Economic Growth (Hansard, 10 December 1998)

§ 2. Mr. Ben Chapman (Wirral, South)
What plans he has to review the methodology for calculating national economic growth rates. [61746]

§ The Chief Secretary to the Treasury (Mr. Stephen Byers)
The Office for National Statistics has recently reviewed its methods for estimating national economic growth. Its work is important, as it informs the discussions of the Monetary Policy Committee of the Bank of England. The Government welcome today's decision by the Bank to cut interest rates. As the Bank said, it follows a weakening in global economic activity. The cut was made possible only because the Government are steering a course of economic stability in an uncertain and unstable world.

§ Mr. Chapman
I thank my right hon. Friend for that answer. Does he agree that our economic growth forecasts are based on sound methodology, but are also cautious and prudent? Does he also agree that Labour Members are in the business of realism and not pessimism? Does he further agree that that contrasts sharply with Conservative Members, who are constantly taking the pessimistic view and talking down the economy and the United Kingdom?

§ Mr. Byers
It is a matter of great regret that Conservative Members fail to recognise the underlying strengths of our economy. The fact is that 400,000 more people are in work now than when we took office, on 1 May 1997. In the shadow Chancellor's own constituency, there has been a 29 per cent. reduction in the number of those who are out of work. I should hope that he would be able to knowledge that, and to recognise the United Kingdom's underlying economic strengths. The Government are not prepared to go back to the days when he was a Treasury Minister—the days of boom and bust, interest rates at 15 per cent., inflation at 10 per cent., and over 1 million jobs lost. That was the reality. We shall not go back to those days. We are steering a course of stability in an uncertain world.

§ Mr. John Wilkinson (Ruislip-Northwood)
May I suggest a methodology that may be more readily understood by the general public—counting the tally of P45s issued? Yesterday, 200 were issued at Alsthom; today, 1,200 were issued at Doulton; and probably a lot more will be issued tomorrow and the day after. Is not the economy heading for great stability against the rocks?

§ Mr. Byers
That was a very good example of the way in which Conservative Members have a very partial approach to events in the economy. The reality is—as always—that, at particular times, some areas face particular difficulties, whereas other areas create employment opportunities. However, to consider the economy in the round, the figures and the facts show—I know that the hon. Gentleman does not like facts to get in the way of his own prejudice—that 400,000 more people are in work now than when the previous Government were ejected from office. That is the reality, and those are the facts. It is about time that Conservative Members recognised them.

§ Mr. Edward Davey (Kingston and Surbiton)
Will the Minister tell the House how much weight the Government put on surveys of business confidence when they forecast economic growth? Will the Minister confirm that, after 18 months of Labour in power, business confidence is 464 now at an 18-year low? Will he tell us whether he thinks that the 0.5 per cent. cut in interest rates will be enough to lift the business gloom?

§ Mr. Byers
The Government welcome the interest rate cut announced today by the Bank of England, which will be good news for businesses, consumers and home owners. We believe that the Bank has been able to take that decision only because of the tough measures that we have introduced to ensure that inflation is at the 2.5 per cent. target, and to cut last year's national deficit by £20 billion. Interestingly, a majority of people express confidence when asked specifically about their own business, whereas they express pessimism about the economy as a whole. It is an example of people listening to scaremongers, such as Conservative Members, who talk down our economy.

§ Mr. Francis Maude (Horsham)
Talking of realism, as opposed to the Government's astonishing complacency, has the right hon. Gentleman seen today's MORI poll of senior executives, showing not only that only 1 per cent. expect the economy to improve in the next year—whereas a staggering 89 per cent. expect it to worsen—but that a majority of them take a more pessimistic view of their own business prospects? Are all those people talking down the economy? When will Ministers stop talking down British business by attacking it? When will they abandon their complacency and reverse the burdens that they are piling on which threaten to make Britain's downturn the first and the worst in the western world, with 2,000 more job losses announced just this morning?

§ Mr. Byers
The right hon. Gentleman talks about talking business down and placing burdens on business, but we are a Government who have cut corporation tax, from April 1999, to 30 per cent. From next April, we are cutting corporation tax for small businesses to 20 per cent. Those burdens were imposed on business by the Conservative Government. They are being lifted by this Government. That is why we have underlying strength in the economy, and can steer a course of stability. We shall continue to do that, not adopting the right hon. Gentleman's short-term approach, but planning in the long term for continued economic prosperity and stability.