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Lord Mackay of Ardbrecknish: My Lords, I am grateful to the Minister for giving way. He is praying in aid businessmen in this country. Perhaps he can name a single businessman, including his noble friend Lord Simon of Highbury in his previous capacity as chairman of BP, who approves of a £5 billion per annum pension hit?
Lord McIntosh of Haringey: My Lords, what the noble Lord persists in calling the £5 billion pension hit and which I shall persist in calling the removal of double tax incentives, which were no longer justified and were an anomaly, has been criticised by a very large number of people. But in the wider sense of the completion of the review of advance corporation tax which took place last week, my noble friend's successor, Mr. John Brown, the chief executive of BP has said that the changes are very welcome. They reflect consideration of what people have said and they make Britain a great place to do business from. Mr. Adair Turner of the CBI has favoured the reform of the corporation tax regime in line with the principles announced by the Chancellor. Richard Baron, the taxation executive of the Institute of Directors, has said that the abolition of ACT was wonderful for companies.
Lord Mackay of Ardbrecknish: My Lords, I hear what the noble Lord is saying about the abolition of ACT; but that is not the question I asked. I asked him to give me one quotation approving the decision to take £5 billion a year out of pension funds. He has singularly failed to do that. Can he try again?
A number of other noble Lords quite rightly drew attention to what was necessary to improve R&D, innovation and private investment. As regards private investment, I claim that the greater certainty which is now possible from the abolition of ACT and the ability of companies to forecast their cash flow and profits more accurately, must be an advantage to private investment. We recognise the need for steps to improve R&D and innovation. We have set up a group under Mr. Nigel McCulloch of Biotech to look at the financing of high-tech. companies which, I am sure noble Lords will acknowledge, are at the forefront of our needs for increased R&D. That is without in any way denying the valuable investment which is carried out by pharmaceutical companies.
We are also committed to the reform of capital gains tax, which will encourage long-term investment and about which the Chancellor will have more to say in his Budget. I hope that my noble friend Lord Montague will be able to wait until that time to receive an answer to the very proper questions that he asked. The noble Viscount, Lord Caldecote, also talked about investment from his great experience at 3i. He made a particular plea for the shipbuilding industry. That plea struck home to me. I cannot claim that there are any specific shipbuilding initiatives in the Government's plans at the moment; but the whole thrust of our work must be to encourage investment both in shipbuilding and in other manufacturing industry. The noble Viscount is quite right in saying that very serious and important opportunities have been lost in recent years.
Perhaps I my now say a brief word about growth forecasts, which comes back to what I said at the beginning about the difference between forecasting and targets. I believe that it is clear from the pre-Budget report that all of the forecasts are in a range. It is our intention in particular with forecasts of growth, that our policies should result, for example, in the next year or two in an increase from 2.25 per cent. to 2.75 per cent. growth. High and stable growth are at the centre of our policies.
At the same time our economic prospects must be affected by the availability of jobs, skills and people who are willing and able to go to work. That is the reason why we announced in July the biggest ever programme to get the young and long-term unemployed off welfare and into jobs. The new deal which we have announced provides for help to the long-term sick and the disabled to get them into work. It provides out-of-school childcare and a 10-fold increase in the number of out-of-school clubs over the next five years. I am grateful to my noble friend Lord Levy for his reference to that in his excellent maiden speech. There will be extra help for lone parents in the form of interviews and advice to get jobs.
I acknowledge, as all Members of the Government have done, the difficulty of finding jobs in areas of very high unemployment. There will be action on skill shortages in bringing forward new deal payments to employers to meet the cost of training. The tax and benefit reform is still incomplete. It is designed to make work pay--in other words, to remove the disincentives to work which have existed until now. My noble friend Lord Davies of Coity, in a moving speech, was very powerful in his remarks on the need for a minimum wage. Tax credits for working families were referred to by the noble Lord, Lord Mackay of Ardbrecknish, and are of course still in the planning stage. We are aware of the implications for family and individual taxation, and income tax at the starting rate of 10p is in the planning stage, as are changes to national insurance and benefit tapers.
I think it is important to re-emphasise the role of skills and the need to improve our skills. I liked the reference my noble friend Lord Levy made to "youth clubs for the elderly". I thought he might have been describing the House of Lords when he described a place which was clean, well-lit and warm enough and gave people the chance for civilised intercourse, but perhaps he did not quite mean that. At the same time we need responsible pay settlements to achieve lower inflation more quickly and to reach higher growth and more jobs.
I was surprised at how little reference there was about the individual savings accounts. They were welcomed by the noble Lord, Lord Taverne, and by my noble friend Lord Desai, who rightly referred to the need for better regulation. That of course is taken into account in our plans. I am afraid the noble Lord, Lord Mackay, has been seduced by early headlines. The best estimate we have of people who will be affected by the overall investment limit is between 300,000 and 500,000, rather than the million he was talking about--hardly "middle England" as some of the broadsheets chose to say this morning.
However, the noble Lord is right in saying that you have to get complementary policies for long-term investment in the form of stakeholder pensions locked-in saving as well as the additional savings which will be provided by the individual savings accounts. I would remind him that it was under his Government that the cost of TESSAs and PEPs, in terms of tax lost, largely for better-off people, had risen out of control to £1.5 million. We are prepared to live with that £1.5 million but we are not prepared for it to be concentrated on the better off. Our intention is to use the same money to encourage twice as many people to use the individual savings accounts. I hope that those who are involved will think that this is a worthy objective. At the same time, as the House will know, there has been a fairer deal for pensioners in the form of help for winter fuel bills and reducing VAT on energy saving schemes, to which the noble Lord, Lord Ezra, referred earlier this week and again today.
Many noble Lords have referred to European monetary union, nearly all of them urging us to move faster rather than slower. It is interesting that there has not been a single hint of the official Conservative Party policy of no entry into EMU within two Parliaments, whether from the Conservative Front Bench or from the Back-Benches--
To recapitulate, what we have been trying to do, and will continue to do, is to deliver high long-term growth with low unemployment. We have an economy which is growing slowly. It was over trend, and it needs to slow to more sustainable rates next year, and we anticipate that inflation will remain low. For this we need responsible pay settlements from the boardroom right across. This will allow higher sustainable growth and more jobs. Somebody used the words "courageous economic policies". We are not looking for courageous economic policies but for prudent economic policies, and we will not gamble with the nation's finances. If that means that in the short term there is a cry for more public expenditure we understand that, and we understand the position of the Liberal Democratic Party on that, and the position of many in our own Party. However, the need for prudence and long-term sustainable policies will sustain us in our determination to achieve the best results for this country's economic prospects.
Lord Currie of Marylebone: My Lords, I thank my noble friend for that conclusion to this debate and for responding to the many contributions we have had from all parts of the House throughout this debate. We have had many very effective contributions and five excellent maiden speeches, four of them, I am pleased to say, from these Benches. We have ranged very widely. We have covered the core issues of macro-economic policy, fiscal policy, monetary policy, taxation and government spending, and the vital issue of EMU.
I said in my opening speech that we would range widely and that the ingenuity of your Lordships would ensure that we did not confine the debate too narrowly but that many diverse issues would nestle comfortably within the span of the broad Motion. Indeed, that has proved to be so. We have talked about employment, the management of the Civil Service and its efficiency. We have talked about the vital role of the voluntary sector and we have had a fascinating personal political history of the past half-century or more. We have talked about shipbuilding; and we have had a fascinating account of