Autumn Statement: Economy — House of Lords, 2016-11-29
Topic: Macroeconomics
John Horam (Conservative, Centre-right): My Lords, this has been an interesting debate, thoughtfully started by my noble friend Lord Young of Cookham. He declared that he was a reformed character. Not too much reformed, I am glad to say—as we saw, he still retains his sense of humour and his remarkable stamina. He has sat throughout this entire debate and has already listened to 19 speakers, with another 20-odd to come. That is a remarkable example of his stamina as befits the bicycling baronet he was in the other House. I can also tell the House that he is also still remarkably non-partisan. Indeed, he managed to be non-partisan in the other House when he was Chief Whip, which is some sort of a record. We—at least on these Benches—are delighted to have him in his present position in the House of Lords I will make only two brief points in this debate. The first is that I am extremely glad that growth has come back as the centrepiece of economic policy-making in this country, as opposed to the deficit. It has always been obvious to me, speaking as a bit of an unrepentant Keynesian economist, that if you go for growth, first of all you get growth, and secondly, if you get growth you also get the resources to deal with the deficit. If you make the deficit your priority, you do not get growth, and you may not do much better on the deficit. Therefore the logic of the situation has been plain. I know that my noble friend Lord Higgins will recognise some of the arguments here from his days at the Treasury. He was Treasury Minister when I first went into the House of Commons, and I remember those days with great affection. I am therefore delighted that this fundamental change has taken place I only wish that we could persuade the German Chancellor, Dr Wolfgang Schäuble, to adopt a similar Keynesian demand-management approach. I respect Dr Schäuble; he admitted that he shed tears when he learned the result of the referendum. That is an interesting admission by the German Finance Minister. Unfortunately, the Germans are still in hock to the so-called Freiburg school of economics, which places all the emphasis on structural reforms—which, in practice, means reducing wages and throwing people out of work—and not on any kind of demand management. As a result, the European economy is performing much less well than it could. One reason that we are seen to be doing better is that, sadly, the European economy is doing much worse. One might ask, "Why does that matter to us when we’re not going to be in the European Union?", but how the European Union performs economically still matters profoundly to us and that will continue to be the case, and I am sad that the German economy is not performing as well as it could. Given the situation that we find ourselves in, perhaps now is not the time to lecture the Germans on the economy. None the less, I wish to make that point because it is important to our general performance My second point reflects on what the noble Baroness, Lady Warwick, homed in on—no pun is intended here. She mentioned that housing is central to our problems. I am delighted that the Chancellor made such an issue of housing and that he is trying to do all he can to improve the situation. It is clearly a question of supply, and I am glad that we have got rid of some of the fungus of other issues that surrounded this matter under the previous Administration. We are now homing in on what really matters As the right reverend Prelate the Bishop of Birmingham rightly said, it is a question not just of housing but of affordable housing—social rented housing as well as every other kind. Every aspect of our housing situation needs to fire on all cylinders if we are to meet the targets, although I am afraid that we may not do so. I was delighted that the Secretary of State for Communities and Local Government, Sajid Javid, talked only the other day about being radical. We absolutely need to be radical in this area if we are to have any hope of meeting the demanding targets that we have set ourselves, but I am afraid that those targets may not be adequate to deal with the situation that we face However, I believe that we have a good team at the DCLG with Sajid Javid and Gavin Barwell, who is a London MP and therefore understands the situation. I hope that those two can bring about a Harold Macmillan/Ernie Maples solution to our housing problems and achieve a new 300,000 houses a year. I fear that they will fail on that target because it is a demanding one; none the less, I hope that they will achieve much in the next four or five years On the subject of housing, I would like to make one point which may seem rather strange but it is related to the Chancellor. I welcome unreservedly his saving of Wentworth Woodhouse, the house just north of Rotherham in Yorkshire. People believe that it was the model for Mr Darcy’s Pemberley in Jane Austen’s Pride and Prejudice. That may or may not be true—the noble Baroness, Lady Hollis, indicates that she agrees with me on that—but anyone who knows the house is aware that it is an incredible Palladian building. Actually, the building is Palladian at the front and baroque at the back. The second Marquess of Rockingham decided that the baroque building that his predecessors had built was unsatisfactory. He was twice Prime Minister of this country and he had the means—from coal-mining on the estate—to achieve his ambition, and he built a Palladian addition on the front. It is a remarkable building. If it is true that by the end of this century Asia will have all the manufacturing jobs, America will be providing all the food and Europe will be the museum where people come to spend their money, then it was indeed a very wise investment by the Chancellor to save this remarkable building. If it is properly conserved, I think it will be the equal of Chatsworth and Blenheim I wish the Chancellor well. I think that he is now a round peg in a round hole. As one or two speakers have said, he is well equipped from his business experience—both as a failed businessman on some occasions and as a successful businessman on others—to do this job. I wish him well and I believe that he has fundamentally taken the right attitude as regards both the economy and housing.