Economic Growth (Hansard, 5 February 2002)

§ Lord McIntosh of Haringey
My Lords, the frameworks for fiscal and monetary policy, which have been in place since 1997, and the Government's tough decisions in reducing the public debt to a sustainable level have ensured that the United Kingdom has the best possible chance of sustaining healthy economic growth in a climate of global weakness.

§ Lord Roberts of Conwy
My Lords, with the reduced growth rate in the last quarter of last year of 0.2 per cent-1.9 per cent on an annual basis—and with the prospects for growth this year being as bleak as they are, how can the Government seriously consider raising taxation, which will depress growth still further? Is there a new wealth-creating agenda, as described by the Chancellor in The Times this morning?

§ Lord McIntosh of Haringey
My Lords, the noble Lord refers to The Times. I do not know whether he heard the Chancellor speaking on the "Today" programme this morning. We have only the preliminary estimate for GDP growth for 2001, which is 2.4 per cent. That is slightly above the figure expected in the Pre-Budget Report. The report expects growth in 2002 to be between 2 and 2.5 per cent. The premise of the noble Lord's question is not accurate.

§ Lord Oakeshott of Seagrove Bay
My Lords, the Minister speaks of a provisional estimate of 2.4 per cent for GDP last year. Is he at all concerned that last year the British economy suffered the steepest fall in manufacturing output since the depth of the recession in 1991, combined with the fastest growth in personal borrowing since the peak of the Lawson boom in 1990?
502 How long can that situation be sustained? Surely consumer credit is far too easy and the squeeze on industry is far too tight.

§ Lord McIntosh of Haringey
My Lords, we have never denied that there are particular difficulties for manufacturing industry. We are glad to debate that at any time. The estimate of growth for last year is pretty well complete. Our expectation of growth in 2002 is that it will be faster than in any other G7 country. That is not simply a Treasury estimate; it is a view held by the IMF, the OECD and the National Institute of Economic and Social Research. It is a fairly widely held view.

§ Lord Tebbit
My Lords, as the Minister will be aware, an important part of that growth is provided by exports of our manufacturing industry in particular. In that context he will also be aware of the importance of the exchange rate. One of the objectives of Her Majesty's Government is to have a stable and competitive exchange rate. Is it currently stable and competitive?

§ Lord McIntosh of Haringey
My Lords, it is indeed the Government's objective to have a stable and competitive pound over the medium term. That does not mean that we have an exchange rate target at any particular period in time; we do not have a particular exchange rate target now. A stable and competitive pound can be achieved only through sound public finances and through low and stable inflation.

§ Lord Northbrook
My Lords, how important does the Minister regard the EU's stability and growth pact in sustaining economic growth as compared with the golden rule?

§ Lord McIntosh of Haringey
My Lords, our own criteria contribute, and have contributed, successfully over the past five years to the stability of the economy and to the public finances in this country. The stability and growth pact is an additional criterion to which we pay considerable attention.

§ Lord Saatchi
My Lords, Members on the Government Front Bench like to wear their hearts on their sleeves in relation to the National Health Service. They routinely condemn our Benches for heartless cruelty. How, then, did they feel on discovering that, in the five years since they came to power, they have invested less in health and in education than any government in any five-year period since the Second World War?

§ Lord McIntosh of Haringey
My Lords, I am more inclined, as I have said previously, to be a "speak your weight" machine rather than to wear my heart on my sleeve. I do not recognise the noble Lord's figures as being accurate. I should be glad to hear them in more detail, but in any case they do not appear to be relevant to the Question on the Order Paper.

§ Lord Marlesford
My Lords, returning to my noble friend's supplementary question, is the Minister 503 confident that the Chancellor recognises that the world slow-down—not to say recession—would be a great deal worse had it not been for the 10 dollar a barrel fall in the price of oil over the past year, which was a major fiscal stimulus to the world? Does he recognise that to increase taxation now would undo that good and that the Government have plenty of scope to borrow, as far as it may be necessary, and that at present it is cheap to do so?

§ Lord McIntosh of Haringey
My Lords, I have no particular insight into the Chancellor's mind, nor do I know what facts he retains in it, particularly in the period running up to the Budget. That confirms my view that I should not express opinions about taxation levels in the run-up to the Budget.