Macro-Economic Model

Oral Answers to Questions — National Finance – in the House of Commons at 12:00 am on 6th November 1975.

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Photo of Mr Marcus Lipton Mr Marcus Lipton , Lambeth Central 12:00 am, 6th November 1975

asked the Chancellor of the Exchequer what plans are in hand for re-designing the Treasury's macro-economic model; how much they will cost; and what benefits to the taxpayer will accrue therefrom.

Photo of Mr Joel Barnett Mr Joel Barnett , Heywood and Royton

The model is under continuous development. It is not possible to separate the staff costs of redesigning the model from the broader costs of forecasting and policy analysis work. It is in the interests of the taxpayer that economic policy should be based on the best possible analysis.

Photo of Mr Marcus Lipton Mr Marcus Lipton , Lambeth Central

Of what use is this weapon? What does it do? Who looks after it? How many hours of work a week are devoted to it? Has it been approved by the CBI and the TUC? May we have a look at it at some time?

Photo of Mr Joel Barnett Mr Joel Barnett , Heywood and Royton

I am well aware of my hon. Friend's long-standing interests in models. I shall be happy to invite him to look at the various models which are available in the Treasury. Although the forecasts that are available from all sources—not only from the Treasury—have to take into account judgments that are not always accurate, it would be too cynical to assume that they are not of some value.

Photo of Mr Ian Lloyd Mr Ian Lloyd , Havant and Waterloo

In the light of yesterday's declaration, will the Chief Secretary tell the House and the country one significant fact? What is the Government's view of the existing or projected desirable net-of-tax return on risk capital in the private sector?

Photo of Mr Joel Barnett Mr Joel Barnett , Heywood and Royton

That does not have much to do with models. We are in favour of a reasonable return on risk capital. This is amongst the matters, arising out of yesterday's statement, that will be discussed.

Photo of Mr David Howell Mr David Howell , Guildford

Might not one benefit from this model—if we are not to be allowed a glimpse of it—by a clearer view of the development of the public sector borrowing requirement through the year? As the Prime Minister has got into a muddle with his figures on the public sector borowing requirement, I hope that the Chief Secretary will explain the figures to my hon. Friend the Member for Blaby (Mr. Lawson) in replying to a later Question. The confusion was not helped by the Chancellor of the Exchequer's recent Guildhall speech. Will the Chief Secretary reassure the House that an explanation will be given of this critical element in public confidence in the economy?

Photo of Mr Joel Barnett Mr Joel Barnett , Heywood and Royton

If there is anything that I can do to restore the hon. Gentleman's confidence, I shall be happy to oblige. I do not agree with what he said about my right hon. Friends. We shall make appropriate statements bearing on the forecasts that we obtain from the model.