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Finance Bill

My Lords, the noble Lord has made his point and I have done my best to respond to it. We will have to stand in disagreement about the position for the time being. The noble Lord, Lord Ryder, raised some interesting issues, particularly over the management of the economy as a whole. Regarding this much vaunted concept that the Government have been involved in increasing debt significantly, over the economic cycle which began in 1997, when debt was at 43.3 per cent, we have got it down to 36.6 per cent by 2006-07. I appreciate that times are a-changing. We are moving into a position of the greatest concern to us all, and we are going to have manifold debates on these issues. I respect opinions about the strategy to be adopted for the future, but I counsel noble Lords that the Government’s judicious record over the past 10 years bears active scrutiny. I emphasise that if noble Lords are going to refer back to the past Administration, they should look at the most classic, obvious difference between the time we are in at present and the one when they were in power: Britain was an oil-rich economy then, while now we are purchasing energy—not just oil, but gas as well—because of the natural features of the ending of the North Sea assets. These may be harsh facts but they are attendant also upon the very real success of this Government in the past, and they are why we need to adjust—as all sides are asking me to indicate the Government are doing—to the changing situation. I suppose that my noble friend Lord Peston must now sign up to the fact that economics is the dismal science after all, as he proved to be slightly gloomier than any other contributor to the debate. I hear what he says about the privations that have to be undergone. Why does my noble friend think the Government are so firm on the question of pay increases in the public sector at present? If it is suggested on the Opposition side that the Government never approach the roof until the rain starts, have they not noticed the number of three-year agreements that have been concluded on the crucial issue of pay, which is so important to the public sector? I take no joy in the fact—nor, I think, do the noble Lords opposite—that, as my noble friend says, there will be some decline in living standards. None of us can take joy in that fact, because it means that many of our fellow citizens will find things more difficult than they have in the recent past. However, I assure my noble friend that the Government are making the necessary adjustments to these issues, and are well equipped to guide the country through what we all recognise will be a difficult period. I accept what the noble Lord, Lord Stewartby, said in his comments: sensitivity to tax changes is now very high. The noble Lord, who has been in the Treasury in interesting times, says that the reaction of the public to any tax increase is very sharp these days. Indeed it is. However, in difficult times, as has been reiterated on all sides of the House, difficult decisions will have to be taken. The noble Viscount, Lord Trenchard, will not agree with what I said about the fiscal rules, but he will recognise that in my response to the noble Lord, Lord Forsyth, who introduced the issue first, I did my best to respond to his point. The noble Viscount said that we had slipped in the corporation tax league table, but British corporation tax still compares well with that in most of the other advanced economies. Other advanced economies are showing exactly the same strains as the British economy in coping with the present circumstances.