HL Deb 24 November 1994 vol 559 cc368-80

3.34 p.m.

Debate resumed on the Motion moved on Wednesday last by Lord Wade of Chorlton—namely, That a humble Address be presented to Her Majesty as follows:

"Most Gracious Sovereign—We, Your Majesty's most dutiful and loyal subjects, the Lords Spiritual and Temporal in Parliament assembled, beg leave to thank Your Majesty for the most gracious Speech which Your Majesty has addressed to both Houses of Parliament."

Earl Ferrers

My Lords, we come now to the last day of the debate on the Address in reply to the speech which Her Majesty was graciously pleased to deliver. One could not help but reflect, when witnessing that remarkable ceremony of the opening of Parliament, how much the Monarchy, Parliament and democracy are inextricably bound together in the United Kingdom.

We were made conscious again of the great debt of gratitude which we all owe Her Majesty for the way in which she carries out her responsibilities, and for the unique respect and affection in which she is held by both Houses of Parliament and throughout the country.

Noble Lords

Hear, hear!

Earl Ferrers

My Lords, today we turn our minds to industrial and economic affairs. Today's debate will be enlightened by two maiden speeches to which we all greatly look forward—one by my noble friend Lord Nickson, who is a distinguished industrialist, and the other by the noble Lord, Lord Gladwin of Clee, who is a distinguished trade unionist.

Earlier this year the Government published a competitiveness White Paper. That set out the policies which we propose to carry out in order to try to help British business to win at home and abroad. The White Paper is the first comprehensive attempt by any British government to try to set out what "competitiveness" is actually about.

Whether we can improve our ability to earn a living depends on our ability to better our industry; to better our trade; and to better our ability to sell both at home and abroad and to all manner of people. We can only improve our ability to earn a living if we can improve our competitiveness in an increasingly competitive world. Competitiveness in business is the only way to raise living standards and to improve the qualify of life of people.

It is the duty and the business of businesses to create wealth. Governments do not do that. They merely have to try to set the conditions in which businesses can succeed—and that is difficult enough, especially when the whole world goes into recession. But, fundamentally, it is to businesses and to their employees that we must look if, as a country, we want to improve our competitiveness.

Often the best way in which governments can help is to get out of the way; to give people their heads; and to allow their entrepreneurial spirit to flourish. If we look back a little—and there is no harm in doing that from time to time, provided that one does not do it for too long so that one gets a stiff neck—it was this Government who broke the ground on privatisation, a task which was unthinkable 15 years ago. Where we have led, many others have followed—France, Germany and the Eastern bloc. Even that bastion of communism, Russia is trying to follow suit.

Britain led the world in privatisation: the world watched Britain; the world admired Britain; and the world followed Britain. It has been the greatest success story of the last half century, pioneered by my noble friend Lady Thatcher when she was Prime Minister.

It was this British Government which showed that privatisation increases efficiency: it cuts costs; it improves management; and it enables businesses to react to what the public and the customer wants. It ensures that investment decisions result from the needs of customers, not from the whims of bureaucrats. It does so by increasing efficiency. If that happens, it leads to lower prices. That is good for the customer and for business, because it enables businesses to compete effectively against their competitors.

Since 1979, 47 major businesses have been transferred to the private sector. If anyone doubts the benefit of that, let me remind your Lordships of one simple fact. In 1979 those now privatised industries cost the taxpayer £35 million a week. Those same industries are now returning to the Exchequer £50 million a week in taxes on profits. That is some considerable turnaround.

We intend to continue in that vein, both to privatise part of the United Kingdom Atomic Energy Authority and to deregulate the domestic market for gas. Privatisation will enable AEA Technology to realise the full potential of its commercial activities. It will be able to sell its services in the way in which it—and not the Government—sees fit. That will benefit both its customers and our competitiveness. The Gas Competition Bill will bring genuine competition to the whole of the gas market. In all the brouhaha about whether people should get a discount for paying by direct debit, and all the rest, we tend to forget that since privatisation the domestic gas consumer has already benefited from a fall, in real terms, in gas prices before VAT of over 20 per cent. Now they will be able to benefit further.

The independent suppliers are confident that they can offer price reductions of around 10 per cent. By having more than one supplier, it will enable the industry, as a whole, better to provide what the customer wants. It was only at the end of the previous Session that we saw the passing into law of the deregulation Bill. Everyone hates regulation, until, of course, things go wrong, and then they say, "People should not be allowed to do such things". But, in our increasingly sophisticated society we have to have regulation whether for food, for safety or for the way in which we conduct our business. But these things, like tadpoles, have a nasty habit of multiplying themselves. But, unlike tadpoles, the old ones do not die off; they tend to hang around to the inconvenience of everyone.

Bad regulation has a heavy impact, particularly on small businesses. Yet small businesses are the engine room of the future. Deregulation will help these small businesses to concentrate their efforts on what they do best—that is, creating wealth and jobs. There are some 3,500 regulations which, as the current jargon says, "impact" on businesses. We have already earmarked nearly 900 of those for repeal or for reform. Some 55 measures, which will save businesses millions of pounds, have already been notified to Parliament under the new procedures. But this is only scratching at the surface. We want to cut out those regulations which raise prices, which destroy jobs, and which stifle innovation and choice. We have extended this work to cover charities and the voluntary sector, and we intend to keep up the pressure, both at home and in Europe.

If the Government are to enhance rather than to harm competitiveness, we need to understand how businesses operate and to understand the opportunities and the threats which businesses face. Businesses also need to see, and to know, how others operate. We have therefore sponsored different parts of industry to do different things to help them to become more competitive. We have, for instance, taken car component manufacturers to Japan to learn some of their methods. We are working with business, with trade associations and with people who have been seconded from the private sector to apply the search for improvement right across the board.

I said that small businesses are the engine room of the future, so they are. It is worth reminding ourselves that no fewer than 1.2 million businesses were created during the 1980s. There were approximately 3 million businesses in the United Kingdom in 1992, and 96 per cent. of those employed fewer than 20 people. Between 1989 and 1991—only two years —these small firms created an additional 350,000 jobs. We should never underestimate the powerful influence which small businesses have on the economy of the country.

The relationship between small businesses and the banks has received a good deal of attention in recent years, and the Government have made it clear that we expect the banks to show understanding and sensitivity in their dealings with small firms. Despite this, many small businesses continue to feel disenchanted with their banks, and I hope that this is a matter which can be addressed. Late payment of debts is a matter of particular concern for small businesses. Cash flow is, of course, vital to their survival and to their growth and no one should underestimate the damage which can be done to cash flow—and indeed even to the viability of the business as a whole—by the late payment of debt. We do not believe that a statutory right to interest is the right answer, but we have said that we will review the case for legislation if there has been no significant improvement within two years.

Small businesses often need help and advice. They ask anything from, how do I start a new business?, how do I raise money?, what accounts do I have to keep?, what are the statutory requirements for my business?, to how can I export? There is much advice and knowledge on offer but from such a huge variety of outlets that the poor unfortunate businessman seeking help frequently does not know which way to turn. So the Government decided that there should be one place, in each locality, essentially run by private enterprise, to which the aspiring businessman can turn for help. These are what have been called Business Links. The Business Links will bring together all the local business support agencies including the training and enterprise councils, the chambers of commerce, the enterprise agencies, and national and local government. Business Links will reach out to companies which want to grow by providing them with support and advice which are specifically geared to their own particular needs.

From April 1996 all the services of the Department of Trade and Industry will normally be provided through Business Links, including support for exports, for innovation and technology, for design, and for the new diagnostic and consultancy services. Business Links will be able to help companies to export, to improve design, to improve the quality of their business planning, to encourage innovation and the spread of good practice, to improve their financial skills, and to improve the professionalism of their marketing activities. There are already 52 Business Links open. Our aim is to have at least 200 Business Links established in England by the end of next year.

Britain is first and foremost a trading nation. We are so good at denigrating ourselves and our achievements that one sometimes forgets what we have achieved. Few people realise that the United Kingdom exports more per head than does either Japan or the United States; that after decades of decline our share of world trade in goods stabilised in the 1980s; and that our exports are now at a record high. They grew by 12 per cent. in volume in the last year alone. Last year we exported more televisions and microchips than did either France or Germany, and over twice as many as did Italy. We exported twice as many computers as did either France or Italy, and more than Germany. We want to build on these achievements. And, what is more, we cannot afford to relax our efforts, because our competitors will not be relaxing theirs.

Although our exports are doing well, as a country we could do better, particularly in breaking into new markets. Last year Germany exported five times as much as we did to China and Italy exported more than twice as much. Although our exports to China grew by an impressive 47 per cent. between 1992 and 1993, German and Italian exports grew by 50 per cent.—and that was from a higher base. So, in order to help to encourage our exports, we in the Department of Trade and Industry have recruited over 100 private sector people, who have been seconded from the private sector, to work as export promoters. They are people who know about business, who know about running companies and who know about exporting—the opportunities and the pitfalls. And they will be able to help and to advise others who want to export.

In all of these ways the Government are helping industry to improve its competitiveness. But the most important thing which a government can do is to provide the conditions in which businesses can invest in the future with confidence. Low inflation and low interest rates are vital if we are to remain competitive. Fortunately, as a result of the policies which we have adopted, inflation is running at its lowest level for over a quarter of a century. It has been below 3 per cent. for 13 consecutive months—the longest consistent period since 1964. Interest rates have been brought down to their lowest levels for 17 years. The outlook for the British economy is the best it has been for many years. In the past year alone output has risen by over 4 per cent. This is the strongest growth we have seen since the end of 1988, and it has far outstripped even the best projections. And we are still expected to be the fastest growing major European Union economy this year. In the last year alone, manufacturing output has risen by 5 per cent.; investment in plant and machinery is up by over 5 per cent.; unemployment has fallen by over 300,000; manufacturing productivity has risen by 6 per cent., far outstripping the growth in earnings; and unit wage costs have actually fallen by nearly 1½ per cent.—the biggest drop since records began in 1970. These figures are, I believe, all enormously encouraging, but we cannot ease up. In this life you are on an escalator. You either go up or down. If you stand still, you soon land down at the bottom. We want other countries, too, to invest in the United Kingdom because this creates jobs; it creates work for other companies which provide the components; and it is good for Britain.

But if we want other countries to invest in the United Kingdom they will want to be satisfied that we will be a better country in which to invest than are others. To a large extent we are succeeding. Britain is now the most attractive place to invest in Europe. We have, for example, the lowest main rate of corporation tax in the European Union. Forty per cent. of Japanese inward investment to Europe has come to the United Kingdom; 43 per cent. of American inward investment to Europe has come to the United Kingdom; we remain the number one location for United States and Japanese investment.

Those who want to invest in Europe have chosen the United Kingdom rather than France, Germany, Italy or Spain because they see that the United Kingdom is the best country in which to invest; that it is a country which encourages investors, and that it is a country which treats investors fairly. Inward investment since 1979 has created or safeguarded at least 600,000 jobs.

A great deal of investment by other countries into the United Kingdom has taken place over the last decade. In 1989 Toyota invested £700 million in their car plant at Burnaston. That created 3,000 jobs. Fujitsu invested £400 million in a semi-conductor factory in County Durham, creating over 800 jobs. That is likely to increase to 1,600. Robert Bosch of Germany has invested £100 million in a factory near Cardiff to produce car alternators. That has created 800 jobs. Last month Samsung of Korea announced a decision to invest £450 million to set up manufacturing facilities in the North East of England. The company is also transferring its European headquarters to London. Together these will employ around 3,000 people. Earlier this month Sony announced its new European computer games centre in Merseyside. That will create 260 jobs.

The advances being made and about to be made in communications, computers and technology are likely to have an impact on our lives and our way of life not dissimilar to that which the steam engine had on our forebears. Whereas a few years ago car doors were being formed by panel-beaters, now they are being designed by computers in three-dimensional graphics. Whereas a few years ago we thought it a wonder to have direct access by telephone to someone in another country, now the fax is being supplemented by video conferencing and by interactive television.

That is a development with quite extraordinary possibilities, one of the least of which—although it may be one of the easier ones to understand—is that if your Lordships wished to watch a cricket match on TV—something which I fancy some noble Lords sometimes do—your Lordships would be able to determine whether to watch the match from the position of mid-off, the wicketkeeper or even silly point. That is an important point. That is the way in which television and television technology will develop. If it can do that in connection with what one might call pastimes, think what it can do for industry.

Telecommunications, and all that that covers, will play a fundamental part in innovation and efficiency, not only in research and development but in all the phases of production and marketing. It offers enormous opportunities for the expansion of businesses and for employment, particularly for small and medium-sized firms. Those who do not take advantage of it will miss out.

Information superhighways will be a major catalyst in enhancing the competitiveness of the United Kingdom as we move into the 21st century. The Government have set out their vision for building the United Kingdom's information superhighways in a command paper which we published on Tuesday.

We led the world in liberalising our telecommunications sector way back in 1984. We are now well placed to be a leader in the new era of what is known as "broadband communications". It is thanks to privatisation and deregulation that the United Kingdom is already a world leader in these new information techniques, and this gives us an excellent platform on which to build.

We will have to match the emerging "broadband technologies" with what is being done for the superhighways. This is complicated stuff, and deeply technical, but there is a growing convergence between telecommunications, information technology and broadcasting and the Government will do all that they can to encourage and to foster this. Networks for schools and hospitals are already well under way.

My Lords, I believe that the future is hugely exciting. It holds out possibilities for us which were previously unthought of and, if they were thought of were discarded, probably as fantasy. The world has shrunk. Technology has vaporised barriers. We are in a world market; it is simply not an option to be an island on our own. We want to be there "mixing it" in the markets of the world with the best of them: there is a better opportunity tomorrow. Our job is to find it, to seek it out, and then to exploit it. I have no doubt that the entrepreneurialism of British business, which has characterised the nature of British business over the centuries, will achieve that—provided that we set the right conditions. That we are determined to do.

3.55 p.m.

Lord Eatwell

My Lords, we have heard a notably informative speech from the noble Earl, a speech full of apparent good news. It contained passage after passage full of cheery optimism and hope. It contained a myriad of facts. It contained not a single coherent new idea.

The noble Earl began by saying that he would look backwards. But there was no analysis of the cause of the recession from which we have now emerged; there was no indication of which discredited economic ideas have been abandoned; there was no indication of what exactly the current intellectual parameters of the Government's policy might be; and there was no inkling of how exactly the Government are going to ensure that the current recovery is sustained and that we do not slip back into recession. And there was no analysis of the Government's policies towards the European Union.

I can see that no one today expects the Government to be able to present a coherent policy on Europe. The Chancellor of the Exchequer is an enthusiast for monetary union. The Secretary of State for Employment is opposed to monetary union. The Prime Minister, as has become customary, seems to believe one thing on one day and another thing on another. It would be quite unfair of me this afternoon to expect logic or coherence in the midst of a family quarrel which has now gone as far as a suicide pact.

However, we might hope for coherence elsewhere. We find none. The gracious Speech declares that the Government, will continue with firm financial policies". At the same time the Government boast of two years of interest rate cuts, beginning when inflation was double what it is now. Was that firm financial policy?

The gracious Speech declares: Fiscal policy will continue to be set to bring the budget deficit back towards balance over the medium term". Yet the Budget Red Book directly contradicts that proposition. It says that the Government are determined, to ensure that when the economy is on trend the public sector borrows no more than is required to finance its net capital investment". Which is it? A balanced budget or borrowing to pay for investment? Should we not be told?

Throughout the Government's presentation of economic policy there is the ambiguity and uncertainty which is the inevitable result of a lack of coherent ideas. Lacking any clear analysis from the noble Earl of what has happened, we must go in search of the economic policy which has produced all the good news with which he sought to cheer us up on this dull November afternoon.

With the aid of the most powerful analytical tool available to economists, namely hindsight, it is not difficult to work out what the Government's economic policy has actually been. First, the Government devalued the pound; secondly, they raised taxes which, by cutting living standards, ensured that resources were available to the export industries; and thirdly, they had a stroke of good luck. A world-wide slump in raw material prices took the sting out of any inflationary pressure which the devaluation might have created. That is how the Government did it. Do they intend to continue the policy stance which has brought the good news which the noble Earl assailed us with? Are we to expect more devaluation and higher taxes with fingers crossed for continued impoverishment in the third world which ensures ever lower materials prices? That has been the policy for the past two years.

Why did not the noble Earl boast about the devaluation and higher taxes? Why did he not tell us, as Mr. Maples does in his famous memorandum, that real take-home pay is falling this year and "will fall again in 1995–96"? Why did not the noble Earl tell us that the result of the Government's policy, as Mr. Maples put it, will be, four or even five years of recovery with no rise in living standards"? Perhaps it is because the noble Earl realises, as so many are coming to realise, that instead of creating new strengths for the British economy the recovery from recession has exposed the weakness of the economy—a weakness which the policies of the past decade have created.

What is really happening has been identified precisely by the Engineering Employers' Federation. The EEF says: Today there is a real danger that recovery from deep recession will be seen as evidence that the UK economy is healthy and that no further policy changes are needed. The EEF does not agree. The cyclical economic recovery which is now happily occurring will not be sufficient to ensure continuing growth of employment and living standards. For sustained future growth it will be necessary permanently to increase investment, by a large amount". In the past 15 years Britain has had the lowest rate of investment among the major industrial countries. That persistent low investment—low investment in capacity, skills and new techniques—means quite simply that while our trading sector may be efficient, it is far too small. And the problem is getting worse. Despite the strong overall growth of the economy, gross fixed capital formation is today falling. Even more serious, given the importance of manufacturing in our international trade, investment in manufacturing is not only falling. It is now, in real terms, 30 per cent. below the levels achieved in the 1989 boom. Indeed, investment in manufacturing is now well below the levels of 1979.

British business is showing its total lack of confidence in the Government. British business is not investing. Everyone knows that if we do not invest, growing demand cannot be met. Of course, in the short run, extra shifts can be worked with existing machinery. More overtime can be worked by skilled workers. But there is a limit, and without investment Britain reaches that limit all too soon with serious consequences both for the balance of payments and the rate of inflation. That is why living standards, as Mr. Maples put it, will continue to fall.

So what is the Government's policy on investment? The noble Earl told us a lot about export and information services of the DTI. He told us about the DTI's role as a travel agency, taking businessmen to Japan. But when will the Government do something concrete? Are the Government themselves willing to take a lead by launching an investment programme to tackle the high infrastructure costs which place such a serious burden on the competitiveness of British industry? Are the Government at last prepared to face up to the serious deficiencies in Britain's investment in education and skills training in comparison not only with our European partners but also with the East Asian tigers like South Korea or Taiwan?

The answer to those questions is all too clear. Only this Monday, on the very day the German Government announced the creation of a Ministry of the Future, combining education, science, and research and technology, and dedicated to placing Germany in the forefront of world innovators, the President of the Board of Trade declared that he would commit the rest of his political career to converting the "last tiny rump" of Tory MPs who wrecked his plans to privatise the Post Office. That is his priority. That is his approach to investment in the Post Office, a vital part of Britain's communications infrastructure, whose importance is paramount for every industry in Britain.

The Government are simply unwilling to amend the Treasury rules to allow the Post Office to raise capital and operate freely. To do that would draw into question the rationale of their mindless privatisations, not only of the Post Office but of the railways too. How many noble Lords have taken the new Eurostar train to Paris and experienced the awful feeling of national shame as the train crawls from Waterloo to the Tunnel before speeding to Paris on the French side? Instead of a rational policy which allows the public sector industries to operate freely and compete according to sound commercial criteria, building alliances where appropriate with private sector investors—a policy which the Labour Party has consistently advocated—the Government prefer dogma.

If they are so dogmatically opposed to public investment, surely the Government must be doing something to boost private investment and help the growth of small firms on which so much of the necessary job creation and technical creativity depends. Something more than just information services is needed. Again, dogma has triumphed over any attempt to construct a practical policy.

As we learned over the summer, the Treasury is steadily (with due apologies to the noble Earl) emasculating the DTI. The boyish figure of the then Chief Secretary simply told the distinguished President of the Board of Trade that he could not have his regional incentives, and that was that. The DTI launched a study of competitiveness. It was a notable damp squib. Then the DTI launched a study of dividends and investment. What happened to that? When will it be published? Will the noble Viscount tell us? The truth, as he knows, is that it will never be published.

Indeed, the Treasury has cut the DTI down to size. Last year's Red Book revealed that in real terms the budget of the DTI would be cut from £3.5 billion in 1993–94 to £2.1 billion in 1994–95, to £1.6 billion in 1995–96 and to £1.2 billion in 1996–97—a department shrunk to just a third of its former size in four years. That will teach the President of the Board of Trade to say that he would intervene between meals. What a sad end for an ambitious president—Tarzan replaced by the Incredible Shrinking Man.

The DTI is not the only department which is being cut. The Red Book plans indicate major cuts in the Department of Employment too. No doubt Mr. Portillo will be asking for even greater cuts. At a time when our international competitiveness depends more than ever before on the quality and talents of our labour force the Government are obsessed with a labour market strategy which maximises uncertainty, exacerbates the poverty trap and penalises the unemployed. More time is spent by the Department of Employment on monitoring and penalising the unemployed than in helping them to retrain.

So here at last we have a policy. In the name of "flexibility", the Government are dismantling the employment rights of workers, denying them consultation, and denying rights for women and the disabled embodied in the social chapter of the Maastricht Treaty. They have stripped away minimum wage protection for those on poverty pay.

I hope that we hear nothing today from the Government side of the demonising slogan that workers' rights "destroy jobs". Not only does it ill behove a Government who have presided over record levels of unemployment to talk about others destroying jobs, but also all the evidence indicates that the deregulated, so-called flexibility strategy is profoundly inefficient. For example, in the deregulated services sector in the United States, there has been no productivity growth for the past 20 years. In the deregulated US construction industry, productivity growth has been negative over the past 20 years. In Europe, both sectors have enjoyed high rates of productivity growth. The reason is simple to see. A labour market policy which increases instability and uncertainty necessarily undermines investment in skills by firms and by their workers.

Today the Labour Party is publishing a new fair contract with the unemployed. We are committing ourselves to a package of measures which will create true flexibility, including, I can announce, a national insurance holiday for employers who hire people unemployed for over one year, and a tax rebate of up to £75 a week for six months to any employer who takes on a person who has been out of work for two years or more.

True flexibility, true efficiency, derives from a well-trained, secure and self-confident labour force which feels involved and committed to the enterprise in which it is employed. That is Labour's goal. By contrast, the Government's policies have done nothing but undermine the creation of a world-class labour force in this country.

So there we have it. For the past two years the economy has been successful because the Government have pursued a policy of devaluation and higher taxes, which they avidly declare they do not believe in. But even that transient success cannot be sustained without higher investment. Yet investment is falling and the Government have no policy whatever to do anything about it.

Britain desperately needs a government committed to investment and industrial prosperity; a government, most of all, whose policies are built on the long-term approach that every industrialist knows is the key to building economic success. Instead, we have a Government committed to a suicide pact in a desperate scramble for short-term survival. The sooner that pact is put into effect the better for Britain's economy.

4.10 p.m.

Lord Jenkins of Hillhead

My Lords, the gracious Speech is mostly a dish which needs a little embellishment. This year it is only the shrimps around the sole which can be remembered even eight days after the Speech. I cannot think quite what state of forgetfulness will have fallen upon it eight months from now. I suspect that as an autumn manifesto for 1994, Mr. John Maples' draft will prove more resonant than the Speech and may also be a better guide to the Government's action programme.

On top of that, we come to the effusion of Mr. Patrick Nicholls, which seemed to be composed in about equal proportions of the attractive combination of envy of big countries and contempt for small countries. The Prime Minister and other luminaries seem to have an extraordinary touch in choosing figures of mature and statesmanlike views and phrases as vice-chairmen of the Conservative Party.

However, to turn in a happier direction—as I thankfully do—some of the embellishments which we have had to the gracious Speech have been highly acceptable. We have had a notably rich crop of maiden speeches. I recall in particular the speeches of my two new noble friends Lord Tope and Lady Thomas as well as that of the noble Lord, Lord Attenborough, whose aphorisms were well worth waiting a year for. There was also the speech of the noble Lord, Lord Phillips of Ellesmere, who combined the pastoral reminiscences of a Shropshire boy, if not a Shropshire lad, with the intellectual authority of high level science. The speech of the most reverend Primate the Archbishop of Canterbury also made a considerable impression on me.

Today is the economic day and we are now almost on the eve of the Budget. I remain very sceptical of the wisdom of Mr. Lamont in turning a spring festival into an autumn one. Many noble Lords may have seen the powerful article of Mr. Terence Higgins in The Times yesterday which pointed out how precipitately that decision was taken and how its result has been a further reduction of executive accountability, as well as considerably reducing the opportunities for economic debate in another place. It is also, in my view, markedly inconvenient for your Lordships' House if the Commons is mainly concerned with the Budget and consequential legislation before Christmas, which virtually means no legislative work for your Lordships' House in the early part of the Session. Except in so far as it is corrected by starting major and controversial measures in this House—on which the Government's experience in the last Session may not have been entirely happy—the consequence is inevitably an uneven spread of work for your Lordships' House over the parliamentary year and a great deal of back-end loading with considerable inconvenience.

Then there is the argument of tradition, but we should not necessarily be too bound by it. The tradition of the spring Budget, like most great British traditions from a festive Christmas to schools based on games and the imposition of a standard ruling class English accent, dates from the third quarter of the 19th century and no earlier. Nevertheless, it has had a fairly long run from the time when eight successive Gladstone Budgets, flanked on the one side by the University Boat Race and on the other by the opening day of the Royal Academy, gave a sense of spring stability in an epoch which was on the whole very stable indeed.

I have long been fairly sceptical of excessive Budget flummery and of making too much fuss about Budget secrecy. No one seems to do that much today, in any event. But there was much to be said for the spring tradition and the Government or a future government would be wise to reconsider the matter.

Chancellors are dominating figures in their day, central to the success or failure of the government. But what they do in the field of economic management is remarkably ephemeral. It is all washed away by the high tide of their successor; it is building sandcastles on a beach, compared even with departmental Ministers whose legislation can easily last longer. Nevertheless, institutional changes as opposed to economic management carried through by Chancellors can have a more permanent effect. On that ground, I should be doubtful about Mr. Lamont's two institutional changes which were: first, to move to an autumn Budget; and, secondly, to abolish that Conservative creation, Neddy, which had served seven of his predecessors pretty well.

However, having said that, I have come to appreciate recently why Mr. Lamont felt quite so infuriated at having to hand over to Mr. Clarke when he did. Mr. Clarke had a luckier inheritance than was superficially apparent at the time. First, he enjoyed the great benefit of not being Mr. Lamont—although perhaps that point was not easily taken by Mr. Lamont himself. Secondly, Mr. Clarke took over springs which were set for rebound because they had been so long suppressed and depressed. In those circumstances, the situation is often spoken of as though the recoil, when it comes, totally justifies the long years of suppression and depression which have gone before it. We had the same argument in relation to the depression of the noble and learned Lord, Lord Howe, followed by the boom of the noble Lord, Lord Lawson, in the 1980s. That is well set out in the most engaging and lucid, if not over-compressed, memoirs which the noble and learned Lord, Lord Howe, has just set before us.

The argument of constantly preparing for the sunrise—that provided you are getting into a good position it does not matter how long you wait—ignores the vast tranche of national wealth which has gone for ever. It ignores the dismay, the misery even, which has been caused to individuals and is not recallable. Nor can the effect on Britain's long-term performance be disguised by choosing very favourable base years for statistics.

The bad years also often leave permanent damage, as with the excessive reductions in the manufacturing base in the early 1980s and the gross neglect of infrastructure in the early 1990s. Both of those points were vividly illustrated in the speech of the noble Lord, Lord Eatwell.

Nevertheless, with some strong export-led growth—a good deal of it European; I am not sure quite how that is reconcilable with the view that all the rest of Europe is a totally stagnant backwater—even if set off by a very weak investment performance, it means that the Chancellor has a considerable opportunity.

It is, of course, the case that the more he stresses the opportunity, the more he must accept the responsibility for how he develops it. There will be no one to blame, no scapegoats but himself, if things go wrong. Perhaps I may say, for a moment combining habitually hubris with humility, it is not entirely different from the position that I handed over to the noble Lord, Lord Barber, in the spring of 1970; although I would say in all honesty that there was at that time suppressed wage pressure, which, except at the higher levels of the gas company, does not seem to exist quite so strongly at the present time. Nonetheless, there was a real opportunity then, as there is now. I hope very much that the present Chancellor handles that opportunity better than it was then handled.

What is likely to happen? My guess is that this year we shall have a responsible Budget. It may be slightly dull; but there are many worse things than dullness. But next year will be the test. That will be the temptation. Will we then have a splurge, a return to the not notably Gladstonian traditions of those Conservative financiers, Maudling, Barber and Lawson? Will we begin again the rather dreary round of getting quickly into difficulties and casting away the relatively rare opportunities? Maybe we shall, but I hope not. Maybe we shall not. In any event, we shall wait, and we shall see.

Forward to