Members of the Lords debated the UK economy and the role of the government in promoting growth, yesterday (Tuesday 29 January)
Lord Deighton (Conservative), commercial secretary and government spokesperson for the Treasury, opened the debate, saying: ‘The trauma caused by the global financial crisis and the ensuing recession required urgent action. This government responded with a radical programme of reform, designed both to meet the immediate danger to our public finances and to raise the performance of our economy to ensure our competitiveness in a fast-changing, global environment. This programme has four key components and we are driving forward on each one of them.’
He went on to explain the four aspects, saying: ‘The first and principal building block upon which all other policies depend is the return to fiscal stability... The second component of this programme is monetary policy... The third component involves reforms to our financial system,’ with the fourth component being ‘...a comprehensive package of structural reforms aimed at rebalancing and strengthening the economy for the future, including an ambitious agenda of infrastructure investment.’
Lord Eatwell (Labour) followed, saying: ‘The question before us today is: in the situation in which we find ourselves, what is to be done? How can we get Britain back on to a secure growth path? Should we follow the recommendations of the chancellor of the exchequer that we stick with austerity, accepting his declaration that "Britain is on the right path"? Let us call this plan A. Or should we adopt plan B, following the advice of Adam Posen, former member of the Monetary Policy Committee, and particularly of Olivier Blanchard, chief economist of the International Monetary Fund (IMF), who said last week, "if things look bad at the beginning of 2013 - which they do - then there should be a reassessment of fiscal policy... We think that slower fiscal consolidation in some form may well be appropriate."’
Baroness Kramer (Liberal Democrat) expressed her views on the economic situation, saying: ‘I do not think you have to have an economics background to recognise that over a longer time than the Labour period - over a generation - we allowed our economy to become unbalanced... We became overly dependent on the financial services sector. We failed to make sure that vigour extended beyond the south-east and covered the rest of the country. In perhaps the cruellest rub of all, we neglected providing the kind of skills to our young people who were not going to take the academic route but needed vocational training and apprenticeships.’
Lord Deighton (Conservative), responded on behalf of the government.