Finance Bill — House of Lords, 2020-07-17
Topic: Macroeconomics
Andrew Adonis (Labour, Centre-left): My Lords, I completely agree with the noble Lord, Lord Lilley, that we need a more efficient state. We need to pay attention to that in this crisis. In his speech this morning, the Prime Minister predicted that there will be a return to normality by Christmas. I tend to be with George Eliot on these matters: of all mistakes in life, prophesy is the most unnecessary. I do not think it at all likely that we will be back to normal by Christmas, but who knows? Anyone who tries to prophesise is almost certainly making a mistake. However, we must have public policy in the midst of a crisis where, as the Japanese famously say of politics, "An inch ahead is darkness." The question is: what should that policy be Among those who are more reputable economists than me, there are three different models: the post-crisis situation could be L-shaped, V-shaped or U-shaped. The truth is that no one knows whether it will be L-shaped, V-shaped or U-shaped. The right stance for the Government, who hold our destinies in their hands, is to observe the precautionary principle. Since there is a distinct possibility of mass unemployment after this crisis on a scale that we have not seen in recent history—my noble friend Lord Livermore said that the economy has contracted more this year than in any year since, I think, 1706—surely the right precautionary principle for the Government is to work on the assumption that the post-crisis situation will be L-shaped; that is, with a big shock in demand and supply, which will continue. Significant efforts by the Government to boost both supply and demand will therefore be required That broadly seems to be the Government’s policy, except that they make announcements then put time limits on them. At the moment, they have to do that because they can only see a certain period ahead, but I look to the Minister to assure us that, if we are in an L-shaped post-crisis situation with a massive contraction of both supply and demand, the Government will continue to provide the economic support that they have done On the actual measures, let me be frank: I agree with some and I disagree with others. I agree strongly with the measures taken in respect of youth employment, such as the kick-start scheme. I am sceptical about the stamp duty cut. I am not a great fan of giving people £10 to eat out when many cannot even afford to eat in. We need ceaseless activity on the Rooseveltian principle in this crisis. I will not criticise the Chancellor or the Minister for taking initiatives that involve action to try to tackle the roots of a supply and demand crisis just because I may happen to disagree with particular measures. Inaction is the great crisis that we potentially face, not too much action, particularly in respect of youth unemployment, where the kick-start scheme is vital I do not have time to continue. Will the Minister give a commitment that the Government will do all that they can to maintain the kick-start scheme and, if necessary, give a direct and explicit commitment to employing young people who face unemployment after this crisis? If I can break my own rule and engage in some prophesy, the big thing I fear is mass youth unemployment after this crisis, which would be unconscionable.