Comprehensive Spending Review

Lord Davies of Stamford Excerpts

Wednesday 20th October 2010 Lords Chamber

[Lord Sassoon]

I thank my noble friend Lord Newby for drawing attention to the fact that departments will be encouraged to take the maximum opportunity of flexibility in pay and other conditions in the way that he described to mitigate the effects of the inevitable job reductions in the public sector. We will also be introducing a number of other measures to mitigate those job losses, which of course we very much regret. For example, we are introducing the regional growth fund and there is the protection that comes with the wider pension reforms. With assistance from Jobcentre Plus, there will be a further range of measures to mitigate the effects of the job losses in the public sector.

[Lord Davies of Stamford]

My Lords—

[Noble Lords]

My Lords—

[The Chancellor of the Duchy of Lancaster (Lord Strathclyde)]

My Lords, we have agreed to extra time for this Statement, but perhaps we should, as a matter of courtesy, give priority to those noble Lords who sat through the reading of the Statement, rather than those wandering in five minutes before the end.

[Lord Davies of Stamford]

I take it that the Government themselves acknowledge that the recovery is fragile and that, by reducing planned public expenditure and increasing taxes so drastically—the Statement rather skated over the taxes aspect—thereby taking demand out of the economy, they are taking some risk, at the very least, with that fragile recovery. In that context, was it sensible to announce the reduction of public sector jobs by 490,000 before publishing the detailed departmental plans from which, presumably, that figure was derived? As a result, not merely the holders of the 490,000 jobs but the whole public sector—millions of people and their families—will be deeply anxious about their future and will be reducing, perhaps drastically, household expenditure. That will take more demand out of the economy quite unnecessarily in a context where we require the reverse of that.

[Lord Sassoon]

My Lords, I think that what the country has really been worried about is how the Government would deal with this horrendous deficit problem. What underpins the prospects for renewed, sustained growth is that we have reduced the deficit as a necessary precondition and that we have done so in such a way that the markets are convinced that we are serious about it. The latest official data show that GDP grew strongly, by 1.2 per cent, in the second quarter. It is the substantial accumulation and growth of government debt that risks that ongoing recovery and that is what we have dealt with.