Pre-Budget Report 2009

My Lords, the Motion on the Order Paper to approve the Pre-Budget Report struck me as rather strange. The EU demands that we approve it, but what if we decide not to approve it? I wish to say right at the start that I do not approve of it very much. Not only do I not approve of the report; most of the commentators—most of the financial experts and economists—have serious reservations about it, as my noble friend Lord MacGregor said, as do I. Now, maybe Moody’s does not have reservations about it, as the noble Lord, Lord Barnett, tells us, but does anybody have confidence in the rating agencies? I shall be very brief, not only because I have been overactive in the Chamber for three of the past four sitting days—a self-denying ordinance forced me to remain silent on the SSRB debate, knowing that I would be involved in the ad hoc group—but also because much of what I want to say has already been said. However, I think that attention should be drawn to two issues, and I aim to be brief in making my points. The two issues are: the process of these regular tomes issuing forth from the Treasury; and the lack of any firm commitment to improving the public finances, indicating, or warning, exactly where the axe will fall, if it does, or whether there will just be shifting from one expenditure area to another. I am not criticising the Government about the Pre-Budget Report process, just about how it is carried out. For years I have hoped that these reports and Budgets would be clear and straightforward in their content, but that has been hope unfulfilled. All that has happened is that they have become ever glossier. Production companies must rub their hands in glee when they win a contract to publish these documents—sorry, perhaps I should say books—consisting of 211 pages and a very glossy cover. My main point is not about the glossy cover. However, if the Minister would like to give some thought to things other than the stuff inside the report, perhaps he could tell us whether the Government’s policy is to encourage greengrocers to use plastic bags for every purchase, as depicted in one of the photographs on the cover. On the same theme, perhaps he could tell us what the picture of a boy throwing a blue ball—blue, mind you—at an adult is meant to say, or the intent behind the photo showing a train leaving St Pancras, if it is St Pancras. Is this a sop to the EU showing a trainload of people going over with a Pre-Budget Report to get its approval? Or is the train carrying off the bankers and entrepreneurs to reside elsewhere in order to avoid the tax on bonuses or the 50 per cent tax rate? On this latter point, I approve of the tax on bonus payments to those who, alongside the Chancellor of the Exchequer and his predecessor, created the parlous state in which we now find ourselves. To be serious, my main point about the process is that we get all this year after year. All Governments have indulged in it. We receive the great speech of the Chancellor of the Exchequer, but every one of us knows that the devil is in the detail and that we will have to pore over it for days. It smacks of being a bit of a game, but it is deadly serious. This time, to put it very mildly, the speech and the content of quite a bit of the report do not send the same message. Correction: superficially they might pass the test, but the short-term tactics to try and keep the populace happy until June 2010 tell a very different story from the long-term implications of the actions proposed. In effect, it is an expensive charade. We are so bored with the endless mantra of lists of what this great Government have achieved over the past—and very long—12 years and seven months. Do they really think that we believe them? It is an insult to our intelligence and an outrage. Child benefit is just one example. However, my noble friend Lord Lamont has shot my fox on that one. He is not in his place, but I have already told him so. Suffice it to say that the child benefit issue was an example of legerdemain, which is unacceptable. There are many more such hidden jolts to the confidence that the Government hope to engender, but those looking for comfort are probably not consumed with a lively interest in reading the small print inside the glossy book My second point concerns the state of the public finances. There is nothing about the Government’s plans to bring the public finances into order that induces confidence. Again, we have statistics that are highly selective and questionable and no expenditure data at department-by-department level—just statements that X per cent will be saved, or fiddling round and shoving figures from one box to another. As my noble friend Lord MacGregor said, it is an indication of the massive mismanagement over this period of 12 years and seven months. Those of us who have some knowledge of statistics know only too well that statistics can be found to prove almost any point; at university we used to call it selective sifting. But let us leave that to one side. What we all need is a narrative telling us exactly how the Government plan to put the public finances in order. The problem as I see it is that if there is no firm plan in place, we could be forced by the markets into some most unpalatable actions. Time is running out. In the view of one financier to whom I spoke—he is not a banker— ""we are hanging on by our fingertips"." I hear you ask: what do you—perhaps not me, but the Conservatives—suggest? I am not an adviser to the Conservatives, nor an adviser to anyone, which is not a surprise. However, it seems to me that we should have a strategy that involves two prongs: get the private sector to grow as fast as feasible and wise, and tackle the overweening waste in the public sector. We can all agree that there is a lack of confidence in the private sector. Please do not quote focus groups or spurious surveys and polls at me; I am sufficiently close to the ground to know that there is a serious lack of confidence among those who were memorably described by a former Labour Lord Chancellor as "the ordinary people". Although I have constantly promoted the savings ratio over the years, perhaps now is the time to give that a bit of a rest. We now have a savings ratio of 5 per cent positive, rather than 1.5 per cent negative. Private investment is where the emphasis should be focused, together with sensible consumption. A 5 per cent savings ratio could finance £50 billion if the money goes nowhere else. But nothing is that simple; I am talking in the broadest of terms. What does not sit easy with this is the serious increase in taxation. I remind your Lordships that a previous Conservative Chancellor of the Exchequer took a very brave risk by switching the emphasis from indirect taxation to direct taxation, which in turn was rewarded by an increase in growth, tax yields and confidence. Perhaps the Government should look at that. Hand in hand with that, the public spending issue must be tackled. A serious reduction in public expenditure must be undertaken, but not in front-line services. I certainly hope we never let pass our lips again the sentence that we heard in the past week, "putting the front-line services in front". Surely the front-line services are in front—otherwise why describe them as front-line services? Just step outside this House. Gross mismanagement of public services stares us in the face at every turn. I have a whole list that I will not bore you with. We are in limbo. I fear that we may be on the way to hell. Heaven is probably not obtainable, but please let the Government be both transparent and humble.