Part of the debate – in the House of Lords at 3:46 pm on 3rd November 2008.

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Photo of Baroness Noakes Baroness Noakes Shadow Minister, Treasury 3:46 pm, 3rd November 2008

My Lords, I thank the Minister for introducing this important debate, for which we have been pressing since the House came back last month. I welcome the Minister's agreement with the noble Lord, Lord Lea, about having a public inquiry into the issues surrounding the banks. I hope that it will cover the way in which Ministers have behaved throughout. We look forward to hearing further details.

It sometimes seems as though the Government are occupying a parallel universe, in which they have exercised outstanding stewardship of our economy and have made no mistakes. They lay all the blame for today's problems on others, including irresponsible US lenders, greedy bankers, commodity traders and inadequate international financial architecture. And, as they told us last week, the economy will be all right because the Government will tear up the rule book—their own fiscal rule book—and spend and borrow without limit.

We have lost count of the number of times that the Prime Minister, when he was Chancellor, claimed to have abolished boom and bust. He presided over an economy built on debt, both government and private. He believed in stories of economic miracles spun by Alan Greenspan, and even made him an adviser to the Government. He created an economy which is not well balanced and not well prepared for the downturn—a possibility which he denied. To quote the Institute for Fiscal Studies:

"We are entering the current recession with one of the largest structural budget deficits in the industrial world and a debt level ... which is larger than that of most industrial countries. We have done less to reduce our structural budget deficit and less to reduce our debt than most other industrial countries since Labour came to office".