Pre-Budget Report 2009

My Lords, this is what I would call a cold, grey day. The noble Lord, Lord Myners, looks rather grey today with his grey outfit and undertaker’s tie—undertaker is a political translation for entrepreneur. I have a difficulty. The noble Lord, Lord Myners, always shows the House great courtesy, because when he is speaking in a debate, he tends to sit here throughout. He was not almost drummed out of the House by the Chief Whip, as I was when I joined as a junior, for having the nerve to get up to go to lunch. I have therefore sat through all the debates in which I have spoken perhaps only for a few moments—most of them, indirectly, have been economic—in the 1970s, 1980s, 1990s and now. My difficulty is that I really do not want to say the same thing three or four times. Therefore, I take a cue from the noble Lord, Lord Barnett and my noble friend Lord Renton. At the moment, an election is coming and no one is telling the full story because they do not know it. Sometimes in life, you have to go, as I have in the debate, by what we call the rule of thumb. That means, you guess. If you want to know which way the wind is blowing, in the Navy you stick your thumb in your mouth, hold it up to the wind and whichever side is cold is where the wind is coming from. That leads you to the great excitement of depression, because that little trick tells you, if you put your back to the wind, whether the depression is coming from the right or the left, but it is always coming from the right if you have your back to the wind. We may be in a depression, but I am not quite sure why. I have looked at the figures. Another rule of thumb is: divide 72 by the prevailing rate of interest and that tells you how long it takes to double your money or to double your return. If we take the government debt and take an interest rate of 3.5 per cent probably, if the government cannot pay it off, the debt will be outstanding. I have one hope today, because I heard someone mention 2013. I suddenly calculated that in that year, I will have been in your Lordships' House for 50 years. Have I learnt anything? Probably not—but I have been drip fed by wise men. What comes to mind, first, is that in the banking sector, as the noble Lord, Lord Myners, knows, you have to separate the banks. You have to have the investment banks, or the merchant banks, and you have to have the clearing banks. You have to go back to the automotive trade and look at the question of gearing: of not being geared more than two to one. In fact, some modern cars that have more than five gears end up stalling because people move too far in a high gear. So the banking system is fairly easy to sort out. The question is: where is the revenue coming from? As we know full well, we have moved to the services sector, where we had a surplus, in general, over the past few years, of £40 billion a year on services, mainly financial services, but we had a deficit growing and growing in visibles, physicals, in real trade, to £100 billion last year and possibly £110 billion this year. When people say that things are going well and England is booming with exports, they forget that of course Oxford Street is full—but only Oxford Street—of course people are flooding into London to do their Christmas shopping, and of course British Airways will hurt the economy desperately. But people are flooding in to buy because of the vast depreciation of sterling, and 80 per cent of all that we sell in the shops is now imported. We have a problem with exchange rates. I do not mind repeating that it was my great uncle, Stafford Cripps, who first devalued the pound, so the rate of the currency has become of historic interest to me. I keep my own chart. When the euro emerged, it was 1.66 to the pound. The rates say that it is 1 or 1.1, but you try to change a pound for a euro and you will probably get less than a euro today. The dollar has moved up and down constantly. We are now in a devalued currency where we need to import, and the cost of our imports is rising. The worry is that we do not now make a lot of things we can export, so our future has, inevitably, to be where it always has been, which is in the international field. I have been involved in foreign trade and in encouraging inward investment with most of the agencies, and one of the things we used to encourage was recognising that decision-makers were usually the chaps at the top. If you could make England an attractive place for them to come and work, then they would come and bring their businesses with them. I have mentioned before in your Lordships' House that this is particularly true of the Japanese. When we were getting Nissan into the United Kingdom, the most important factor was, effectively, golf. By chance, the Japanese bought my mother’s old family house at Denham, and they turned it into a Japanese golf course, and then they bought another old family house and turned it into a golf course, so I had two golf courses to offer them free membership of. Foreigners want to come here because they want to be here. This is a great country to be in. Suddenly, with one word, you scare them off. That word is "non-dom". As your Lordships know, domicile is a matter of fact. You take the domicile of your father at birth, and you cannot change it, except voluntarily from the age of 16, and only then if you cut off all relationships with your domicile of origin. In my case, that would mean resigning from the MCC, as it would for my noble friend Lord James. For so many people, these things are impossible. From this very light-hearted thing, I realise that, at the moment, we have frightened the foreigner. We have frightened him because of the lack of security of the currency, which needs to be stable, because no one is quite sure what to do, and the lack of understanding of what Governments want to do. Inevitably, one has to have a proposal. The noble Lord, Lord Myners, may remember that I wrote to him before a debate some time ago and asked him whether he could tell me the expenditure on non-departmental public bodies. He wrote back and said that he could not tell me. Unfortunately, I left that letter in the back of my 25 year-old Land Rover—if you have an old Land Rover, you do not have to pay road tax, so everyone in your Lordships' House should make sure their cars are 25 years old, as you do not have to register them. I asked the Minister whether he or his department would be kind enough to provide me with a copy of that letter. Unfortunately, after four questions my secretary—who has been with me for 45 years, is called Miss Moneypenny and who does not give up—did not get an answer. I then asked more questions on NDPBs. I asked 32 altogether, and the Minister’s colleague wrote back and said they had not got the answer to the question about what the budget was for the past four years and suggested I should ask the Library. I went into the Library and found the answer in about 18 minutes. Here we have these bodies, which are not called quangos because my last question was to ask what is the difference between a quango and a NDPB. The answer was that quangos do not exist; they have gone, and they are now NDPBs, which started in 1980. Here we have this particular body, which has a most interesting budget. The last figures were for up to February 2008. Today, we have a budget expenditure of £42 billion a year. I think that this year the figure will be £45 billion. The Government have brought down the number of NDPBs, but the expenditure since they came to power in 1997 has doubled from £24 billion to £45 billion. That is the equivalent of half the total health budget and is more than the defence budget. It is a very worrying amount of money. I am not suggesting that NDPBs do not fulfil a role, but it would be nice to know, in terms of disclosure, what they do and what they achieve. Should the Minister feel it appropriate, I would be perfectly happy to consider taking them all over. The answer is that if you can do the job of some of them in the Library, it may be that you do not need them all. What do they do? There is some real saving. The second area is very simply that if we are to be an international trading country again, we have to trade. We cannot support a trade deficit on visibles that is rising each year. We have a major deficit with virtually every country in the world at the moment. The two most successful markets for us are the United States and Ireland, but the Ireland situation will drop away. So if we have no trade, we have no revenues. If we decide that we want to persuade every foreigner that this is not a free country where you can live and work with the best accountancy systems in the world, the most trusted Government, the most trusted legal system and the language, we will not get anywhere. The noble Lord may feel that I have been light-hearted, but he will forgive me because I am trying to make a point.