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Lord McIntosh of Haringey: My Lords, as the noble Lord, Lord Roberts, knows, we do not produce forecasts intervening between the Budget forecast and the pre-Budget forecast six months later. We have no basis on which to alter the forecast made in Budget 2002 of growth this year of 2 to 2½ per cent. Our forecasts over the past few years have been exceptionally good. The 2001 forecast was predicted in each of the six-monthly figures produced between the Pre-Budget Report 1999 and the Pre-Budget Report 2001. So we are fairly confident that we stay within our forecasts.

No, I do not agree that the increase in national insurance contributions will be a danger to growth. On the contrary, it will be a significant contribution to the necessary funding of the National Health Service.

Lord Barnett: My Lords, does my noble friend accept that the more important growth figure is that given in the Budget report this year of the trend growth rate of 2¾ per cent? Does my noble friend recognise that growth forecasts, even those made by the noble Lord, Lord Saatchi, or his researchers are as likely to be wrong as weather forecasts? In those circumstances, does he nevertheless accept, and is it the Treasury view, that if there is a blip in that 2¾ per cent the changes he would need to make would not affect the public expenditure forecast?

Lord McIntosh of Haringey: My Lords, with no disrespect to the Meteorological Office, no, I do not think so. Our forecasts are always produced within a range. They have been within that range for the past two years at least and, I would almost certainly say, further back. In Budget 2002, we forecast growth

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this year of between 2 to 2½ per cent and next year of 3 to 3½ per cent. I see no reason why we should alter those forecasts.

Lord Lamont of Lerwick: My Lords, without in any way disagreeing with what the noble Lord, Lord Barnett, has said, is it not the case that Budget 2002 expects the budget over the next four to five years to grow 3 to 3½ per cent faster than the G7 average? Is it not also true that, as the noble Lord, Lord Barnett, has said, the long-term rate of growth is expected to be 2¾ per cent rather than the historic 2¼ per cent faster than the EU average? Given that in the short run we shall outperform G7 and in the long run we shall outperform the EU, what is the beef in the argument for the euro?

Lord McIntosh of Haringey: My Lords, the argument for the euro is not based on those calculations. There is no reason why it should be. It does not figure in the Chancellor's five economic tests.

Lord Newby: My Lords, the Minister will know that the increase to 2¾ per cent for trend growth is based largely on the Government's projections of continuing high levels of immigration. Can the noble Lord tell us what assumptions the Government have made about where those high future levels of immigration will come from; what skill levels the immigrants will have; and, of great importance particularly in London, what the implications will be for public infrastructure and, not least, housing?

Lord McIntosh of Haringey: My Lords, that is a little far away from the Question. I do not accept that the forecasts of medium-term growth are based in large measure on assumptions on immigration. Of course there are assumptions about levels of immigration contained in the forecasts, but I think that the noble Lord, Lord Newby, is exaggerating their impact. It is a fact that we have had a substantial level of immigration of people of working age. In view of the longer-term problem of the balance of people between working age and those older and younger who are not able to contribute to the economy, that may be rather a good thing.

Lord Saatchi: My Lords, if the Government's record of economic forecasting is as reliable as the Minister suggests, why is it that in Budget 2001 the Government forecast their own need for borrowing to be £34 billion and yet, just a year later, in Budget 2002, they forecast that they will need to borrow more than double that—£72 billion?

Lord McIntosh of Haringey: My Lords, there are two answers to that. First, when I referred to the validity—rather than reliability—of government forecasting, I was talking about government forecasting of economic growth. Forecasts of government borrowing are forecasts of a difference between two very large figures. One reason why there is a difference between the forecasts for government

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borrowing is that the Government have made expenditure decisions to protect our public services, which the previous government failed to do.

Lord Berkeley: My Lords, if my noble friend is looking for people of working age to come into this country, may I remind him that there are several thousand of them sitting in Sangatte near Calais wanting to come over in a freight train?

Lord McIntosh of Haringey: My Lords, I do not like saying that supplementary questions are outside the scope of the main Question, but it is about the economic growth rate in the first quarter of 2002.

Lord Renton of Mount Harry: My Lords, in answer to my noble friend Lord Lamont, the Minister mentioned the five economic tests. When does he expect to give us an answer as to whether the five economic tests have been met?

Lord McIntosh of Haringey: By 2003, my Lords.

Competitive Tendering: National Security Exemptions

2.51 p.m.

Viscount Goschen asked Her Majesty's Government:

    On how many occasions since 1997 the requirement for the Government to engage in a competitive tendering process has been waived on the grounds of national security.

Lord McIntosh of Haringey: My Lords, central records are not maintained on individual procurements or the procurement routes used. Responsibility and accountability for procurement is delegated to the accounting officers of government departments, local authorities, NHS authorities and trusts and certain utilities.

Viscount Goschen: My Lords, is it not time that the Government gave a straight answer to a straight question? The national security exemption from the procurement directive is extremely narrowly drawn and should be used only in extraordinary circumstances. Is it not then extraordinary that the Government are unable to answer the Question about when the grounds of national security were used to exempt the Government from what are otherwise their legal obligations?

Lord McIntosh of Haringey: My Lords, national security obligations under paragraph 6(h) of the supply regulations are, to my surprise, rather widely drawn. Indeed, exemptions from competitive tendering are extremely widely drawn. That wording states that there is an exclusion for contracts for,

    "work which is classified as secret or where the carrying out of services under it must be accompanied by special security measures in accordance with the laws, regulations or

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    administrative procedures of any part of the United Kingdom, or when the protection of the basic interests of the security of the United Kingdom require it".

That is widely drawn, and the House can imagine the complication there would be if we started to give details of, for example, Ministry of Defence contracts that fell within that category.

Lord McNally: My Lords, when those exemptions are invoked, is Parliament's Intelligence and Security Committee asked to make a judgment on whether the powers have been correctly used?

Lord McIntosh of Haringey: My Lords, not so far as I know.

Earl Howe: My Lords, as regards the smallpox contract, does the Minister agree that in the United States there was an open and competitive procurement process that was completed within six weeks, compared to that in the UK, which took more than four months without competitive tendering? Are there lessons to be learnt from that for future similar procurements, if only to ensure value for money for the taxpayer?

Lord McIntosh of Haringey: My Lords, of course I cannot comment on the reasons for the United States decisions, but they carried out a procurement exercise for what is known as the New York version of smallpox vaccine, which is certainly viable and has been widely used in the United States and the Americas. Our requirement was for a vaccine that is equally viable and has been widely used in the World Health Organisation eradication programme. We have particular experience of its use in Europe, Africa and Asia.

The professional view taken by the Joint Committee was that we should choose that vaccine. We talked to five manufacturers considered capable of producing that vaccine. The outcome was that one supplier was considered to be able to meet our requirements for specification, quantity and delivery.

Youth Crime

2.55 p.m.

Baroness Seccombe asked Her Majesty's Government:

    How they respond to the result of the survey, commissioned by the Youth Justice Board, indicating that a quarter of all children between the ages of 11 and 16 have committed a crime in the past year.

Lord Rooker: My Lords, the "quarter" referred to in the noble Baroness's Question relates to those at school. For those excluded, it is nearer two-thirds. The survey is informative but its conclusions are not new—it is the fourth survey of its kind. We are working hard to tackle youth crime and have made significant

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improvements to the youth justice system. In recent years, we have established the Youth Justice Board, youth offending teams and introduced new measures and interventions. We have also halved the average time taken to deal with persistent young offenders from 142 days to exactly 71 days at present. We continue to make further improvements, including tackling street crime and truancy.

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