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House of Lords

Monday, 20th October 2003.

The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.

Prayers—Read by the Lord Bishop of Sheffield.

The Lord Bishop of Liverpool

James Stuart, Lord Bishop of Liverpool—Was (in the usual manner) introduced between the Lord Bishop of Oxford and the Lord Bishop of Sheffield.

Public Finances

2.40 p.m.

Lord Northbrook asked Her Majesty's Government:

    Whether they expect a deterioration in the public finances compared to Budget estimates.

The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey): My Lords, on the basis of cautious assumptions audited by the independent National Audit Office, the public finances are sound and the Government are on track to meet their firm fiscal rules over the economic cycle. An interim forecast update for the public finances will be published as usual in the Pre-Budget Report.

Lord Northbrook: My Lords, I thank the Minister for his usual informative reply. As Treasury forecasts are about 15 per cent below independent forecasts for 2003–04 and no less than 30 per cent below forecasts for 2004–05, does he believe that Treasury forecasts are hopelessly optimistic? Does he agree with the Institute for Fiscal Studies that at some stage in the near future taxes will have to be increased by about 11 billion to return to the previous caution about the Chancellor meeting the golden rule?

Lord McIntosh of Haringey: My Lords, I apologise if my answer was informative. It was certainly not intended to say anything other than is in the public domain already. I shall respond to the speculations of the noble Lord, Lord Northbrook, when we debate the Pre-Budget Report.

Lord Saatchi: My Lords, perhaps the Minister would accept a plain English version of what is happening in public finances. Is it true that every day this year the Government have spent twice as much money as has come in by way of tax receipts? Is that the reason why the Chancellor has quadrupled his borrowing forecast from 30 billion to 120 billion and why he is now on his borrowing limit? Is that also the

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reason why the Treasury is now planning new taxes on car owners and home owners to fill the black hole that has been created in the public finances?

Lord McIntosh of Haringey: My Lords, as ever the noble Lord, Lord Saatchi, is eternally ingenious in finding new statistical ways to express the same speculation, but it is still speculation. He knows as well as I do that the accusations about new taxes on home ownership and on car ownership have only this morning been authoritatively denied by the Financial Secretary to the Treasury. In due course, he will have a response to the rest of his speculation when we have the Pre-Budget Report.

Lord Barnett: My Lords, while recognising that the noble Lord, Lord Saatchi, will believe almost anything, could my noble friend comment on the fact that the Office for National Statistics has been revising its forecasts on actual facts and economic growth? Can we believe anything that the Office for National Statistics tells us?

Lord McIntosh of Haringey: My Lords, the changes in the estimates of GDP growth from the Office for National Statistics result from the adoption, only this year I am sorry to say, of an instruction from the European Commission about chain-linking, which was issued in September 1998. Other European countries have already adopted that chain-linking method, which is better because it takes a longer measurement period for the estimation of GDP growth. In every other way, and indeed in this way, the Office for National Statistics has a very high reputation among international statistical organisations for the accuracy of its figures.

Lord Newby: My Lords, I know the Minister hates speculating on these matters, so perhaps I can ask him a factual question. How much larger would the budget deficit need to become beyond the estimate set out in this year's Budget before the Government break their own golden rule?

Lord McIntosh of Haringey: My Lords, the noble Lord, Lord Newby, is as well informed about the golden rule as I am. He knows that in order to maintain the golden rule we would have to borrow only to invest over the period of the cycle, and, in order to adhere to the sustainable investment rule, we would have to keep our debt below 40 per cent. I repeat what I said in my first Answer to the noble Lord, Lord Northbrook, we are in no danger of breaking either of our fiscal rules.

Baroness O'Cathain: My Lords, in answer to the question of the noble Lord, Lord Barnett, the Minister said that the international reputation of the Office for National Statistics is very high. That may be true, but certainly its national reputation is not. Of the growth forecasts for the past 12 months, is it not true that 11 of them had to be revised?

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If, as the Minister said, the directive from the European Union was in 1998, and it has only now been chain-linked, what will happen with the introduction of HICP? Will we have a similar problem where the statistics cannot believed?

Lord McIntosh of Haringey: No, my Lords, the Chancellor has made very clear the extent to which the harmonised index of consumer prices will be implemented. It will of course be implemented for the purpose of the rules on which the Bank of England Monetary Policy Committee conducts its business, but it will not have an effect on any of the other things on which there has been speculation; notably pensions payments.

Lord Tomlinson: My Lords, as my noble friend cannot be tempted to speculate about the future, can I invite him to look back over the recent past and to tell us a little about the background against which the Budget estimates will be produced—record periods of low inflation, record periods of low interest rates and an economy that has managed to miss the general decline in productivity that has taken place in many other European economies?

Lord McIntosh of Haringey: My Lords, in the well-worn phrase, my noble friend is absolutely right. I have had the opportunity to stand at this Dispatch Box for nearly six and a half years listening to accusations about the economy and to forecasts of disaster for the economy—notably from the Conservative and Liberal Democrat Front Benches—all of which have proved to be unfounded.

Lord Howe of Aberavon: My Lords, does the noble Lord acknowledge that this Government came into office upon the foundation of the extremely well managed economic policy of their predecessors? The noble Lord has been very anxious to describe everyone else's comments as speculative and he rests huge confidence on those of the Treasury. Would he bear in mind that the Treasury's forecasts sometimes turn out to be even more speculative than other people's?

Lord McIntosh of Haringey: My Lords, I can partly agree with that. Certainly, it is true that the economy of this country has performed well in comparison with other G7 states, not just for six and a half years, but for approximately 10 years. Credit for that must be given to more than one administration. I do not accept the rest of what the noble and learned Lord, Lord Howe, said even from his great experience. In fact Treasury forecasts—which were particularly unreliable in the last years of the Conservative government, even when they were doing rather well—have proved to be exceptionally reliable and have outshone those of independent assessors.

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Bullying at Work

2.49 p.m.

Baroness Gibson of Market Rasen asked Her Majesty's Government:

    What progress has been made on strategies to eradicate bullying at work.

Lord Evans of Temple Guiting: My Lords, the Government believe that employees should be able to work without fear of being bullied or harassed by employers, fellow employees or anyone else. The Government very much welcome and support awareness raising initiatives in this area, such as the Ban Bullying Day that took place last Thursday, organised by Amicus and supported by the Andrea Adams Trust, a charity chaired by my noble friend Lady Gibson of Market Rasen, which is doing vitally important work in this area. We note that the Post Office, Rolls-Royce and many other large organisations took part in the day.

Baroness Gibson of Market Rasen: My Lords, I thank noble friend for that reply. Is he aware that since we debated the Dignity at Work Bill in your Lordships' House in November 2001, increasing numbers of employers and employees have been working together to ensure that bullying is eradicated from their workplaces?

Lord Evans of Temple Guiting: My Lords, my noble friend is right. A number of important initiatives are now under way to stop bullying at work. The Department of Trade and Industry is considering a proposal under the Partnership At Work Fund for a nationwide survey of bullying at work. The Health and Safety Executive is developing stress management standards, one of which will relate to bullying. The Advisory, Conciliation and Arbitration Service is active, but ultimately the Government can make only a contribution in the fight against bullying. That is why we so much welcome working with unions, companies and others to achieve the goal of reducing the enormous problem of workplace bullying.

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