Finance Bill

My Lords, 36 years ago almost to the day and the hour, I made my maiden speech in the other place. I spoke in the Second Reading of the Finance Bill, and as punishment was put on the Finance Bill Committee for the next five years. Luckily, that cannot happen to me here. It was my first speech in Parliament but it was almost one of my best. Inflation at the time was raging at 20 per cent, which is completely unsustainable and I came to the conclusion and suggested in my speech that it would result in middle-class revolution. I said that middle-class people would be marching on the streets between the fruit-growing areas of Evesham in my constituency and the Malvern Hills. I was completely wrong—they all stayed at home—but it was a magnificent speech. I am afraid that this one will not be as good for various reasons, not least that it will be short—I have almost finished it already. As I enter my dotage I do not remember or even understand the clever economic arguments that one used in the past. In 1974 I was still running a semi-respectable econometric forecasting company—the noble Lord, Lord Burns, was a part-time member. Terry Burns, as I used to know him, was absolutely brilliant as a computer and econometric programmer. He was working at that time on the London Business School forecasting model, commanded—I think that is the right word—by the inimitable Professor Jim Ball. The other thing that I have to consider in this speech is not to be controversial. I suppose that means being anodyne. However, I hope that your Lordships will forgive me if I say one thing of substance about the Bill that we are currently debating—I shall be as uncontroversial as I possibly can be in saying it. It is, I assume, a matter of no controversy that there is a debt problem in this country. It is also a matter of no controversy that the coalition Government are adopting a fiscal stance in terms of taxation and public expenditure policy to remedy that situation. I understand that it is, in a broad sense, supported by the Opposition. There is debate about timing and, because it is controversial, I do not intend to go into that. I simply want to put before your Lordships the point that there is a strategic alternative to what is going on at the moment. It is not one that I support—I have to give an opinion about that—but there is one. The noble Lord, Lord Razzall, hinted at it. In most cases similar to the one we are in with high government debt, there could be a monetary policy aimed at stoking up a bit of inflation to bring down the cost of the debt in real terms. That is quite normal for Governments. It is a perfectly reasonable alternative and may, indeed, come about by default at some point, but the problem with it is that if you have a little bit of inflation, it can, in bad times, become quite big inflation. That was the point of my raising this in my maiden speech when we had 20 per cent inflation. One fifth of people’s savings were collapsing every year. It seems to me that a policy that implicitly or explicitly is based upon inflation, which could be an alternative to what we have at the moment, is not a brilliant idea. Even if you have low inflation, it is not good news for those dependent on savings or on fixed incomes. I hope that it is not too controversial to say that I support the present strategy so far as fiscal policy is concerned. I have one final, very small, point, which I hope your Lordships will not feel is too sycophantic. This House in its present shape contributes a little bit towards the balance of public expenditure by not paying its Members. If there were to be a change to an elected Chamber where professional Members were fully paid, that situation would alter. I simply make that point. It is a very small point in connection with the revision of this Chamber, and there are much wider issues that I hope noble Lords will allow me to come back to on another occasion, but I would tax noble Lords’ patience and it certainly would not be relevant and would be controversial if I went down that way so, on that basis, I will sit down.