Vol. 711 Monday No. 89 15 June 2009 PARLIAMENTARY DEBATES (HANSARD) HOUSE OF LORDS OFFICIAL REPORT ORDER OF BUSINESS Questions Finance: Balance of Payments Armed Forces: Human Rights Act EU: Transport of Horses Public Transport: Alcohol Co-operative and Community Benefit Societies and Credit Unions Bill First Reading Political Parties and Elections Bill Report (1st Day) Iraq Statement Political Parties and Elections Bill Report (1st Day) (Continued) Legislative Reform (Minor Variations to Premises Licences and Club Premises Certificates) Order 2009 Motion to Approve Political Parties and Elections Bill Report (1st Day) (Continued) Grand Committee Welfare Reform Bill Committee (3rd Day) Written Statements Written Answers For column numbers see back page £3·50 Lords wishing to be supplied with these Daily Reports should give notice to this effect to the Printed Paper Office. The bound volumes also will be sent to those Peers who similarly notify their wish to receive them. 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All prices are inclusive of postage. © Parliamentary Copyright House of Lords 2009, this publication may be reproduced under the terms of the Parliamentary Click-Use Licence, available online through the Office of Public Sector Information website at www.opsi.gov.uk/click-use/ 835 Finance: Balance of Payments[15 JUNE 2009] Finance: Balance of Payments 836 Lord Davies of Oldham: My Lords, they are significant House of Lords figures, which are unparalleled in recent decades, as the noble Lord will appreciate. But he also knows that Monday, 15 June 2009. they are reflective of a strategy of investment in this economy, which is being pursued by every advanced 2.30 pm economy in the world, including, most importantly, the United States and, to a great extent, China. In so Prayers—read by the Lord Bishop of Bradford. far as public deficits occur from this, those are a price which has to be paid in order to minimise the sharpness Finance: Balance of Payments of the recession and to keep the level of unemployment Question as low as we can. I am sure that the whole House applauds those developments. 2.37 pm Lord Peston: My Lords, I think that I may have to Asked By Lord Sheldon congratulate my noble friend. Apart from being Deputy To ask Her Majesty’s Government what is their Chief Whip, he is also now a Parliamentary Under- latest forecast for the balance of payments in the Secretary at Defra. Just to cheer him up a bit, Defra is current financial year. an area that does not interest me at all. There are two interesting questions about the balance Lord Davies of Oldham: My Lords, the Government of payments. We have been in deficit in this country forecast for each calendar rather than financial year. since, I think, 1985, which means that even though The forecast for the balance of payments deficit economists always say, “This can’t go on”, it always for 2009 is 3.5 per cent of GDP, or £48.5 billion: up seems to go on. Specifically on the present state of from a deficit of 1.7 per cent of GDP in 2008, or affairs, bearing in mind that it is a duty of an economist £24.5 billion. never to look on the bright side, otherwise we would cease to be the dismal science, would one be accused of being complacent by saying that the remarkable Lord Sheldon: My Lords, I thank my noble friend thing about the balance of payments at present is that for that reply. Although the Treasury does not officially we do not seem to have the slightest sign of an forecast the balance of payments other than at Budget emergency or crisis on the horizon? Am I being time and on pre-Budget occasions in the autumn, I complacent in suggesting that possibility? understand that the Chancellor of the Exchequer may not publish the usual spending review this autumn. Can my noble friend confirm whether this is so? The Lord Davies of Oldham: My Lords, if my noble assessment of the borrowing of £175 billion this year friend is to introduce complacency to our discussion, I and the next is that it is large and continuing, with hope that he will concentrate on Defra in due course necessary expenditure cuts affecting our economic and make life a little easier for me. On the issue that he recovery. When does he expect the financial position raises, it is obvious: our balance of payments forecast to be restored, with no further borrowing? for our worst year is below the balance of payments deficit in the mid-1980s under a previous Administration. Therefore, this does not feature as a factor which Lord Davies of Oldham: My Lords, those are two should concern us over much, save for the obvious fact fairly fundamental questions. Both are wider than and that the country has to earn its way. It is important somewhat remote from the balance of payments issue, that we move from deficit with regard to growth. The which was the basis of my noble friend’s original forecast for the end of 2009 is of deficit, but we look Question, although I had anticipated that it might go forward to a resumption of growth next year. a little wider in this short exchange. He will have to wait for any commitment on the pre-spending position. I cannot comment at this stage, but he will appreciate Baroness Noakes: My Lords, in 1997 we had a from the figures that we have on the balance of payments surplus on trade in goods and services of £4 billion. deficit that the United Kingdom’s economy remains Last year, we had a deficit of 10 times that amount. If one of the most competitive. We are actually benefiting you look behind those figures, last year we had a at present. Repatriated income from investments is in deficit on goods alone of £93 billion. Does the Minister fact less than earnings, so our balance of payments think that these are signs of good economic management? figures are better in those terms, but my noble friend will recognise that we are addressing ourselves to the Lord Davies of Oldham: My Lords, it is a sign of whole question of economy recovery and that economic management in difficult times. I notice that developments in the balance of payments are a factor the noble Baroness did not take the opportunity of in that. defending past strategies of her party that led to balance of payments deficits greater than we are facing Lord Forsyth of Drumlean: My Lords, does the in the middle of this worldwide crisis, which everyone Minister agree that the Government’s plans to borrow recognises is of a unique severity since the 1930s. She an additional £900 billion through the gilts market can will accept that these deficits have to be accounted for. be achieved only by a substantial increase in interest They are part of the necessary recovery with regard to rates? What does each percentage increase in interest the economy. She will delight in the fact that we see cost the Government? improvements in the position in due course. 837 Finance: Balance of Payments[LORDS] Armed Forces: Human Rights Act 838 Lord Lea of Crondall: My Lords, my noble friend I thank the Minister for her Answer. We welcome mentioned China and the United States. Last night on the fact that the MoD has offered commanding officers Radio 4, the deputy governor of the Bank of China indemnity from prosecution under human rights law. said that the investment and trade relationship with Will the Minister put the Chief of the Defence Staff’s the United States would decline and that that with the letter to commanding officers in the Library? European Union would increase substantially. Does This judgment results from a conflict between English my noble friend agree therefore that talk in this House common law, which recognises that the duties of the and elsewhere about China and globalisation versus Armed Forces include putting one’s own life in peril the European Union is wrong and that we must do and ordering others to do so, and European human everything possible to be fully integrated into the rights law, which emphasises protection of life as a European economy and everything that goes with it? priority.