Finance: Fiscal and Monetary Policy

Lord Forsyth of Drumlean Excerpts

Tuesday 2nd November 2010 Lords Chamber

[Lord Sassoon]

My Lords, first, since the noble Lord, Lord Barnett, draws attention to the fact that we did have a strong third quarter of growth at 0.8 per cent, we should celebrate the fact that we have had a third consecutive quarter of growth. The recovery will no doubt be choppy, and I am sure that at certain points what happens will suddenly become our responsibility, not theirs. That aside, the responsibility of the Treasury official who attends the Monetary Policy Committee is essentially to bring to the attention of committee members matters of which they ought to be aware in coming to their independent conclusions on monetary policy judgments. That includes briefing them, for example, on the judgments that have been made in the Treasury’s Budget so that they can factor them into account in their deliberations.

[Lord Forsyth of Drumlean]

My Lords, has my noble friend seen the reports today on the mid-term elections in America, which state that President Obama's deficit reduction council is set to recommend that the best way to reduce the deficit is to cut the burden of taxation on the private sector in order to create wealth?

[Lord Sassoon]

My Lords, in the judgments that my right honourable friend the Chancellor of the Exchequer made about how to achieve the huge and very necessary consolidation of the fiscal position here, by the end of the consolidation period, 77 per cent of the burden will have been taken by expenditure cuts and only 23 per cent by taxation, because it is precisely by not raising taxes and choking off growth that we will get the economy growing again in a balanced way. I am grateful to my noble friend for bringing our attention to that matter.