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Pre-Budget Report 2007

My Lords, I am grateful to all noble Lords who have spoken in this debate. I was grateful for the generous welcome for my presence of the noble Lord, Lord Newby, and even for the rather less enthusiastic welcome from the noble Baroness. I regret that this is not my second debate on the economy and was not able to participate last week, but the noble Baroness will have to reconcile herself to the fact that there is much talent on the Treasury Bench and that many people are eager to participate in the major debates, whereas the Queen’s Speech offers only a limited number of opportunities. We were excellently served by my noble friend last week when he summed up the debate. I hope that she will feel that, at this second opportunity, I, too, will respond to the debate as constructively as I am able. I rather regret the fact that she regards the debate as not being timely. The straightforward fact is that we are under an obligation to produce a response to Europe by the end of November. Due to our budgetary arrangements, we receive dispensation from time to time to present our report to Europe later than the November deadline, but in circumstances where we have produced our Pre-Budget Report, it would look quite extraordinary if we did not meet our obligations by putting it before both Houses and presenting it to Europe in good time. That is why this debate is taking place now. I hope that the House will recognise that it is an advantage for the Government to be in good standing with Europe by meeting their timetable, not least because the report is a contribution to the overall strategy which the European Union pursues with regard to the economies of the member countries. The more we are able to co-operate in those terms, the better are the returns for the United Kingdom. I greatly welcomed the fact that the first contributor to the debate was the noble Lord, Lord Marlesford, who never fails to entertain the House with his insights into the economy. We all know his long record of participation in these economic debates and his distinguished record as an economic commentator before he arrived in this House. He and those on his Benches were perhaps overly pessimistic about the present situation. We must of course counsel some anxiety about international circumstances which present some challenges, but the British economy is strongly positioned to cope with such fluctuations. The noble Lord suggested that one of the great problems was that we have massive public and private debt. He was of course right that individual households have considerable debts—we can gross them up to the figure of £1.4 billion which he mentioned. It is also the case that households have increasing personal assets. The personal assets of households in the United Kingdom have increased by 72 per cent over the past 10 years. We must remember that when we are talking about the difficulties. I will not follow the noble Lord, Lord Newby, down the road of discussing Northern Rock. He will forgive me for saying sufficient unto yesterday is the participation thereof. He will also recognise that when we look at the issues with regard to Northern Rock as with household debt we seek to identify those areas that are real securities against those where there is exposure. All I am suggesting to the noble Lord, Lord Marlesford, is that he is probably being somewhat unfair with regard to households when he grosses up personal debt, produces a substantial figure and suggests that that should make our flesh creep. With regard to this situation, he generously said that the Government had maintained an income tax rate, which has now obtained over nearly two decades—a consistency that I know he applauds. The noble Lord, Lord Newby, was more explicit in congratulating the Government, but at the same time he will recognise that there is also some advantage in consistency with regard to taxation in respect of business. I know that the noble Lord, Lord Newby, has particular reservations about capital gains tax, but when we came to power, capital gains tax was running at more than twice the level than it is now. There is still a debate to be had about the increase to 18 per cent. The noble Lord, Lord Newby, mentioned second home owners, who are the beneficiaries of this and might not be regarded as the most significant people to benefit. We will have a debate on these matters, but it does not alter the fact that when it comes to the issue of taxation with regard to business, the Government have adopted an intelligent and responsible approach. I reassure the noble Lord, Lord Newby, that we will not keel over in the face of industry pressure with regard to our proposals, but we are prepared to listen to the industry and business case. It is only right that a Government who are interested in the prosperity of our enterprise economy should do so. The Chancellor has given enough illustrations of that. I was very grateful to my noble friend Lord Haskel; the sole contributor from my own Benches.