers, and we all believe that the balance must be right.

When I asked the hon. Member for Banff and Buchan (Dr Whiteford) to say how much more an enlightened Scottish Government would like to give, by means of welfare payments, to tackle immediate problems of low income or poverty, she was not able to tell me. That was a pity, because I took it that her intention, and the purpose of the amendments, was to give the Scottish Executive power to increase benefit levels in comparison with the levels, or the range, of benefits currently on offer in the Union. I did not think that SNP Members were seeking these powers in order to be meaner than the Union Government are proposing to be, and I see them consenting to that. I feel that this debate would be richer and fuller if they shared with us the amount of extra money that they would like to spend.

Patrick Grady (Glasgow North) (SNP): Surely the point is that it is for the Scottish Government, whatever their colour, to decide how they want to use the powers. Perhaps one day a Government of the right hon. Gentleman’s colour will be using them. However, no Government would be able to use any powers that had been vetoed by the Secretary of State.

John Redwood: That brings us back to an important and interesting question. At what point does the transfer of power become destabilising for the currency union and the common transfers that make up our common country? That, surely, is one of the issues that were examined in the referendum, when a majority of Scottish people felt that they wanted to remain in the United Kingdom and in the currency union. Having read and listened to what was said by those who were actively involved in the debate, I suspect that the currency union was rather central to the securing of that vote, and that it was when the parties of the Union said that Scotland should leave the currency as well as the UK, if that was the wish of the Scottish people, that the majority voted to stay in the Union.

Mr MacNeil: I should be fascinated to know the size of the changes in welfare spending that the right hon. Gentleman would find destabilising. The hon. Member for Gainsborough (Sir Edward Leigh) said yesterday:

“the Scottish Parliament spends £37 billion and raises £30 billion”.—[Official Report, 29 June 2015; Vol. 597, c. 1234.]

He described that as “quite responsible”. He also said that the UK raised staggeringly more—£648 billion, an amount that is about 20 times greater—but, of course, the UK also spent a great deal more, with a black hole of £732 billion. Given those figures, and given the difference between the sizes of the states of Scotland and the UK, in terms of both spending and raising powers, just what type of changes does the right hon. Gentleman think would have to hit welfare before it began to destabilise the Union? I suggest that it would be necessary to make a millionaire of each and every unemployed person before that point was reached.

John Redwood: I do not think that it would be necessary to go that far. At present, there is clearly a disproportion between the size of Scotland and that of the rest of the United Kingdom, and, as the hon. Gentleman’s budget figures show, a lot more money is collected elsewhere than in Scotland. That, however, is not the point at issue. [Interruption.] I am not asserting anything; I am just asking a question. We are engaging in a crucial debate on how much welfare power should go to Scotland. I am one of those who agree that some welfare power should go to Scotland in accordance with Smith, but we have to ask how far it goes, and what the consequences might be.

If countries have a common work area and a free movement area, and if they share a language, a labour market and a currency, that arrangement can bring benefits when it has settled down, because it is backed by political union. When we start to unpick the political union, we must ask ourselves at what point that unpicking of that union, or the welfare transfer union, will become damaging. A point will be reached when it does become damaging, because one part of the country will be too attractive, or too unattractive, compared with another part. A single currency area as big as the United Kingdom can work only if there are fair systems for raising money from the rich, wherever they may be in that big area, and giving enough to the poor, wherever they may be.

Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP): Is the right hon. Gentleman aware that parts of the United Kingdom are already more unattractive because of decisions on welfare spending? The bedroom tax is one example. In the highlands, there are some 70 communities with no one or two-bedroom properties on the social register for people to move to. How can it possibly be fair for that principle to apply across the UK, when the people who live there are unable to cope with that heinous tax?

John Redwood: I fully understand the arguments against the spare room subsidy, or the bedroom tax. I understand the politics of it only too well. I do not want to go into my private views now, but it is a matter to be settled within the Union Parliament, and by the Government of the Union, under current powers. It does not make good law to say that if there is a particular benefit that people in Scotland do not like very much, that is the one that we should be able to fix. We need to come up with a settlement for a longer-term period which takes account of the principles.

It is for that reason that I am presuming to spend just a few minutes reminding colleagues that very big principles are involved in this instance. We need to secure the right balance, one that enables Scotland to feel that it can make enough of its own decisions to meet the mood of the majority, but falls short of giving it so much power that the Union’s mechanisms for switching money around do not work. I find it very difficult to make decisions on this Bill without knowing what the financial settlement will be, because it will not work unless there is enough money to make it work, or if England does not think that it is fair to them. Scotland may well find that the financial settlement is not fair to them—I am sure our SNP colleagues will not be shy if that is the case—but England has delivered big majorities for me and many of my colleagues, so we have a mandate and a voice and we need to make sure that the financial settlement that emerges is fair to us. The range of powers that Scotland has will have a bearing on that settlement.

Mr MacNeil: I thank the right hon. Gentleman for giving way; he is being very kind. On welfare, we already share a common language with a country in the common travel area, namely the Republic of Ireland, where people can get up to €188 per week, with extra payable for those who have children. I am not saying that people are going from Liverpool or the north-east of England to a far more advantageous situation in the Republic of Ireland in the common travel area—which they could do—so I think that the right hon. Gentleman’s fears are misplaced. I would almost suggest that his fears are politically motivated and based on wanting to keep powers in Westminster and a deep psychological need for Westminster to over-control aspects of people’s lives around the current UK.

John Redwood: I am afraid that that is a bad example, because it proves my case. Ireland broke from the pound, set up its own currency and then, unfortunately for Ireland, chose the euro, but that was Ireland’s decision and it has had a bumpy ride ever since.

The big difference we need to remind ourselves about for the purposes of this welfare debate is that there is a common currency, so there have to be some limits to the amount of freedom appropriate for welfare benefits. If the SNP wishes to be truly independent and wants an independent currency, I fully understand its position and none of these arguments makes any sense.

I think I have made my point and I hope that Ministers will bear in mind that it is very difficult to come to a conclusion before we know what the financial settlement will be. It is also very important to remember that there is a common work, language and currency area, which means that there has to be some family resemblance in the benefits that are paid.

John Redwood (Wokingham) (Con): Has my hon. Friend seen the work of the so-called five presidents of the euro area, which sets out how they wish to press for full fiscal union, with a euro Treasury and a euro budget under central control. Will he assure the Committee that we will have nothing to do with any of that?

The Financial Secretary to the Treasury (Mr David Gauke): Yes; my right hon. Friend makes an important point about the euro area. No doubt he will have heard the speech delivered by my right hon. Friend the Chancellor of the Exchequer (Mr George Osborne) at the Mansion House a couple of weeks ago, in which he made it clear that one of our priorities in the UK’s negotiations ahead of any referendum will be to ensure that the “euro-outs”—the European Union member states that are not in the eurozone—are properly protected and do not find themselves disadvantaged by the eurozone countries working together to the disadvantage of the “euro-outs”. That is a real priority for the United Kingdom.

John Redwood (Wokingham) (Con): The productivity puzzle can be understood and resolved. It is a combination of bad news and not such bad news. There was a sharp fall in productivity at the time of the crisis, because we lost a lot of very expensive output, a lot of people lost their jobs and the net result was a big fall.

Since the crisis has hit, there has been a continued loss of top-end jobs in areas such as oil, financial services and banking, which score very well in terms of the way people compile productivity figures. An industry such as oil, which produces a lot of extremely valuable output and has a limited number of very well-paid people, gives an enormous boost to productivity, as we have learned today from Norway. We have just lived through a period when, through no fault of any of the three Governments who have been presiding over it, there has been a sharp decline in the output of oil—because it is now a very mature province—and a big fall in the oil price. That recent fall is down to market circumstance and to things happening well away from this country.

There was also a big loss of top-end jobs in banking and financial services. There will be mixed views in the House of Commons on the social value of those jobs, but they scored very well in the run-up to the crash. Some of those jobs have now gone all together and some have gone to lower tax jurisdictions elsewhere. The bad news side of it accounts for the drop in productivity during the crisis and the slow growth since the crisis.

The better reason why our productivity is below that of some of our continental comparators is that we have gone for a model—I think and hope with the agreement of all parties—of having more people in employment and of creating conditions in which this economy can produce many more lower paid jobs in the hope that that will lead on to higher paid jobs and more output and activity, which is a better model than those people being out of work.

Let us look at the way the productivity figures are calculated. If a country sacks 10% of the least productive people in the economy, which is the kind of thing that the euro was doing to some of our competitor countries in euroland, it can be flattering for its productivity figures, because the least productive jobs go, and the productivity of the total country rises, but the country is a lot worse off, because it then has 10% of its workforce out of work who would otherwise have been in less productive jobs. It is the same in a business. The easiest way for a business with below-average productivity to get to average or above-average productivity is to close its worst factory, but that is not always the answer that people in this House would like.

George Kerevan (East Lothian) (SNP): The right hon. Gentleman is making the best he can of a bad job. For instance, if we look at the share of research and development in gross domestic product in the UK, we see that it was down not just over the 1990s, when we had the last Conservative Government, but for the period from 2000 to 2007. R and D is a fundamental component of productivity and it is down. He cannot gainsay that.

John Redwood: One has to first understand a problem before one can address the problem. I think we are all in agreement on this issue. Would we like higher productivity? Yes, we would. Would we like more better paid jobs? Yes, we would, and that goes for Conservatives as much as any other party in this House—probably more than any other party in this House. We not only will the end—more high-paid jobs—but are prepared to take some of the decisions that Opposition parties always deny or query in order to allow those better paid jobs to be created.

Let me go on from the analysis. I hope that the hon. Gentleman will reflect on what I have said and understand that I have provided a good explanation of the path that productivity has taken since 2007, which is a matter of common concern but has some understandable things that we cannot address. For example, we cannot suddenly wish a lot more oil into Scotland, and that remains a fact. We will not be able suddenly to create all those high-end banking jobs. Some Opposition parties probably would not like them anyway. We are where we are. What we can do about productivity is to work away on those parts of the economy where the performance has been most disappointing.

Amanda Milling (Cannock Chase) (Con): Does my right hon. Friend agree that cutting some of the red tape that affects our small and medium-sized businesses would help with the productivity puzzle?

John Redwood: I agree, but only if we have ineffective or over-the-top regulation. Removing it can give more people access to the market and provide a greater competitive challenge, but we need some regulation, because we need rules and certain guarantees in the market.

Let us take a sector that I asked the shadow Chancellor (Mr Chris Leslie) about. It was a problem that, in the Labour years, we had a long period of practically no growth in public sector productivity. I am the first to admit that the concept of productivity is more difficult in parts of the public sector. People actually like more teachers relative to the number of pupils, because they hope that that will create better teaching and a better system in classes, but it means that productivity falls. That means that we need other parts of the public sector, where the productivity issue is more straightforward or more like the private sector, to be even better, so that the overall performance of the public sector does not lag behind and cause difficulties.

As we have quite a big public sector in this economy, the performance of the public sector is very important. It also happens to be the area where Ministers have most control and most direct influence, so it is the area that this House should spend more time on, because we are collectively responsible for the performance of the public sector. I think most parties now agree that we want to get more for less in the public sector, so that we can control public spending. There are disagreements about how much control we should exert on public spending, but I hope there is agreement that if it is possible to do more for less while improving—or not damaging—quality, that is a good thing to do.

Bill Esterson (Sefton Central) (Lab) rose—

John Redwood: I am afraid I need to move on because many people wish to speak. Time is limited.

I draw the attention of my right hon. Friend the Chief Secretary to the Treasury (Mr Greg Hands) to the issue that I raised with him in my intervention. One very important industry that is almost completely nationalised—the tracks, signals and stations are completely nationalised and the train operating companies are very strongly regulated and controlled by franchises, so they are almost nationalised—is the railway industry. It is a growing industry, and this Government are committing a lot of money to it. It is an industry which, I believe, all the main parties in the House wish to commit money to and wish to grow and invest in.

However, an independent study in 2011, the McNulty report, showed that our railway does less for more cost than comparable railways on the continent. It should be a matter of great concern, and I hope it will be a matter for review by those dealing with the railways and with public spending, because as we channel those huge sums of money into our railway to try to get expansion and improvement, we need to pull off the trick that the best private sector companies manage—of driving quality up and costs down at the same time.

A myth in some public sector managers’ minds is that a cut in the amount spent is bound to lead to worse quality or impaired service, whereas every day in a good private sector company they go to work saying, “How can I spend less and serve the customer better? How can I apply new technology so that I get more for less? How can I have a better skilled and better motivated workforce?”—I hope it is not done by unpleasant management, because that usually leads to the wrong results—and “How can I motivate the workforce more so that they are empowered to achieve more and do less?”

That is the spirit that we need in the public sector, and if we began with the railways, it would make a very important contribution to improving our overall productivity rate.

John Redwood (Wokingham) (Con) : I hope that, when the Government bring the Bill back on Report, they will give further consideration to the question of campaign spending limits. We are all freshly back from an energetic general election campaign, and one of the finest things about the United Kingdom’s traditions that ensure fair and free elections is the fact that we have pretty strict expenditure limits in each constituency. Those of us who were the incumbents fighting to retain our seats were rightly subject to rules stating that we could not use our incumbency in any way, as that would have provided us with an obvious advantage. We could not use our ability to raise more money, for example, because there were strict limits in place.

Those strict limits applied for a five-month period. We had the long campaign period, which was subject to expenditure control, followed by the short campaign period. It is the short campaign period for the referendum that we are talking about today. I believe that it was right to impose the campaign limits early, because political parties are increasingly campaigning well in advance of the general election proper, and it looks as though the referendum campaign will kick in well before the referendum proper. Indeed, there are clearly already stirrings, even before this Bill has passed through the House of Commons.

It is good that we all have to face the challenge from a number of candidates, any one of whom has a reasonable chance of raising the maximum that we are allowed to spend in a given constituency. It is quite a large sum for an individual to raise, but it is quite a modest sum for someone who has a reasonable amount of support or who asks for small or medium-sized donations from a range of people. It is not that difficult for a relatively popular party or candidate to raise the money needed in order to spend right up to the constituency limit, to give them the maximum chance in the challenge.

I understand that the sums will be rather bigger in a national referendum campaign, and that if one side is a lot more popular than the other, that would give it an advantage not only in the vote but in the amount of fundraising it could do. But I do think that, under the current Bill, the very large sums that would be available, because of the way the parties and some of the supporting organisations are thinking, are thoroughly disproportionate. That would give the impression of unfairness, and the British people have a great sense of fairness. Many people on the yes side have a sense of fairness and would prefer it if the referendum campaign were conducted with more equal sums of money, so that the weight and quality of the argument matter more than access to funds and special ways of messaging.

My second point is to support those who are talking about the duration of the campaign. The campaign proper could well be limited to four weeks. An awful lot can be said in four weeks. Those with little interest in politics will get rather bored if the referendum campaign dominates the news and media for more than four weeks. Given the natural interest of quite a lot of people in this subject, and the enthusiasm of many of those who wish to campaign on either side, there will, in reality, be a longer period. There should be a long and a short period, as there is in a general election, so that there is proper control of the messages and the money spent in the longer time period, although it would be up to either side, or both, to take the view that they really do want to concentrate their spend and their message in the last four weeks because they might be afraid of overdoing it. I suspect though that they will want a longer period, so we will need some kind of regulation on the longer time period—the full duration of the campaign proper.

My third point is to support those who have raised serious issues about the expenditure of public money, particularly about the expenditure of European Union money. It would be wrong for the European Union to spend any money intervening in a British referendum over whether the United Kingdom stays in the European Union. It is, after all, United Kingdom taxpayers’ money. On current polling, we know that there is a split of opinion, with very substantial bodies of opinion on both sides. People would be very reluctant to see their tax revenue taken by the European Union and then spent on putting out messages and propaganda on just one side of a very contentious referendum.

Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP): I must remind the right hon. Gentleman of what happened in the Scottish referendum. The only difference was the way that it was funded. In the United Kingdom, funds are collected centrally and go to London. If the European Union had the same model, they would be collected centrally and go to Brussels and then given out again. The point is that it is taxpayers’ money. In Scotland, we saw our taxpayers’ money come back to the UK Government and used against one side of the referendum campaign.

John Redwood: I quite understand, but I am suggesting something different. I am suggesting that to have a completely fair and independent referendum, there should be much stricter controls over the expenditure of Government money.

Mr MacNeil: I am very grateful to the right hon. Gentleman for his revelatory tone and words. He said that he wants a stricter and fairer system, so his commentary on the Scottish referendum is instructive and very welcome.

John Redwood: The result in Scotland was pretty conclusive, so the expenditure of Government money was not the crucial thing that made the difference to the result. The result speaks for itself. But we can always learn from past experiences. For my choice, I do not favour the expenditure of public money on interfering in elections and referendums. I am known to be careful with public money anyway, and I would not want the money to be spent on this area. It is for individuals to decide what they wish to do by way of political intervention, and they can make their own decisions. If we let them have more of their own money to spend, they may wish to spend it on interventions in elections. That is how I would rather it was done. In this case, it would be particularly counterproductive for the European Union to spend some of our money, which we send to them, on intervening on one side. It would cause enormous resentments. Indeed, the no campaign might even welcome it as it would be a cause in itself which it would make use of if this became a clear use or abuse of public money.

Kate Hoey (Vauxhall) (Lab): I raised the issue of the EU on Second Reading. I had a helpful letter back from the Minister for Europe this week. Will the right hon. Gentleman comment on his final paragraph? He says:

“I would trust the proper diplomatic relationships with Governments and institutions, and encourage them to stick by their duty to respect the right of the British people to take their own decision responsibly.”

I do not feel that I can trust the EU on this very important issue. Does the right hon. Gentleman feel that?

John Redwood: I am afraid that I do share some of the hon. Lady’s worries. I would like to see that clearly stated in writing and as an act of policy from the EU itself. That would probably be much appreciated in many sections of the United Kingdom, so that we can be sure that there would not be clumsy, unwarranted or unwelcome interference. It would be a double irony if the EU were using our money to do it. That is what makes it particularly difficult. UK taxpayers of both views would be paying the money to the EU, but only one side of the argument would be funded by that money.

Mr Christopher Chope (Christchurch) (Con): Surely the Government could do something on this front. They could ask the European Commission and the European Union not to intervene and not to fund the referendum campaign. They could then get a written undertaking from the Commission not to use European Union funds. That is outside the scope of the Bill, but the Minister could give such an undertaking.

John Redwood: Indeed. I am speaking to amendment 10 tabled by my hon. Friend the Member for Stone (Sir William Cash), who seeks to clarify this point and prevent the use or abuse of EU money. I hope that the Minister will respond and that he will have his own proposals on Report. The Electoral Commission has given exceedingly good advice across the board on this referendum. It seemed to suggest that it would not be right for the EU to give money for the campaign, and it would be nice to have a reassurance that the Government share that view and accept the advice of that august body, which is there to guide us.

There is an additional issue with EU money, to which some colleagues have referred. What do we do about the EU money that is routed to bodies or organisations within the UK that choose to make a donation to a referendum campaign? That is another difficulty. As I understand it, such a donation would be perfectly legal because the organisation giving the money would be able to say that it had other sources of money and it was not a direct gift of EU money to the referendum campaign. Such a body may be swayed by the fact that it had had generous access to EU moneys in the past. While one would hope that none of them were donating for that reason, people would suspect that a body in receipt of substantial EU moneys in the normal course of business that saw fit to give money to the campaign to stay in would hope that the EU would be better disposed to it when it put in its next application for money.

Sir William Cash (Stone) (Con): I do not know whether my right hon. Friend was here when we were debating part of this, but the Electoral Commission’s position is that a central principle of the regulatory regime that it supervises is that foreign sources of funding should not have undue influence on our democratic process. It has come to the conclusion that the European Commission does not fall within the list of bodies that can register as a campaigner. Does my right hon. Friend agree that we have to get to the bottom of that? It is highly arguable that the European constitutional arrangements are effectively embedded in our own constitutional arrangements by virtue of sections 2 and 3 of the European Communities Act 1972. We need to get this right.

John Redwood: I was present to hear my hon. Friend speak to his amendment, and I am aware of the legal minefield that the provision could represent. That is why I worded my remarks cautiously—I said that I thought it was the view of the Electoral Commission that it would not be appropriate for the EU to spend money on the campaign. As he reminds us, it has made a clear statement about being a principal donor to the campaign, but there are other ways in which it could help, and it might argue that it was a domestic institution for these purposes. It might say that the EU’s writ runs within the UK. There is an office of the EU in London; it might try and route it through the London office. We need to say that that would be unwise. The Minister may think that it is illegal or that it should be impeded in some way. We need clear guidance from the Minister.

I return to the issue of indirect funding of the campaign by grant-in-aid to organisations that are helped or partially funded by the EU. Of course, it is a matter for the referendum campaign to argue over the rights and wrongs of EU funding. I am sure the no campaign will want to say that the money we send to Brussels and which it gives back to our organisations could be given to them directly by the United Kingdom Government if Brussels were not in the way. It could be pointed out that the £11 billion we send to Brussels in tax revenue is spent outside the UK, so, were we to leave, that money would be available for either tax cuts or extra spending in the United Kingdom.

That would be a matter of debate in the referendum, but an issue for the Bill relates to the legality, morality and political wisdom and judgment regarding the point at which an organisation becomes so dependent on EU funding that it has a very strong interest in it. Restrictions or limitations—or at least a declaration of interest—might need to be made if such a body decides to become involved in the referendum campaign. It would be wise to let people know of such a clear financial interest if the body played an important part in the yes campaign.

Sir William Cash: Does my right hon. Friend think it would be possible to have a register of interests? Then, when companies go on the BBC and say, “We don’t want the United Kingdom to leave the EU,” we would know where their money comes from, what their actual policy is and the extent to which they are dominated by the EU system.

John Redwood: A register of interests would be one way of handling it. It would be quite complicated for large companies, but rather easier for grant-receiving organisations. The issue for companies is rather different. I am all in favour of business people taking an active part in our politics, but they may need to intervene as individuals, because if they are an executive in a very large company that has a broad shareholder base, they may not be speaking for their shareholders on a very political issue. People would ask them, “Is this your private view or are you speaking for the company and has it been tested in a company general meeting?” That is probably a debate for another day. I am all in favour of major business involvement, but unless someone owns the company they have to be careful in associating the company with their own particular views.

The conclusion I wish to put to the Government is that this Bill is extremely welcome, but it is work in progress. These are very complicated areas, because the EU is a unique and powerful institution. In order to have a fair assessment by the British people of its worth or demerits, we need to be very careful and to not in any way trammel our usual belief in independence and fairness when we test the mood of the people. I do not think the Bill quite yet meets that requirement, but I hope that, on Report, Ministers will have better and more detailed answers about how we handle the scale of campaign donations and the period prior to the referendum campaign proper with respect to controls over messages and financing, and that they will be able to address the very vexed subject of how much power, influence, money and messaging the EU itself can inject into what should be a United Kingdom debate.

John Redwood (Wokingham) (Con): Would my hon. Friend like to confirm that it is a principle of fairness in all British elections and referendums that individuals—Ministers as well—participate on whichever side they wish under a single campaign, for yes or for no, which has proper controls over expenditure and publications? Does he also acknowledge that there cannot be a third category of intervention by the Government, because that would break the normal rules of campaign funding and control?

Sir William Cash (Stone) (Con): I completely agree with my right hon. Friend.

John Redwood (Wokingham) (Con): This referendum gives the British people the great opportunity to restore their precious but damaged democracy. For all too long, the British people have had to watch as successive Parliaments have given away their birthright by transferring important powers to the European Union. Big decisions have been taken away from the sovereignty of the British people and given to the bureaucracy of the European Union.

I believe in the sovereignty of the British people and I would like to help them restore it. Before we joined the European Economic Community, the sovereignty of the British people was clear and it worked well. The British people could elect a Parliament. The Parliament was sovereign until it had to face re-election. That meant that the Parliament was responsive to the British people between elections because those elected recognised that if they did not please, did not serve well—if the chosen Government did not govern wisely—they would be thrown out by the British people at the end of the five years. So the sovereignty of the British people required a sovereign Parliament that they could dismiss and they could influence, and much of the architecture of this building and the political architecture of our country was based on maximising the access to MPs and maximising the influence of MPs over the wider Government.

Mr Mark Hendrick (Preston) (Lab/Co-op): Does the right hon. Gentleman accept that in what is now the European Union, it is quite usual for member states to pool sovereignty? Like the democratic process that he talks about, Members of the European Parliament are democratically accountable to their electors and can make decisions on behalf of their constituents in exactly the same way.

Mr Redwood: States cannot pool sovereignty. They are either sovereign or they have given their power away. The British people do not think the European Parliament exercises control or power over the Brussels machine in the way that this Parliament at its best exercises power over the British government machine. That can be seen from the way that the British electors do not turn out on anything like the same scale in a European election, because they do not believe in that Parliament and they understand that that Parliament has very limited influence over the unelected bureaucratic government in Brussels.

Now that we are in the EEC and it has evolved into the European Union, the fundamental condition that one Parliament cannot bind its successors has been removed. That has completely undermined one of the basic pillars of our democracy. We had the rule that any new Parliament can amend or repeal any law of a previous Parliament. It can reverse or change any decision relating to the future about the expenditure of moneys or the development of policy. The British people now do not have that full sovereignty. If they elect a new Parliament, the new Parliament discovers, as this one is doing, that there are a large number of areas where we cannot change things to reflect the will of the British people because it would be illegal under European law to do so. We find that, because so many vetoes have been removed, we can no longer prevent things happening from the European government that we do not want. Worse still, because there is a whole body of agreed European law and treaty that we inherit as a new Parliament and a new Government, there are very large areas where we cannot fulfil the will of the British people and we therefore cannot please them.

Fortunately, Britain still has a fairly powerful Parliament because we stayed out of the euro. Those countries that went into the euro are discovering that they now have puppet Parliaments. We see the terrible tragedy in Greece, where the Greek people have understandably said that they want a complete change of economic policy. They want to get away from unemployment and recession and austerity from the European Union and have a pro-growth policy at home, and they are told that they cannot do that because it is against European rules.

Mike Gapes (Ilford South) (Lab): Did the right hon. Gentleman support Margaret Thatcher when she signed up to the Single European Act?

Mr Redwood: No, of course I did not, and I gave her very strong advice not to sign up to the Single European Act. She often took my advice. It was a great pity that she did not take my advice on that occasion, because I fear I was also right on that one. She was a very great lady who did hugely important things for this country—not least getting a lot of our money back, which Labour foolishly gave away, meaning that we are much worse off than we need be—but she was not always right. I think that on that occasion she thought it was going to help a market, whereas the truth, of course, is that we do not need European bureaucracy and a lot of laws to have a market; we just need buyers and sellers and one simple rule, which is that, if something is of merchandisable quality in Britain, it should be of merchandisable quality in Germany and France as well. We had that in the Cassis de Dijon judgment and we did not really need all the extra laws that were being imposed on us.

As we can no longer change things, the British people are going to get very frustrated. We saw their frustrations in the last election. Looking at constituencies that elected Conservative MPs and MPs of other parties, it was very clear to me that there was a strong majority feeling that this Parliament should be able to decide who comes to our country and who is given admission, and that this Parliament should decide how generous we should be on welfare benefits and to whom we should pay them. We might disagree among ourselves about how many people we invite in, how much money we give them and when we first pay them—that is a healthy part of our democratic debate—but the position we find ourselves in today is that we cannot decide those things, because the powers to control our borders and to settle our welfare system have gone to the bureaucracy and courts of Brussels and the continent. They are no longer present in the United Kingdom.

Whenever we have these debates, they often come down to a simple issue of trade. I would like to reassure anyone watching or listening to this debate that our trade is not at risk, whether we stay in or leave. There is no need to accept my word for that—I am sure that many people will not—but they may accept the word of the German Finance Minister, who has very clearly stated that he would like Britain to stay in, but that if we leave, of course Germany would want to trade with us on the same terms as she currently does. And why is that? it is because Germany sells us twice as much as we sell her.

I say to my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), who would not take an intervention, that there is no way that Germany would want to pay a 10% tariff on exporting Mercedes and BMWs to the United Kingdom; and, because Germany will not want to pay a 10% tariff, nor will our motor manufacturers have to pay a 10% tariff. So worry not: our jobs and our trade are in no way at risk.

We should remember that Britain has faster growing trade with the rest of the world, where we do not belong to a special club, than it does with the rest of Europe, where we do belong to a trade club. There are many such trade clubs around the world, but very few of them are evolving in the European way of imposing more and more government and bureaucracy on their companies and traders, because they believe in prosperity and more free trade. We do not belong to any of those clubs, but we trade extremely successfully with the countries that are in them. If someone is in a club that genuinely promotes trade, they are happy to trade with people from outside that club as well, because they obviously need to be able to trade with the whole of the rest of the world.

Many of us feel that the EU as currently constituted is thoroughly undemocratic. It stifles and prevents the will of a once sovereign people from being properly expressed. It means that a Government cannot be elected on a prospectus that they can implement in all respects, because the European Union will not let them do so. Above all, the European Union represents the past: it is holding us back. It is something from the last century.

It is a complete myth that the European Union is a body that keeps the peace. The peace is being kept by NATO and by the fact that our partners—France, Germany, Italy and Spain—are all peace-loving democracies. I am amazed that pro-Europeans have such a negative view of our partner democracies in Europe that they think that, without a European bureaucracy, they would all be at war with each other. Of course, they would not, both because they now believe in peace themselves and because NATO and mighty America, as she has done since 1945, are guaranteeing the peace.

Let us get rid of these myths. Our economy is not at risk, and being out of the EU or in a better and new relationship with the EU is the future: it means we can be more prosperous, have more freedom and, above all, restore the sovereignty of the British people. We can restore our parliamentary democracy.

John Redwood (Wokingham) (Con): I rise to speak for prosperity, not austerity; I speak for England as well as for more powers for Scotland; and I speak for greater democracy as we seek to wrestle power back from the bureaucratic tentacles of Brussels.

Austerity is what was given to this country in 2008-09. Then we had desperate austerity. We had deep recession and the biggest loss of national income than at any time since the second world war. We had families losing jobs, families losing bonuses, families having to take pay cuts. We saw austerity rampant. Since 2010, first the coalition and now the Government, led ably by my right hon. Friend the Prime Minister, are about restoring prosperity for the many, growth to our economy, the extra jobs we need, the higher pay and the better living standards that come from creating that world of opportunity.

We speak not just for prosperity but, yes, for aspiration. We speak for aspiration just as surely as some Opposition Members spoke for envy at the time of the general election. The electors told them that they did not want envy; they wanted aspiration. They do not mind other people doing well, as long as they too have a chance to do well. They are not jealous of people who go to good schools, but they want to go to a good school themselves, or send their children to one. They are not jealous of people who work hard and earn a lot of money, and want to keep a large amount of that money to spend on themselves, but they want the opportunity to do the same. I urge my right hon. Friend the Prime Minister and his colleague the Chancellor of the Exchequer to press on in supporting those very aims. Spreading prosperity ever more widely is what lifts us from austerity and banishes austerity from our land.

Clive Efford (Eltham) (Lab): Before the banking crisis hit in 2008, the right hon. Gentleman was calling for less regulation of the banking system. Does he still hold that position?

John Redwood: If the hon. Gentleman cares to read the economic policy review that I submitted to my right hon. Friend the Chancellor of the Exchequer, he will see that it clearly warned of a banking crash. It said that Labour’s regulatory system—introduced by the hon. Gentleman’s party after the 1997 general election—was not requiring enough cash and capital to be held by the banks, and that that was causing enormous strains, which would go wrong. I saw it coming; he took it down. The Labour party changed the regulatory system, the regulators made a huge mistake, and the banking system powered the recession, which was also furthered by the mistaken budgetary policies pursued by Labour. I am very pleased to see that those who now wish to represent the Labour party as its leader have said sorry for the economic and regulatory mistakes that are made by the hon. Gentleman’s party

Clive Efford rose—

John Redwood: If the hon. Gentleman wants to have another go, by all means let him do so.

Clive Efford: One of the myths that were put around was that the Labour Government maxed out on their credit card. Will the right hon. Gentleman confirm that before the banking crisis hit in 2008, debt as a proportion of the country’s GDP was lower than the level that we inherited in 1997?

John Redwood: What matters is the rate of change. The Labour Government were borrowing too much at a time when the economy was overheating and collecting a lot of tax revenue, and we have been trying to right that mistake ever since.

I think it would be helpful if, in this Parliament, we could have a more grown-up discussion about public spending and tax revenues than we were allowed in the last Parliament, because the meaning of austerity has shifted. It now has a narrower definition than the disaster that hit living standards and individual families in 2008. To the so-called progressive parties, austerity now means not increasing public spending as quickly as they think that it should be increased.

Let me remind the House what successive Red Books—Budget books—have told us about what happened between 2010 and 2015, and what they tell us will happen between 2015 and 2020, subject to the Chancellor’s Budget. It is very easy to remember. Between 2010 and 2015, the coalition Government increased total public spending by £1,000 per person per year, if the final year of those five years is compared with the starting point. The recently elected Conservative Government plan to do exactly the same: they wish to increase total public spending per head by £1,000 per person a year by the end of the current Parliament. That is not a huge rate of growth, but it is not an overall decline or a cut.

Because we inherited such an enormous deficit and could not continue to borrow on such a scale, we were—as a result of VAT increases and the general increase in revenue from some economic growth—charging people £2,000 a head more per year at the end of the last Parliament than the Labour Government did in their last year. This Parliament requires exactly the same increase, without any rate rises but coming from faster growth in the economy. The Red Book’s aim is that we should charge everyone £2,000 extra a year by the end of the Parliament than at the beginning. I think that that is a measured and sensible proposal to rescue us from enormous borrowing and a big debt hole, and I think it can work. I especially welcome the fact that, this time, it will require no tax rises.

Geraint Davies (Swansea West) (Lab/Co-op): The right hon. Gentleman may know that the number of people earning over £20,000 is now 800,000 lower than it was in 2010, and those higher-paying jobs have been chopped up into little part-time, low-wage, zero-hours jobs. That is why the tax revenues are not coming in and that is why debt as a share of GDP has gone from 55% to 80%. Admit it: you have failed.

John Redwood: That is a bit rich from the party that crashed the car and did all the damage to living standards in 2008. Would I like it to be going faster? You bet I would like it to be going faster, and so I am sure would the Prime Minister, but it has to go at a pace that can be achievable without taking risks and making it worse in the way that Labour did.

My party is not the party of low pay. We want people to be better paid. It is just that we have an economic policy that may deliver better pay; the Labour Government’s policy clearly did not, because they drove people out of work. They abolished the bonuses and they drove wages down by their dreadful recession, and that recession was caused by a combination of their mistaken economic policy and, above all, their mistaken misregulation of the banks. They should have stuck with the regulation of the banks we had before ’97. We never did anything like that with the banking system. We never had a run on a major bank under the Conservatives. We never had a big recession created by a banking crash. Labour needs to understand the history and understand that in future we have to follow different policies to try to avoid that.

I also wish to speak for England. I am very pleased that the Gracious Speech says that there will be early progress in making sure that those MPs elected for England can make more of the decisions that relate only to England. I hear that the SNP are already saying that that should be in legislation. I think it is entirely right that in the first instance it should be done by amending the Standing Orders of this House of Commons. It can be done simply and quickly, and it is judge-proof and it is proof against challenges from outside this place. If we want a sovereign Parliament, sometimes this Parliament has to act in a sovereign way, and surely we can be sovereign over our own votes and procedures.

Pete Wishart (Perth and North Perthshire) (SNP): The right hon. Gentleman is, I think, a champion of Parliament and parliamentary procedures, so surely he agrees that we have to debate this issue? There has to be a Bill; there has to be legislation. It is not good enough just to change the Standing Orders of the House for something so constitutionally important.

John Redwood: Of course there will be a debate, and the SNP can use all the parliamentary procedures, which some of its Members know well, to make sure that the issue is properly scrutinised and debated, but we do not need a great piece of legislation. We just need an agreement on who votes on what. It is not that complicated, it is extremely popular outside this House, and it was clearly offered to the British people by the Conservative party. It was one of several policies in our manifesto which were about twice as popular as the Conservative party itself, and we were the most popular party when people did not really like any of the parties in the election very much. They backed us, but they backed some of our policies rather more.

Sir William Cash (Stone) (Con): I rise to support my right hon. Friend’s extremely relevant comments. The legislation has of course already been passed, in the form of the devolution Act in 1998. That is what devolved the functions. That is why it is necessary and fair to make sure that, through our Standing Orders, the English people know that they get exclusive rights over their own legislation.

John Redwood: I am grateful to my hon. Friend. To those who say we have not thought through this issue I would point out that we wrote many papers on it in opposition and that we thought it through over a 15-year period—it was in the 2001 Conservative manifesto—so the proposals should come as no surprise to anyone who is interested in the subject or who has been following the debates.

The third point I strongly support in the Gracious Speech is that at last we will get a referendum on our relationship with the European Union. Any honest Government picking up the task today should say to the British people that we need a new relationship because now the euro is driving so many of the changes in the EU. Those in the euro need much closer and stronger centralised government; they need to stand behind each other rather more. They are going to need common benefit systems and common cash transfer systems, and they are going to need to send support from the richer to the poorer areas, just as we do within our Union of the United Kingdom—if one part falls on hard times, the other parts pay more tax and send it the money. There is a mutual insurance or solidarity system which should appeal to all those of a socialist mind; it even appeals to me, because I think when some are down on their luck within such a union, they should be supported by others in the union. The United Kingdom has very clearly, and quite rightly, never elected a party that wanted to join the euro. The public have no appetite to join it; they have no wish to start raising more taxes in Britain in order to send financial assistance to Greece, Portugal or Spain, although those countries desperately need it.

Of course we need to define a new relationship with the emerging, closely centralised political union of which our colleagues in the EU now speak all too often, and I am pleased that my right hon. Friend the Prime Minister is taking on this difficult and tricky task. There will be a range of views within and among the parties on this issue, so a referendum would be a good way of making the final decision. I urge my right hon. Friend to bear in mind that what the British people, and many in this Parliament, want is to restore the British people’s right to make up their mind and their MPs’ right to ensure that the British people’s views are reflected in what happens here. At the moment, it is all about borders, immigration and welfare systems, and at the general election the British people expressed a strong wish for change on those matters. We need Ministers who can deliver those changes, but some of them are neither legal nor possible under our current EU arrangements.

In the future, the British people might want to see changes in other areas. They might want cheaper energy, for example, but they would discover that their politicians were not entirely able to deliver it because energy is hedged by many European rules, laws and requirements. Britain therefore needs some way of dealing with a situation in which, because of European rules, elected Ministers are unable to act on a matter of consummate importance to the British people. We might be able to do certain things, because we can get a special deal through not being in the euro—that relates to how much centralised government the countries in the eurozone, which we must keep out of, are going to take to themselves. Adopting that more widely might help with their other problems, because at the moment we are seeing a series of collisions between the will of the people following the elections in countries such as Greece and perhaps Spain, and what the European establishment is dishing out by way of policy.

If Opposition Members dislike austerity, they should study what has happened in Greece. It has seen very large public expenditure cuts, of a kind that I would not have supported, at a time when its economy was imploding and its banking system was broken, and its GDP has fallen by 25% since 2008. Let us imagine how we would feel if that had been inflicted on us by policies from Brussels. Thank heavens that those of us who made the case against the euro persuaded others to keep us out, because there but for the grace of God would have gone Britain into a euro-scheme that can deliver untold damage and austerity. Who would want 50% youth unemployment? That is what they have in several parts of southern

Europe now, thanks to the devastating austerity machine that is the euro. I urge my right hon. Friend the Prime Minister to take advantage of our non-membership of the euro to negotiate a democratic settlement for us, so that if we need something for our prosperity, this House will be able to deliver it.

Mr John Redwood (Wokingham) (Con):

I rise to correct some of the myths emanating from the Opposition, who do not seem to read the figures. I hope they will catch up with the Budget detail from the Red Book now that it is more commonly available. We are talking about a set of plans for a five-year period that demonstrate that the Government think that, given the growth in the economy, they can afford to spend £60 billion a year more by the final year of the forecast period than is currently being spent.

The biggest change announced in this Budget is a very substantial increase in the planned amount of spending for the end of the period, 2019-20, at which time the Chancellor proposes a £38.1 billion increase in total managed expenditure—well up on the figures in the autumn statement. This is good news. It shows that the Chancellor is reflecting the confidence in the economy, the reduced cost of interest charges as the cost of borrowing comes under better control and the lower rate of inflation, which will have a beneficial impact on the cost of providing public services.

Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP): The right hon. Gentleman is giving an impression of a growing state, when what is happening in real terms is clear from page 112 of the Red Book—that, as a percentage of GDP, this Chancellor and his party are cutting the state by 13%, which will affect the poorest in society most. That is the legacy of a Tory Government.

Mr Redwood: I am giving the cash numbers, which are clearly set out on page 111. If the hon. Gentleman is patient, I will come on to deal with the argument about real terms and the percentage of the economy.

Let us start with cash. The £60 billion increase in the annual spend at the end of the period is a big increase, and if we can keep inflation of costs down, it could provide a real increase. We had these arguments at the beginning of the last Parliament. When I quoted the cash figures, people said it would amount to a real decline, yet we have had a real increase, with the last two years seeing real increases in total general public spending, as I indicated in a recent intervention and as this Red Book makes very clear. If the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) reads it he will see the real increases in general Government current spending over the last couple of years. Those have been affordable and the lower rate of inflation is helping.

If we look at public spending as a percentage of GDP, we see that, yes, it will fall, but that is extremely good news, because it means people will be able to keep more of the money they earn from their productive activities and as the economy is growing we can have better public services.

One of the cruellest myths being put around by the Opposition at the moment is that if we took public spending to 35% of GDP, we would be cutting it to 1930s levels. That is complete nonsense: for most of the 1930s, public spending as a percentage of GDP was well below 35% in any case, but I recently looked at the numbers and found that, in real terms, public spending this year is nine times the level of real public spending in the early 1930s—nine times in real terms.

Mr Brooks Newmark (Braintree) (Con): It is statistically worth pointing out that the direction in which we are heading is towards 35.2% of GDP, but that when the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) was Chancellor he was spending about 35.8% or 35.9% of GDP. There is not a huge difference between where we are going and where he was.

Mr Redwood: To make the point, the Chancellor has said that he will spend a little bit more in the last year of the period so that we reach exactly the percentage of GDP that Labour thought appropriate in 2000. We cannot say that because we are spending the same percentage of GDP we have cut spending or that it is down in real terms. If we have a healthy, growing economy, public spending is well up in real terms, as is the general size of the economy. We should welcome that. What we want is growth in the economy, so that we can have affordable growth in the range and quality of public services. That is exactly what this illustrates. I hope that Labour Members will stop trying to con people into believing that if we ended up with 35% of GDP—1% lower than the Chancellor intends—we would somehow have 1930s levels of public services. It is so absurd that I cannot believe that they even dare to repeat such nonsense day by day.

What we want from this Budget, and what I think it helps to deliver, is more growth. It is great news that we now have such good employment figures, which show record highs. It is good news that unemployment is reducing and good news that youth unemployment in particular is reducing.

What has happened over these five years is quite remarkable if we consider two important background points. The first is the state of the banks inherited in 2010. This House has never really understood or grappled with the magnitude of what happened to the banking system under Labour, or the magnitude of the changes between 2008 and today, particularly with respect to RBS and HBOS. If we had asked most economic forecasters what would happen to the UK economy if we took about £1 trillion of assets off the balance sheets of two leading banks, they would probably have forecast that the economy would crash in a remarkable way. What is fantastic for our country is that after the initial crash over which Labour presided in 2008-09, we have managed to get the economy back to growth while mending the banks and going through the extraordinary shrinking on the banking balance sheets. [Interruption.]

I find it remarkable that Labour Members will not listen to what I am saying. They lived through this dreadful experience and their regulators allowed the banks to over-expand their balance sheets, when many of us were saying that it was going too far. [Interruption.] Indeed, we did. We constantly said that regulation was too lax. I remember writing in the report of the economic policy review undertaken by the Conservative Opposition that, while in some areas there was far too much regulation, the regulation of the things that really mattered—cash and capital—was far too lax, and needed to be tightened. However, the Labour Government and their regulators then made the worse mistake of over-tightening in a hurry, and precipitated a major crash. Labour needs to learn from that. Indeed, we all need to learn from it, because we do not want it to happen again. We need to understand why there was such a big crash in output and in people’s living standards and real incomes, and why it took time, between 2008 and 2013, for growth to resume. The reason was that the banking system was so badly damaged that, obviously, it took time to get it back into shape.

As the Chancellor said himself, there was another reason for our problems. In 2011 there was an extremely unpleasant euro crisis, which had an impact on Britain because we live by foreign trade as well as by our domestic activities. We had to shelter ourselves from the worst of that. We are now in the process of orientating our trade much more strongly towards Asia and the Americas, the growing parts of the world, and away from the European area, which is mired in recession and is still experiencing enormous difficulties. It decided to create a single currency without creating a single country to back it and love it, and is having to live with awful strains and stresses as a result.

As we meet today, this Budget is an important event. It is certainly a very important event politically in the United Kingdom. However, a far more important set of events is taking place on the continent, where hectic negotiations are taking place between Greece, Germany and the rest over whether Greece can stay in the euro. It is not easy to see a happy outcome in either direction from those very pained discussions, but are we not glad that we are not having to live with that awful experience in this country, thanks to some of us who urged very strongly that we should stay out of the euro?

The hon. Member for Bishop Auckland (Helen Goodman) thinks it is funny that Greece has a youth unemployment rate of 50%, but I do not. I think it is a disgrace. I also do not think it is funny that several countries on the continent have a general unemployment rate of 25%. That is quite unacceptable, and the Labour party would rightly condemn it every day of the week if it were happening here, but it is not happening here because we ran our own economic policy, and we have done a much better job that they did on the continent.

Mr MacNeil: Does the right hon. Gentleman accept that most of the problems of the European Central Bank are to do with a fixation on inflation—a fixation that he shares?

Mr Redwood: I have no fixation on inflation, but neither do I think that runaway inflation creates prosperity. It is necessary to manage inflation, and to manage growth, and to have an economy that can expand. I am very pleased that this Budget helps to create and preserve the expansion that is now under way in the United Kingdom. I think it is good news that it contains measures to promote more home ownership and saving, and I think it is good news that it contains measures that will help enterprise and business to promote more jobs, because what we want are more jobs and better-paid jobs.

I was pleased to hear the Chancellor say that most jobs now are full time, and that many are highly skilled. That is what the country needs: more skills, more opportunity, and the chance for individuals to train, work and educate themselves well so that they can get better-paid jobs. That is what we all want in the House. It is sometimes suggested that the Conservatives do not want it, and I find that regrettable. We want it as much as anyone else. We want more jobs, better-paid jobs, and more skilled jobs. We know that we have to earn our money, and we want to create opportunities for people to earn theirs.

The Budget contains some sensible judgments on how much the country can afford in increased public spending. I think that £60 billion is a perfectly good judgment of the amount of extra public spending that will be possible by the end of the next Parliament. It also contains a judgment on how we can finally get rid of the deficit and start to cut the debt. I find it a bit odd that Labour has been telling us that too much was cut in this Parliament, and is now saying that the deficit is too high. I have news for Labour. You have to cut if you want to lower a deficit; it does not just magic away. The question is, how do you get that judgment right?

John Healey (Wentworth and Dearne) (Lab): It is possible to deal with a deficit simply by cutting, which is largely what the right hon. Gentleman’s party has done, but it is also possible to deal with it in a more balanced way by cutting where cutting is needed, raising revenue where it is right to do so, and ensuring that there is enough growth to bring in the revenue. That was the fundamental problem with the policies that existed at the beginning of the current Parliament.

Mr Redwood: The right hon. Gentleman has just described the policy of this Government. They put some taxes up, they went for growth—which is now coming through, and is helping to tackle the deficit problem—and they reduced the over-optimistic spending plans of the outgoing Government.
We have been told that it was wrong to cut capital spending. Well, I seem to recall that the only bit of spending that the Labour Government cut in detail before leaving office was the capital budget. They made massive cuts in capital. The Chancellor has restored some of those cuts, but because of the parlous state of the overall finances, he could not restore all of them.

The Budget presents a good package. There is good news on home ownership, good news on employment and good news on growth. A great many myths need to be put back into the dark room, because they are not going to con the British public.

Mr Redwood (Wokingham) (Con): I would just like to point out that although we have cut the planned spending increases of the previous Government, public spending has actually been going up. As the Red Book confirms, Government spending went up by 1.5% in real terms in 2014, and by another 1% this year.

Mr Mark Hoban (Fareham) (Con): That demonstrates the challenges we face to get the pace right. One thing we should be absolutely clear about is the importance of sticking to the course.