Economy: Growth

Lord Skidelsky Excerpts

Thursday 6th December 2012 Lords Chamber

[Lord Skidelsky]

My Lords, the best thing about the report by the noble Lord, Lord Heseltine, is that it reflects a broad agreement that something more than deficit reduction is needed to get the economy growing again. The noble Lord’s enthusiasm to get things done is the thing I have most admired about him over the years. There is a good cartoon on the front of his report, No Stone Unturned. Noble Lords have probably all seen it, but the rock the noble Lord needs to push away ought to have the image of the Chancellor graven on it. The noble Lord proposes a Whitehall pot of £50 billion to be bid for by voluntary partnerships between local authorities and businesses over five years but, as far as I understand it, and I stand to be corrected, the Government are making no extra resources available. Rather, this is a way of getting local responsibility for the spending of money already available to local authorities so there is no assurance of any additional stimulative effect. That is an important defect.

The noble Lord has been anxious not to breach the Chancellor’s deficit reduction programme. In fact, the report explicitly states:

“I believe the Government’s economic strategy is right”,

but it is precisely this that needs to be questioned. We are in an extraordinary position. The main international organisations now all agree that austerity is having a chilling effect on the economies of Europe, yet they also say that there is no alternative. That seems much too passive. The Chancellor alone denies that his deficit reduction policy has any responsibility for the weak performance of the economy. It is all blamed on head winds. I regret to say that the OBR has helped him massage his figures to show that the deficit is coming down and therefore that he is on track, even through the track is five years longer than he thought it would be in 2010. As Chris Giles notes in today’s Financial Times,

“had the OBR shown teeth, Mr Osborne would have failed on all his fiscal targets”.

The only thing worth talking about today is the validity of the targets themselves and the theory of the economy on which they are based, but that is the last thing this House seems to be willing to discuss. I hope we will soon be given more than three minutes per speaker to address the larger issue.