Pre-Budget Report

My Lords, this has been an interesting debate with many notable and intelligent contributions, especially, I am glad to say, from this side of the House, where the speeches were of such high quality that I should like to pay tribute to all the Conservative speakers and to the interesting speech of the noble Lord, Lord Pearson. As well as being interesting, this has been a rather surreal debate. I say that because so much of what is in the convergence programme—the document we are discussing today—is open to question. It is a sad state of affairs that the Government have so devalued themselves that the figures and statements they produce are no longer credible. For example, eight years ago before the economic crisis—and I choose this so no claim can be made that economic events distorted the forecast—Gordon Brown stated that Her Majesty’s Government would borrow £28 billion between 2001 and 2006. The Government actually borrowed £129 billion during that period. If that size error could be made in benign circumstance, what hope is there now? We have had to live through a series of hopeless forecasts, to which my noble friend Lord Ryder so ably drew attention in the debate. We have had to suffer the misleading spin produced to try to conceal reality. Not only have economic forecasts been spun but also all areas of government activity have. The public have had enough spin to make even the strongest feel dizzy. Even the convergence programme document itself has distortions; for example, the employment statistics. These describe the large number of people who will be employed in 2057, as if the Government have the slightest idea what will be happening next year, let alone in nearly half a century. A graph demonstrating the 2028 figure is included, but it completely ignores the present increase in unemployment to which my noble friend Lord Northbrook drew attention. I shall be interested to hear the Minister's answer to the question asked by my noble friend Lady Noakes on the assumptions used about unemployment and the impact that unemployment figures will have on the PBR. My noble friend also commented that the EU is forecasting that the British economy will shrink by 2.7 per cent in the current year, nearly three times as much as the Government are forecasting. For 2010, the EU is forecasting that this country might creep out of negative growth whereas the Government are forecasting 2 per cent growth. Which forecast is the most credible? As my noble friend Lord Northbrook said, it is not likely to be the Government’s. It is shaming to have to stand here and say that the European Union is more believable than Her Majesty’s Government. This over-optimistic forecasting on the economy will lead to projected borrowing figures being worse than predicted. The estimated figure for next year is £118 billion but no serious outside commentator believes this and on the Government’s record they would be right. When the extra borrowing is added in, what impact will it have on the UK’s debt ratios as we go forward? The treaty debt ratio limit of 60 per cent, already exceeded, will be even worse, and that before all the items that this Government exclude from official statistics are included. Others have already mentioned these today—local government pensions, public pension liability, private finance initiative, Network Rail, the banks, and so on and so forth. Together they add nearly another £1,000 billion to government liabilities. I look forward to hearing the Minister’s response to the question asked by my noble friend Lady Noakes on the ability of Her Majesty's Government to fund future years’ borrowing which, as I have said, may well exceed the figures estimated. The Minister was asked to confirm that there would not be further tax increases beyond the proposed 45 per cent. Will he also say whether he agrees with the remark made by the noble Lord, Lord Healey, the former Labour Chancellor of the Exchequer, that this tax increase was only imposed to cheer up Labour’s core vote, and that all high taxes achieve is to drive abroad those most able to contribute to improving the economy? The noble Lord, Lord Healey, also said that there are probably twice as many people working in the public sector than are necessary. Does the Minister agree with him? And does he accept that reducing this unnecessary expense in the public sector, thus redirecting resources from the unproductive sector of the economy to the productive sector, is ultimately the only way to solve this country’s economic problems and bring budget deficits and government borrowing back to levels which will not create an unfair burden on our children and grandchildren?