EU: Fiscal Compact Treaty

Lord Barnett Excerpts

Tuesday 7th February 2012 Lords Chamber

[Lord Sassoon]

My Lords, I am happy to confirm to my noble friend that of course this intergovernmental agreement, which goes to the heart of strengthening the fiscal arrangements within the eurozone, is a necessary but not sufficient part of what we hope to see with the eurozone returned to health. There are a number of other critical elements, including sorting out the immediate situation in Greece, getting the European banks’ capital positions where they need to be, and so on.

[Lord Barnett]

My Lords, will the noble Lord be advising the Government to be one of the 27 member states agreeing to a fiscal solution to the problem or will the Government take the view that, whatever happens in the short term, in the longer term it is perfectly impossible for a country like Greece in the state that it is in to be able to have the same exchange rate and interest rate as Germany? In those circumstances, will the Government be making arrangements and planning for something to happen that would not be helpful, because, as the Chancellor put it, it would be disastrous if the whole thing broke up? Is contagion a bigger problem than many of us expected it to be?

[Lord Sassoon]

My Lords, it continues to be the Government’s wish that the eurozone holds together and makes the arrangements, some of which I outlined in my previous answer. As I have said in answer to previous questions from the noble Lord, Lord Barnett, the Government take all precautionary measures and look at all scenarios that there may be as this still very severe situation continues to unfold.

Individual Savings Accounts: AIM Shares

Lord Barnett Excerpts

Tuesday 31st January 2012 Lords Chamber

[Lord Sassoon]

My Lords, it is entirely appropriate, because ISAs are the main savings vehicle for people in this country, that a range of products, both cash and equity and debt products, should be eligible for an ISA. As I explained, there is an appropriate line to be drawn, and it is where the previous Government and this Government drew it. This Government are fully continuing on AIM with the previous Government's policy.

[Lord Barnett]

My Lords, I declare an interest as a holder of ISAs who has no desire to invest in AIM. The noble Lord, Lord Forsyth, made a major point to which the Minister did not reply. It is totally inadequate to keep saying that the Government are not going to do it. Will the Minister not at least reconsider it?

[Lord Sassoon]

My Lords, there are no plans to reconsider it. My noble friend Lord Forsyth put up another possible reason why the Government might not want to make the change. I said that the Government were not making the change for the reasons that I first gave.

Eurozone Crisis

Lord Barnett Excerpts

Tuesday 17th January 2012 Lords Chamber

Asked By

[Lord Barnett]

To ask Her Majesty’s Government whether HM Treasury is developing contingency plans for use in the event of a Eurozone collapse.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, as my right honourable friend the Chancellor of the Exchequer made clear in the Autumn Statement, the Government, including of course the Treasury, are undertaking extensive contingency planning to deal with all potential outcomes of the euro crisis.

[Lord Barnett]

Thanks for that very informative reply. I hope that there will never be a need to use the contingency reserve, because, as the Chancellor has said, it would be devastating for the UK economy if there was a collapse in the eurozone. We already have a near recession—if not an actual one—forecast without such a collapse. I gather that the Government are more amenable to the new draft treaty that has been promoted for the next summit. In those circumstances, and given the risk of jeopardising the slightest chance of preventing that collapse, would he not agree that it would be very foolish to veto that summit as well?

[Lord Sassoon]

My Lords, first of all I welcome the compliment paid to my Answer by the noble Lord, Lord Barnett. He asked me a yes or no Question. I gave him a very full Answer and some extra things he did not ask about, so I am glad that he appreciates that. I am not going to speculate on our negotiating position because this is all very fast moving. All I can reiterate is that we are working very hard with our European partners to see a resolution of all aspects of the crisis. They have invited us to be at the table to discuss the arrangements that the eurozone countries are making among themselves and we are active and positive participants when we are invited to be there, as we are at those discussions.

Economy: Private Capital Investment

Lord Barnett Excerpts

Tuesday 20th December 2011 Lords Chamber

[Lord Barnett]

My Lords, the Question asked what additional facilities the Government have provided. In practice, would the Minister agree that there are no additional facilities outside the deficit reduction plan? Indeed, the measures that he has already mentioned were well taken care of when the OBR reported that growth will be down to 0.7 per cent, which is hardly helping. In the light of the current economic situation, will the Government consider real, additional facilities outside the deficit reduction plan?

[Lord Sassoon]

My Lords, to be clear, the three measures that I mentioned in my opening Answer were indeed new and additional measures, the costings of which are given in the Autumn Statement.

Economy: Deficit Reduction

Lord Barnett Excerpts

Thursday 15th December 2011 Lords Chamber

Asked by

[Lord Barnett]

To ask Her Majesty’s Government what evidence they have that their deficit reduction plan is working.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, tackling the deficit is necessary to supporting sustainable economic growth. The Government’s consolidation plan has restored confidence in the UK’s fiscal position, preserving our AAA credit rating and leading Standard & Poor’s to move the UK’s rating from negative outlook to stable. In May 2010, the spread of UK gilts to German bunds was in line with Italy and Spain; since then, UK rates have fallen by over 150 basis points but Italian and Spanish bond yields have risen by over 100 basis points.

[Lord Barnett]

In the midst of all that, the noble Lord forgot to answer the Question. As I am sure he will recall, the Prime Minister said that the deficit would be eliminated in 2015 and his own Office for Budget Responsibility has said that it will be 2017. Why was he not willing to say that? Is there something wrong in telling the truth that he has to give me a long, wordy Answer? However, it is even worse than that—and some very respected forecasters are forecasting that it could be even worse. Would he not accept that if the circumstances change, through no particular fault of the Government, changes in policy should take place? For example, we might do something to stop the unemployment figures announced yesterday being even worse. What does he have in mind in the event of some kind of major change in circumstances?

[Lord Sassoon]

My Lords, the Government are on track to meet the fiscal mandate which was set by my right honourable friend the Chancellor. The mandate requires the Government to bring the cyclically adjusted current balance into balance at the end of five years. The Opposition may not like it but that fiscal rule means that there is an ability for us to be flexible in the face of very difficult economic conditions; it means that we can preserve the infrastructure expenditure, which is so important, to underpin long-term growth; and it means that the automatic stabilisers can operate. If the noble Lord, Lord Barnett, is suggesting that we should abandon all of that, I wonder what his policy would be.

Economy: Government Policies

Lord Barnett Excerpts

Wednesday 7th December 2011 Lords Chamber

[Lord Sassoon]

My Lords, our exporters are leading the growth in this country and indeed, although it is early days, there are some signs from the figures over the past 18 months that at last, after a decade of a declining share of world trade, the UK’s share is increasing. It is a modest increase and it is early days but our exporters are performing very strongly.

[Lord Barnett]

I would like to welcome one part of the Statement from the Chancellor, when he said that he had negotiated £20 billion of funds from pension funds for infrastructure investment. That is very welcome. However, could the noble Lord tell us how exactly it is to be financed with the pension funds? Is it a PFI deal, or what rate of interest are they going to be paid?

[Lord Sassoon]

I am grateful to the noble Lord, Lord Barnett, for welcoming this important initiative. In fact it is a case of the pension funds coming to us. That particular group of pension funds has £800 billion under management. So it will be funds that they already have under management, and they wish to allocate a greater share to the infrastructure sector. It does not hit the public sector in any way.

EU: Member States’ Budgets

Lord Barnett Excerpts

Tuesday 29th November 2011 Lords Chamber

[Lord Sassoon]

I beg my noble friend’s pardon. I think that a number of false premises were used to back up that supplementary question.

[Lord Barnett]

My Lords, if the eurozone decides to strengthen its fiscal rules, which many press upon it as being vital if they are to work, but there is no question of a change in the treaty, what would the Government do, because we clearly would not be involved?

[Lord Sassoon]

My Lords, this is a fast-evolving set of proposals. Indeed, the euro area’s Finance Ministers are meeting later this afternoon. One of the issues on the table is that the Commission and the euro group are exploring the possibility of limited treaty changes, and Mr Van Rompuy is due to present the outcome of that work to the December European Council. When we see any proposals—if there are any—we will consider what we should do about them.

International Monetary Fund

Lord Barnett Excerpts

Thursday 24th November 2011 Lords Chamber

Asked By

[Lord Barnett]

To ask Her Majesty’s Government by how much they expect to increase their contribution to the International Monetary Fund.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, at the G20 Britain, and all the other countries, agreed to ensure that the IMF continues to have resources to play its systemic role to the benefit of its whole membership. We stand ready to contribute within limits agreed by the House and set out in the International Monetary Fund Act 1979. However, there is currently no agreement about the timing, extent or exact method through which IMF resources will be increased.

[Lord Barnett]

In thanking the noble Lord for his Answer, I remind him that the Chief Secretary to the Treasury said on 6 November that he expected our contribution—which is the Question I asked—would be up to £40 billion. Perhaps the noble Lord could answer that as well. He and the Government recognise the need to provide funds for the IMF. Indeed, the Prime Minister said in the House on 7 November that it would be irresponsible to walk away from helping the IMF, but that it must not be used for a bailout. Can the Minister explain the difference between helping for a bailout and helping for a crisis—a very serious world crisis?

[Lord Sassoon]

My Lords, in answer to the first question, the position under the International Monetary Fund Act 1979 is that the limits agreed by Parliament currently stand at 38.8 billion SDRs, or about £38.3 billion. That is where the £40 billion figure comes from.

On the question of what the IMF is there to do, it is to look at the overall systemic risks in the world and support individual countries. It is not there to support countries in one particular zone as opposed to others or to support currencies. It is there to consider, under its criteria, country by country, where support might be needed.

Economy: Monetary and Fiscal Policy

Lord Barnett Excerpts

Tuesday 8th November 2011 Lords Chamber

Tabled by

[Lord Barnett]

To ask Her Majesty's Government how they are co-ordinating monetary and fiscal policy in the current economic climate.

[Lord Peston]

My Lords, on behalf of my noble friend Lord Barnett, and at his request, I beg leave to ask the Question standing in his name on the Order Paper.

Economy: Inflation and Unemployment

Lord Barnett Excerpts

Thursday 27th October 2011 Lords Chamber

Asked By

[Lord Barnett]

To ask Her Majesty’s Government, in the light of the most recently published figures, what plans HM Treasury has to reduce inflation and unemployment.

[Lord Barnett]

My Lords, I beg leave to ask the Question standing in my name—rather than the previous Question—on the Order Paper.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, the Government’s economic policy objective is to achieve strong, sustainable and balanced growth. Budget 2011 reaffirmed the independent Monetary Policy Committee’s remit to target 2 per cent inflation, as defined by the 12-month increase in the consumer prices index. The Government have introduced a range of measures to reduce unemployment and support the unemployed into work, including get Britain working, the work programme and modernisation of Jobcentre Plus.

[Lord Barnett]

My Lords, I hope that the modest attempts that the Treasury is making to help the unemployment situation are successful. However, does not the Minister accept, if he wants to be honest with the House, the plain fact that the deficit reduction plan overshadows all those minor measures, and unemployment continues to rise? I do not expect him to be able to announce what the Chancellor is going to do in the near future. However, given the change of circumstances around the economy, will he at least tell us that the Chancellor is considering, without changing the plan, at the very least putting off some of those measures to later years and bringing forward some of the infrastructure and capital expenditure plans, which would help to reduce the terrible unemployment that is blighting so much of the country?