§ 2.50 p.m.
§ Lord ORR-EWINGMy Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
§ The Question was as follows:
§ To ask Her Majesty's Government what grants have been made in each of the last four years to the National Institute of Economic and Social Research; what other economic forecasting institutions have received grants and how much has been allocated to each.
§ The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Baroness Birk)My Lords, the Treasury grant-aids an approved programme of research projects by the National Institute for Economic and Social Research. Grants over the last four years were as follows: 1974–75, £90,000; 1975–76, £141,000; 1976–77, £151,000; 1977–78, £177,000. In addition, smaller grants have been made to the University of Cambridge Growth Project, which produces medium-term forecasts at the industry level, using a large, disaggregated macro-economic model. Over the same four-year period, the amounts have been £34,000, £17,000, £22,000 and £24,000, respectively. The Treasury does not provide financial assistance to any other forecasting institutions.
§ Lord ORR-EWINGMy Lords, I thank the noble Baroness for that reply. Is it wise to concentrate £500,000 of Government contracts, and thus create a near-monopoly, with one of the bodies undertaking this economic forecasting? Would it not be wiser to spread the load between several such bodies, and perhaps thus ensure that those who have the wisest prophecies get their just reward rather earlier in more contracts?
§ Baroness BIRKWith great respect, my Lords. I think that the noble Lord has got a little wrong the purposes with which the Treasury money is concerned. The money provided by the Treasury for the finances of this organisation is for an approved programme of work, which 895 consists of specific research projects. The making of regular forecasts is financed by the Social Science Research Council, and not by the Treasury, so that it is not directly grant-aided in respect of forecasting. The Treasury finances the research work of the Institute because it is considered of very high quality and is therefore valuable. But it also commissions work from other institutes— for example, the Policy Studies Institute, the Institute of Manpower Studies and the Institute of Development Studies. In case the noble Lord has forgotten, annual support to this body was started in 1961 by Selwyn Lloyd, the then Chancellor of the Exchequer, and, in fact, the Government Department's contribution amounted to a similar sum in real terms during the time of the last Administration. So that support has come from both Governments.
§ Lord SANDYSMy Lords, does the noble Baroness agree that her phrase "disaggregated macro-economic model" is somewhat difficult to interpret, and really means taking each year separately?
§ Baroness BIRKMy Lords, what it means, to make this crystal clear, is that there is a system of simultaneous equations which represent the main quantitative relationships in the economy.
§ Lord ORR-EWINGMy Lords, the noble Baroness says it so charmingly, but I wonder whether she can persuade her "briefers" to use simple language, and not the eccentrically complicated language of her first reply. Does the noble Baroness consider that there are other very reputable forecasters, such as the London Business School and the Institute of Economic Affairs, and would it not be wiser to share with some of these others and not give an enormous slice of business to one in making these forecasts?
§ Baroness BIRKMy Lords, the other organisations which the noble Lord mentioned, such as the Economic Intelligence Unit, the London Business School, the Henley Forecasting Centre and so on, can all be brought in to have discussions with the Chief Economic Adviser, and may be from time to time given different aspects of projects to work on. But I would remind the noble 896 Lord that in April the Ball Committee published a report (Cmnd. 7148), of an analysis of recorded forecasts by these main institutes, including the Treasury. It came to the tremendous conclusion that no one is better than another, and no one is worse.
§ Lord CARR of HADLEYMy Lords, may I just press the noble Baroness a little further on that? In her original Answer, she specifically separated support for their research work from forecasting work by this and other institutes, and she made it clear that the grant was not for forecasting. So the accuracy or otherwise of the forecasting of different bodies is irrelevant in terms of the noble Baroness's Answer. But I think that it still needs explaining why so very much greater a quantity of research grants is given to this one body than to all the other bodies in this field put together. May I support my noble friend's plea that the Government should give very careful consideration to spreading research grants over a wider range of institutes?
§ Baroness BIRKMy Lords, this is certainly a matter for my right honourable friend, and I shall raise it with him. Nevertheless, as I think I explained and as the noble Lord rightly said, this is for research projects; it is not for forecasting. Over a period of years which covers both Conservative and Labour Administrations, this has been considered a reliable and valuable body and the fact of its not having industrial sponsors and being Government-supported has enabled it to keep its independance. This has been generally accepted. I shall certainly pass on any comments, but nothing that I have delved into has made me feel that there is anything wrong about this.
§ Lord CARR of HADLEYMy Lords, may I ask one very particular question? Is not a conference taking place now in order to arrange that the Institute has industrial sponsors, and does not this alter its basis?
§ Baroness BIRKMy Lords, that is entirely a matter for the Governor of the Bank of England, and it has nothing at all to do with the Government.
§ Lord WYNNE-JONESMy Lords, if a sum of money is available to do a certain 897 amount of research, does my noble friend not agree that to divide it into a very large number of small sums produces very little effect, and that it may be far better to use the money in a concentrated way? Does she not agree that research divided up into minute fragments is not research, but is a form of pools speculation?
§ Baroness BIRKYes, my Lords. There is a great deal in what my noble friend has just said about that. I would just remind the noble Lord, Lord Carr, that we are talking in terms of very small sums.
§ Lord LEATHERLANDMy Lords, does my noble friend also agree that if financial assistance were given to all these other bodies we should merely be increasing the number of QUANGO organisations?