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Public Expenditure: Review of Commitments

My Lords, I am grateful to the noble Lord, Lord Eatwell, for the points that he has made. Of course, it is not happy announcing these cuts, but it is absolutely necessary. It is a reflection of the speed with which the new Government have picked up the inheritance that again we are coming forward with a significant review of some of the wasteful spending decisions that were taken in a haphazard and speedy way in the last few months of the previous Government. I do not know whether the noble Lord was listening to his Front-Bench colleague in another place, the former Chief Secretary, but I heard him start his response to this Statement by saying that these cuts were so trivial that they were not worth making. That seems to be rather at odds with the argument of the noble Lord who says that these cuts somehow are fundamental to how we support demand in the economy. I defer to the noble Lord. I am more of an accountant than an economist, but I am a little confused. However, the maintenance and growth of demand in the economy is critical to the programme of the new Government. Restoring confidence for businesses and individual savers is at the heart of that. Maintaining low interest rates, supporting the flow of credit to businesses, having a clear path on corporate taxation and reducing the burden of regulation will all be parts of the underpinning of growth and demand. Although the noble Lord runs down the current prospects for the economy, he refers to the depreciation of the pound, which indeed seems to have had a positive effect that is now coming through in much stronger export growth. The noble Lord asked about the OBR forecasts. As I said earlier in the week, the OBR will publish new forecasts in connection with the Budget next week and will take account of the effects of all decisions made by the new Government up to and including the Budget. He also asked about discount rates used in assessing total lifetime costs. Perhaps I may write to him on that point. To take the specific cuts in reverse order, the noble Lord talked about Stonehenge. The costs and benefits of this project had to be considered in the light of the current financial picture and the benefit of going ahead with it simply does not at this time justify the costs. The search and rescue helicopters project is a joint DfT-MoD project, which would deliver a harmonised search and rescue service for the United Kingdom for 25 years from 2012. Given the pressures on public spending, the MoD and DfT intend to conduct a rapid but thorough review of this project. We will continue to work closely with the preferred bidder while this review is taking place. The noble Lord talked more generally about skills. I can assure him that the combined skills and support for those entering the jobs market is central to the Government’s overall programme. Perhaps I can write a more comprehensive answer for him on that than I can give immediately.