Comprehensive Spending Review

Lord Howe of Aberavon Excerpts

Wednesday 20th October 2010 Lords Chamber

[Lord Howe of Aberavon]

My Lords, I have to confess an interest in this subject, although it is rather a reminiscent one. As I listened to the noble Lord, Lord Eatwell, my mind went back about 30 years to when I introduced my third Budget to deal with the economic legacy of the Labour Government whom we had displaced. Today, the noble Lord, Lord Eatwell, has not begun to offer anything by way of alternative policy that can be considered by the Chancellor of the Exchequer. I wonder whether he was one of the 364 economists who wrote to the Times after my Budget to say that everything that we were proposing was wholly wrong, without offering any alternative. I know that the noble Lord, Lord Peston, who is not in his place, was one of the leading signature seekers in that exercise. This is not just a frivolous point. They were no doubt sincere in their enunciation but, almost on the day following that and for the next eight years, we had steady, sustained economic growth, inflation came down from the huge figure that we had inherited from the preceding Labour Government and, in the end, unemployment also began to come down.

It is worth reflecting on those points. The central defect with which the Government are grappling is comparable. The Government are borrowing £1 pound for every £4 that they spend and the rate of interest that they are paying is costing £120 million a day more than would otherwise be the case. There is no doubt whatever about the necessity of a comprehensive spending review. No one has challenged that. The review has been undertaken with a wide range of sophisticated skills. It has addressed not simply that central problem but a wide range of other policy questions—almost the complete government programme.

[Noble Lords]

Question!

[Lord Howe of Aberavon]

My Lords, my question is: will it not remain essential for months and indeed years ahead to have a similar economic discipline to that being imposed so far in this comprehensive spending review? Also, given the many features with which the Chancellor has dealt today, is not this review absolutely inescapable? It is not merely a comprehensive spending review but a continuous spending review, to which the party opposite has offered no alternative policy but in which the policy of the Government has been clearly set out comprehensively and with courage.

[Lord Sassoon]

My Lords, I am grateful to my noble and learned friend Lord Howe of Aberavon for reminding us of the confidence that we can have in the tough decisions that this Government have taken. He was the architect of a similarly bold, tough and successful consolidation of the public finances in the early 1980s. This is indeed an important lesson for us. I agree with him that this must be driven through in the way in which he describes. He points out that the Opposition have provided no alternative policies, but it is worse than that: I understand that, when listening to my right honourable friend’s Statement in the Chamber, the shadow Chancellor sent out an e-mail in his name—I do not know how he did it—asking the public or whomever he was e-mailing for any ideas so that the Opposition could formulate an alternative policy. We look forward to hearing the outcome.