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Lord Henley: My Lords, I shall not quote Dr. Johnson on the subject of education in Scotland. I understand that the General Teaching Council in Scotland works perfectly well, but there is no need to establish, on a statutory basis, such a body in England. We have very different educational systems north and south of the Border. As I made clear earlier, north of the Border there is one union representing all teachers whereas south of the Border six unions represent teachers.

Baroness Brigstocke: My Lords, does the Minister agree that one of the most pressing needs for teachers is to have in-service training? It is not just the initial training that matters, but also after they have been teaching for several years. Does he agree that that could enhance enormously their feeling of pride?

Lord Henley: My Lords, my noble friend is absolutely correct. That is why we make considerable sums of money available for in-service training. I regret that I cannot quote a precise figure to my noble friend on this occasion, but considerable resources are available.

PSBR: 1997-98 Forecast

3.28 p.m.

Lord Barnett asked Her Majesty's Government:

The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, the Government's fiscal objective is to bring the PSBR back towards balance over the medium term. The summer economic forecast published on Tuesday projects the PSBR falling to £23 billion in 1997-98, around half its level in 1993-94.

The general government financial deficit--the measure of the deficit used for the EMU convergence criteria--is forecast to fall to just below 3 per cent. in 1997-98.

Lord Barnett: My Lords, would not the simple answer to the first part of my Question have been to say, "No"? The plain fact is that since November the PSBR has risen by £8 billion. In those circumstances, how can the Minister be so complacent in his Answer? As regards the second part of my Question, does he agree--I assume that he does--with the European Monetary Committee, one of whose members is a senior Treasury official, in its recommendation that there should be no tax cuts in November as it might threaten the prospects of our joining the economic and monetary union, if that is the Government's decision?

Lord Mackay of Ardbrecknish: My Lords, as the summer economic forecast makes perfectly clear, the public sector borrowing requirement is not going down as quickly as forecast in the Red Book. The reason for that is

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that the Government's general receipts have been lower than was predicted. In relation to the second point, my right honourable friend the Chancellor made clear on a number of occasions that we, on this side of the House, are a tax-cutting party and will cut taxes, as we have done in the past, whenever it is right and prudent in the interests of the British economy to do so.

Lord Clark of Kempston: My Lords, does my noble friend agree that the percentage of GDP in relation to public sector borrowing is one of the lowest in the European Union? Does he agree also that the cost of servicing the public sector borrowing requirement has been that much reduced because of the reduction in the base rate of bank interest? Does he agree also that it ill becomes the Labour Party to criticise the public sector borrowing requirement of this Government when, in the last Labour Government between 1974 and 1979, they managed to double the national debt? Does he further agree that one of the other facets of our economy is the balance of payments and that the new figures on our invisibles show a surplus of £20 billion, which is double what it was 10 years ago?

Lord Mackay of Ardbrecknish: My Lords, I agree with all the points made by my noble friend. Indeed, he is right to draw the attention of the House to the fact that currently the United Kingdom has the third lowest debt to GDP ratio in the European Union and only Luxembourg and France are better. He also draws our attention to the position of the last Labour Government, as the noble Lord, Lord Barnett, recalls well--he struggled mightily to achieve it. It would have been a good deal worse if his colleagues had been allowed to do all the spending that they wanted to do. Under the last Labour Government the debt to GDP ratio averaged 62 per cent.; under the Government of my right honourable friend the Prime Minister it has averaged 44 per cent.

Lord Bruce of Donington: My Lords, is the Minister aware that the most well-informed sector of public opinion in the United Kingdom would not regard it as an unmitigated disaster if we failed to reach the ridiculous criteria set out in the Maastricht Treaty? Is he aware also that a growing number of people do not share some people's obsession with the divine wisdom of bankers?

Lord Mackay of Ardbrecknish: My Lords, the criteria in the Maastricht Treaty are sensible for any prudent economy to try to follow. Indeed, most successful economies do try to follow them with low government borrowing, low tax and low public spending. That is what we are doing and that is why the OECD predicted that the United Kingdom will have the highest growth rate of any European Union G7 member this year and next, coupled with low inflation, as witnessed by this morning's figures.

Lord Boardman: My Lords, does my noble friend agree that if a choice is to be made, it is better that we should follow the economic policy suitable for this country rather than distorting it in order to chase the criteria of the monetary union?

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Lord Mackay of Ardbrecknish: My Lords, the United Kingdom Government's first obligation is to the United Kingdom economy. We will not do anything that damages that when it comes to considering the European convergence or entry into the EMU. We have always made clear that these issues will be decided by us not in our desire to say "Yes" to everything Europe wants, but to make sure that our policies are based on what is best for the British economy.

Lord Eatwell: My Lords--

Lord Ezra: My Lords--

The Lord Privy Seal (Viscount Cranborne): My Lords, if we take the questions one at a time I am sure that both noble Lords will have an opportunity to speak. Perhaps the noble Lord, Lord Eatwell, could begin.

Lord Eatwell: My Lords, is the Minister aware that in every government economic forecast this decade the figure for the PSBR has risen? To take a case in point, is he aware that the figure for the PSBR projected for this year is £14 billion higher than that projected 18 months ago? In terms the Minister may understand, that is 7p in the pound in income tax. Given that the Government's fiscal policy is failing year after year, what are the Government going to do about it?

Lord Mackay of Ardbrecknish: My Lords, I am not sure that I can agree with the noble Lord that the Government's fiscal policy is failing. The public sector borrowing requirement is the difference between two large figures. A small change in those large figures makes a significant difference to the subtracted PSBR. As I said in my original Answer, government receipts have been lower than predicted, but general government expenditure has been on track, and the reason is that this Government control public expenditure. That is an important part of the calculation. But every time I come to this House with suggestions about controlling public expenditure, the party opposite opposes me.

Lord Ezra: My Lords, the Minister referred twice to reduced receipts having affected the PSBR estimates. Does he agree that a large part of those reduced receipts has been due to the relatively poor performance--worse even than last year--of manufacturing industry over the past six or seven months? When does he think that trend will be reversed?

Lord Mackay of Ardbrecknish: My Lords, I am not sure that that is the main cause of the reduction in receipts. The reduction came in corporation tax, income tax and value-added tax. It therefore arises from three taxes. In relation to manufacturing industry and the economy generally, the noble Lord should welcome that important indicator, the unemployment rate. On the most recent figures, the unemployment rate in this country at 8.4 per cent. on the ILO standardised rate is considerably below the EU average of 11 per cent. and below the level of every one of the major players in the European Union, and falling.

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Energy Conservation Bill

Read a third time, and passed, and returned to the Commons with amendments.

Housing Bill

3.38 p.m.

The Minister of State, Department of the Environment (Earl Ferrers): My Lords, I beg to move that the Bill be now further considered on Report.

Moved, That the Bill be further considered on Report.--(Earl Ferrers.)

On Question, Motion agreed to.

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