asked Her Majesty’s Government:
What is their estimate for the balance of payments in the current financial year.
My Lords, the Government will publish updated forecasts for the UK economy, including for the current account of the balance of payments, in the autumn Pre-Budget Report as normal.
My Lords, I thank my noble friend for that reply. The latest figures show that so far in this financial year the Government’s borrowing is £37 billion. Will my noble friend confirm that, in quoting John Maynard Keynes, the Chancellor of the Exchequer has said that Governments should spend their way out of a recession and that he is set to pour some billions of pounds into major public works to fend off the economic downturn? Some public works will take some time to organise. Will my noble friend indicate the public works that are being considered, how much will be spent and when they will be put in place?
My Lords, that question appears to be a little above my pay grade. I am briefed on balance of payments issues, which is the subject of my noble friend’s original Question. As regards investment in the economy and necessary public help in circumstances where we all recognise there is a difficult year ahead for the British economy, those announcements will be made in the very near future. My noble friend is absolutely right; they are not the kind of investments that are likely to produce immediate and early results. However, my right honourable friend the Chancellor has indicated that this investment is necessary in circumstances where otherwise demand in the economy could drop significantly.
My Lords, given that we are experiencing the worst financial crisis in my lifetime, and I think even in most of your Lordships’ lifetimes, is it not extraordinary that we have not had an opportunity to debate what is going on? Our banks are being nationalised and the debt is growing out of control. Last Tuesday the noble Lord, Lord Peston, asked when we would have an opportunity to debate this. So far, nothing has happened. Surely if Parliament means anything at all, it should be discussing the issues which are on everyone’s mind throughout the country.
My Lords, as the noble Lord will recognise, that point was made at least as forcefully last week from my own Benches. I scurried off to the usual channels to see what the prospects for such a debate were against a background where, as the whole House will appreciate, this period is customarily dominated by government business related to Bills which are still outstanding. That will be the broad pattern over the next month. However, I am hopeful that discussions on the need for an economics debate will reach a fruitful conclusion. In the mean time, the noble Lord will take every opportunity he can to raise these issues, as he has done today.
My Lords, the Government are talking about reprioritising expenditure in terms of capital projects. Could they at the same time give greater priority to skills training, from apprenticeships to high-level skills, so that British firms can compete more effectively in the global export markets? Do they accept that that could have a quicker effect than directing expenditure at capital projects, which might take a long time to produce results?
My Lords, that is a constructive proposal, although there are certain aspects of the skills agenda that take rather a long time to come to fruition. We are encouraged that international judgments on the British labour market indicate how competitive we are and how flexible our labour market is with regard to its ability to adjust to demands made on it. I agree with the noble Lord that one of the issues that needs constant attention is the uprating of the skills and abilities of our people to meet the opportunities that are presented to them.
My Lords, having spent my life flogging dead horses, I will not say again that we ought to have a debate; except that we ought to. Will my noble friend allow me, especially as he has a whole file full of answers, to return to the balance of payments, which is the subject of the Question? Is it not interesting that the balance of payments has been in deficit for a considerable period, and yet that has not led to a financial crisis? That suggests two things to me. It partly reflects what I gather is known in the technical literature as the Lawson doctrine, named after the previous Chancellor, that if the deficit is the outcome of rational decisions in competitive markets by the private sector, ipso facto it cannot possibly be a problem. It is a perfectly rational event to occur. Apart from that, is there not an indication that our ability to borrow to cover that deficit is strong evidence of the strength of the economy and the faith that the rest of the world has in us?
My Lords, I am grateful to my noble friend for drawing attention to the fact that, in the teeth of the difficulties that obviously obtain with regard to the economy, we are better placed than almost any other advanced economy to cope with the vicissitudes that we undoubtedly will face over the next year. As for my noble friend suggesting that his plea last week represented the flogging of a dead horse; far from it. The horse is alive and frisky. The question is whether it gets to the winning post.
My Lords, the current account has been in deficit for a very long time, as the noble Lord, Lord Peston, pointed out. More recently, that has been matched by equally negative statistics. For example, we have rising unemployment, falling employment, rising inflation and rising public sector debt. Can the Minister name one statistic that shows that there is something good in our economy? All the other information shows that we have a very stressed economy.
My Lords, there is the reduction in interest rates and, if the noble Baroness wants to shift from the here and now to the longer term, the prediction that by the end of next year the inflation rate will have dropped to the target set by the Bank of England and the Government. Those are two dimensions of the economy for which the noble Baroness might show some approval.
My Lords, has my noble friend considered whether a further substantial cut in interest rates might be a timely boost to domestic demand, while the fiscal boost takes a considerable time to provide its benefits? At the same time, it might cause the pound to weaken against the euro, the currency of our major trading partners, and therefore be helpful in stimulating demand for our exports, and, of course, assist the balance of payments.
My Lords, part of that process has been in existence over recent months, as my noble friend will recognise, but, as he knows only too well, the setting of interest rates is the responsibility of the Monetary Policy Committee of the Bank of England, which takes a rounded view of the needs of the economy and inflation projections. Experts expect inflation rates in the British economy to decline with considerable rapidity in the coming year.
My Lords, we are in the ninth minute, I am afraid.