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Lord Haskel: My Lords, I thank the noble Lord for giving way; he did mention my name. I must explain that two Select Committees are sitting this afternoon—the Select Committee on Economic Affairs and the economics sub-committee of the Select Committee on the European Union. Many of the

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people on the Labour Benches are on those committees, which is why they are not here. Other people have other engagements. As the noble Lord will see, if one cannot be here for the winding-up speech, one is advised not to speak.

Lord Brooke of Sutton Mandeville: My Lords, I am sure that that admirable explanation does not apply to any of my noble friends who have managed to speak, but I am grateful to the noble Lord, Lord Haskel, for giving it.

There are two interpretations of what Mr Holmes identified as the silence of the dog in the night, in the case of the racehorse Silver Blaze, which was as much a thoroughbred as the present Chancellor. I acknowledge the points that the noble Lord, Lord Haskel, made, but I must say that the first interpretation might be less charitably—if metaphorically—compared with Churchill's verdict, given in his life of his great ancestor the 1st Duke of Marlborough, on the Margrave of Baden, of whom he said that his military epitaph for all time must be that the two greatest captains of his age thought that his absence from a crucial battlefield was well worth the loss of 15,000 men. The second, more charitable, interpretation is that the Minister's colleagues have such confidence in him, especially when he speaks twice—his winding-up speech in the first debate, embracing culture, media and sport, as well as the economy and industry was a tour de force—that they feel that they can safely leave the entire field to him alone.

I spoke in the earlier debate and deliberately avoided second-guessing the Chancellor, in advance of the Pre-Budget Report. Therefore, I shall limit my contribution today to one point most easily made by someone who was present for both debates. The noble Lord, Lord McIntosh of Haringey, will recall that, in the first debate, the noble Lord, Lord Roll of Ipsden, who has, characteristically, been in his place today already, and the noble Lord, Lord Skidelsky, spoke most generously of the Chancellor's macro-economic management. Both noble Lords were confident that it would continue in any difficult times that lay ahead. The noble Lord, Lord McIntosh of Haringey, will also recall that he prayed both of them in aid in his winding-up speech, especially the noble Lord, Lord Roll of Ipsden, as he was wholly—if gratefully—entitled to do.

There was, however, one admission from the Minister's winding-up speech on 20th November. I do not hold it against him, for he made it clear at the start of his speech that he was hard put for time to answer even a significant proportion of what he described as the valuable points that were made. However, I shall remind him of the omission, so that he can rectify it on this occasion. After the noble Lord, Lord Skidelsky, had praised the Chancellor's macro-economic management, he went on to say that the Chancellor had developed serious symptoms of delusion in micro-policy. He said that the Chancellor was,

    "always tweaking this tax or that tax, this target or that target, thinking up this or that clever wheeze".

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The noble Lord went on to say that it was,

    "the reverse of the admirable trend towards simplicity set by the noble Lord"—

my noble friend—

    "Lord Lawson, when he was the Chancellor, and the reverse of what British industry requires".—[Official Report, 20/11/02; col. 433.]

In the event, the noble Lord's advice came too late before the Pre-Budget Report, which included another addictive dose of micro-economic meddling.

By chance, I raised the same broad point in the small business debate that we held last summer, to which the admirably ubiquitous noble Lord, Lord McIntosh of Haringey, also replied. I was nothing like as eloquent as the noble Lord, Lord Skidelsky, but I paid tribute to my noble friend Lord Lawson of Blaby and my noble and learned friend Lord Howe of Aberavon for the way in which, in the 1980s, they moved us to the point at which businessmen made decisions for their essential worth and for themselves and not because there was a dedicated tax distortion in their favour.

In his winding-up speech in the small business debate, the noble Lord, Lord McIntosh of Haringey, gently chided me for not applauding the Chancellor's efforts to be the businessman's friend. However, he did not respond to the central point, nor did he respond to the similar argument made on 20th November by the noble Lord, Lord Skidelsky. I have acknowledged that the Minister was short of time on 20th November, and I recognise that it would have been churlish of the Minister, after expressing gratitude to the noble Lord, Lord Skidelsky, for his macro-economic approval, to bite the hand that had fed him by taking issue with the noble Lord's micro-economic criticism. However, I hope that tonight, on this less time-constrained occasion, the Minister will do proper justice to the argument made by the noble Lord, Lord Skidelsky, and, incidentally and more modestly, to mine.

4.47 p.m.

Lord Stoddart of Swindon: My Lords, I apologise for speaking in the gap. I would have put my name on the list to speak, but I did not expect to be here for the beginning of the debate. I am happy to say that the situation changed, and I was able to hear the opening speech of the noble Lord, Lord McIntosh of Haringey. I have listened attentively to the debate. It is unfortunate that there have been no speakers from the Labour Benches to support the noble Lord, Lord McIntosh of Haringey. Perhaps, I am the next best thing, as a Labour expellee.

The noble Lord needs a little support, as all the speeches so far have been antagonistic. The case that he put was very reasonable. The British economy has had sustained growth, coupled with high employment and low inflation. That is altogether good. Monetary policy, coupled with fiscal policy, has produced a good outcome over the past five or six years. We cannot deny that. As the noble Lord said, Britain's performance has been better than that of the major economies in Europe. That is something we should applaud; I applaud it very much.

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The noble Lord, Lord McIntosh of Haringey, said that the British fiscal position was stable and better than that of other countries. We are able, therefore, to expand expenditure on our public services, which have been run down for a long time. That has been done by a government who have fiscal freedom and a Bank of England that can run monetary policy in accordance with the needs of the country. The Bank has done that well and in public, not in private or in secret. The British people have been able to see how and why the Bank has taken its decisions and have, therefore, supported it.

The outline given by the noble Lord, Lord McIntosh, was good and I support it. He said that the Government, pestered by world events, were resolved to pursue a steady course. That is what we want them to do, is it not? That is precisely what governments should be doing. I agree with the Government's borrowing policy. It is when there is a recession in prospect that we should be borrowing to ensure that it does not affect us. That is the good Keynesian economics on which I was raised.

Why put all that at risk by playing around with the proposition of abandoning our currency and, with that currency, the ability to run our own economy? The noble Lord, Lord Howell, instanced what happened in Portugal. Indeed, I believe that this morning the Portuguese Foreign Minister was urging Britain to join while 1 million people in his own country were protesting against the impositions of the single currency. As the noble Lord, Lord Howell, noted, the German economy is in deep trouble and its banking services are on the brink of collapse. Why should we want to join a failed system such as that?

If our economy is stable, satisfactory and on the right road, why should we want to join? The message I give to the Chancellor of the Exchequer is, "Carry on Gordon. Don't let the Prime Minister grind you down".

4.51 p.m.

Lord Newby: My Lords, follow that! Although "European Communities" appears as part of the title of the debate, traditionally, as far as I can recall, it has not been about Europe, and far less about the euro. Today has been an exception in that we have had significant speeches on the issue by the noble Lords, Lord Howell and Lord Higgins. Even the Minister felt—I believe, because of the title—that he had to include in his peroration a reference to the fact that all this economic activity was taking place because Britain is in the centre of Europe.

The noble Lord, Lord Stoddart, referred to the Portuguese Prime Minister, whose comments, as reported today, pose a challenge to both sides of the House. If I heard him correctly, the Portuguese Prime Minister said that Britain would not, and could not, exercise its full potential in influencing the future of Europe as long as it remained outside the principal project within the European Community at the moment; namely, the single currency. Those who argue—the noble Lord, Lord Stoddart, probably does

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not argue this, but many would, including the Prime Minister—that on the one hand we can exercise a major influence on the direction of Europe and, on the other hand, stand aside from its single biggest project—the euro—fly in the face of political reality. It is a challenge to both of them.

It is not my role—it is that of the Minister—to answer all the points made today. However, I could not let one comment by the noble Lord, Lord Howell, pass. He argued that public expenditure was running out of control and that there was no link between the level of public expenditure and the quality of public services. Clearly, there is no linear link if one were to increase public expenditure to infinity. However, if the noble Lord, Lord Howell, argues that the provision of public services at the end of this Government's cuts in 1999–2000 was not leading to poor provision of public services in schools, hospitals and other areas, I do not believe that he could have been in a school or hospital, or talked to a teacher, doctor or nurse at that time.

None of us would argue that opening a tap marked "public expenditure" solves all the problems. Equally, to argue that first-class public services can be provided on a pittance, as the noble Lord seemed to imply, is flying in the face of reality.

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