My Lords, the Government have brought the deficit down by four-fifths since 2010. With a strong fiscal position and close-to-record low costs of borrowing, we can invest more in our growing economy and public services. The spending round was delivered in line with existing fiscal targets in the Charter for Budget Responsibility. The Government are reviewing these and will maintain a clear set of rules to anchor our fiscal policy.
I thank the Minister for that reply, but it does not tell us what we can afford: it tells us the Government’s hopes and aspirations. Yet the Office for National Statistics tells that the public finances are getting worse, borrowing is going up, income from taxes is going down and our deficit is increasing. Does he not agree that in these circumstances a constant stream of spending promises and tax cuts without some sort of credible fiscal framework is irresponsible, reckless and not the action of a serious Government?
My Lords, the situation described is not one that I recognise. A thousand extra people are in work every day since 2010. The deficit is down by four-fifths from its peak of 10% in 2009-10 to 1.9% in 2018-19, and wages currently outpace inflation. Productivity is a challenge. It is not performing as we would like—it has stalled since the financial crisis—which is of deep concern to the Government. Historic low interest rates for borrowing costs are a big opportunity. That is why the Chancellor has made it clear that the fiscal rules are under review and, when we have a chance to have a Budget, those will be made clearer.
My Lords, can we not agree that it was disappointing that the former Labour Prime Minister was not able to get rid of boom and bust? With that in mind, will my noble friend agree that, when the economy is doing well, we must be careful not to ratchet up debt so that when we hit more difficult times we are resilient?
My noble friend puts it very well. Debt is central to the Government’s plans. We will maintain a clear set of rules to anchor our fiscal policy and keep control of our debt. But we have to face up to the challenge of productivity to invest in education, skills, and the physical and public service infrastructure of the country, and the opportunity presented by low rates of interest is one that we should review and take seriously.
My Lords, the IFS has been very clear that the Government are now set to blow through their fiscal ceiling next year with excessive borrowing. I will pick up the point made by the noble Baroness on the Minister’s own side. Having seen that Labour failed to keep an adequate cushion in 2008, therefore setting us into a pattern of bust and austerity, why are this Government going on a spending spree that repeats exactly that pattern—and in a context of Brexit, when the economy would be weaker than it has been in decades?
I am not sure that the noble Baroness can have it both ways. The need for investment in physical infrastructure, training and skills is urgent. Keeping a lid on debt is also important. I note that the IFS also recommended in the report to which she referred that the Government should delay setting any fiscal rules until greater certainty over EU exit was confirmed. In the meantime, the Government are pushing hard for a deal and will continue to do so.
My Lords, will the Minister agree—I somehow think he might not—that the Chancellor is as frivolous in fiscal discipline and monetary rectitude as his colleague the Prime Minister is in keeping his promises? We have only to look at 31 October —do or die, dying in a ditch, and all the other things that we have had to live with. Does the Minister agree that the Chancellor is following in the very bad habit of making promises that he has no intention or capacity to keep?
My Lords, I was desperately searching for something I could possibly agree with in the noble Lord’s analysis, but there is nothing. The Chancellor is taking extremely pragmatic, well-judged decisions on investment in infrastructure for the country. These investments have been called for by business, the trade unions and professional groups. His decisions are thoroughly sensible and are supported by many noble Lords on all sides of the House.
My Lords, how do we know that the Chancellor is involved in judicious taking of decisions? He introduced a spending round without any suggestion about how it would be paid for. He was then given, by the grace of the Prime Minister, a date for a Budget. That has now been abandoned. Meanwhile the Office for Budget Responsibility, which is under an obligation to give an objective analysis of the Government’s proposals with regard to the economy and which is likely to produce a very different analysis from that which the Minister has presented to this House today, cannot pronounce until there is a Budget. Are not the Government glib on spending but entirely evasive on how they intend to pay for anything?
We will find out later today or tomorrow when that Budget is likely to be. It is beyond my competence to predict that date, but I reassure the noble Lord that if there is any review of the Charter for Budget Responsibility it will be subject to a vote in the Commons and to a debate here in the Lords. I look forward to being part of that debate.