HL Deb 10 March 1993 vol 543 cc1056-7

2.46 p.m.

Lord Eatwell asked Her Majesty's Government:

How they reach the "assumption" on the level of unemployment in 1995–96, published on page 53 of the Chancellor's Autumn Statement for 1992.

The Parliamentary Under-Secretary of State, Department of the Environment (Lord Strathclyde)

My Lords, the 1992 Autumn Statement followed the long-established convention used by all governments in assuming an unemployment path flat at around recent levels for the whole survey period.

Lord Eatwell

My Lords, I am grateful to the Minister for that reply. But is he aware that many of the expenditure estimates in the Autumn Statement, notably the estimates for the Department of Employment and the Department of Social Security, are dependent on and functions of the unemployment assumptions, which he has attempted to display as virtually worthless? Since the noble Lord feels that the unemployment assumption is merely a projection of current levels and therefore not a forecast, does he also feel that the estimates for the Department of Employment and the Department of Social Security are equally worthless?

Lord Strathclyde

No, my Lords. The Autumn Statement is published every year and is a very reasonable view of what will happen during the course of the survey period. The National Audit Office report on social security forecasting found that on average in the first year Treasury unemployment assumptions served at least as well as independent forecasts, and in 1988–89 were even better.

Lord Richard

My Lords, I am trying to follow this discussion, but not being a professional economist it is difficult for a bear with little brain like myself to do so. Perhaps the Minister can help me. As I understand his Answer to the Question, the figures of 2.74 million, 2.8 million, 2.8 million and 2.8 million up to 1995–96 are not forecasts but are figures which the Treasury and everybody else can use merely to make sure that they can do the necessary arithmetic. If that is so, can the Minister tell us what the forecasts are as opposed to the working assumptions?

Lord Strathclyde

My Lords, the noble Lord the Leader of the Opposition knows very well that no government ever make forecasts of unemployment, neither this Government nor the previous one.

Lord Dormand of Easington

My Lords, is not the assumption based on the estimated effect of the Government's economic policies? In this respect will the Minister say when the phrase "the ingredients are now in place for economic recovery" was first used?

Lord Strathclyde

My Lords, the whole point of this year's Autumn Statement was to provide the ingredients for recovery. We have done that by providing extra finance for the construction industry, by reducing interest rates and by planning for long-term growth in a non-inflationary period.

Lord Bruce of Donington

My Lords, would it not have been more frank if on page 53 of the Autumn Statement, which relates to the figures that have been referred to by my noble friend Lord Eatwell, instead of inserting the figure 2.8 million for the three years under the heading of "Economic Assumptions" to have said, "We do not propose to make any assumptions at all because it is the convention that whatever we say is never regarded as truthful by anybody"?

Lord Strathclyde

My Lords, if the noble Lord wants to disregard those figures, that is entirely up to him. But for many people the figures are very useful.

Lord Barnett

My Lords, do the assumptions include that the exchange rate will be the same in 1995–96?

Lord Strathclyde

My Lords, the noble Lord will have to look at the Autumn Statement for the answer on that point.

Lord Eatwell

My Lords, is the Minister aware that the Answer which he gave to my Question suggests that the Treasury believes that the future will simply be like the past? Does the Treasury therefore assume that the recession will continue?

Lord Strathclyde

My Lords, the noble Lord has totally ignored my first supplementary answer. It is a long-established convention used by parties of both political persuasions to set the unemployment assumption flat at around recent levels.