Thatcher watches her former ministers condemn government economic policy

May 8, 2009 at 3:59 pm 2 comments

lords2
by Tony Grew

A string of familiar faces from financial crises past spoke in Lords debate on Britain’s economic prospects yesterday.

Two former Chancellors of the Exchequer contributed to the debate, which was watched by former Prime Minister Margaret Thatcher.

Her presence in the chamber led former Cabinet Secretary Lord Butler to discuss her legacy.

“Seeing the noble Baroness, Lady Thatcher, in her place today, I should like to say one further thing to the House,” he said.

“In some comment on the origins of the banking failures, it has been suggested that banking irresponsibility is a legacy of Thatcherism.

“Many things have been attributed to Thatcherism that the noble Baroness would have difficulty in recognising, but this is one of the most absurd.

“It is true that, when markets were freed up and greater scope was given to enterprise, greater scope was inevitably given to people to behave irresponsibly.

“However, the noble Baroness was in the vain of propounding sound finance, both publicly and privately, and she would have been the last person to support or encourage borrowing, particularly for the purpose of irresponsible speculation.

“I am sure that she would say to the House today that, if the principles of sound housekeeping had been followed in recent years by some financial institutions that failed to do so, we would not have had the banking difficulties that we have today.”

The tone was set by Lord Forsyth of Drumlean, a former Conservative Cabinet minister, who secured the debate.

“Every Labour Government are the same,” he told peers.

“They leave office with unemployment and debt higher than they when they started. This Government, it seems, will be no different from any of their predecessors.

“It gives me enormous pleasure to have here with us this morning my noble friends Lady Thatcher and Lord Lawson and my noble and learned friend Lord Howe, who had to deal with the consequences, 30 years ago almost to the day, of the mess left by a previous Labour Administration.

“To the Administration led by Mr Gordon Brown – he has squandered the legacy which he inherited from John Major.

“He inherited the strongest economy that we have had in 100 years and turned it into the weakest since the great depression.”

Nigel Lawson, Lord Lawson of Blaby, Chancellor of the Exchequer from 1983 to 1989, felt a sense of deja-va.

“As my noble friend Lord Forsyth said in his excellent speech, which opened this debate, this really is, “Here we go again”.

“We face the twilight days of a Labour Government who have got the economy into a most almighty mess, including a massive fiscal deficit.

“The public finances are in a serious structural mess, leaving aside the amplification through this cycle. It will fall to a Conservative Government once again to clear up that mess.

“If we were to listen to the Government, we would believe that the problem was a new kind of flu virus—financial flu, which came across the Atlantic from the United States—and that, until then, we were perfectly healthy and fit and there were no problems at all.

“That is poppycock.”

Lord Lawson also attacked the planned rise in taxes for people on incomes over £150,000 a year.

“What we must not do is raise the top rate of tax from 40 per cent to 50 per cent,” he said.

“Not only is this highly damaging but it makes no contribution at all—not even the smallest one—to narrowing the budget deficit or to reducing the problem with the public finances.

“When I brought down the top rate of tax from 60 per cent to 40 per cent 21 years ago, not only did it bring in more revenue, which can be seen from the figures, but it had a curious result which even I did not expect.

“The top 1 per cent of households had been paying 14 per cent of the total income tax yield, but 10 years later the top 1 per cent of taxpayers were paying 21 per cent of the total yield. There was a redistribution in taxation.”

Norman Lamont, Lord Lamont of Lerwick, Chancellor from 1990 to 1993 had some sympathy for the present incumbent.

“I do not think that anyone could have envied the Chancellor of the Exchequer in introducing this Budget,” he told the House.

“His situation was not one of his own making, but I thought that he delivered his speech with commendable stoicism considering the position in which he found himself.

“Before the Budget, I said that I hoped it would be a Darling and not a Brown Budget.

“Unfortunately, I think that it was a Brown one, and highly cynical at that.

“Nowhere is that cynicism more demonstrated than in the decision to reintroduce the 50 per cent rate of income tax—not just the measure, but also its timing.

“My main criticism of the Budget would be that it did not show a clear path to restoring the national finances.

“The public finance figures revealed in the Budget were a horror story with the gargantuan deficit.

“I would suggest that the most alarming figure was not the 12.4 per cent of GDP deficit, but, as my noble friend Lord Lawson pointed out, the figure for the structural deficit—the 9.8 per cent of GDP.

“That huge figure shows that a large part of the deficit was not related to the downturn and not going to come back just with the recovery of the economy.

“By itself, that figure was a condemnation of the fiscal rules the Government have practised in the past and of their own overspending.”

Another former Thatcher minister, Lord Lang of Monkton, was also critical of Gordon Brown’s administration.

“The Government’s broad approach to the crisis has been, first, to flood the economy with money—money borrowed, money promised, money printed—hoping, no doubt, in the process to wash away the trail of their past record of mismanagement,” he said.

“Now they are relying on the Bank of England to print money to buy gilts from the banks.

“Prices go up, yields go down and thereby companies’ pension-scheme deficits go heavily into deeper deficit. That, in turn, reduces companies’ capital for new investment and slows recovery.

“Having brought the country to its knees by excessive borrowing over the past decade and some £600 billion of debt racked up in the good years, the Prime Minister was forced back, in the words of the most reverend Primate the Archbishop of Canterbury, “like an addict returning to the drug”, and now hopes to raise some £700 billion of debt over the next five years.

“I do not believe that there is another country in the world that will have to borrow more in proportion to its GDP.

“With other major countries seeking to raise more than $2 trillion this year alone, and with sterling devalued by some 30 per cent, there must be a very real danger of a gilt strike and the loss of our triple-A credit rating.”

Former Conservative Treasury minister Lord Ryder said the Chancellor and the Treasury should “come clean with us about the state of our public finances and provide us once and for all with a credible framework for setting them right.”

Former ministers Lord MacGregor and Lord Patten also condemned the goverment.

Industrialist and Labour peer Lord Bhattacharyya said the Treasury and the Prime Minister should be “applauded for their swift action to secure the financial sector at a moment of global crisis.”

“I am an optimist about this country; that is the reason I live here,” he said.

“We live in a great, resilient and innovative nation. Yet far too often we are seized by negativity when we have the chance to grow.

“We must be confident and Britain will grow and prosper. To seize that opportunity, it is vital to have a Government who understand the needs of industry.

“In preparing for recovery, we must not waste the talents of our young people … recent announcements on skills, internships and apprenticeships are particularly welcome.”

Elected hereditary peer Lord Selsdon confessed to being confused.

“My Lords, I get the feeling that a lot of people think that we have sold our birthright for a mess of pottage. What an extraordinary mess we are in.

“I used to think that I knew what an instrument was; I thought I knew about debt and equity.

“Now I am completely confused.”

In his contribution to the debate Lord Butler claimed that “much current political dialogue is about which Government can take the most credit for the prosperity of the past 15 years and which will be most competent to deal with the difficult situation that the world now faces.”

Lord Butler said it was less to do with government or financial authorities “than to an extraordinary combination of circumstances.

“We have had a supply of cheap manufactured goods from the Far East, a flow of cheap labour from eastern European countries and an abundance of cheap credit.

“In those circumstances, it really is not surprising that the western world has been prosperous over this recent period.

“The trouble is that the prosperity has been built on major imbalances in the world economy. It has been built on consuming countries, including the United States and the United Kingdom, consuming more than we were earning and living on the credit of the exporting countries—particularly China, Japan and Germany.

“One of the aspects that worries me most about the situation as we look forward is that the steps that are being taken rightly by world leaders to deal with the situation that the world faces do very little to tackle those imbalances.”

He advised the Treasury to encourage “those areas of the economy from which growth will come.”

“Whatever the public distaste at present for parts of the financial services industry, we must also recognise that it will remain a very important sector of our economy.”

The Lord Bishop of Portsmouth, one of two bishops to contribute, was in philosophical mood.

“We already know from experience, but also instinctively, that many things will have to be different,” he said.

“How we handle this moment as a nation and people, and as individuals, will determine the kind of country we will be in the future.”

Lord Marlesford said it was curious that in the debate “we have 20 Conservative speakers yet the Labour Party has only been able to put up eight people.

“That is despite having created hundreds of new Peers since 1997. I fear this reflects, yet again, the dying embers of the Government. They seem to have lost the will to survive.”

Winding up for the Opposition, Baroness Noakes summed up the mood of the House.

“I doubt that the Minister when he responds will have the humility to accept the Government’s share of blame for the economic mess we find ourselves in,” she said.

“I wager that he will not acknowledge the dishonesty of the claim to have ended boom and bust; indeed, he may even try to deny there has been a boom.

“This Budget read the last rites for new Labour and few will regret its passing, but we do regret the human tragedy that the Government’s policies have inflicted on the people of this country.

“It is at most 13 months until the next general election. The best that we can hope for is that this Government do no further damage in the mean time.”

For the government Lord Myners, Financial Services Secretary to the Treasury, praised peers for holding “a frightfully good debate.”

He was less generous about some of their advice.

“I heard a sequence of presentations which could be summarised as penny-wise and pound-foolish—early savings now but at huge cost for the future,” he said.

“We are looking forward to the economic upturn.

“At the heart of this year’s Budget is our ambition to build for the future.

“That means funding to unlock housing projects that will build thousands of new homes, ambitious targets for our digital communication infrastructure, investment in our national transport networks and hundreds of millions of pounds to support low-carbon energy generation.”

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2 Comments Add your own

  • […] Bishop of Bradford, who took his seat in the Lords in March, chose a debate on the country’s economic prospects for his maiden […]

    Reply
  • 2. philanthropicwall  |  June 6, 2009 at 1:19 pm

    Being British, I love ‘Wallflower’ by MC Frontalot with the lyrics “I’ve got a new dance called The Margaret Thatcher.
    It’ll get in your pants, you’d better call the dispatcher.
    and don’t do anything I wouldn’t condone
    except a dance named after a villainous crone.”
    Songs featuring Margaret Thatcher continue to be produced, such as The Magggie Thatcher Experience (http://www.maggiethatcher.com/video.html )with Thatcher’s Death Anthem and ‘The Lady’s not for Burning’ (http://www.maggiethatcher.com/buymusic.html) who are trying to Flash Mob Thatcher’s Death by using social networking sites such as Facebook.(http://www.flashmobdeath.tk) They are a one piece spoof band from Sheffield, Yorkshire who make use of Flash Games related to the iron lady or the Miners Strike to gain popularity. (http://www.milksnatcher.com )They are not the only ones, however. Chumbawamba also have an E.P out called ‘in Memorium’ which will be sent out to everyone who orders one the day Thatcher dies. The genre ‘Geek or Nerd Hip Hop’ have also produced songs featuring Thatcher such as MC Frontalot with the lyrics “I’ve got a new dance called The Margaret Thatcher.
    It’ll get in your pants, you’d better call the dispatcher.
    and don’t do anything I wouldn’t condone
    except a dance named after a villainous crone.”

    Reply

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