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Address in Reply to Her Majesty's Most Gracious Speech

My Lords, the gracious Speech dealt with the economy in two sentences. That, I fear, is a fine example of arrogance and complacency: "My Government will continue to pursue economic policies which entrench stability and promote long-term growth and prosperity. To this end, my Government will continue to secure low inflation and sound public finances".—[Official Report, 17/5/05; col. 5.] In tabloid-speak I reckon that that means, "All is brilliant; we are brilliant; no worries", or at least on the economic front. I see that the Minister opposite is smiling. I hope that he continues to smile and I wish him well in his new position. I hope too that all his debates are as happy as this one is obviously turning out to be. I am afraid that I want to sound a warning note about arrogance and complacency. We must not be complacent, but some of the speeches so far in the debate have been pretty complacent. During the hyperbole of the general election, potential voters were told what the candidates thought they needed to know in order to be re-elected. As a result, the same old statistics were bandied about. That is not a political point, because every party does it. It is not even a UK point because, in every democracy, every party does it and gets away with it. However, I am aware of the constant manipulation of statistics. "Lies, damn lies and statistics",as Disraeli said so memorably. He is the same great Disraeli who transformed my party and made it national when he said that the Conservative Party is, "a national party or it is nothing". As an aside, I guess that he would be very pleased to hear that, in the nation of England—for we are a nation in terms of the rugby Six Nations Cup and so forth—the Conservatives won more votes in the recent general election than did the party of government. Economic statements leaning heavily on a selective recourse to statistics reflect a measure of arrogance. Who is truly fooled? The latest mantra being propagated by the Chancellor is a case in point. I say sorry to the Minister because he said precisely the same thing today when he claimed credit for 51 quarters of continuous growth. By my basic maths, 51 quarters is 12 ¾ years. As far as I recollect, the governing party has been in power for eight years. I know it seems like 12 ¾ years to me—and probably a lot more to some of my noble friends on these Benches—but we are not fooled. Bearing in mind the fact that some 17 million of the voting public stayed at home and that the Government achieved a 22 per cent endorsement from the voter population, there is no justification for any of us being complacent or arrogant or, indeed, for using the latest description from the government Benches of having achieved a hat-trick. Frankly, the general election turnout should be recognised as a humbling experience. As the right reverend Prelate mentioned, if more time in the past four years had been spent "on the ground" listening to the concerns, hopes and real-life experiences of the voter population, more people would have stirred themselves to vote. As an economist, I am the first person to admit that the subject of the economy is not exactly riveting. However, I am very concerned that some of the trends prevailing both in this country and internationally could have serious implications for the United Kingdom. The fine words of the gracious Speech promising to, "continue to secure low inflation and sound public finances", could well sound a little hollow in a couple of years' time, or even sooner. The latest inflation report from the Bank of England makes sombre reading for those who rely on domestic demand to fuel growth. The latest national accounts 18 May 2005 : Column 44 suggest that consumer spending growth slowed markedly in the last quarter of 2004 to only 0.2 per cent compared with 0.7 per cent in the previous quarter. The facts are that spending has decelerated in every quarter since the first quarter of 2004. In recent years, retail spending has made a substantial contribution to the overall growth in consumer spending. Even if you have no interest in economics, you must be aware that the retail scene is, as described recently by one major retailer, "a bloodbath out there". Margins are under huge pressure and costs seem to be accelerating. If those two trends continue, we know what the outcome will be in economic terms. It is a word of warning. The inflation report, being written by the Bank of England, is less dramatic in its use of language than was that person in the retail sector. Nevertheless, in its latest edition, the bank concedes that its regional agents point to, "lacklustre retail spending". The Bank of England attributes the deceleration in consumer spending to weak income growth, rises in interest rates and a slowdown in the housing market. To those three reasons I would add a sudden realisation of the huge growth in personal debt, an issue which has been mentioned already twice today. At the last estimate, British householders are £1 trillion in debt. I repeat: £1 trillion. In his opening speech, the Minister anticipated that someone would raise that issue, and someone is raising it. The Minister said that he was worried about debt but that it was "grounded on strong fundamentals". So that is all right then. I do not think so. The subject of personal debt does not feature large in our debates in this House nor, indeed, in Questions. Is that because we feel unable to come up with proposals to deal with the situation? Is it because we feel we do not have the right to encourage people to be less extravagant? Is it because we are not really concerned at the slick marketing of store cards and credit cards which catch the vulnerable? It is probably all of those. However—and this is a matter that I have raised before—I fear that a large proportion of our citizens are pretty well financially illiterate. The very surprising data unearthed by companies in the utilities sector are that the apparent or perceived affluence of individuals is in no way reliable evidence of their ability to pay. In my own circle of acquaintances I have looked on in horror when told of a credit card debt of many thousands of pounds which has been pretty much at that level for many years. Those interest payments, probably at a level of 20 per cent, are seriously impacting on both the stress level—that is, the health—and the living standards of that individual. I am referring to intelligent, educated, white collar, professional employees, not the kind of people we feel are most vulnerable to these situations. They seem to have grave difficulty in grasping what is at stake. Only last weekend, in the Times of Saturday, 14 May, I read about the charity Personal Finance Education Group, which promotes the teaching of finance in schools and provides resources for teachers. The chief executive of the charity is quoted as saying: "It is perfectly possible for someone to go through school without getting any personal finance education at all, which is horrendous when you think about the decisions they will have to take as school leavers" I know that personal finance is, theoretically, on the national curriculum, but it is competing for a place in the classroom against much more interesting subjects—at least in the view of the pupils. In the same article a lady is quoted as having arrived at university, "with the financial acumen of a 10 year-old". It is just a thought, but why not include financial literacy as part of the English curriculum? After all, we have got a thing or two to learn from Dickens and Micawber. We are all guilty of complacency on this issue. Are we going to do anything about it or are we still going to put it in the "all too difficult" basket? Is it that we have never really thought about the long-term impact of mounting personal indebtedness on the objective contained in the first sentence of the gracious Speech, namely: "My Government will continue to pursue economic policies which entrench stability and promote long-term growth and prosperity"?