The Recession: IMF Warnings (Hansard, 8 May 1991)

§ The Minster of State, Department of Trade and Industry (Lord Hesketh)
My Lords, the Government will continue to pursue policies designed to establish the basis for a resumption of non-inflationary growth. Inflation is now falling and there are encouraging signs that activity will recover from around the middle of the year, as forecast in the Budget.

§ Lord Molloy
My Lords, I thank the noble Lord for that reply. Is he aware that the research of the IMF seems to indicate that Britain has the lowest output of the seven leading nations? Because of that, unemployment is likely to increase according to the IMF. Therefore we could be in a serious situation. Ought not the Government to study the IMF report? Contributions to it were made by leading groups of economists in the country. Perhaps the Government should form a committee to examine how we are to get out of this extremely difficult situation.

§ Lord Hesketh
My Lords, I am sure that the noble Lord is aware that the figure quoted by the IMF is the same as that quoted in the Budget by the Government.

§ Lord Barnett
My Lords, can the Minister tell us how we shall recognise when we have turned the corner to which the Chancellor referred?

§ Lord Hesketh
When GDP rises, my Lords.

§ Lord Ezra
My Lords, will the noble Lord indicate whether the Government have any views on the trend of inflation next year? They should bear in mind that in yesterday's press widely reported views of a number of experts were that inflation may start rising again next year after having fallen this year.

§ Lord Hesketh
My Lords, I believe that the Government and the whole country are more interested in anticipating falls than considering that there may be rises.

§ Baroness Phillips
My Lords, will the Minister explain what "non-inflationary growth" means?

§ Lord Hesketh
My Lords, non-inflationary growth is the growth achieved without an excessive increase in inflation.

§ Lord Stoddart of Swindon
My Lords, does the noble Lord not think that he is being unduly optimistic and perhaps even complacent? Did he read the report yesterday or did he receive the news in his post yesterday from building employers that the building trade was going through not a recession but a slump? It was stated that there would be a 100,000 fewer jobs in the industry by the end of the year. Did he hear the news today that Rolls-Royce is to lay off 1087 8,000 people rather than 4,000? Did he read the news over the weekend that 40,000 small businesses will collapse this year? Unemployment will be 2½million by the end of this year and 3 million by the end of next year. Under those circumstances, does not the noble Lord think that the Government are being complacent and therefore not taking the right action to get out of the recession?

§ Lord Hesketh
My Lords, in the light of the noble Lord's remarks I am amazed that I am even considering staying in the country. I draw his attention to the surveys which he did not mention: the ABCC survey, the CBI publication on quarterly trends, the IOD survey of only yesterday and the 12 per cent. increase in the first quarter in private housing orders. Also he did not mention that after the fall in GDP, real GDP growth will be 22 per cent. higher than it was a decade ago. Neither did he mention that the real net income of a married man with two children is 37 per cent. higher than it was.

§ Lord Peston
My Lords, that reply was enormously interesting although I have no idea what connection it had with the question. But that is by the way. I congratulate the noble Lord. His answer to my noble friend Lady Phillips on what was non-inflationary growth, bearing in mind that it is the university examination season, would get him at least an A-minus. However, it is customary to write more than one sentence.
Were the newspapers right in reporting the IMF statement that the way to deal with our recession and the unemployment problem is to cut unemployment benefit? Did the noble Lord read that as I did? Have the Government any view as to whether the way out of the problem is to cut unemployment benefit? For example, is it the Government's view that the unemployed are responsible for their own unemployment?

§ Lord Hesketh
My. Lords, the only Government that I am aware of in this country who have taken directions from the IMF are the Government who preceded this one.

§ Lord Peston
My Lords, I am right, then, that this Government have no intention of following the advice of the IMF on this matter. I should like the noble Lord to confirm that that is the case. I shall put it differently. Am I right in assuming that the Government will not follow the advice of the IMF on this matter?

§ Lord Hesketh
My Lords, I have to repeat my previous answer. The only Government of whom I am aware who have taken direction from the IMF are the preceding Labour Government.

§ Lord Williams of Elvel
My Lords, there must be a yes or no from the Government to the question, will they accept the IMF advice. It is as simple as that.

§ Lord Hesketh
My Lords, I have given the answer twice. I believe that it was a perfectly adequate answer which reports the facts.

§ Lord Molloy
My Lords, is the noble Lord prepared to take the matter seriously? What the IMF said has been supported by the Institute of Directors. Is it to be dismissed? The CBI and Mr. John Banham recently described the situation in this country of our economy going from bad to worse. The chambers of commerce expressed their alarm at the plunge in exports and the engineering employers say that the decline will continue for some time and as a consequence there will be considerable unemployment. The IMF, the CBI, the Institute of Directors, the Association of British Chambers of Commerce, all these people have considerable knowledge. Could the Government at least consult them and be prepared to accept that there is a dangerous situation for our nation? We ought to get together to see whether we can ward off the disaster into which this Tory Government are leading us.

§ Lord Hesketh
My Lords, I fear that the noble Lord is being slightly selective. I draw his attention to the survey by the chambers of commerce of 24th April, the CBI information on quarterly trends of 30th April and the remarks of the Institute of Directors yesterday. They all said something rather different from what he suggested.

§ Viscount Mountgarret
My Lords, does my noble friend think that questions in your Lordships' House are becoming rather long-winded?

§ Lord Hesketh
My Lords, it would be considered most inappropriate for a single Minister to come to the Dispatch Box and give an answer to that question.