Budget Statement

Lord Higgins Excerpts

Wednesday 23rd March 2016 Grand Committee

[Lord Higgins (Con)]

My Lords, my noble friend Lady Knight of Collingtree and I have been working in this building for 50 years and therefore I regard it as a great privilege to be able to congratulate her on her valedictory speech. But of course, much more than that, I congratulate her on a lifetime of public service both in the House of Commons and in the House of Lords. My noble friend mentioned that people are anxious to get away for the recess. I think that she should look behind her because it is standing room only. Noble Lords have come here to express how very much they honour the way in which my noble friend has behaved as a parliamentarian over many years during a career that has extended across both Houses. My noble friend has played an important role. She referred to a number of events when we were together in the House of Commons. We both served for many years on the executive of the 1922 Committee and I can remember a number of occasions when her point about the importance of being together rather than divided was very relevant—certainly at that time in relation to Europe and now perhaps again.

Having said that, my noble friend has, in some ways, a unique achievement. I did not realise until the other day that she had succeeded in getting through no fewer than four private Bills. All of us know how very difficult it is even to get one through. To get through four, on a range of issues from nationality to copyright and child welfare, is something of which my noble friend can be justifiably proud.

A few days ago, I had the good fortune to meet a number of my noble friend’s former constituents. There is no doubt that they hold her in great affection. It is also the case—as we see by everyone assembled here today—that she is held in very great affection in this House as well. All her friends will miss her very much, but we also wish her a very happy retirement. It could not be better deserved and we therefore join together, I think, in saying that my noble friend should be congratulated and we wish her every success and happiness in the future.

I come now to the Budget. My noble friend and I have survived more than 50 Budgets and a great many of them turned out to be rather controversial. However, it is quite difficult to remember a Budget quite like this one. The late Iain Macleod used to say that a Budget looked good on Budget day but it very rarely looked good by the end of the week. That has certainly proved to be case as far as this Budget is concerned.

I am rather puzzled by the resignation of the former Secretary of State for Work and Pensions. When I first heard about it, I came to the view that he must have resigned because the proposals which he was in favour of were being watered down. I remain unclear as to whether he is in favour of those proposals or not. In all events, it raises a number of difficult issues—referred to by the spokesman from the Labour Party and others—as clearly in the light of these changes we are left with a rather large black hole. Something needs to be done to fill that hole but my understanding is that the Chancellor will contemplate on what has happened and then make decisions in the Autumn Statement.

I want to take up a point made by the noble Lord, Lord Darling. It is important to have targets for deficit reduction because, as he well knows from trying to cut public expenditure in the Treasury, if one does not have a fairly clear view of what one needs to do and achieve, then one will run into real problems in getting anywhere near the target. On a 50:50 basis of being likely to achieve the present target, I think the Chancellor should stick to his guns, but it is going to require a number of very difficult decisions.

In that context, I make just one point. There has been some question lately of whether one should look at the ring-fencing of pensions. It is very important that that framework should be maintained. For many years I represented the constituency of Worthing, where it is said people come to die and forget what they came for. There is a very large number of pensioners there. They have suffered very badly in recent years because of what has happened to interest rates. They have all saved carefully throughout their lives and hoped to have a happy retirement, and then they find that the return they are now getting on their savings is absolutely minimal. Therefore that needs to be taken into account in any question of whether anything should be done on pensions to offset the hole which has been left by the change in policy on welfare payments generally.

I very much agree with what the noble Lord, Lord Darling, said about the general approach to taxation and public expenditure. It is certainly the case that those who lose shout a great deal louder than those who benefit from any change cheer, and that needs to be taken into account. However, we also need to consider not just the fiscal framework but the monetary framework. I am glad to see the noble Lord, Lord Skidelsky, in his place, with all his knowledge of Keynes; for some years we have gone along with the combination of Keynesian views and those of Milton Friedman, or what Paul Samuelson used to call the neoclassical synthesis. We do not have any theory now to deal with a situation where there are negative interest rates. We need some theory for that because the effect of the negative interest rates will be very important. I therefore hope that we will succeed in thinking that through collectively.

The overall situation is very difficult. We will have to contend with a situation where we have to maintain our determination to cut the deficit, otherwise we can never get back to a situation of normal demand management where we run a deficit if the economy is depressed and a surplus if it is overheating. Therefore we have to take a general view on that. Overall, however, as a number of noble Lords have pointed out, the Budget includes a number of very good proposals with regard to reducing taxation. We will need to look at this matter again to see where we go from here. However, the overall approach is right, and the Government should stick to their policy. We should continue to aim at the present target, otherwise we will find ourselves in a situation where the overall balance of the economy has still not been put right. We have a long way to go.

I conclude by quoting from one of my successors as chairman of the Treasury Committee, Andrew Tyrie, who on the question of whether the Chancellor should resign said very clearly that we should be grateful to him for leading us out of the worst economic crisis we have had in modern history. He has done that; he is the right person to continue to manage our economic affairs. While the situation is clearly very difficult, none the less we have achieved a great deal since he became Chancellor and we must continue to pursue the policy he has maintained throughout that time.