Below is the text of Mr Major’s response on Invisibles made on 7th June 1990 in the House of Commons.
Mr. Tony Lloyd To ask the Chancellor of the Exchequer what he forecast for the surplus on invisibles in 1990 in the 1989 autumn statement; and what is his latest forecast.
Mr. Norman Lamont A total of £6 billion and £1½ billion.
Mr. Lloyd The Chief Secretary will understand my scepticism about his forecasts, given the Government’s bad historic record of forecasting the balance of payments. Does the right hon. Gentleman recall that when Opposition Members have complained about the deficit on manufactures, his Government have frequently told us that we should not worry about that because everything would be made up by the invisibles? Does the right hon. Gentleman agree that it was a mistake so to damage the manufacturing sector that it is incapable of performing in the way that the nation needs? What does he intend to do to ensure that global shortfall in the balance of payments is made up?
Mr. Lamont On the hon. Gentleman’s first point about forecasts, the Government’s forecasts on the current account do not differ substantially from those of the vast majority of outside forecasters. Indeed, the right hon. Member for Leeds, East (Mr. Healey) described the forecasts of the Government of which he was a Member as being rather like long-range weather forecasts – better than nothing. We have a higher opinion of our forecasts than that.
The hon. Gentleman also referred to the deterioration on the invisibles account. That is due to a number of factors to which I referred at our previous Question Time, including the timing of EC payments. That is why, despite what happened in the last quarter of last year, we are expecting the position to improve according to the forecasts that I have given to the House.
Mr. Quentin Davies Will my right hon. Friend give some thought in future to whether, when publishing the invisibles figures, a clearer distinction might be made between interest and dividends received, intergovernmental payments, and the sale of services to non-residents – all of which are conceptually different elements in the national income account, and distinguishing between them might avoid some of the confusion that has given rise to some of the questions this afternoon?
Mr. Lamont I shall certainly look into the point that my hon. Friend has raised. Several points have been made about the compilation of the invisibles account, including, for example, the fact that appreciation of our overseas assets does not score, although it might be argued that it should count against interest payments and dividends.
Dr. Marek The Chief Secretary might be squirming, after 10 years, that his Government have achieved the record that the tax burden has increased sharply since 1979. The total tax burden is much higher now.
Mr. Major No.
Dr. Marek Yes, it is, and the Chancellor of the Exchequer knows it. He also knows that the balance of payment on our visibles is much lower now than it was in 1979. He has achieved the unique record after 10 years of his Administration that he managed to wipe out the balance of payments on our invisibles in the last quarter of the last year. Instead of simply telling the House that he expects this shameful state of affairs to improve, will he tell the House precisely why he expects it to do so?
Mr. Lamont I explained carefully to the hon. Member for Stretford (Mr. Lloyd) why we expected an improvement in invisibles. We also expect an improvement on the current account because we expect the economy to slow down as a result of the measures that we have already taken. We have repeated that on many occasions.