HL Deb 13 November 1979 vol 402 cc1091-3

2.41 p.m.


My 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 change they forecast for gross national product over the next 12 months.


My Lords, I would ask the House to await the publication of the next Industry Act forecast.


My Lords, is my noble friend aware that in the last five years of the Labour Government the average annual national growth was 0.3 per cent. and that, despite this experience, the last Government set a target of a 3 per cent. growth this year and all their plans of public expenditure were adjusted to an ambitious target which they had never succeeded in getting within one-tenth of in practice? Is this not a very unwise way of running the economy?


My Lords, my noble friend does well to draw attention to these matters. One of the greatest problems we face is the low growth in the last five years and the fact that the previous Administration based so many of their plans on a projected rate of growth which was not and could not be achieved.


My Lords, has the Minister noticed that since June of this year production has gone down by 8 points for all industry and by 11 points for manufacturing industry?


My Lords, the problems we face at the moment are the result of the high rate of inflation which we inherited from the previous Administration, and there is the absolute——


My Lords——

Several noble Lords: Order, order!


——need to deal with this problem as a prerequisite for the resumption of growth, which is an objective I think we all share.

Baroness BIRK

My Lords, would the Minister care to tell the House what the rate of inflation was when the Government came into office, and what it is today? If not, perhaps I could remind him.


My Lords, I need no reminding by the noble Baroness. The underlying rate of inflation in May exceeded 12 per cent. The latest figure for the RPI is somewhat over 16 per cent.; of that, 3½ per cent. is a once-and-for-all change due to the increase in the rate of VAT, which was introduced partly to finance the reductions in the level of direct taxation which were so sorely needed, as well as to reduce the public sector borrowing requirement, which was running at a level far in excess of that which had been set by the previous Administration as their target.


My Lords, is the Minister aware that it is not so much the problem of low growth which is crucial to the people of Britain, but the fueling of unrealistic expectations by the forecasts such as the noble Lord, Lord Orr-Ewing, originally referred to? Is he further aware that there is a school of thought which maintains that to continue the policy of indefinite economic growth is unrealistic and is doomed to failure because of constraints such as the availability of raw materials, and that we would do much better to consider the redistribution of resources, such as the cancellation of the Government's programme to replace the Polaris missile fleet with a new fleet costing £10,000 million, which could be devoted to the social services?


My Lords, will my noble friend——

Several noble Lords: Answer, answer!


My Lords, I was very interested indeed to listen to the speech by the noble Lord, which would require a speech to answer it, but in so far as he made one point which is relevant to the Question on the Order Paper—namely, that referring to the publication of unrealistic forecasts which then fuel expectations which cannot be achieved—I entirely agree with him.


My Lords, will my noble friend continue with the Government's policy of clearing the obstacles and increasing the incentives so that real national wealth can be created under this Government?


Yes, my Lords.