HL Deb 09 October 2003 vol 653 cc455-6

3.15 p.m.

Lord Roberts of Conwy asked Her Majesty's Government:

Whether the economy is meeting the Chancellor's growth targets for 2003 and 2004; and, if not, what will be the effect on public finances.

The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey)

My Lords, estimates of growth in gross domestic product for the first two quarters of 2003 are fully consistent with the Budget forecast range of 2 to 2.5 per cent growth for 2003 as a whole.

Lord Roberts of Conwy

My Lords, could the noble Lord tell us just how much of the growth increases in the first and second quarters was attributable to the new method of calculation? In other words, could we have both sets of figures?

Secondly, does the noble Lord agree that the Government should redouble their efforts to reduce bureaucratic costs in the public sector because they are taking far too much of the government increase in spending on public services?

Lord McIntosh of Haringey

My Lords, the components of the increase are much more complex than I can explain in the course of a Starred Question. But if I can send anything to the noble Lord, Lord Roberts, I will certainly do so.

On the noble Lord's second point, I am afraid that the so-called public sector inflation is a phoney figure—it cannot be given any more dignity than that. The Government consumption deflator is the ratio of current price government consumption to constant price government consumption, and it does not mean anything—it often works in the opposite direction. For example, if you take the ratio of inmates in custody to gaol officers, the measurement is prisoner nights in custody. You could, of course, increase so-called public sector inflation by increasing the number of prisoners per gaoler, but I suggest that the noble Lord, Lord Roberts, and the House would not think that desirable.

Lord Newby

My Lords, will the Minister accept that the real problem with public finances is that even if the Government reach their growth target, current projections are that income from taxation will be some £10 billion less than the Government projected because their projections were based on a wholly exceptional period during which City bonuses meant that any increase in growth led to a higher than usual level of tax revenues? Therefore, even if the Government hit their growth target, they will be faced with substantially larger borrowing requirements than they set out at the time of the Budget.

Lord McIntosh of Haringey

My Lords, I was happy to answer the question of the noble Lord, Lord Roberts, because it was a factual question about figures which have been published. The noble Lord, Lord Newby, knows perfectly well that I do not speculate on these figures in between—indeed, I do not speculate on them at all. The Government do not give a running commentary on macro-economic statistics. We will do that in the Budget Report and the Pre-Budget Report later this year.