CLEVELAND, Ohio -- Cloud Computing won Preakness Stakes 2017 today (Saturday, May 20) at Pimlico Race Course in Baltimore, Md. Cloud Computing edged Classic Empire. Senior Investment finished third, Lookin At Lee fourth and Gunnevera fifth.
Multiplier was sixth, Conquest Mo Money seventh, favorite Always Dreaming eighth, Hence ninth and Term of Art 10th.
The Preakness, featuring 3-year-olds covering 1 3/16ths miles on a dirt track, is the second "jewel'' in horse racing's Triple Crown. Two weeks ago, Always Dreaming won the Kentucky Derby at Churchill Downs in Louisville, Ky.
This was the 142nd running of the Preakness.
Always Dreaming (6/5 odds minutes before race) was joined by Lookin At Lee (9-1), Classic Empire (2-1), Cloud Computing (13-1), Conquest Mo Money (10-1), Gunnevera (11-1), Hence (22-1), Multiplier (19-1), Senior Investment (30-1) and Term of Art (45-1).
Always Dreaming tried to become the 36th horse to win the Kentucky Derby and Preakness. The most recent to do so was American Pharoah in 2015. American Pharoah won the Belmont to complete the Triple Crown.
The Preakness was the 13th on a 14-race program.
Cleveland connection: Among those at Pimlico on Saturday was former Cleveland Browns offensive lineman Robert Jackson, who is part of the ownership group for Always Dreaming. Jackson is a Bay Village resident. Also part of the ownership group is Cleveland radio mogul Tom Wilson and All Pro Freight owner Chris Haas.
Pimlico's fate: A record-setting crowd on Friday, followed by a huge throng for the Preakness, will enable the owners of aging Pimlico Race Course to break even this year, but won't blunt their effort to move the Preakness to nearby Laurel Park.
"It's going to come to a head at some point later this year," Sal Sinatra, president and general manager of the Maryland Jockey Club, said Saturday. "We'll see where it shakes out."
The Maryland Stadium Authority is in the midst of a study to determine how much money it will take to sufficiently renovate 147-year-old Pimlico. If the money isn't there, The Stronach Group wants to hold the Preakness at newer, shinier Laurel Park.
Faces in the crowd: New England Patriots coach Bill Belichick.
Background: Always Dreaming tried for his fifth victory in five starts. The morning-line favorite at 4-5 started from the No. 4 post position.
Two weeks ago, Always Dreaming, trained by Todd Pletcher and ridden by John Velazquez, was a 9/2 favorite at the outset of the Derby. On a sloppy track, he covered the 1 1/4 miles in 2:03.59 to beat Lookin At Lee by 2 3/4 lengths and Battle of Midway by 7 3/4. Morning-line favorite Classic Empire was fourth and Practical Joke fifth.


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Oman Air And Ministry Of Toursim Launch Major Marketing Campaign In UK
Spectacular images showcasing Oman in the United Kingdom form part of a major new marketing campaign by Oman Air and the Ministry of Tourism.
Her Excellency, Dr Rajiha Abdul Ameer Ali, Minister of Tourism said "the joint campaign which will run for six months reflected a shared view of the importance of the United Kingdom to Oman's business, trade and tourism sectors".
The campaign will see fresh motivational images of Oman at strategic locations in London, complemented with a wide range of print and web-based promotions.
Her Excellency said "our objective is to build awareness in Oman as the destination of choice for cultural, nature and adventure tourism in the Middle East. The campaign is additional to our on-going marketing efforts in the United Kingdom" the Minister said.
Oman Air commenced London Gatwick services in November 2007, and will increase from six to daily services from October 2008.
Peter Hill, Oman Air's Chief Executive Officer said "the United Kingdom market is vital to Oman Air's international strategy and we will look to position our new aircraft on the sector as soon as possible. The joint campaign will assert Oman Air's competitive advantage as the only non-stop service between London and Muscat" he said.
He added "our network expansion and Oman's tourism growth are closely linked. I am sure our joint campaign will be a useful pilot for how Oman Air and the Ministry of Tourism will work together in other international markets."

redpajama_set_name: RedPajamaCommonCrawl


WHAT THE LAW STATES The Law (LOPD) aims to guarantee and protect the data and fundamental of individuals to their personal and family privacy.
SCOPE OF THE LAW ALL companies – private, public and state – whether a one-man business or a subsidiary of a larger enterprise holding and managing personal data, collected in any format (manual, computerised, etc.) have to register these files at the Spanish Data Protection Agency (AEPD).
3- Allow individuals to exercise their ARCO rights (Access, Rectification, Cancelation and Disagreement).
WHY COMPLY?– It's the law!


The Orangeville Junior B Northmen are leading the West Division of the OJBLL with a 10-2 record and 20 points.
Over all the squad is two points behind the Six Nations Rebels who now are in first place in the League with an 11-1 record so far.
The Northmen travelled to Owen Sound on Thursday, May 18, to take on the North Stars.
The Northmen had a bad first period when the North Stars scored six unanswered goals to take a huge lead in the Thursday game.
They finally got on the scoreboard in the second period on a goal from Nik Farrus followed by a second O-ville goal from Jarett Petrie but at the end of the second frame they were trailing 9-2 with one period remaining.
The squad fought back in the third scoring twice but they had to settle for a 9-4 loss.
The Northmen were back in form the following night (May 19) when they went to Guelph to take on the Regals.
Opening with to unassisted goals from Grant Scott and Cameron Spenser early in the first period, Nik Farrus and Tanner Buck scored to make it a 4-0 game to end the frame.
The second period again ended with a shutout when the Northmen evened the first period total with four more goals from Craig Maizis, Tanner Buck, Shane Hillis, and Malcolm Young on a shorthanded effort.
The third period saw a repeat with four more Northmen goals to end the game 12-0.
Final period goals came from Malcolm Young, Tanner Buck, Grant Scott, and Tyler Halls.
The Junior B Northmen will return to the Alder Street arena in Orangeville on Sunday, June 4, when they will host the Niagara Thunderhawks.
Game time is 4:00 p.m.


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A graphic showing where air quality has deteriorated since 1988 according to a study by UW Bothell professor Dan Jaffe and doctoral student Crystal McClure. Published in the journal Proceedings of the National Academy of Sciences of the United States of America.
Air quality is worse in the west due to bigger wildfires
A study released last week shows air quality in much of the west is worsening.
by Aaron Kunkler
Wednesday, July 25, 2018 8:30am
Air quality in many western states is getting worse even as air across the rest of the country is getting cleaner.
A study conducted by University of Washington Bothell professor Dan Jaffe and doctoral student Crystal McClure found that air in the Northwest is getting dirtier due to fine particulate matter, which is known to be harmful to humans. Although many cities and urban areas still exceed federal levels for these fine particles, the overall reduction comes from a decrease in human emissions across the country. Fine particulate matter are small particles of material that are so small that they can be inhaled and work their way deep into the lungs or into the bloodstream and can cause health problems, especially for people with lung or heart conditions.
The study looked at extremely small particles with a diameter less than 2.5 microns and focused on the worst seven days of the year for pollution. A micron is one-millionth of a meter. To put this into perspective, a human hair is 50 to 70 microns in diameter. Data was analyzed from between 1988 to 2016 from monitoring stations in rural parts of the country to avoid interference from pollution from cities. It found that in many western states during the dirtiest seven days in a year, pollution is getting worse. This includes much of Eastern Washington and Oregon, Nevada, Idaho, Montana and Wyoming and some of Utah and California. Notably, the Seattle-Portland corridor seems to have avoided much of the increase in air pollution.
The study found wildfires are a significant source of these particles and since the mid-1980s there's been an increase in the frequency and duration of large fires, which the report suggests is due to climate change and warmer, drier conditions.
"This is another nail in the coffin that climate change is real and is happening now," Jaffe said in a press release.
According to the Union of Concerned Scientists, which published information on fires in the west, in the 1980s there were around 140 wildfires larger than 1,000 acres. Between 2000 and 2012 there were around 250 wildfires of the same size. The average length of wildfire seasons was around five months in the early 1970s, but this has increased to more than seven months. At the same time, annual temperatures in the western U.S. have increased by nearly 2 degrees, leaving forests drier for longer periods of time and leading snowpacks to melt sooner. During the 2015 wildfire season, a particularly bad one, more than 10 million acres burned across the U.S.
By mid-century, temperatures in the western U.S. are expected to increase even more, between 2.5 to 6.5 degrees due to human emissions. This will lead to forests suffering drought stress, and the areas where forests are water-limited is projected to increase to 32 percent by the 2020s, another 12 percent by 2040 and an additional 12 percent by the 2080s. Drought-stressed trees are susceptible to both large wildfires as well as pine beetle outbreaks, which also increases the likelihood of wildfires.
Video of Bothell-based trainer hitting dog with bat prompts social media outrage
WSDOT shares new work zone safety message and video
Kirkland officer fatally shoots man threatening 18-month-old child
King County Sheriff's Office will conduct investigation into shooting.
Kirkland park board reviews concepts for 132nd Square Park
The city aims to better manage stormwater in Totem Lake/Juanita Creek basin.
Northwest University awaits approval of 20-year master plan
Plan includes the addition of four new structures and the replacement of three existing buildings.
Kirkland organizations receive Get Active Stay Active grants
The City of Kirkland, Imagine Housing are among the recipients.
EvergreenHealth revises failed Prop. 1 measure for the Aug. 6 ballot
The public hospital failed to pass a $345 million bond in April. The tweaked proposal will make its debut on the Aug. 6 ballot as a tax rate extension, not an increase.
Fliers linked to neo-Nazi group pinned outside Kirkland, Kenmore churches
Police were advised of the fliers.


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Cultivating Place
Jennifer Jewell / North State Public Radio
Government & OrganizationsNon-Profit
Gardens are more than collections of plants. Gardens and Gardeners are intersectional spaces and agents for positive change in our world. Cultivating Place: Conversations on Natural History and the Human Impulse to Garden is a weekly public radio program & podcast exploring what we mean when we garden. Through thoughtful conversations with growers, gardeners, naturalists, scientists, artists and thinkers, Cultivating Place illustrates the many ways in which gardens are integral to our natural and cultural literacy. These conversations celebrate how these interconnections support the places we cultivate, how they nourish our bodies, and feed our spirits. Take a listen.
On Posh Cow Parsley & Other Adventures In Growing Flowers From Seed, Clare Foster
There are few things so affirming as growing plants from seed, this week on Cultivating Place, we talk about the adventures of growing flowers from seed with Clare Foster, Garden Editor of House & Garden, UK. A gardener, author, and seed-sower herself, Clare's newest book (with co-author, with Sabina Rüber) is "The Flower Garden: How to Grow Flowers From Seed" (Laurence King, 2019). It's fun, colorful, and easy! Listen in! Cultivating Place now has a donate button! We thank you so much for listening over the years and we hope you'll support Cultivating Place. We can't thank you enough for making it possible for this young program to grow even more of these types of conversations. The show is available as a podcast on SoundCloud, iTunes, Google Play and Stitcher. To read more and for many more photos please visit www.cultivatingplace.com.
54 MIN4 days ago
Robin Wall Kimmerer On Gardening And Citizenship
On this Fourth of July – Cultivating Place is pleased to be in conversation with Dr. Robin Wall Kimmerer, author of "Braiding Sweetgrass: Indigenous Wisdom, Scientific Knowledge And The Teachings Of Plants." Together we explore the interrelationship between gardening and citizenship. She states: "I think that is our deepest longing - to belong to each other and to belong to this larger community of life and for me this notion of tending the garden at all the scales we've been implying here is a powerful way to belong." Join us! Cultivating Place now has a donate button! You can find it at cultivatingplace.com. We thank you so much for listening over the years and we hope you'll support Cultivating Place.
55 MIN1 weeks ago
A Garden Can Be Anywhere, With Lauri Kranz Of Edible Gardens LA + More
As summer heats us up and slows us down, the garden and in particular the edible garden is front and center. This week Cultivating Place is joined by Lauri Kranz, of Edible Gardens LA conversing about how growing your own food is one of the most empowering things you'll ever do. Stay With us! Cultivating Place now has a donate button! We thank you so much for listening over the years and we hope you'll support Cultivating Place. We can't thank you enough for making it possible for this young program to grow even more of these types of conversations. The show is available as a podcast on SoundCloud, iTunes, Google Play and Stitcher. To read more and for many more photos please visit www.cultivatingplace.com.
Sally Romo Family Stories
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Annie Sorrell and Loga Fixico


The Wooden Prince, Op. 13, Sz60 (1917).
New Symphony Orchestra of London/Walter Süsskind.
This is a miraculous discovery. The New Symphony Orchestra of London play with amazing assurance and are accorded a top-notch recording that shows analogue at its finest: warm yet detailed. Booklet notes are refreshingly detailed, even to the extent of including musically-notated quotes to illustrate the progress of the story.
The Wooden Prince is a captivating fairytale of magic, princes and princesses. A Prince falls in love on the spot with a Princess, who alas is impervious to his attentions. A fairy puts various obstacles in his path to stop him from contacting his beloved, so he creates a wood copy of himself. It works, and the Princess dances with her toy. But the fairy creates new clothes for the Prince and - eventually - they become a couple and live happily ever after.
Bartók�s music in this ballet is powerful and intense (more so than a précis such as that above may be seen to imply, perhaps). It is rarely acidic, often capricious (as in the clarinet�s depiction of the Princess� movements, around 4�00, and her ensuing clarinet-dominated dance) and sometimes plainly and unashamedly Romantic. Bartók�s mastery of orchestration is overwhelming, and Süsskind�s keen ear for balance ensures textures never become crowded. The alertness to rhythm, so vital in Bartók�s music, is no less impressive.
The very opening, indeed, shows how multi-faceted this score is. It is at once a magical evocation of a world of the imagination, but the aloof strings evoke not only mystery but also disquiet and even inherent danger. The interaction between the innocence of a fairy-tale and its manifestation as something more horrific provides the basis for Bartók�s realisation. The darker passages of the score (e.g. around 10�40, as the Dance of the Forest begins) are remarkably evocative under Süsskind�s direction, the gestures taken as just that (try the upward swish of the strings at 15�06, booklet quote p.5). Yet the extreme Romanticism of other sections is in no way under-played.
The grotesque elements of the Princess�s dance with the �Wooden Prince� is fully brought out in this performance (around 27 minutes in, onwards, including the �dance proper�, around 28�30). The climaxes are magnificently taken - and listen to the comic effect of the contrast of the arrival of the Princess with her dishevelled doll (41�16).
Whatever the merits of individual moments (and indeed, of the many marvellous instrumental solos), above all it is the sheer life and vivacity of this performance that makes it so impressive. Boulez (DG 435 863-2) and Dorati (Philips 434 357-2) have oft been cited as the foremost available versions of this ballet. Now another name can be added to the list.


The pipe organ and ornately painted walls at St Peter's Cathedral in Pecs, Hungary. Photo: Washington Post.
Dead Romans, Christian kings, marauding Mongols, Ottoman occupiers, Hapsburg edifices, pioneering painters and a modernised downtown: All the highlights (and lowlights) of Hungarian history are on display in the little city of Pecs.
And today, Hungary's sunniest town is basking in the glow of its title as a European Capital of Culture for 2010.
But like the rocky path from Roman settlement to humming university town, the road to Pecs' spruced-up state has been long and bumpy.
With the cultural capital designation - which the town shares this year with Istanbul and Germany's Ruhr Valley - came the promise of European Union funds for renovating city parks, building a concert hall, library and arts centre and staging concerts, exhibitions and festivals around Pecs and in neighbouring towns.
But just as funders were opening their wallets to pay for those ambitious projects, the international banking crisis exploded.
And because Hungary is not yet on the euro (it still uses the forint), shaky currency conversion rates and quickly vanishing loan sources forced the organisers to scramble for funds, delaying construction.
That's why, even on a June trip to Pecs (rhymes with "h"), I found myself stepping around chopped-up footpaths, skirting fenced-in construction sites and muddying my shoes on rutted streets.
Still, Pecs didn't fail to charm.
Located in southwest Hungary, it's known as the "Mediterranean City", which might seem like a joke given that Hungary is a landlocked country.
But something about Pecs' position between the gentle Matra and Villany hills means that it gets an average of 200 days of sunshine a year.
Plus, many of its Hapsburg-era buildings, including the post office and the town hall, are painted in cheerful, candy-colour pastels.
Wandering the winding streets, you can imagine the sea just around the next corner.
The first stop on any walking tour of town is the Gazi Kasim Pasha Mosque, now the Inner City Parish Church.
It's generally known as the Mosque Church, however, having first been built as a church, then destroyed and remade as a mosque in the 16th century by the occupying Turks, then remade again into a church after the Turks' expulsion at the end of the 17th century.
It was expanded and redeveloped several times over the ensuing centuries, but Arabic inscriptions from the Koran are still visible in portions of it today.
A prayer apse faces Mecca, and there are distinctive Islamic geometric decorations and arches below the central domed roof.
When the Turks invaded Hungary to expand the Ottoman Empire in the mid-1500s, they found Pecs so inviting that they took over the thriving medieval town, driving locals outside the city walls.
Some of those walls still ring the inner city, offering visual interest and a challenging climb for visitors seeking views of Pecs and the hilly countryside beyond.
Go up the barbican tower at the corner of Klimo Gyorgy and Esze Tamas streets for the best vistas.
Pecs' proximity to the Balkans and Italy - the city calls itself a gateway to the Balkans - is one of its major draws.
Around town, the most obvious evidence of these neighbours is found in the restaurants: terrific brick-oven pizza at Az Elefanthoz, luscious pastas at Crystal, and Serbo-Croatian restaurant Afium's lovely "hatted" bean soup, which comes in a ceramic bowl covered with a baked bread top.
But long before there were separate countries whose citizens now make Pecs their home, the Romans ruled the city, and what they left behind is stunning: numerous tombs of the wealthy Christian citizens of Pecs from the 3rd and 4th centuries.
Hungary officially became a Christian nation (thanks to sainted King Istvan) in the year 1000, but nearly eight centuries before that there were Christians in Pecs.
In the Cella Septichora Visitors Centre, a multi-storey labyrinth leads to vaulted stone tombs from around AD390, remnants of the city walls, and viewing platforms and windows into the grave sites, with their frescoes depicting saints and Bible scenes, plus still-vivid geometric and floral patterns.
Inside the nearby Early Christian Mausoleum is an even older site, an excavated chapel from around 275.
All of the early Christian spots are now designated Unesco World Heritage sites.
The early Christian sites are near the remains of the medieval city walls.
Just up the hill from them is St Peter's Cathedral, whose walls and ceiling are covered in stunning late-19th-century paintings.
King Istvan declared Pecs a bishopric in 1009, but the church that stood on the cathedral's site was destroyed by a fire in 1064, and the basilica now there took another two centuries to build.
The Turks used the building as a mosque and its crypt as an armoury.
On one visit to the cathedral, I found most of the north wall obscured by scaffolding, part of an ongoing restoration project.
At the top of the wooden platform, I saw an elderly man gingerly retouching saints' portraits and Bible scenes close to the ceiling.
Watching the restorers scraping and plastering St Peter's, I realised something: Culture doesn't mean a thing if it isn't tended.
Maybe that's what all that mud and construction means; maybe that's what the European Capital of Culture designation stands for in the end: that preserving the past to bring meaning to the future takes a lot of work, money, time and patience.
And to witness that transformation in progress is certainly worth a side trip from Budapest.
After two millennia - and a couple of years of renovation - Pecs is finally ready for the spotlight.


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You are here: Parliament home page > Parliamentary business > Publications and Records > Hansard > Commons Debates > General Committee Debates > General Committee Debates
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Public Bill Committee Debates
Government's assessment as set out in the pre-Budget report for the purposes of Section 5 of the European Communities (Amendment) Act 1993
The Committee consisted of the following Members:
Chairman: Mr. Eric Illsley
† Allen, Mr. Graham (Nottingham, North) (Lab)
† Efford, Clive (Eltham) (Lab)
† Gauke, Mr. David (South-West Hertfordshire) (Con)
Goldsworthy, Julia (Falmouth and Camborne) (LD)
† Heyes, David (Ashton-under-Lyne) (Lab)
† Howarth, Mr. George (Knowsley, North and Sefton, East) (Lab)
Leigh, Mr. Edward (Gainsborough) (Con)
† Morden, Jessica (Newport, East) (Lab)
† Newmark, Mr. Brooks (Braintree) (Con)
† Singh, Mr. Marsha (Bradford, West) (Lab)
† Smith, John (Vale of Glamorgan) (Lab)
Streeter, Mr. Gary (South-West Devon) (Con)
Taylor, Mr. Ian (Esher and Walton) (Con)
† Thurso, John (Caithness, Sutherland and Easter Ross) (LD)
† Ussher, Kitty (Economic Secretary to the Treasury)
† Watson, Mr. Tom (West Bromwich, East) (Lab)
† Wright, David (Telford) (Lab)
Annette Toft, Committee Clerk
† attended the Committee
Column number: 3
Fifth Delegated Legislation Committee
[Mr. Eric Illsley in the Chair]
Mr. David Gauke (South-West Hertfordshire) (Con): On a point of order, Mr. Illsley. First, may I welcome you to the Chair?
Today, we shall be debating the "Convergence Programme for the United Kingdom: submitted in line with the Stability and Growth Pact", as part of our obligations under the European Communities (Amendment) Act 1993. That document was available in the Vote Office only from yesterday lunch time. My office picked up a copy of it later in the afternoon. I went to the Vote Office a week ago today to ask for the documentation for this debate and was just given a copy of the European Communities (Amendment) Act. No mention was made of the convergence programme. I am not criticising the Vote Office; it had not been provided with the document.
I went again to the Vote Office on Monday because I was sceptical that that was all the documentation available, but it had no more information. Only yesterday, having spoken to the Baroness Noakes, was I aware that there was, in fact, an additional document. I went again to the Vote Office, but it had no copy of it. We contacted the Treasury, but was told that it did not have a hard copy, but that it could e-mail us a copy. It was only some time later in the afternoon that an e-mail from the Clerk arrived with a copy of the document.
I have had a chance to look through the document, but not with the detail that I would have wished. We have been given inadequate time to study it, especially since it was published in November. I accept that the Treasury is having a difficult time at present, but it is not unreasonable to expect such papers to be made available in the Vote Office in advance of today's sitting. I should be grateful for your guidance, Mr. Illsley, about whether the position is acceptable and whether it is appropriate for us to continue this morning's debate.
On a further point, the House of Lords debated the matter on 20 November. The Government were keen to hold the debate on that date so that they could submit the report to the European Commission before the end of November—as they told Members in another place. I should be grateful for clarification as to whether the report has already been submitted to the European Commission and that we are debating a fait accompli. It seems odd that we are having to debate a document to decide whether it should be submitted, when it might have already been submitted and was only made available
to the House with less than 24 hours' notice. Such practice does not seem to treat Parliament with the respect that it deserves.
The Chairman: I will deal with the hon. Gentleman's latter point first, mainly because it is not a point of order for me. However, he can raise it in debate with the Minister to determine the status of the document and whether it has been submitted to the Commission.
I am advised that the document was available in the Library from yesterday lunch time or thereabouts. Its late availability is not sufficient reason to delay this morning's proceedings. However, I can reflect the hon. Gentleman's views back through the usual channels and the House authorities to ensure that, in future, documents of this size are more readily available in a timely manner to enable hon. Members to digest fully the information available to the Committee. I am also advised that the information in the document is sourced from the pre-Budget report and could have been available from that source. As I have said, I will take his views on board and reflect them back.
The Economic Secretary to the Treasury (Kitty Ussher): I beg to move,
That the Committee has considered the Government's assessment as set out in the pre-Budget report for the purposes of section 5 of the European Communities (Amendment) Act 1993.
Thank you for your guidance, Mr. Illsley. I welcome this opportunity to debate the information provided to the European Commission under section 5 of the European Communities (Amendment) Act 1993. Each year, as hon. Members know, the Government report information to the Commission on our economic and budgetary positions and our main economic policy measures. By formally sharing information from the pre-Budget report with our European partners, we can help to ensure that there is a proper, accurate and effective EU system and meet our commitments to contributing to enhanced employment and growth.
The information was set out in the pre-Budget report in October and that material forms the basis of what we are sending to the Commission. The background to this year's report and spending review is a time of increased international economic uncertainty and a more fragile global environment, which has already seen turbulence in America, Asia and Europe. As the Chancellor set out to the House on 9 October,
"provided we maintain the course for economic stability that we have set, we can respond to that global environment. We will do so by taking no risks with stability and no risks with unaffordable promises that put the public finances at risk."—[Official Report, 9 October 2007; Vol. 464, c. 167.]
The full impact from turbulence in the international markets is as yet unclear, but the International Monetary Fund has said that the international uncertainty will have an effect on growth across the world. Independent forecasters expect growth next year in America and the euro area to fall to 2 per cent. and 2.5 per cent. In these circumstances it is right that we, too, are cautious. The forecast for growth next year is also of 2 to 2.5 per cent. However, because of the strength of our economy, our commitment to openness and liberalised trade across the world, and our flexibility and dynamism at home, the forecast for growth in 2009 and 2010 is 2.5 to 3 per cent. That is in line with the economy's trend rate of growth and with the forecast in the Budget.
Against the backdrop of recent events, decisive action in the UK has brought inflation down to around our target of 2 per cent. and it is forecast to be on target next year and the year after. Employment is at a record level. Productivity is growing strongly—up 2.7 per cent. in the past year. While this year, growth in America is expected to be 2.1 per cent., in Japan 2 per cent., and in the euro area 2.6 per cent., growth in Britain—with exports and investment rising—is expected to be 3 per cent. Britain is the fastest-growing major economy in the world.
The strength of the UK economy is the direct result of the monetary and fiscal policy framework that we have introduced. First, the Government's monetary policy framework seeks to ensure low and stable inflation. The Bank of England Act 1998 gave full operational independence to the Monetary Policy Committee. It has discretion to decide when and how to react to events and has a clearly defined remit to maintain price stability, subject to supporting the Government's objectives for growth and employment. The monetary policy framework has delivered the longest period of low and stable inflation since the 1960s, along with low interest rates. That has provided the platform for record employment levels, higher investment and economic growth.
Our two fiscal rules are the golden rule that over the economic cycle the Government will borrow only to invest and not to fund current spending, and the sustainable investment rule that net debt should be held over the economic cycle at a stable and prudent level. We are meeting our first fiscal rule with a current Budget in surplus over the cycle. In the last economic cycle from 1986 to 1997, that rule was missed, with a deficit of £240 billion. Over this cycle, with a current budget deficit last year lower than forecast, we have a surplus of £18 billion. We are therefore meeting our first fiscal rule.
We will also meet our second rule that net debt should be at a sustainable level. Debt is at 44 per cent. in America, 49 per cent. across the euro area, 86 per cent. in Japan and 94 per cent. in Italy. In Britain, debt is 37.6 per cent. this year and below 40 per cent. in every year of the projection period, so we are meeting our second fiscal rule.
Mr. Brooks Newmark (Braintree) (Con): Does the Economic Secretary not share my concerns, notwithstanding the Government's definition of debt to gross domestic product, that perhaps more than £1 trillion is now held off balance sheet? That is £2 for every £1 that is on balance sheet. Is that a concern for her?
Kitty Ussher: I am grateful for the question, but that is not a concern because off balance sheet is nothing new and it is up to the auditors—the Office for National Statistics and others—to determine whether it is correct that a liability should be on or off balance sheet. Some things are on, some things are off and we have no concerns about the definitions. Indeed, it is right that it is independently scrutinised in that way.
Mr. Newmark: Will the Economic Secretary give way again?
Kitty Ussher: The hon. Gentleman is persistent, but of course I will give way.
Mr. Newmark: I will be persistent because, at the end of the day, the taxpayer has to foot the bill. Public sector pension liabilities today are more than £700 billion, if you add the private finance initiative and other costs. All those liabilities must be paid for by the taxpayer. The Prime Minister, when he was Chancellor, called for greater transparency in Government accounts, but we have not seen that in the past 10 years.
Kitty Ussher: That is precisely why we comply with international best practice with regard to what is on or off balance sheet. Our net debt remains below 40 per cent. It is up to the auditors to judge whether we account correctly for those liabilities. I am perfectly satisfied that there is sufficient transparency.
I have been talking about net debt. Debt interest was 3.5 per cent. of national income in 1997. Next year, it is expected to be just 2 per cent. That low debt allows more investment in front-line services. We can afford sustained investment in our priorities only because of the two fiscal rules that ensure sound public finances. The rules have protected a historically unprecedented increase in public net investment, while debt and borrowing remain low and stable. Last year, borrowing was 2.3 per cent. of national income; which was £4 billion less than forecast.
Over the past 10 years of this economic cycle, borrowing and debt in Britain have been lower than in Japan, the euro area, America, and in the countries of the Organisation for Economic Co-operation and Development as a whole. Net borrowing is forecast to fall from 2.7 per cent. this year to 1.3 per cent. in 2012, compared with a peak in 1993 of almost 8 per cent.—the equivalent of £110 billion today.
The UK also continues to meet the reference value on the treaty deficit throughout the projection period, with the deficit reaching 1.6 per cent. of GDP by 2012-13. The projections the Chancellor set out are also consistent with the Government's prudent interpretation of the stability and growth pact. Such an interpretation takes account of country-specific factors including the long-term sustainability of public finances, the economic cycle, and the important role of public investment. The UK's public finances remain sustainable.
As I set out earlier, the UK's debt level compares favourably with other EU member states and we continue to meet the EU treaty reference value for general government gross debt—60 per cent. of GDP—by a significant margin. The reforms to the stability and growth pact agreed in March 2005 rightly place a greater focus on the avoidance of pro-cyclical policies and on reducing and maintaining low debt, with the flexibility for low-debt countries such as the UK to invest in the provision of public services.
Mr. Newmark: Will the Economic Secretary give way?
Kitty Ussher: The hon. Gentleman is keen to intervene mid-sentence. I shall give way shortly.
The challenges of the decade ahead require a balance to be struck between delivering further investment in public services to equip the country for change, and entrenching the macro-economic stability that is essential in the increasingly competitive global economy. The
2007 Budget set out the overall spending envelope for the 2007 comprehensive spending review period, locking in the historic increases in investment since 1997, while allowing total public spending to increase by an average of 2 per cent. per year in real terms.
Mr. Newmark: I appreciate the Economic Secretary's point about investing in public services, but is it the Government's intention still to use PFI as a means of doing that and, therefore, put those liabilities off balance sheet again? Are there not double standards when the Government's new standards require that private and public companies must account for their pension liabilities on balance sheet now, yet the Government persist in holding public sector liabilities off balance sheet?
Kitty Ussher: The hon. Gentleman does not seem to have listened to what I said earlier. Some PFI liabilities are on balance sheet and some are off, depending on the definition of the ONS. We comply with international best practice in that regard. It is a bit rich for a party that starved our public sector of the investment that it required over time to start quibbling in this way. I would be more interested in looking at its books to find out exactly how its public-spending black hole is to be filled, rather than continuing along this line. [Hon. Members: "Gaping hole."] A gaping hole, as my hon. Friends point out.
Having assessed the future investment needs of the country, the continued strength of the UK's public finances, with net debt remaining below 39 per cent. throughout the forecast period, enables the Government to announce an additional £2 billion to total public sector net investment in 2010-11, with total public spending increasing by 2.1 per cent. in real terms. We are extremely proud of that. Within that envelope, current spending grows by 1.9 per cent. a year in real terms and net investment rises to 2.25 per cent of GDP.
It is no secret that this spending review is tighter for many Departments, and the Government remain committed to ensuring that public spending delivers the public's priorities and value for money for the taxpayer. The spending review has identified substantial savings that can be made by Departments. Building on the £20 billion already achieved, Departments will save a further £30 billion by 2010, and that money will be available for reinvestment in public services. Departmental plans are being published, setting out in detail how those savings will be achieved.
The resources released through that ambitious value-for-money programme, together with the increased spending delivered in the CSR, will enable the Government to sustain the pace of improvement in public services and focus additional resources on their key long-term priorities. That will be matched with reform and clear objectives set out in new public service agreements defining the Government's top 30 priorities for the coming period.
Those key priorities include: meeting the challenge of globalisation by investing in the human and physical capital that will keep the UK economy competitive over the long term; education spending in England growing at 2.8 per cent. a year in real terms; investment in science and university research rising to over £6 billion a year in three years time; and increasing transport investment to £14.5 billion a year by 2010-11.
Other key priorities include: making the UK a better place in which to live by continuing to improve the NHS, with investment in health in England rising from £90 billion this year to a total of £110 billion in 2010; progressing towards the objective of decent and affordable housing for all, with total spending on new housing of a least £8 billion over the next three years; protecting the nation from external and internal threats, with total spending on counter-terrorism and intelligence rising from £2.5 billion in 2007-08 to £3.5 billion in 2010-11; continuing the longest period of sustained real increases in defence expenditure in over 20 years; and helping to tackle climate change and protect the countryside, with the budget of the Department for Environment, Food and Rural Affairs set to increase to £4 billion by 2010-11 and the creation of a new environmental transformation fund with a three-year budget of £1.2 billion.
Of course, the spending review will help us tackle international poverty by increasing the budget of the Department for International Development by 11 per cent. a year over the CSR, enabling total UK official development assistance to reach over £9.1 billion a year, which will put us on course to meet our European commitment of having 0.5 per cent. of national income devoted to development aid by 2010—double what it was under the Tories. It will help us to meet our commitment to achieving for the first time the United Nations goal of 0.7 per cent. by 2013.
I hope that I have summarised our task, which is to meet and master the global economic challenge, making the critical decisions to secure Britain's long-term economic future. The pre-Budget report, which has been before the House since early October, drives forward the greater economic mission of our time: to meet the global challenge, unleash the potential of all British people and deliver security, prosperity and fairness for all. That is the programme set out in the 2007 pre-Budget report and comprehensive spending review, and that is, with the approval of the Committee, the basis on which we are sending updated information to the European Commission. I welcome the opportunity to debate it this morning and look forward to the contributions that will follow.
Mr. Gauke: Once again, Mr. Illsley, I welcome you to the Chair. It is a great pleasure to serve under your chairmanship.
I shall return briefly to the issues that I raised in my earlier point of order. I am grateful for the clarification that the convergence programme essentially reiterates the figures contained in the pre-Budget report. Perhaps the Economic Secretary, in her closing remarks, could confirm that there has been no change to the numbers contained in that. I expected an apology for the failure to provide a copy of that document to the Vote Office before an intervention by the Clerks and, indeed, by my own office, but there we go. I also seek clarification on what the Economic Secretary has just said with regard to the sending of the report to the Commission. The implication of what she was saying is that the report has not yet been sent.
Kitty Ussher: I apologise to the hon. Gentleman; I meant to include in my opening remarks that the report has been submitted because there was a deadline of 1 December. However, it has been submitted subject to
parliamentary approval. That is understood by the Commission and the report will be deemed null and void if we do not approve it today. On his earlier point, I made a ministerial statement on 20 November, stating clearly that copies were available in the House, which we thought was sufficient, but I will take his comments on board for next year.
Mr. Gauke: I am grateful for that. The statement may well have said that copies were available in the House, but the fact is that they were not available in the House; that is the point that I was raising.
The figures contained in the convergence report are based on what is in the pre-Budget report. The timing of the PBR was somewhat unusual. In recent years, the PBR has tended to occur in early December; this year it was in early October, in part to combine with the comprehensive spending review, which had been delayed. It was originally due in the summer but it got delayed and could not be delayed any further, so the decision was made to combine it with the PBR in October. Indeed, the PBR was moved back a further week to provide a springboard for a crushing general election victory for the Government. That was just two months ago—how distant that time appears.
The submission is normally submitted after 1 December, but given that there was an early PBR, I understand why the Government were keen to submit it before the beginning of December, in accordance with the code of conduct that applies in these circumstances. However, it raises the question of whether the information contained in the PBR is as up to date as it might be. Normally these matters are debated shortly after the PBR is published, but because we have had a two-month gap, which has been a particularly eventful two-month gap as far as the economy is concerned, there are reasons to question some of the numbers contained in the PBR. I will do that in a moment.
Even on the PBR figures, the Government's borrowing figures are distinctly unimpressive. Looking at the position for 2007-08 and the predictions that the Government made for the borrowing figure in the PBR of 2006—a year ago—the prediction was that borrowing would be £31 billion. In the Budget of March 2007, the figure was £35 billion. By the time we got to the PBR in October, the figure had gone up to £38 billion and the projection for borrowing over the next five years was increased in the PBR by £16 billion. We must remember that we have gone through 15 years of economic growth and this year our growth of 3 per cent. and possibly above is at the top end of, or above, our trend rate of growth. This is a period in which we should be running a comfortable surplus. These are the good years in an economic cycle, but we should prepare ourselves for the slowdown that we may be about to enter. However, we enter more difficult times at a time when the Government have little flexibility as far as the public finances are concerned. They are running a deficit and borrowing far more than they planned to or should do. We have the worst structural deficit of any major western economy, which is not something to be proud of.
I turn to the fiscal rules that the Economic Secretary referred to and, first, to the sustainable investment rule that net public debt as a proportion of GDP will be held
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over the economic cycle at a stable and prudent level. That has been defined within the current economic cycle as keeping the public net deficit below 40 per cent. for each and every year. Will the Economic Secretary confirm whether that will be the test for a stable improvement level for the next economic cycle? She referred to the 40 per cent. test and, indeed, the 40 per cent. test is referred to within the convergence programme at paragraph 4.7, which states that the net figure will be below 40 per cent. up to 2012-13. The implication of that could be that the Government will apply the same tests for the next economic cycle as it did for the current one, or the past one—it is not clear where we are on economic cycles at the moment. I would be grateful for clarification on the matter as the Government have not made it clear.
I raise that point given the concern expressed by my hon. Friend the Member for Braintree this morning and on numerous other occasions—he is tireless in making the point—that some areas of public sector indebtedness, such as some PFI liabilities, some public sector pension liabilities and Network Rail, are not included within the tests. I would be grateful if the Economic Secretary could confirm that. I think that it was implicit in her remarks that there was no intention to reform either the definition of public debt or, presumably, the 40 per cent. test, but I would be grateful for clarification.
I turn to the other fiscal rule, the golden rule that Governments should borrow only to finance capital spending. It is widely accepted—although I do not expect the Minister to accept it—that the frequent changes of dates of the cycle made by the Treasury have undermined confidence in that golden rule. The Financial Times carried out a survey of economists and institutions, and said:
"Almost none use the Chancellor's fiscal rules any more as an indication of the health of the public finances".
Kitty Ussher: The hon. Gentleman expresses scepticism about the dates of our cycle. Does he not believe that the National Audit Office was correct when it audited our cycles and said that they were correct?
Mr. Gauke: It would be helpful if the economic cycles could be not just audited but determined by an independent body. The fact that almost every change to the economic cycle has made it easier for the Government to comply with the golden rule leads to suspicion. We can talk to economists and to economic commentators, and none of them take the golden rule as seriously as they should do. That is a pity because the objective behind the golden rule is laudable, but it is not delivering. It does not provide confidence to the economy as a whole by acting as a genuine restraint upon the Government, because of the frequent changes in the economic cycle.
Kitty Ussher: Does the hon. Gentleman suggest that the National Audit Office is not independent?
Mr. Gauke: No, I do not suggest that, but the NAO takes a subsequent look at events, and that is not that same as determining what the economic cycle is.
I was formerly a member of the Treasury Select Committee. That all-party Labour-dominated Committee has advocated on a number of occasions that we should look again at the determination of the golden rule. There seem to be two possible ways of doing that. One would be for an independent body to determine what the economic cycle is; the second approach might be a forward-looking rule. I would be grateful if we could look at whether there is any indication of what approach we could take.
Earlier in the summer, there were hints about a possible reform of the golden rule. It was area in which the new Chancellor might have struck out boldly. He would perhaps not have been as attached to the existing rule and he could have set out his independence by making a reform in this area. Sadly, that does not appear to have happened, which is a great pity and perhaps we should consider the matter. From what the Economic Secretary has said, it would appear that there are no plans for reform, and I regret that.
Mr. Newmark: I appreciate what my hon. Friend says, but notwithstanding the points made by the Economic Secretary, the goalposts of the golden rule have been shifted not once, not twice, but three times. It smacks a little of reverse engineering. That is the point that we are concerned with.
Mr. Gauke: I am grateful to my hon. Friend. We both served on the Treasury Select Committee and particularly recall how the then Chancellor, the current Prime Minister, steadfastly refused to answer when I asked him whether, but for the changes in the economic cycle that he introduced in December 2005, he would have succeeded in meeting his golden rule over that particular economic cycle. I suspect that my hon. Friend will recall that occasion too.
I turn now to the two European tests. The first is for general Government net borrowing—the Government deficit. According to the figures contained in both the PBR and the convergence programme, the treaty deficit for 2007-08 is 2.9 per cent. of GDP. The cyclical treaty deficit stands at 3 per cent, which is the reference value for an excessive deficit, so we are very close to being in breach of that. It would be fair to say—I acknowledge the point that the Economic Secretary made—that we are well below the threshold for the other test, which is the general Government gross consolidated debt. However, that is rising quite rapidly and is up to 45 per cent. Clearly there is concern about general Government net borrowing.
That brings me to a point about what has happened since October, given that we have this relatively long period between the figures being determined by the Treasury and the submission to the European Commission. The decline in public finances in that period is striking. On 20 November, the ONS published the public sector finances for October 2007, so we now have the figures for seven of the 12 months of 2007-08. The Institute for Fiscal Studies projects that the public sector net borrowing figure will not be the PBR figure of £38 billion, let alone the £35 billion or the £31 billion that had previously been predicted by the Government, but £42 billion. That is more or less 10 per cent. higher than the figure that the Government predicted just two months ago.
Essentially that is because capital spending is growing at almost twice the rate predicted by the Government in October. Moreover, corporation tax receipts are not performing quite as well as they might do. The PBR forecast for 2007-08 was that they would be 4.5 per cent. more than 2006-07 but, for the first seven months of this year, there has been no increase at all. The figures do not tally exactly, but an increase in deficit of 10 per cent. would result in a 10 per cent. increase in the deficit ratio too. That would take us up to 3.2 or 3.3 per cent. on the European test, which would clearly be an excessive deficit as defined under the stability and growth pact.
Notwithstanding the figures that we already have, there is also reason for concern about the future figures for the economy. We all hope that there will not be a substantial slowdown, but Members on both sides of the House recognise that there are concerns that it may occur. As the Economic Secretary said, the growth forecast issued by the Government has been downgraded from 2 to 2.5 per cent. However, one can simply look at the comments that Mervyn King, the Governor of the Bank of England, made to the Treasury Select Committee last week. He referred to the slowing of growth in public finances. That is a concern because it will have an impact on corporation tax receipts in particular, but on other tax reliefs too.
The UK may be vulnerable to a slowdown in the financial services market. We all know that it is a difficult time for banks. Their profits are down substantially. We have a major financial centre in London and a large financial services industry, which is welcome but it may make us slightly more vulnerable to a downturn within this sector. Figures announced yesterday by the Halifax show house prices falling for the third month in a row, with the sharpest decline for a long time over the last month, which suggests that there is a concern recognised by all parties about the slowing of the economy. Will the Economic Secretary confirm whether the Government remain confident that the 2 per cent. figure that they have predicted, which is at the bottom of the range that they suggest for growth, is realistic? I do not dispute whether it is or not, but I would be grateful for the Government's views on whether that figure is right.
Additional demands on the Exchequer have emerged over the past two months and should be discussed in the context of this debate. First, on the issue of Northern Rock, with which I know the Economic Secretary has been closely involved, the Government have provided a guarantee for the liquidity of Northern Rock, which in itself is a contingent liability. We are not—or at least I confess that I am not—clear about how that liability will feature in Government accounts.
We must also consider that, according to yesterday's business section of The Daily Telegraph, there is a possibility that Northern Rock will be nationalised. In those circumstances, the public sector net deficit would be increased to the extent to which the Government's financial liabilities are increased by more than the Government's financial assets. As I have said, there is talk that that may happen in February. In addition, reports in The Daily Telegraph say:
"Downing street has opened talks with the Conservatives over the nationalisation bill".
That came as a complete surprise to Conservative Front-Benchers. In September, my hon. Friend the Member for Tatton (Mr. Osborne), the shadow Chancellor, wrote to the Chancellor offering cross-party support to protect taxpayers, but he has not yet had a response. Certainly, no approach has been made to us about a nationalisation Bill. If the Economic Secretary would like to open talks immediately after this sitting, I will listen to what she has to say and pass it on to my colleagues. None the less, I would be grateful for clarification about whether there are any potential costs to the Exchequer, as they would be relevant to the information that we have provided to the European Commission on this subject.
Another subject about which we have had some uncertainty is the changes to capital gains tax announced by the Chancellor in his pre-Budget report, when he declared the abolition of taper relief. We all know that that is a revenue-raising measure, which will raise £350 million in 2008-09; £750 million in 2009-10; and £900 million in 2010-11. However, there has been an enormous outcry about the measure and business organisations, such as the CBI, the Institute of Directors, the British Chambers of Commerce, and the Federation of Small Businesses, have been in uproar about it. We know from a breakfast meeting that the Prime Minister, who is the First Lord of the Treasury, had with the editor of The Sunday Times that the Government are considering introducing some kind of retirement relief—perhaps up to £100,000. To be fair, I do not yet know whether the Treasury has been informed of the First Lord of the Treasury's proposals on that matter, but the Treasury did not seem to be aware of them on the day concerned. I do not know to what extent the First Lord talks to the Second Lord about such things, but the Second Lord of the Treasury said in his speech to the CBI on 27 November that plans will be revealed
"in the next three weeks".
That delay increases uncertainty for businesses that do not know whether to dispose of their assets before April 2008.
It is unfortunate that there is such a delay, but any measures introduced may well have a fiscal cost. If that is the case, the numbers that we are submitting are already out of date, unless any changes to capital gains tax, the introduction of retirement relief, or whatever plans will be introduced over the next couple of weeks to reduce the strong opposition to these proposals, are fiscally neutral. I would be grateful if the Economic Secretary could confirm whether the further changes to capital gains tax to be announced will be fiscally neutral. If they are going to have a cost to the Exchequer, we need to know about it today, and we ought to know about it when we are debating our submission to the European Commission. If the Government have plans that they have not yet announced, which are going to incur further costs, we ought to be aware of them, and the figures should be reflected within the convergence programme for the United Kingdom.
I would like to touch on two further issues where the report may be out of date. A further cost may be related to the missing discs from Her Majesty's Revenue and Customs. First, there will be the cost of reimbursing the banks for the various checks that they made over the weekend of 17 to 18 November to record that no fraud had occurred. Although I do not believe that the
Government have ever confirmed this to the House, their press office has confirmed to journalists that the Government will pick up the cost for that.
There is also the huge potential liability for the Government from any identity theft. Although they say that no fraud has yet occurred, it is very difficult for them to establish that. Perhaps there has been a slight failure of imagination. If these discs are in the hands of fraudsters, they are not likely to undertake a big-bang approach to try to steal billions in one day; they will do it gently.
If the banks see any increase in identity theft over the next few months and, in particular, if they can identify any statistical increase relating to families with children, they are likely to go knocking on the Government's door quickly and say that the Government are responsible for that and that they are going to have to cough up. That could be an expensive cost to the Government, and I would be grateful for the clarification as to whether the Economic Secretary accepts that.
Mr. Newmark: There is an additional cost. As my hon. Friend may know, I have five children and my wife has received several letters, so there is the additional cost of postage—not once, but two or three times—that has to be taken into account.
Mr. Gauke: I am grateful to my hon. Friend. There will be various possibilities. We read in the newspaper today that HMRC will reimburse the Metropolitan police some £500,000 for the additional costs of searching for the discs, and for sending police officers into rubbish tips throughout the length and breadth of the country in the hope that they will find a couple of computer discs. He makes a good point about the costs of the letters, but an overall cost will be incurred here. Potentially, the more substantial one is if we start to see evidence of fraud, because it would appear that the Government are clearly going to be liable in those circumstances.
There is one final point about how matters have changed. To be fair, it is acknowledged within the convergence programme, at the top of page 47, in paragraph 5.4. It refers to the fact that the ONS published a new set of population projections on 23 October, and that it is too late to be included in an assessment of the long-term sustainability at the time of the October 2007 PBR. Those were very important figures, and the Economic Secretary will remember that there was considerable press attention given to the projections of a substantial increase in the population of this country. Those figures are not taken into account within this document for the perfectly good reason that they were not available when the PBR was drawn up, but of course, those figures are available now. Again, that underlines my point that we are sending a document that is somewhat out of date.
I know that one point addressed in the convergence programme document and that I could not find in the PBR is close to the Economic Secretary's heart—compliance with criteria to join the euro. I was not aware whether since the change of Prime Minister, the Government have restated their policy on that, but they say in this document that they remain in principle in favour of Britain's membership of the euro subject to
the five economic tests being fulfilled. I do not know why they would not want to shout that from the rooftops, but they seem to have kept it rather quiet, buried within this document at box 2.2 on page 18. I would be grateful to know whether the Economic Secretary, who is a distinguished member of the campaign for Britain to join the euro, still believes that it is Britain's "destiny"—to use the word used by Tony Blair—to be part of the euro.
There is reference to plans to reassess the economic tests for the Budget of 2008. I would be grateful to know how many people are currently working in the Treasury on the reassessment or whether it will essentially involve a couple of people sitting down over a cup of coffee, saying "Should we do this? No, don't be silly", and then leaving it for another year. Also, how seriously do the Government still believe that, in principle, it would be in Britain's interest to join the euro?
In conclusion, this PBR revealed that public finances have not been prepared for the difficult times that may lie ahead. The evidence since it was prepared reveals that times may indeed become difficult and confirms how ill prepared the Government have made the public finances of the UK. I am afraid that it is a demonstration of a degree of irresponsibility and, at times, of incompetence that we find ourselves in this position and that, after years of strong economic growth, our public finances are in the mess that they are. This PBR and, indeed, this convergence programme for the UK inadequately reflect the situation that faces the UK.
John Thurso (Caithness, Sutherland and Easter Ross) (LD): May I begin, Mr. Illsley, by saying what a pleasure it is to appear under your chairmanship? However, I must confess that I am not entirely certain why I find myself here this morning, or what I have done to my Whips Office to find myself temporarily catapulted from the quiet, sylvan pastures of the Back Bench into a spokesman's position. I can assure the Committee that it will not happen terribly often if I have anything to do with it.
Not having a clue what the procedure was for this morning, I therefore thought that I would start by looking at the documents. I must confess that I had much the same problems as the hon. Member for South-West Hertfordshire, so I thought that I would go back to last year's debate and have a look at that. I got out the record of last year's debate and I must say that I have an awful feeling of groundhog day at the moment, not least in witnessing the terrier-like tenacity of the hon. Member for Braintree, which is clearly undiminished across the year. I read the comments of my own colleagues and find myself none the wiser for reading them. [ Laughter. ] That'll teach them to let me loose.
The ostensible purpose this morning is clearly to consider the Maastricht Act provisions and to look at the convergence programme for the UK, as the document before us is entitled. Clearly, there is not a convergence programme of any significance. There is no real, active debate about our joining the euro. I think that, at this precise moment, all parties are quite clear that joining
the euro is somewhere in the future. However, there is a difference between us. Both the Government and my party believe, with slightly varying degrees of fervour, that joining the euro is a place where we would like to arrive at some point in the future, whereas I think that the hon. Member for South-West Hertfordshire, who represents the Conservative party, rather wishes that the whole thing would just go away for ever.
I would like to make one point about the euro. Curiously, over the last year the euro's importance in world economic affairs has increased. I was in Zurich last week, speaking to a number of people responsible for investments for a charity. It was quite striking that they really had no regard for what was happening in Great Britain; it was a matter of supreme indifference to them. They were far more interested in the euro, in its strength and in ensuring that their euros were properly invested. We should at least take note that the euro is maturing and strengthening, and a time will come when we shall look at it again. It is not quite the basket-case currency that some people suggested it might be at the beginning.
The rest of our debate allows us to have another look at the Government's policies for the economy. I do not want to spend a great deal of time doing that, but there are one or two points that I would like to pick up. I was interested in the debate on the point of order raised by the hon. Member for South-West Hertfordshire in respect of the timing of the document. In fact, I believe that the vast bulk of what we needed to see can be found in the pre-Budget report, but the fact that there is a document and that it is dated November but was printed some time ago shows how fast things have been moving in the economy and in the City in recent weeks. Indeed, if one reads the opening paragraph of the convergence programme, one might see a hint of complacency, frankly. It mentions the tremendous "robust and sustainable" growth. It also states:
"The UK economy is experiencing an unprecedented period of growth",
which is a dangerous claim to make in the light of what is happening in the capital markets and other areas.
Later today, the Monetary Policy Committee will make a decision on interest rates. It will be one of the most difficult it has had to make since the inception of an independent Bank of England because, probably for the first time, there are a set of circumstances in which a politically motivated Chancellor might have come to a different decision from that of an independent MPC. It is therefore a testing time for the MPC, and I hope and trust that with its independence and collective knowledge, it will make the right decision. The Treasury Committee, on which I have the honour to serve, will doubtless quiz the MPC as to the reasons for its decision, and the report will make interesting reading.
The Economic Secretary was good enough to say in her opening remarks that the Government will take no risks with stability, which is, of course, an admirable objective. The problem with risk is that we need to know what it is and we do not at the moment know where the risks are. That is what the turmoil in the capital markets is all about—people do not have a clue where the ultimate risk lies. It could lie with an investment company or with an insurance company, or
with the banks. There is a parallel with our public finances in that we are not entirely certain what the risks are and where they lie. The old order of certainty is not what it was.
The level of consumer debt is a critical element of that. A large part of consumer debt is secure debt—mortgages—and should therefore not be too much of a problem. However, we are now learning, by the example of Northern Rock and other things, that mortgages in excess of 100 per cent. are based on a 95 per cent. mortgage with the balance of some extra 25 per cent. given by way of an unsecured loan. We have no idea how much such loans are worth. As has been mentioned, the housing market has been in retreat for the third consecutive month, which must build pressure. We do not know how the situation will pan out, so I would suggest that consumer debt is a major risk, as is the housing market.
Credit must be given when credit is due: in many ways, the Government have managed the economy well in the past 10 years. I am therefore not attacking the Government, but merely urging caution at a time of what is clearly extreme difficulty that has been brought about by events in other countries. Clearly, the direction of the housing market is cause for concern. The fundamentals are stronger today than they were in 1991, 1992 and 1993, and there is good reason to hope that we will not have the same level of problems, but we would be complacent if we believed that they will definitely not happen.
We can learn the lesson from the example of Northern Rock. Interestingly, I asked the Governor what he thought might happen as regards the general level of the financial markets in May, and he told me that all the fundamentals were in order and that there was no reason why anything would go wrong. That remained true—there was nothing fundamentally wrong with Northern Rock, other than that nobody wanted to take its paper when it needed that. Subsequently, there was a liquidity crisis, which was the one event for which it had no plan. A major cause was sentiment and emotion—the one thing that we do not enter into our calculations about the future economy. There was a run on the bank because the man and woman in the high street decided that there was a problem. It was not about economics; it was about sentiment.
I want to say a word about the PFI and being off balance sheet. I come back to the lessons that we are learning. If we had talked to the banks about their special investment vehicles and their off-balance sheet vehicles three months ago, they would have said that they were absolutely sound. Today, one bank—Citigroup—is publishing £141 billion of exposure, so it has gone from nothing to £141 billion in two months. I am not suggesting that that will happen to the Government, but what we have seen of auditing in the past is not necessarily how to look at the future.
Everything we are looking at—whether growth or productivity—and all our aspirations for the country are wrapped up in where the current problems in the economy will go. It is a testing time. I want all those with responsibilities, whether they be in the Government, independent governors of banks or other members of the tripartite arrangements, to conduct themselves in a way that will lead us to come out with the best possible
result. As for the Commission, I do not have the slightest doubt that it will receive the report with the same enthusiasm with which we are sending it.
Mr. Newmark: I am delighted to see the Government Members out in full force for this important debate. I know that the Government Whip is particularly keen to hear what I have to say. I congratulate the Economic Secretary on her commitment to ensuring that the Treasury is run as a paperless office. Indeed, a copy of the UK convergence programme was, of course, made available on the Treasury website, but as my hon. Friend the Member for South-West Hertfordshire said, paper copies did not reach the Vote Office. I was a little amused to hear that, when my office requested a paper copy from the parliamentary unit at the Treasury, the response was that a copy would be sent over immediately, but that unfortunately it was the only copy available. Perhaps the other copies had already been forwarded to Brussels in anticipation of the Committee's approval—or perhaps it is the pre-Christmas post.
Mr. Gauke: They might have been lost in the post.
Mr. Newmark: Perhaps, indeed.
The Government notes at paragraph 1.7 of the report that the
"disruption in global financial markets has meant economic prospects have become more uncertain",
before emphasising that they believe the economy to be resilient enough for the impact to be minimal, and that
"growth could slow by less than expected."
Is that judgment in accord with the Governor of the Bank of England's statement to the Treasury Committee that conditions are not only highly uncertain, but rather uncomfortable? Is a revision of emphasis in the programme required in light of those comments?
Paragraph 2.4 states:
"Stability allows business, individuals and the Government to plan more effectively for the long term",
but how is stability being reinforced by the Chancellor's shilly-shallying, for example, on capital gains tax rates since the pre-Budget report?
Paragraph 2.7 makes another equally confident claim, and states that the
"most recent assessment, published in the 2006 Long-term public finance report, shows that the UK fiscal position is sustainable over the long term. The UK is in a strong position relative to other developed countries"—
the point made by the Economic Secretary—
"to face the challenges of an ageing society."
How does that statement square with the fact that the Chief Secretary said last week at Treasury questions that public sector pension liabilities
"should not be grossly simplified and misrepresented."—[Official Report, 29 November 2007; Vol. 468, c. 424.]
I agree with the principle, but at the same time he admitted that the ONS has already released new figures, back in October, and that a revision of the long-term public finance report was now both forthcoming and overdue. Should this expected revision not be reflected in the convergence programme?
My favourite claim is in paragraph 3.4, which says:
"Central banks have offered more liquidity at slightly longer maturities, including in the three-month money market, and, in some cases, against a broader range of collateral than usual."
There is no hint there of the mismanagement that caused the first run on a bank in 150 years, while the European Central Bank and banks in Europe avoided difficulty. There is no mention that one particular central bank that accepted a
"broader range of collateral than usual"
was Northern Rock, together with its depositors, in return for a rapidly escalating commitment of taxpayers' money. There is no admission from the Government that the "slightly longer maturity" of the liquidity may well be indefinite. That is just a flavour of the quite remarkable optimism with which the Government intend to regale Brussels and that at least proves that Ministers are capable of keeping a stiff upper lip abroad, whatever disasters befall them at home.
I move to some specific questions about the treaty deficit and the way that it is calculated. It seems that the Treasury prefers to use the cyclically adjusted treaty deficit because that measure has, in the past, helped to push the Prime Minister in the right direction. We begin to see from table 4.1 of the convergence programme that, next year, it will push him even closer to another breach.
The figures themselves appear to move about quite a bit. Table Bl of the pre-Budget report and table 4.1 of the convergence programme note this year's treaty deficit as 2.6 per cent. of GDP and the cyclically adjusted treaty deficit as 2.4 per cent. of GDP. However, in its release of 28 September, the ONS preferred to split the difference by claiming the treaty deficit for this year as 2.5 per cent. of GDP. Will the Economic Secretary comment on the difference between the figures from the ONS and those that appear in the document before us?
Furthermore, it seems to be the practice of the ONS to publish the treaty deficit figure in a different format, depending on the year in question. I have the biannual releases going back a few years. Sometimes, as in the latest release, they are based on the financial year, but on other occasions they revert to the fiscal year. Moreover, it does not seem to matter when in the year the figures are published. I have no doubt that the ONS was already fully independent of the Treasury—I think that this is the point that the Economic Secretary was making—even before the advent of the new Statistics Board, but will she explain the methodology to me?
Misplaced optimism, the massaging of figures and a refusal to acknowledge criticism have all been hallmarks of this Government in the past. When, for example, the European Commission issued in January last year its indictment of the UK's failure to adhere to the 3 per cent. target for the second time in as many years, a Treasury spokesman said in response:
"As set out in the Budget last week, the UK treaty deficit is forecast to fall to 3 per cent. in the coming fiscal year, and will reach 1.6 per cent. by 2010-11. The UK continues to have the lowest average debts and deficits of any major European economy with the public finances sustainable and increases in public investment fully affordable."
Again, that point was made by the Economic Secretary earlier.
From table 4.1 of the convergence programme, we see that the treaty deficit position for 2010-11 is predicted to be not 1.6 per cent., but 2.1 per cent. on both the adjusted and the non-adjusted measure. That is an upwards revision in forecasting of 0.5 percentage points, which is significant for two reasons. First, in January last year, the Council made a recommendation that the UK should correct its deficit by 0.5 percentage points in a "credible and sustainable manner" between 2005-6 and 2006-7. It looks very much as if the Council's recommended margin for improvement is exactly the same as the Government's own margin for error in forecasting. Secondly, given that the estimated deficit for 2007-08 is 2.9 per cent., or 3 per cent. when cyclically adjusted, how confident is the Economic Secretary that the latest estimate will not miss by a similar margin and result in the UK breaking the Maastricht criteria yet again? Before concluding, I would like to turn briefly to the sixth report of the European Scrutiny Committee from the last Session, which addressed the stability and growth pact and, in particular, both the Council's opinion on the UK's convergence programme and the Commission communication that arose from it subsequently. The European Scrutiny Committee had already noted the substance of the Council's dissatisfaction with the Government's data on the UK convergence programme in an earlier report. Nevertheless, the Government failed to address many of the points raised by the Committee, which subsequently had to reiterate its request for an explanation of the concerns that the Council had expressed.
Persevering, in its sixth report the European Scrutiny Committee again drew attention to both "omissions of data" and to the criticism that some data was being
"aggregated differently from the harmonised measure".
The Committee eventually received an explanation from the former Economic Secretary to the Treasury, but it seems to have been the result of a process which reads as if it was a bit like pulling teeth. I quote from paragraph 9.6 of the Committee's report:
"The Economic Secretary to the Treasury writes belatedly in response to our repeated request on points related to the UK's Convergence Programme."
Later, paragraph 9.15 says:
"We note the further comments the Minister makes now (and which we would have liked to have seen much more promptly) in relation to the apparent dissatisfaction with the Government's data."
What was the reason for the delay in answering the European Scrutiny Committee's queries? Clearly, the Government could have done more and acted quicker to address concerns about the quality and the presentation of the data in the UK convergence programme.
There are, however, several questions that come to my mind out of all this. First, is the new version of the convergence programme up to scratch and does the new Economic Secretary feel that she can give it her full confidence? Secondly, can she confirm for the record how much importance the Government attach to the adherence to the Maastricht convergence criteria? As with so many other policy areas, the Prime Minister has in the past attached great significance to compliance with the Maastricht criteria when the going was good but, surprisingly, he became a little less interested when the rules were repeatedly breached and the Council started issuing critical missives. So, will the Economic Secretary signal whether the current Chancellor still
believes in the importance of the Maastricht criteria and that convergence remains, to borrow the Prime Minister's favourite phrase, "in the national interest", or are we, once again, just going through the motions here today?
10.3 am
Kitty Ussher: I am grateful for this debate and I hope that I will be able to respond to all the remarks that have been made.
I would like to start by congratulating the hon. Member for Caithness, Sutherland and Easter Ross on his promotion, which I hope is not temporary. He is extremely welcome, and I particularly welcome his comments that we have, of course, managed the economy very well and that the economic fundamentals are much better than they were under the Conservative party. On that basis, I wish him a long and happy career on the Liberal Democrat Front Bench.
I will address the questions put by the hon. Member for South-West Hertfordshire, who speaks for the Conservatives. No, there have not been any changes to our forecasts since the pre-Budget report, the published forecasts of the pre-Budget report and the Budget. As I said in my opening remarks, our forecasts incorporate an assumption about various changes to economic indicators. We have indicated a downwards revision of our growth forecast for next year, although we still think that our growth will be positive and will compare well with other countries.
Do we think that the document is out of date? Quite simply, no. We had 61 quarters of growth, we are fastest growing economy in the G7 and we are very proud of our record. The IMF forecast released after the PBR has the UK as the fastest-growing economy in the G7, alongside Canada.
With regard to economic cycles, we had that debate when the hon. Gentleman was kind enough to take my intervention. I simply make the point that the judgment of when the end of the economic cycle should be is, by its nature, backward looking. There are many forecasts, including our own, about the forwards likely end of an economic cycle. To get the definitive answer, however, it has to be retrospective, and when we make a judgment on that, we will invite the National Audit Office, which is independent, to audit it.
With regard to the sustainable investment rule and whether it will apply in the next economic cycle, perhaps the best thing that I can do is state what that rule is. It states that public sector net debt as a proportion of GDP will be held over the economic cycle at a stable and prudent level. That is our rule. Other things being equal, net debt will be maintained at 40 per cent. of GDP over the economic cycle. That is our policy.
Mr. Gauke: I just seek clarification. I accept what the rule is, but the question relates to the interpretation of the rule. Is the Economic Secretary saying that the same interpretation—the 40 per cent. test—will be applied for the next cycle as has been applied in this cycle?
Kitty Ussher: I am simply saying what our current interpretation of that is.
With regard to Northern Rock, the Chancellor of the Exchequer has made the position clear on many occasions. We are obviously committed to protecting the interests of the taxpayer as well as those of depositors and wider financial stability. It is important to realise that the liquidity support and the Treasury guarantee that have been put in place to provide the company with a period of stability and maintain those aims have had no impact on public finances. At this stage, it is a contingent liability secured against the company's assets. Obviously, we are working closely with the other members of the tripartite authority to find a long-term solution that protects the interests of taxpayers.
Mr. Newmark: I understand why the Government want to protect depositors: that is absolutely right and important. However, I am still interested in why the Government would risk perhaps £11 billion of taxpayer's money to protect subordinated debt holders and the medium-term note holders, who were actually rewarded for the higher risk. I do not understand why they added potentially £11 billion plus more of such liability.
Kitty Ussher: We took the actions that we felt were necessary to protect the stability of the financial system and I believe we did exactly the right thing. On the issue of discs—I remember being asked this at Treasury questions only last week—I consider any questions of cost completely hypothetical, since the banks have not said that there is any indication of fraud having taken place.
John Thurso: It might be helpful for the Economic Secretary to read the transcript of yesterday's meeting of the Treasury Sub-Committee, as the acting HMRC chairman admitted that there will be costs and he is going to write to us with the details of that.
Kitty Ussher: I was discussing costs to banks. If there are costs to HMRC, I am sure that all members of the Select Committee will look forward to the letter that they will receive on that, as, indeed, everyone in the whole country looks forward to receiving letters from HMRC.
With regard to further changes to capital gains tax, the Chancellor of the Exchequer made clear in his speech at the CBI conference on 27 November that we are listening to the views of the business community and any further proposals will be reported to Parliament before the Christmas recess. I urge Opposition Members to hold their horses for another few days.
Mr. Gauke: I am grateful to the Economic Secretary. To be fair, she is being diligent in responding to all the points raised. However, on the specific issue of capital gains tax, the Government's finances, as set out in the pre-Budget report and reiterated in the convergence programme, take into account the Chancellor's announcement of changes to capital gains tax. We know that there will to be some changes to that. If it is fiscally neutral, the figures contained in the report are up to date, but if the changes are not going to be fiscally neutral, the figures contained in the report are wrong. Therefore, will the Economic Secretary tell us today whether the figures contained in the report are still up to date, because the changes in capital gains tax will be fiscally neutral?
Kitty Ussher: There have been no changes announced to the proposed change to capital gains tax, and therefore everything before us is up to date. The Chancellor has said that any further changes will be announced to Parliament before the Christmas recess. In that event, that is the appropriate forum in which to continue that debate.
The hon. Member for Braintree spoke at some length about the excessive deficit procedure and Britain's performance against the Maastricht criteria. That has come up several times this morning. All that needs to be said is that the treaty deficit threshold is 3 per cent. Our forecast for the foreseeable future is below that, which I think answers his point. An excessive deficit procedure was invoked in the course of the last year and, only a few months ago, the Commission agreed that we were now back within the necessary reference level.
On the euro, the Government policy on joining the economic and monetary union has not changed. It remains as it was set out by the previous Chancellor in his statement to the House in October 1997 and again on the five-tests assessment in June 2003. We will continue to update Parliament through the Budget. I have no idea how many people are involved in our assessment of the euro.
On the question of public service pension liabilities, I am sure that the Committee will be delighted to hear that I agree entirely with the Chief Secretary to the Treasury, that it is appropriate that updated estimates for unfunded public service pension liabilities will be published alongside the next long-term finance report on the state of the PBR. That will be published later in order, as is suggested, to take account of data released by the ONS more recently.
I hope that I have answered most of the points that have been raised. If there are any gaps, I will update hon. Members in writing later. The main point to be made is that we are confident that Britain is well placed to withstand some of the international risks that are out there at the moment. We have had 61 quarters of positive growth. I believe that is a record of which to be proud. I commend the report to the Committee.
Question put:—
The Committee divided: Ayes 10, Noes 2.
Division No. 1 ]
AYES
Allen, Mr. Graham
Efford, Clive
Heyes, David
Howarth, rh Mr. George
Morden, Jessica
Singh, Mr. Marsha
Smith, John
Ussher, Kitty
Watson, Mr. Tom
Wright, David
Gauke, Mr. David
Newmark, Mr. Brooks
Question accordingly agreed to.
Resolved,
Committee rose at thirteen minutes past Ten o'clock.
©Parliamentary copyright 2007
Prepared 7 December 2007


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JEFF HERWIG is currently the Director of Bands at Mercer Area Middle-Senior High School in Mercer, Pennsylvania. He is responsible for all secondary instrumental activities in the district. He directs the Middle School Concert Band, Senior High Concert Band, Senior High Wind Ensemble, Chamber Winds, Jazz Ensemble, Pep Band, and Marching Band.
Jeff is also the founder of M&M Music Press, LLC, based out of Mercer, Pennsylvania. Jeff's works for concert band and chamber ensembles are distributed exclusively through M&M. Prior to working in the Mercer Area School District and starting up M&M Music Press, Jeff served as the Director of Bands at Titusville Area High School located in Titusville, Pennsylvania.
Jeff completed his undergraduate work at Slippery Rock University of Pennsylvania, where he majored in Music Education with an additional focus in Saxophone Performance and Conducting. He is currently earning his Master of Music in Conducting at Messiah College, located in Mechanicsburg, Pennsylvania.
Jeff currently resides with his wife Megan and their son in Mercer, Pennsylvania.