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Fiscal Responsibility Bill

My Lords, I thank all noble Lords who contributed to the debate. It has been a very wide-ranging debate in which many issues have been raised, all of which I found very interesting and have noted. One feature common to all the speeches was a clear commitment to the need for fiscal consolidation, a commitment which is of course at the heart of the Bill. As we have debated, the financial crisis and global recession has had a profound and persistent impact on the public finances in many major countries, resulting in a significant increase in government borrowings and, as a result, government debts. These severe economic shocks have hit every country in the world and have meant that we have had to be flexible in our response to changing circumstances—the noble Lord, Lord Skidelsky, referred to ““black swan”” events. Therefore, in the face of these shocks, as the Chancellor set out in the other place, the Government’s first priority has been, and will continue to be, to provide support to the economy. Costs were of course incurred by stepping in; but not to have intervened would have meant even higher costs, burdening the economy over an even longer period. The Government have always been clear that support must be followed by steps to secure public finances. Our fiscal stimulus was deliberately time-limited to increase its impact during the downturn, bringing forward expenditure on capital projects and supporting sustainable public finances over the medium term. The Government are confident but cautious about the prospects for the economy. As growth resumes and the economy becomes better placed to support tightening, fiscal policy will shift significantly towards consolidation. Well timed and planned fiscal consolidation will support economic growth during the recovery. As many noble Lords suggested, there is an issue of timing. The noble Lords, Lord Lawson and Lord Ryder, among others, pointed to the need to act swiftly. On the other hand, we heard contributions from my noble friends Lord Desai and Lord Peston and from the noble Lord, Lord Skidelsky, cautioning us against moving too quickly. My own view, as I said last week, is that the risks of moving too early considerably outweigh the risks of moving too late. They are asymmetrical in the sense that a premature move which tips the economy back into recession will not deliver the benefits that those advocating such a move would suggest. The scale and quantum of the likely cuts is also a matter for judgment. I invite the noble Baroness, Lady Noakes, to talk a little in her closing speech about the scale of cuts that a Conservative Government would wish to introduce. It is clear to me from contributions from the other side that there is a lust for savage cuts in public expenditure, notwithstanding the lessons that we learnt from both the 1930s and the 1980s. We heard talk last week of the UK being the sick man of Europe. That is absolutely preposterous, but it is entirely consistent with a softening-up for the scale of cuts that I am sure a Conservative Government, if we have one, would have in mind. Indeed, to his credit, the noble Lord, Lord Forsyth of Drumlean—in a contribution which I read on a website with the somewhat curious name of Conservative Intelligence—suggests that there need to be cuts of £75 billion in government expenditure. That is quite extraordinary in terms of the consequences for the lives of British people and the prospects of British business. The sooner we have clarity of message—and I am looking to the noble Baroness to provide it—about the scale of cuts that a Conservative Government would contemplate, the better.