My Lords, the Government are delivering significant fiscal support to the economy, helping to reduce the risk of a deeper and more prolonged recession. The Government have set out a clear plan to reduce borrowing once the recovery is secured. This will see the deficit halved over four years, ensuring that public finances remain on a sustainable footing. The Queen’s Speech announced the Government’s intention to bring forward a fiscal responsibility Bill in the fifth Session, enshrining this plan in legislation. The Chancellor of the Exchequer will set out full details tomorrow in the Pre-Budget Report, alongside his forecast for the public finances.
I thank the noble Lord for his reply, although I anticipated it. I did not expect to hear the details of the Pre-Budget Report today. Perhaps it will be repentance on the scaffold tomorrow for the Chancellor.
I shall try another tack. Was the Guardian newspaper correct when it reported the other day that the cost of quangos—those much maligned, non-departmental and non-ministerial bodies—is now £10 billion a year, but that 123 of them are to be abolished at a saving of £800 million? Is that correct? If so, it would be interesting to have the names of the quangos that are to be abolished. Why were they established in the first place, and why are they going now? Some of us might like to have a few words on the matter.
My Lords, I believe that that may well have been covered in a Statement read to the House yesterday afternoon by my noble friend Lord Davies. I will not speak to the veracity of the Guardian newspaper report, but there is clearly scope to reduce the number of quangos and secure significant savings. As part of the move towards sustainable public finances, once the recovery is firmly established, clearly each and every aspect of public expenditure will need to come under very critical examination.
My Lords, does not the Minister agree that the timing and pace of the reduction of the fiscal deficit should be determined by what is happening in the real economy, such as sustained growth, growing employment and availability of finance to businesses, rather than some arbitrary and unenforceable target, whether set out in legislation or not?
We are very clear that we want a reduction in the deficit of public expenditure and are committed to halving it over a period of four years, once the recovery is well established. It would clearly be most unwise to contemplate any significant change in fiscal policy or support for the economy until the recovery is firmly established. Indeed, that would be irresponsible in its impact on the economy. The IMF has made clear in its recent publication that it believes that the public sector borrowing requirement as a percentage of the deficit will remain below average for the G7 countries throughout the forecast period to 2014.
I think that we can rest assured that the shareholders of the major banks, including the two banks in which the taxpayer has a significant interest, will take due and proper care to ensure that those banks are being run properly. My observation about whether people were in the real world was very much limited to the issue of bonuses.
My Lords, bearing in mind that it is pretty foolhardy to discuss a Bill that we have not seen yet, the fiscal responsibility Bill, I ask my noble friend a sensible question: are we clear how we should measure the fiscal deficit? As far as I know, what counts in the deficit is a very tricky question. When the time comes, I hope that he will ask our right honourable friend the Chancellor of the Exchequer to get some expert advice on the correct way of measuring the deficit.
One of the advantages of the fiscal responsibility Bill which the Chancellor will be announcing tomorrow is that it will allow Parliament to look at multi-year fiscal plans and challenge them. That will include a discriminating eye as to the difference between recurrent expenditure and investment, which is a critical aspect in calculating the deficit—expressing the deficit not so much in absolute terms but in the ability to pay in terms of percentage of GDP.