HC Deb 17 June 1993 vol 226 cc980-2
5. Mr. Boyce

To ask the Chancellor of the Exchequer when he next plans to meet the panel of independent economic advisers to discuss the current state of the economy.

The Chancellor of the Exchequer (Mr. Kenneth Clarke)

The panel of independent forecasters will be issuing its second report in early July. I look forward to receiving it.

Mr. Boyce

What advice does the Chancellor think that he will receive which will boost the confidence of the country, given that in the current report the state—[HON. MEMBERS: "Reading."] Yes, that is what I went to school for. The current account deficit was £l2 billion when the panel issued its last report. The Government's forecast for the coming year is that the current account deficit will be £15½ billion: what encouraging advice does he think the panel will give him?

Mr. Clarke

I imagine that when I receive the advice of the panel I shall find that it contains the variety of advice to which my hon. Friend the Member for East Lindsey (Sir P. Tapsell) rightly referred. I accept that we have a balance of payments problem, which is why I am glad that our export performance is improving and that we are doing so well especially in non-EC markets where demand is not depressed as it is in the Community. Certainly, the Government must do everything possible—in my Department and that of my right hon. Friend the President of the Board of Trade—to support our manufacturers in their efforts to export. Otherwise, I hope that the forecast will take some encouragement from the growth in GDP and manufacturing output and today's fall in the unemployment figures for the fourth successive month.

Mr. Horam

Is my right hon. and learned Friend aware that there was indeed a warm welcome for what he said in his Guildhall speech about growth and recovery and especially about listening to the views of business men? Is he also aware that business men have for some time been calling for a continuation of the process of lowering interest rates? In as far as my right hon. and learned Friend is able to achieve that and therefore able to enhance and maximise growth, he will ease his own problems with the fiscal balance.

Mr. Clarke

I am grateful to my hon. Friend. He sent me a copy of his own interesting suggestions for a policy for industry some months ago, and I have been carrying it around with me ever since. I shall refer to it once more.

One of the things that helps to show the modest signs of recovery is the nine point fall in interest rates which we have achieved recently. It has greatly helped British industry. Clearly, further changes in interest rates can be made only when we have the right circumstances. I set out at the Guildhall the type of circumstances and the type of advice that I would take before deciding on any movement of interest rates.

Mr. Gordon Brown

As the Chancellor has agreed today that the trade deficit is a problem, will he outline the detailed changes in industrial policy that he will introduce? As he said at the Mansion House that achieving higher growth is his objective, what investment in employment measures will he seek to introduce? As the Prime Minister has changed the Chancellor, will the Chancellor now announce the detailed changes in policy so that the country can see action instead of just words?

Mr. Clarke

It is not my intention to pre-empt the work of my right hon. Friend the President of the Board of Trade or my right hon. Friend the Secretary of State for Employment. All three of us will work in the same direction. My next major contribution will, no doubt, be November's Budget, but I assure the hon. Gentleman that he is facing a business-friendly Government who will take specific measures to sustain British industry and commerce in the recovery that it is beginning to make.

Mr. Willetts

Is not it likely that the panel of experts will be able to show in its next report that Britain is heading for an economic growth rate higher than its inflation rate? Would not that be a remarkable achievement?

Mr. Clarke

It would be a quite remarkable achievement. My hon. Friend will agree that it is important to ensure, first, that that is achieved, in so far as it is within the Government's power to do so, and, secondly, that this time we sustain it, because in the past Britain has done quite well for several periods but has always succumbed to various British diseases that held us up once more.

Mr. Beith

Does the right hon. and learned Gentleman recall being advised that interest rate changes should never be made to offset some unfavourable political event? Does he realise that that advice came from the eighth independent adviser, the right hon. Member for Kingston upon Thames (Mr. Lamont)? Was the right hon. Member for Kingston upon Thames justified by anything in his term of office in giving that advice, and what is the Chancellor doing to change a system under which that could have happened?

Mr. Clarke

I have set out quite clearly the grounds on which decisions on monetary policy will be taken. I propose to take decisions in the light of the various criteria that I have set out. It is quite right that they should be taken on the best objective advice and for good economic reasons. We will persevere with that, so I do not think that the right hon. Gentleman will have cause for complaint on that ground in the coming months.

Mrs. Gorman

Will my right hon. and learned Friend take note of the very good advice of his adviser, Professor Patrick Minford, who said on the radio today that, as the Government's policy had brought inflation down to almost zero, it is time for us to consider lowering interest rates so that we can get the jobs going again, which would follow from the Government's admirable effort in killing off inflation?

Mr. Clarke

I know Professor Minford from times gone by. I have met him from time to time and have always listened to his advice with care. I know several members of the panel of forecasters, which my predecessor assembled, and they hold a variety of views. I am waiting to receive all their forecasts. I suspect that there will be a fairly wide range of advice, and I shall take careful regard of all of it.