Queen’s Speech — House of Lords, 2015-06-04
Topic: Macroeconomics
Bryony Worthington (Labour, Centre-left): My Lords, I rise to speak in the debate having listened with interest to the learned and wise contributions of so many distinguished noble Lords, including the most excellent maiden speeches of the noble Lords, Lord O’Neill and Lord King. As ever, the House has today eloquently demonstrated the depth of knowledge and breadth of experience we are so fortunate to embody My own contribution to the debate will focus on an important area of the economy which I fear is neither properly understood nor accorded the right level of respect and attention by the Government that it deserves: energy and climate change. Here we sit on our islands, home to a modest population with limited space and no great abundance of natural resources, and yet over the course of history our impact on the globe has been remarkable. As I am an optimist, I see no reason to doubt that we cannot continue to do so in the future, for we live in interesting times. We are buffeted by the winds of globalisation, with increasing interconnectedness and complexity being a part of our daily lives, and we must respond to these challenges How might we achieve this? Many noble Lords have spoken of addressing our productivity challenge, stabilising our economy, and equipping our citizens with the skills they need to thrive in this world. The Government’s recipe for success appears to be clear: reductions in business rates, freezing taxes, slashing red tape, slashing welfare in as yet undisclosed ways, and smashing the unions. So far, so much ideology. However, the key question is whether the Government can engender one of the most important elements needed for investment and growth in the economy: confidence. Will people and companies feel confident enough to spend money and to spend it here? So far, the evidence is not reassuring. The Government cling to a simple idea that the market knows best and, rid of interfering Governments, that it will deliver all that we might seek of it. That is of course nonsense—Governments have always and always will have a strong role to play in guiding the hand of the market and, in times of economic insecurity more than ever, they must apply a steady hand on the tiller. That steady hand should be manifest in sensible, well-constructed policy-making and regulation, of which there is too little evidence in the Government’s plan The northern powerhouse we have heard so much about remains, sadly, a slogan, without yet any appreciable sign of how it will be delivered—although we might look forward to seeing some detail. The one piece of legislation in the gracious Speech that related to infrastructure was the HS2 Bill, which can hardly be described as new, having been the subject of seemingly interminable debate in this House and the other for many years. The energy Bill contains not much more than a dog-whistle response to a vocal minority who oppose proven, clean, cheap onshore wind, reducing investor confidence when we should be boosting it. That is coupled with another attempt to reassure investors in the North Sea, as if searching to return to the golden era of the 1970s. We cannot evade the truth that in a world of excess capacity, reduced demand and low oil prices, the cash cow that we once relied upon to fill our coffers may be about to be extinguished To return to growth we must play to our future strengths, not try to replay our greatest hits, and we must also once again connect the financial world with the real economy, not rely on property price bubbles and financial derivatives that deliver no net gain to the global economy. We were once a nation strong in engineering excellence and infrastructure and we can be again; our infrastructure needs renewing to adapt and respond to the growing risk of climate change in particular The UK is fortunate to have a world-leading Climate Change Act, which creates the framework for a new industrial revolution in energy. Rather than pursuing fading hopes in the North Sea, the Government should seek to properly back a wide range of alternative sources of energy: renewables, nuclear, and coal with capture and storage, as well as converting transport to run on electricity and giving industrial sectors much-needed support to develop novel processes, electricity-based solutions and carbon capture and utilisation so that they can thrive in a carbon-constrained world. Solutions developed here in the UK will be in high demand, as every country is now waking up to the threat of climate change and pledging to act. There are few areas of our economy where we enjoy a positive trade balance with China; our environmental services is one. We should pursue it more As the Minister knows well, growth in the Chinese economy is delivered through a five-year plan, followed by instructions to state banks, which makes capital available and which results in infrastructure being conceived, financed and delivered with alacrity. This is not how things work here. We seem to have to guide, cajole, regulate and incentivise the private sector to commit investment. Monetary policy in this regard appears to have reached its limits. Government must step in and apply their guiding hand The gracious Speech included a Bank of England Bill. That is welcome, but the Government could and should be doing much more to improve the Bank’s capabilities to identify and respond to potential sources of instability. For example, it could require the Bank to extend its risk assessment horizon to include longer-term risks such as climate change. The issue that Mark Carney refers to as the "tragedy of horizons" prevents us properly assessing the risk that this great threat poses to our economy and to our society more generally. The Bill could also give the Bank greater powers to take action to address potential asset price bubbles—including, for example, those potentially overvalued fossil fuel assets that we may not be able to extract and burn in the way that we currently imagine we will. I will seek to promote that as the Bill makes its way through the parliamentary procedure I would like to end by briefly commenting on the distinctly odd tax Bill. I, like many noble Lords who have spoken before me, find it slightly strange and potentially a great waste of parliamentary resources. In the Government’s zeal to outlaw various tax increases, does this now mean that, to balance the books, the Treasury will embrace progressive green taxation, increases in which are not limited? Can the Minister confirm that? For example, might we look forward to the introduction of a comprehensive climate change levy—call it climate insurance, if you will—the proceeds of which could be spent on the research and development of clean energy and its deployment It has been a privilege to take part in this debate, and I look forward to our continued discussions of these topics in the coming months and years.