Economy: Growth

Lord Lea of Crondall Excerpts

Thursday 31st March 2011 Lords Chamber

[Lord Lea of Crondall]

My Lords, I shall not surprise the House by saying that the analysis of the noble Lord, Lord Flight, is totally the opposite of mine. His is the ideological analysis that lies behind the present Government, a Government who are driving the economy to the wall. Perhaps he and I could have a bet on it.

The noble Lord compared us to Hong Kong. Hong Kong’s logic is effectively to be understood as part of China. It is an enterprise zone for the Chinese economy to some extent and it has a degree of inequality that even the noble Lord, Lord Flight, I assume, would not advocate for this country. The model set by our country with its history, as a northern European country playing a successful part, along with Germany, Holland, Sweden and others, in European society, is not one I hear spoken of as part of the ideology coming from the other side. In fact, the noble Lord’s speech could be summed up as: private sector productive; public sector unproductive. Are people in education not productive? Are people in health not productive? These are caricatures.

I recognise that a question has to be put to the Labour Party and people such as me: what is the alternative? To the wonderful march on Saturday, in which 500,000 people took part, the Government’s response was that we did not put forward an alternative. I do not think that putting a sticking plaster on the present arrangements is the solution, whether it be the operation of the auditors—a mutual admiration society as analysed in our own Economic Affairs Select Committee report published yesterday—or typical boards of directors or the merchant banks. As was pointed out by my noble friend Lord Eatwell the other day, boards of directors in this country do not represent anybody apart from themselves. The churning of shares means that the idea that shareholders are in some meaningful sense the people to whom the board is accountable is fanciful. That the boards’ remuneration committees have pushed up directors’ salaries such that the gap between their pay and that of the average worker is 10 times greater than it was 20 years ago is a scandal. In my view, it is based on fraud in some cases and a lot of these people ought to be locked up. So mine is not exactly the same line of thought as that of the noble Lord, Lord Flight.

In the middle of all this, what is it that Britain is lacking in the four cylinders of its motor car engine firing at the moment? Let us look at the way in which the German economy operates, with its supervisory boards—which I advocate for this country. Let us take a fundamental look at the Victorian company law which we operate even now, more than 150 years since it was written; it is essentially the same. I offer an anecdote. A CEO of a company in this country went to Sweden and the first question put to him was: “How is this takeover, if it goes through, going to help our world market share?” That is not the experience of board members in this country. They are part of a cabal, answerable only to themselves.

Monetary Policy Committee

Lord Lea of Crondall Excerpts

Wednesday 16th February 2011 Lords Chamber

[Lord Lea of Crondall]

My Lords—

[Lord Davies of Stamford]

Does the Minister agree that, although the Monetary Policy Committee has a single target imposed on it—the 2 per cent inflation target—in practice it has been behaving as though, like the Federal Reserve, it has a multiple target, with responsibility not merely for price stability but for stabilisation or employment? It may be a very good thing that the Bank of England has not been increasing interest rates, as it might have done if it had been following a single price stability target over the past couple of years, but are the Government not concerned at the discrepancy between the formal position and the actual practice on which our monetary policy is currently based?

Monetary Policy Committee

Lord Lea of Crondall Excerpts

Monday 31st January 2011 Lords Chamber

[Lord Sassoon]

My Lords, I absolutely agree with my noble friend that the Government are concerned about inflation. It eats into the savings of people who did all the right and prudent things through the last decade. We are concerned and are taking actions to make sure that the hard working and lower-income families in this country are protected in the current difficult economic circumstances.

[Lord Lea of Crondall]

My Lords, is the noble Lord aware that the City correspondents seem to be briefed that the inflation increase is attributable significantly to employment incomes rising? In fact they are not rising because, according to the ONS, the statistics now include, for the first time, three public sector banks, which pay out about £25 billion to people. That has given the impression, incorrectly, that average workers in the public sector are getting an increase.

[Lord Sassoon]

My Lords, forgive me but I did not quite follow the logic of all of that. All I can say is that, if we are talking about the City, the Treasury’s latest comparison of independent inflation forecasts from City and other commentators in mid-December shows that the City is forecasting inflation to come down to 1.8 per cent in 2012 and then to be steady at 2 per cent thereafter.

Taxation: Deficit Reduction

Lord Lea of Crondall Excerpts

Thursday 28th October 2010 Lords Chamber

Asked By

[Lord Lea of Crondall]

To ask Her Majesty’s Government how far they expect increased income tax and corporation tax revenues to contribute to the reduction of the deficit.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, the Office for Budget Responsibility’s Budget forecast shows that income tax receipts are forecast to be 10.2 per cent of GDP in this fiscal year and 11 per cent of GDP in 2015-16. The OBR has forecast corporation tax receipts to be 2.9 per cent of GDP this fiscal year and 3.2 per cent of GDP in 2015-16.

[Lord Lea of Crondall]

My Lords, I thank the Minister for that reply but I hope that I may translate his figures into actual cash. Will he confirm that the Red Book, which fully anticipated the cuts announced last week, states that, as compared with the Labour Government’s plans, there will be a reduction in income tax and corporation tax revenue each year until 2014, when the cost will be £5 billion, and that is on top of another £5 billion as a result of lower national insurance contributions from employers? That adds up over the period to no less than £40 billion. Will he also confirm that that £40 billion is additional to the direct Exchequer cost of extra unemployment payouts, forecast by the Office for Budget Responsibility to be higher in every year through to and including 2014, as compared with the Labour Government’s plans?

[Lord Sassoon]

My Lords, as compared with the Labour Government’s plans, an awful lot of things have changed. The first is that we have a credible deficit reduction plan. We have yet to hear the Opposition’s plans on that. There will be a reduction in public spending of £81 billion by 2014-15, but, critically, we need growth, and so 77 per cent of the deficit reduction plan will come out of a reduction in spending. We absolutely want to keep the pain of increased taxation to a minimum. That is why it is absolutely critical and right that our taxation plans aim for lower revenue than do the Opposition, because that is what is required to get growth in the economy going.