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The Budget

4 p.m.

Lord Richard: My Lords, with the leave of the House, I shall now repeat in the form of a Statement the Answer to a Private Notice Question asked in another place on whether or not the Government will set up a Select Committee to investigate advance disclosures of the Chancellor of the Exchequer's Budget Statement:

4.2 p.m.

Lord Mackay of Ardbrecknish: My Lords, I am grateful to the Leader of the House for repeating the Answer to the PNQ asked in the other place by my right honourable friend Peter Lilley. I know the difference between speculation and disclosure. I hope that the Leader of the House will not use that as his first answer to my questions. Of course speculation occurs all the time; but this morning when I awoke I heard on the radio some speculation about whether the Government would remove the tax allowances for private health care for the over 60s. That is fine. However, the BBC, which

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appeared to believe that it had a story of some import, reported that Treasury sources had confirmed the story. I may be slightly wrong in my choice of words because I am relying on my memory; but it was perfectly clear that that had been confirmed by the Treasury. That goes beyond speculation about the Budget; it is disclosure of the content.

When I arrived in your Lordships' House today I read the Financial Times and the article on the front page written by very responsible journalists: Mr. Robert Peston (who may well be known to quite a few Members of your Lordships' House), Mr. Edward Luce and Mr. Steve Thompson. The article discussed speculation that the Government might be about to drop their plan to abolish dividend tax credit on advance corporation tax. If so, that would mean that pension fund income would be reduced by £3.5 billion. Whether or not ACT is to be abolished is a fairly sensitive piece of information. The speculation has been that it would be abolished. We now move across the boundary between speculation and disclosure. I quote the article in question:

    "A senior member of the Government said:'The markets are bonkers ... we are pressing ahead'".

Either these three respectable journalists are wrong or they are right and a senior member of the Government--whom I take to be a Treasury Minister--used those words to one or all of those three journalists. That is not speculation but disclosure. I believe that the Government should take this matter much more seriously than they are. Of course the Government have every right to follow their manifesto pledges; but one of those pledges was to refrain from indulging in disclosure before the Budget of price-sensitive information. If the noble Lord the Leader of the House looks at the markets this morning, he will see that that information is indeed price-sensitive. I would be interested to know the identity of the senior Member of the Government who spoke to the FT. Perhaps he should do what Hugh Dalton did and come clean, but perhaps the motto should be "New Labour, old habits".

It is rather unfortunate that Treasury sources and a senior member of the Government should disclose information before the Budget. It is doubly unfortunate that the Government do not take these matters seriously.

Lord Harris of Greenwich: My Lords, I thank the Leader of the House for repeating the Statement. I also pay tribute to the noble Lord who has just resumed his seat. We should also thank him for repeating what Mr. Lilley said in the House of Commons about 15 minutes ago, except that the noble Lord, Lord Mackay, did it rather better than Mr. Lilley. Mr. Lilley gave one of the most pathetically inept performances that I have ever seen in the House of Commons.

Is the noble Lord aware that the comparison between what the noble Lord, Lord Mackay, has just said and the Dalton leak in the early years of the 1945 Labour Government is manifest nonsense? Is he also aware that, curiously enough, no Select Committee was set up when the Daily Mirror received a copy of the previous Chancellor's Budget? I do not recall that the previous

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Government suggested that there should be a Select Committee of the House of Commons to investigate that matter. However, I do remember--perhaps the noble Lord, Lord Richard, will also recall it--allegations made in 1969 that a budget leak had taken place which had appeared on the front page of the Sunday Express. Those were allegations made by Sir Gerald Nabarro and were taken up with energy by the Conservative Opposition. A Select Committee was appointed. I quote from paragraph 12 of the committee's report:

    "Your Committee are forced to conclude ... that Sir Gerald has no evidence which would support this allegation".

There was a Select Committee appointed to look at an alleged budget leak which led to substantial expenditure of public time and money but reached no sensible conclusion.

Further, a leak took place when Mr. Nigel Lawson was Chancellor of the Exchequer. Disclosures were made by a national newspaper that the Chancellor intended to withdraw tax privileges from those who took out endowment policies. I do not recall that the then Government set up a Select Committee to investigate this matter, despite the fact that tens of thousands of people took out endowment policies in order to obtain tax relief and so save themselves a great deal of money.

Is the noble Lord the Leader of the House aware that many of us would prefer a situation in which there was far greater sensible discussion before Budget statements and that a great deal of Budget secrecy is unnecessary? Further, is he aware that perhaps we would all benefit from much more mature debate on the options facing the Chancellor before he presented his Budget?

Lord Richard: My Lords, I do not believe that the House should become too excited about this. It is perfectly obvious what is going on. This is a very transparent attempt by the Opposition in another place to disrupt the Budget of my right honourable friend the Chancellor of the Exchequer. It is not a new tactic. It has happened before and no doubt it will happen again. I wholly agree with the comments of the noble Lord, Lord Harris of Greenwich. What he said was powerfully expressed. He had his facts right. The argumentation was good and I agreed with it.

Lord Marsh: Give him a job!

Lord Richard: My Lords, your Lordships cannot expect me to say anything else. I too watched the television performance of the noble Lord's right honourable friend Mr. Lilley. If ever there were a threadbare case, I am bound to say that this is it. On what is it based? As I understand it, it is based on one comment by the BBC and one sentence in the Financial Times. The article in the Financial Times bears looking at for a moment. Perhaps we shall see the extent of this leak. There has been speculation about ACT for a long time. The article states:

    "Traders said some of the rise in share prices was due to rumours--believed to be ill founded--that the Government had dropped its plan to abolish the dividend tax credit, a move which would cut pension funds income by an estimated £3.5 billion".

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I do not comment on the arithmetic because I am not qualified to do so or the technicalities of those rumours. The article goes on to say:

    "A senior member of the Government said: 'The markets are bonkers'".

That seems to me to be a somewhat concealed leak. It states:

    "A senior member of the Government"--

if indeed one ever did talk to the Financial Times--

    "said: 'The markets are bonkers ... we are pressing ahead'".

What does that mean? In relation to what are we pressing ahead? Apart from anything else, the comment is made after the speculation on the Stock Exchange has taken place and not before. It is today's comments upon yesterday's business. With great respect it is a pretty threadbare case. I finish by congratulating the noble Lord, Lord Mackay. He is becoming the Government's all-purpose spokesman.

Lord McIntosh of Haringey: Opposition!

Lord Richard: My Lords, one day it is trade and industry; the next day social security; the third day it is Treasury; last night it was devolution. What guise will we see him in next? Whichever it is, I hope that he will have a better case than the one he has today.

4.10 p.m.

Lord Marsh: My Lords, that was a rather quick exchange, with the exception of the noble Lord, Lord Harris of Greenwich, whose support for the Government is as admirable as it is enthusiastic. The quicker he gets a job the better, and then we can all relax. The noble Lord is using sleight of hand. Yesterday the market shifted 147 points, as I remember it, for no apparent reason. Normally the day before a Budget one would expect all the dealers to sit on their hands for very obvious reasons. One of the issues that has been around is tax credits and ACT, as the noble Lord rightly said. There was a great deal of expectation that that was the Government's policy.

If a government source said, "The market is bonkers", that is a statement that the opposite is a fact. It can only be one or the other. The noble Lord may be able to jump up to say in retrospect, "As a matter of fact, the Government have been highly intelligent and sensible. They decided not to proceed with such an idiot idea". If that is so, obviously it had no effect on the market. But if the Government have decided to proceed with action on ACT and tax credits, and they were told yesterday that the rumour that they were not so going to do caused the market to shift, and therefore it was bonkers, that is a leak.

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