Autumn Statement

Baroness Garden of Frognal Excerpts

Wednesday 5th December 2012 Lords Chamber

[Lord Sassoon]

My Lords, as my right honourable friend the Chancellor of the Exchequer said earlier in another place, the British economy is healing. We are on the right track and turning back now would be a disaster. The deficit has already been cut by a quarter and is forecast to continue falling every year of the Parliament. I find it extraordinary that the noble Lord, Lord Eatwell, questions the OBR’s explanation of this by saying that policy decisions are in some way fiddling the books. It is precisely because of the policy decisions that we took in the Budget and are taking again today that that deficit reduction continues to be on track at the same pace.

Since this Government took office, more than 1 million private sector jobs have been created and exports to emerging markets have doubled. In a tough global economic climate we are making progress. The noble Lord, Lord Eatwell, referred to the growth forecast. The OBR’s growth forecast for the UK next year is that the economy will grow faster than, for example, that of France or Germany.

Let me remind your Lordships of a few examples of how the Government are protecting the economy, supporting growth and ensuring fairness, and of the measures that have been welcomed today. The Government have confirmed an extra £5.5 billion of additional infrastructure investment and support for businesses. That is in addition to the similar £5 billion switch from current to capital expenditure last year. The noble Lord may talk about drops in the ocean but the position now is that public and private infrastructure investment in this country is running at £33 billion a year. Under the previous Government, total average annual infrastructure spending was £29 billion. It is very important that we invest in the future of our infrastructure.

There will be a further 1% cut in the main rate of corporation tax from April 2014 to 21%, bringing it down to its lowest level—far lower than that of our most direct competitors and one of the lowest in the G20—and from this coming April the personal allowance will rise by a further £235 on top of the rise previously announced, making it the highest cash increase ever.

I shall now answer one or two of the other points made by the noble Lord, Lord Eatwell, on quantitative easing. First, the numbers are set out scrupulously transparently to show the effects before and after the transfer of cash on the income side from the APF to the Treasury. The numbers are completely clear. On his question about the contingency, the contingent liability on QE has been set out, and will continue to be set out in the notes to the whole of the Government’s accounts, as it should be. The OBR, in its document, points out, the effect of QE on its central case when it unwinds as being a significant reduction in debt.

Finally, the noble Lord, Lord Eatwell, asks about the distributional effects of all of this. This is an important question, because he asks about transparency and the way we disclose the numbers. The previous Government never set out the distributional effects of their Budgets or Autumn Statements in their pre-Budget reports. We have published today on the Treasury website an 18-page document that goes further than even this Government have gone before in their distributional analysis, with several new tables that I warmly commend to the noble Lord, Lord Eatwell. These confirm, as at every stage in this Government’s deficit reduction plan, that those with the broadest shoulders bear the largest brunt. That is there in the document “Impact on households”.

So, as my right honourable friend the Chancellor of the Exchequer said, the deficit is down, borrowing is down and jobs are being created. It is a hard road, but we are making progress and, in everything we do, we are helping those who want to work hard and get on.

[Baroness Garden of Frognal]

My Lords, perhaps I may remind noble Lords that Statements are a time for brief comments and questions. The briefer the questions the greater the number of noble Lords who will be able to contribute, so I urge everybody to be considerate.