Economy: Deficit Reduction

Lord McFall of Alcluith Excerpts

Thursday 15th December 2011 Lords Chamber

[Lord Sassoon]

My Lords, it is very important that credit flows to SMEs, which is why we announced a package of £21 billion at the autumn Statement, and it could go higher if the demand is there. I take my noble friend’s point about the importance of diversity and new entrants into our banking system. That is something that both the FSA and the Government keep under review.

[Lord McFall of Alcluith]

My Lords, given that the stability message has failed, is it not time now for a growth strategy? Given the appalling figures on unemployment for both young people and others in the country, is there not hope to be given to people? Given that the Government can borrow, with the low interest rates, at a rate less than the private sector, is it not time to invest in infrastructure projects so that we come out of this recession and not make it a depression?

[Lord Sassoon]

My Lords, that is exactly what we are doing: we are investing in infrastructure projects. Indeed, as was announced at the autumn Statement, we are targeting an additional £20 billion of private sector money coming into infrastructure from long-term UK investors. As to the policy mix, I can only refer back to the IMF’s latest assessment which said that the case for relatively tight fiscal and relatively loose monetary policy is strong.