Select Committee on Treasury Second Report


FORMAL MINUTES

Tuesday 17 January 2006

Members present:

Mr John McFall, in the Chair


Lorely Burt
Mr Jim Cousins
Angela Eagle
Mr Michael Fallon
Ms Sally Keeble
Susan Kramer
Mr Andrew Love
Kerry McCarthy
Mr George Mudie
Mr Brooks Newmark
Mr Mark Todd
Peter Viggers



* * * *

Draft Report (The 2005 Pre-Budget Report), proposed by the Chairman, brought up and read.

Ordered, That the Chairman's draft Report be read a second time, paragraph by paragraph.

Paragraphs 1 to 10 read and agreed to.

Paragraph 11 read, as follows:

"In its economic survey of the United Kingdom in October 2005 the Organisation for Economic Co-operation and Development (OECD) concluded that, over the last decade, 'macroeconomic performance has been impressive; GDP growth has been robust and cyclical fluctuations in output have proved smaller than for almost any other OECD country, while inflation has remained close to target'. The OECD believed that this was 'a testament to the strength of the institutional arrangements for setting monetary and fiscal policy as well as to the flexibility of labour and product markets'. Our expert witnesses agreed with this assessment. Mr Martin Weale of the National Institute of Economic and Social Research (NIESR) told us that 'the policy framework has been very helpful in delivering stability, in particular the monetary [policy] arrangements that we have had have meant that the Bank of England has been able to react in a way that other countries have found difficult'. He also believed that the surge in tax revenue in the late 1990s had given the Government considerable room for manoeuvre in terms of producing what has subsequently been an expansion of fiscal policy. The IMF recently described macroeconomic stability in the United Kingdom as 'remarkable' and concluded that this impressive record owed much to good macroeconomic, financial and structural policies, underpinned by sound policy frameworks and supported by a generally favourable external environment. We note the confirmation that over the past six years the United Kingdom has been the most stable economy in the OECD and G7, a record that international institutions have described as 'impressive'. We note evidence that the institutional arrangements for monetary and fiscal policy have played an important role in delivering this stability."

Amendment proposed, in line 22, at the end, to add the words "We also note, however, that for the third year running the United Kingdom is again in breach of the Maastricht deficit rules for 2005, and will now be subject to Commission procedures.".—(Mr Michael Fallon.)

Question put, That the Amendment be made.

The Committee divided.


Ayes, 3
  
Mr Michael Fallon
Mr Brooks Newmark
Peter Viggers
Noes, 9
  
Lorely Burt
Mr Jim Cousins
Angela Eagle
Ms Sally Keeble
Susan Kramer
Mr Andrew Love
Kerry McCarthy
Mr George Mudie
Mr Mark Todd



Paragraph agreed to.

A paragraph—(The Chairman)—brought up, read the first and second time, and inserted (now paragraph 12).

Paragraphs 12 to 29 (now paragraphs 13 to 30) read and agreed to.

Paragraph 30 read, amended, divided and agreed to (now paragraphs 31 and 32).

Paragraphs 31 to 74 (now paragraphs 33 to 76) read and agreed to.

Another paragraph—(Mr Michael Fallon)—brought up, read the first and second time, and inserted (now paragraph 77).

Paragraphs 75 to 97 (now paragraphs 78 to 100) read and agreed to.

Summary read, amended and agreed to.

Resolved, That the Report, as amended, be the Second Report of the Committee to the House.

Ordered, That the Chairman do make the Report to the House.

Ordered, That embargoed copies of the Report be made available, in accordance with the provisions of Standing Order No. 134 (Select committees (reports)).

Several papers were ordered to be appended to the Minutes of Evidence.

Ordered, That the Appendices to the Minutes of Evidence taken before the Committee be reported to the House.

[Adjourned till Tuesday 24 January at 9.45 am






 
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Prepared 25 January 2006