Economy: Overseas Trade Deficit

Debate between Lord Haskel and Lord O'Neill of Gatley

Wednesday 25th May 2016 Lords Chamber

[Lord Haskel]

To ask Her Majesty’s Government what steps they are taking to reduce the United Kingdom’s deficit on the balance of payments in overseas trade.

[The Commercial Secretary to the Treasury (Lord O'Neill of Gatley) (Con)]

My Lords, changes in investment income are driving the UK’s current account deficit. This has greatly reflected Britain’s attractiveness as a destination for investors. In 2014-15, UKTI provided support for 1,610 of the 1,988 FDI projects in the UK. Government efforts are continuing to help reach the Government’s £1.5 trillion target by 2020. However, the Government’s commitment to eliminating the budget deficit should help to narrow the current account deficit, as forecast by the OBR.

[Lord Haskel (Lab)]

I thank the Minister for that reply, which of course is entirely consistent with government policy over the last five years—funding the deficit by inward investment—but the problem is that it is not working. The current account deficit has become larger in each of the last five years and now stands at a record level of 7% of GDP. Are the Government going to continue with this failed policy or are they going to change it before the deficit becomes unsustainable?

[Lord O'Neill of Gatley]

My Lords, I emphasise, as I tried to do in my opening comments, that the current account deterioration is not being driven by a deterioration in the trade deficit. In fact, our trade deficit has been relatively stable at around 2% of GDP for the last seven years.

Spending Review and Autumn Statement

Debate between Lord Haskel and Lord O'Neill of Gatley

Wednesday 25th November 2015 Lords Chamber

[Lord O'Neill of Gatley]

My Lords, again, I am very tempted to rise to the bait of my noble friend’s question, but I have to be careful in this regard, given my own interest in China. All I would say is that as we creep through time, a number of the more sceptical voices about the performance of our own British economy in a sea of great turbulence and unpredictability around the world continue to improve, as does the most up-to-date, ongoing evidence of the economy’s performance.

[Lord Haskel (Lab)]

My Lords, the Statement promised a lot on infrastructure; so did the Budget two years ago, when a £40 billion fund was established to guarantee it. But since then only about 10% of this fund has been used—largely, I suspect, because employment in the construction industry has gone down by perhaps 120,000 people. So what confidence can we have that the infrastructure promise in this Statement will be more successful than what was promised two years ago?

[Lord O'Neill of Gatley]

My Lords, I am slightly surprised at the tone of this question with respect to infrastructure, along with a couple of earlier questions. Let me repeat that within the £12 billion additional commitment to capital spending, much of it, in its broadest sense, is indeed on infrastructure. I also point out that since the summer Budget, an independent commission has been looking at the nation’s infrastructure needs. It will give advice and report back ahead of the next Budget.

I will add that, based on the involvement that I personally have with many other countries around the world, the guarantee scheme that the noble Lord refers to in terms of its low take-up is generally regarded as one of the most sophisticated and credible in the world. It will continue to be used, as we have highlighted in today’s Statement, and we will welcome many more proposals for infrastructure spending from the private sector, which may be interested in using that guarantee.

Economy: Productivity

Debate between Lord Haskel and Lord O'Neill of Gatley

Monday 8th June 2015 Lords Chamber

[Lord Haskel]

To ask Her Majesty’s Government what action they will take to increase productivity as compared to that forecast in Table 5b of the Bank of England May inflation report.

[The Commercial Secretary to the Treasury (Lord O'Neill of Gatley) (Con)]

My Lords, productivity is a key challenge for this Parliament and a key focus. That is why, before the Budget, the Chancellor will publish a productivity plan, which will be a plan to make Britain work better.

--- Later in debate ---

[Lord Haskel (Lab)]

My Lords, I welcome the Minister to his first Oral Questions. I also welcome his words, but I think that many noble Lords will agree with me that we have heard these promises before. However, manifestly, they have not worked. Why not? Will the Minister agree with me that they have not worked because they do not understand that productivity involves every aspect of our economic life and beyond—a life which is presently dominated by austerity? So, once again, I ask the Minister whether the Government will demonstrate their commitment to productivity by moving on from a life of austerity to a life of productivity.

[Lord O'Neill of Gatley]

My Lords, as your Lordships can tell, I am not yet very familiar with the exact procedural formalities. I apologise, as I should be. I have been immersed in studying issues to do with productivity for a large part of my adult life. It is dangerous to associate productivity improvements with a so-called focus either on austerity or on some other particularly cyclical fiscal policy stance.

We are living through a moment in time when a very large number of diverse developed countries are all apparently showing a dramatic slowing in measured productivity, whether it be Germany, which is generally regarded as successful and whose measured productivity has been even weaker than ours in the past few years, or the United States, which is frequently regarded as a beacon. In my maiden speech last week, as those of your Lordships who were here would have heard, I highlighted a number of factors that will be focused on. When the Chancellor makes his presentation, I think your Lordships will see that those feature highly in the appropriate steps we plan to implement.