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Queen’s Speech

I really admire the noble Lord, Lord Oakeshott, as he well knows, but I think that that was a particularly petty intervention, if I may say so. The gracious Speech says: ""Through active employment and training programmes, restructuring the financial sector, strengthening the national infrastructure and providing responsible investment, my Government will foster growth and employment"." However, do we believe that? It would nice to but, based on the Government’s record, the answer has to be no. They have claimed to be doing all these things, with the possible exception of restructuring the financial sector, for year after depressing year. How can these well used stratagems work now when they have not worked before? Have they any ideas as to how to engender growth? I am sure that the true answer is no. For pity’s sake, hand it over to those who can—to those in charge of the economy immediately before May 1997 who left this Government a golden economic legacy, as my noble friend Lord Hunt has already said. It is crucial that we start as soon as possible to rebuild our economy. In simple terms, government borrowing at 40 per cent of GDP will increase to 100 per cent, burdening future generations with a 250 per cent increase in the cost of servicing the debt. The burden will fall on each and every household in the country. However, I very much doubt whether this will be explained by the Labour Party in its manifesto for the next general election. Unless plans are put forward to restore the public finances over the next five years, there is a very serious risk of government not being able to fund the borrowing requirement—namely, not being able to sell enough gilts. Long before the current crisis, I referred several times to the necessity to have a savings ratio of over 10 per cent. On the last occasion, I remember that I was told, "We don’t do the savings ratio any longer; things have moved on. It’s an old-fashioned economic indicator". Old-fashioned it might be but relevant in today’s situation it certainly is. The last time I spoke about the savings ratio, it was negative, at minus 1.5 per cent. It has moved into positive territory but it is still nowhere near sufficient to finance government debt. How can we remedy this? Unless there is a pretty huge increase in the savings ratio, we will be dependent on persuading overseas investors, particularly the Governments of the big five Asian economies to which my noble friend Lord Hunt, referred, to buy our gilts. That is serious and Britain’s creditworthiness hangs in the balance. How will the Government legislate to halve the deficit? As the noble Lord, Lord Razzall, said, the Government seem to think that by stating their intention to legislate, that will make it happen. Do they intend to ensure that the Asian sources of finance will be readily available to help us out? We can live on other people’s savings for so long, but not for ever. Alice in Wonderland looks like a serious book compared to all of this. In simple terms, the facts are these. First, the IMF advises that the credit crunch in the UK is the worst in the developed world. I know that the noble Lord, Lord Mandelson, selectively quoted from the IMF, so I am doing likewise. Secondly, the financing gap—the difference between what people need to borrow to keep the economy in good health and what they can actually lay their hands on—is £215 billion this year and next, or 15 per cent of GDP compared with 2.4 per cent in the US and 3 per cent in the euro zone. Thirdly, the Institute for Fiscal Studies advises that the growth in public sector spending since this Government came into office will need to be reversed completely by 2017—in eight years—to get public finances back under control. We are in a dire economic situation, the worst for 80 years, and it is worsening by the day. The revelations this morning that last autumn, on top of the revealed £500 billion to support the banking sector, the Bank of England secretly gave a bridging loan of almost £62 billion from the taxpayer to further shore up RBS and HBOS, does not fill me with confidence that we have been given accurate data. What other secret deals will be revealed? While I am at it, let me ask the Minister a very simple question. How many directors of the banks bailed out by each and every one of us have subsequently been disqualified from ever having future directorships? I suspect that I know, but I would like it confirmed that the answer is none. None of that will instil confidence in anything proposed by the Government. The economy must be managed with real courage and purpose, not with the facile, pie-in-the-sky words in the gracious Speech. The time for a Government of purpose and courage is now. We cannot afford to disintegrate further. I am taking a risk, but I quote from the Lady in the Scottish play: ""Stand not upon the order of your going, but go at once"." Perhaps I should be gentler, and kindly suggest that the Government should retire gracefully—and now.