Queen’s Speech — House of Lords, 2021-05-12
Topic: Macroeconomics
Sheila Masters (Conservative, Centre-right): My Lords, I, too, congratulate the noble Baroness, Lady Blake of Leeds, on her excellent maiden speech The gracious Speech promised many good Bills that will contribute to the UK’s success. I congratulate the Government on an ambitious programme. Last week’s elections showed the strength of the Prime Minister’s mandate for building a better UK and levelling up. Our focus must now be on the practical steps to rebuild our country. In my allotted time, I will speak about the economy and what the Government need to do—and not do—to underpin economic growth The Government’s Covid-19 policy was to prioritise the healthcare response to the virus. Practically everything else suffered. The damage done by deliberately crashing the economy through lockdowns has left us with a significant loss of GDP, and debt and deficit levels that are in post-war record territory. I support what the Government have done to protect jobs and businesses, but it is vital that we start to move out of that cocoon as soon as possible. In particular, we must ensure that non-viable businesses are allowed to fail. Keeping them on life support with employment subsidies and soft loans will act as a drag on the economy in the medium and longer term if we do not let market forces do their job The Government’s infrastructure programmes will certainly support the economy as we rebuild, but the fiscal impacts are huge. History teaches us that Governments often do not spend money wisely. The out-of-control High Speed 2 budget is a case in point; I will not support the HS2 Bill that is planned for this Session. More importantly, taxpayer-funded infrastructure spending should not become a dominant part of economic management, because the danger of crowding out the private sector is very real. Only by letting our business sector have the space to grow will we be able to create the sustainable jobs and prosperity which, in turn, generate the tax revenues to support other priorities such as social care funding I hope that the Government will prioritise the things that create the best conditions for businesses to grow. I suggest three areas to focus on. First, the Government must use their Brexit freedoms to get serious about deregulation. We need to jettison committees, units and policies that fly under the oxymoronic flag of better regulation. We need a presumption of no regulation, particularly for small and medium-sized businesses. They should simply be allowed to get on with wealth creation, as long as they avoid a carefully defined list of harms Secondly, the Government must not forget that high tax rates drag economies down and discourage investment. Tax yields are not maximised by raising rates, as any number of examples of both raising and reducing taxation rates over the past 30 years testify. The Government need to look again at their plans for corporation tax and resist the temptation to raise income tax or capital gains tax rates Thirdly, a skilled and educated workforce is a foundation stone for business success and therefore jobs. I welcome the Government’s initiatives, including their lifetime skills guarantee. They must be ruthless about ensuring that school leavers are well equipped for the world of work and that universities are not allowed to churn out graduates with degrees that are not valued in the workplace in any way I will finish with a word of caution about the Government’s seemingly boundless enthusiasm for climate change action. Net-zero policies have huge costs and hit the poorest in our society hardest. Legislation to set binding targets will demand careful scrutiny, so that we do not pursue the empty glory of world-beating CO2 reduction at the expense of the economic well-being of our country.