Budget Statement — House of Lords, 2017-12-04
Topic: Macroeconomics
Karan Bilimoria (Crossbench, Unknown): My Lords, the UK economy is forecast to grow by 1.5% in 2017, and we still have debts of £1.7 trillion. Within eight months, the OBR’s GDP forecasts for the next five years have been revised down to the lowest in our history. In those eight months since the last Budget, our productivity growth forecasts have been drastically reduced and, in eight months, the OBR expects the UK to perform worse than our main competitors, with the table of real GDP per capita growth in the G7 from 2016 to 2022 listing in the following order: Germany, France, United States, Japan, Italy, Canada and then the UK. The IMF says 6%; the OBR is even lower at 5%. It makes for pretty grim reading. Mr Johnson of the IFS says that, "We are in danger of losing not just one but getting on for two decades of earnings growth" So what are we going to do about this? George Osborne talked about fixing the roof while the sun is shining. He wanted to achieve his growth by balancing the budget by 2020. This is a pipe dream; it is not going to happen. The IFS calculates that it will be, "well past 2060s for debt to fall to its pre-crisis levels of 40% of national income" There have been some indications recently that we might be heading for recession within the next year and a half. Does the Minister agree? Every 10 years, whatever happens, we have a recession. Are we going to have another? And then we face the longest period of falling real incomes since records began more than 60 years ago There are some good things in this Budget. For example, the Government listened to the Economic Affairs Finance Bill Sub-Committee, on which I sit, when we said of making tax digital that they should trial it out and not implement it straightaway. I am grateful for that. They will pilot it and limit it to turnovers above the £85,000 VAT threshold When it comes to research and development and innovation, the good news is that the Government say that they will invest more in this area. But what is "more" and what is required? We spend 1.7% of GDP on R&D and innovation; Germany and America spend some 2.7% and 2.8% respectively. Two billion pounds a year is a good move, but it is £20 billion a year that we need just to catch up with them, let alone the backlog What about agriculture? The National Farmers’ Union said that it was, "disappointed to see no meaningful measures to help prepare farming businesses prepare for life outside the EU" Just wearing my Cobra Beer hat, I am grateful to the Government for the fact that duty on beer was frozen. On a very serious note, the British pub desperately requires encouragement and protection. This measure will help the great British pub at the heart of our communities It is good that the Government want to reduce single-use plastics waste, and there is no question but that the 5p carrier bag charge has reduced the use of plastic bags by 80% in the past two years. I applaud the Government for going down that route On business rates, much more needs to be done. Yes, there has been a move to CPI, but more needs to be done. Where rates are concerned, there is an initiative for pubs in England to continue to receive a £1,000 discount. Much more needs to be done there, too. Will the Minister agree to that And, of course, the Oxford to Cambridge rail line being revived is wonderful news. I congratulate the Government on that The noble Lord, Lord Tugendhat, has mentioned the £3 billion to prepare for Brexit over the next two years. However, in spite of the national living wage and national minimum wage being increased, we know how low they are going to be. In February 2016, this country was flying: we were the fastest-growing economy in the western world. We were at the top table of the world. Today, I am ashamed to say that we are no longer at the top table. There is only one reason: Brexit. There is only one reason behind this Budget being called lacklustre and boring: well, the Chancellor survived. Alan Milburn resigned because he said that social mobility is not happening. He said that many people voted Brexit because they were dissatisfied with the Government of the day—it was an anti-establishment, dissatisfaction vote. Just yesterday, the poverty figures were released. Britain, a rich country that spends £800 billion a year on government expenditure and is the sixth-largest economy in the world, has poverty today. That is what the focus needs to be on; that is where the Budget needs to focus Three reasons were given for Brexit, and they are all linked to the Budget. The first was: take back control of our money; take back control of £8 billion a year, the net contribution. I have just said that £800 billion is our government expenditure per year—a pie chart, a line, an arrow: 1% of our government expenditure per year is Brexit. A second reason was: take back control of our laws. I ask people and businesses, "What laws? Tell me one law that affects you on a day-to-day basis". They cannot name one, because the laws that affect us every day are made over here in this Parliament, in this House and in the other place. The third reason was: take back control of our borders. There are no exit checks at our borders. Whatever the Minister may say, there are no physical, visible exit checks at our borders. I ask people what percentage of our population of 65 million is made up by the 3 million people from the European Union. The answer is less than 5%. It is said that that 5% is a "burden" and causing our public services to collapse; without them, the public services would collapse, with 130,000 EU citizens working in the NHS and care sector alone and 250,000 working in the construction sector Then we talk about skills. The university sector is hardly mentioned in the Budget. International students alone bring in £26 billion to the economy. There are 450,000 international students—I am president of UCISA, representing them—with 130,000 from the EU. What will happen if we leave? They count as domestic students; they are entitled to loans. What if they reduce the billions of pounds with which they enrich our universities? What about research funding from the EU and research collaboration with the EU? What about the academics from the EU? Some 20% of academics in most of our universities are from the EU. These are the things that will affect our economy, because when it comes to R&D and innovation, it is investment in university research and innovation that is going to work What about the negotiations now? They have stalled. We have heard the news: the lunch was lunch; fudge was served. The bill is to be £40 billion to £50 billion, yet Boris Johnson said they could go whistle and Priti Patel said words that I could not repeat in this House. We are now prepared to pay £40 billion to £50 billion and perhaps give some control to the ECJ. Then there is the question of the Irish border. We will not allow Brexit to break up our union. And then there was the £3 billion in the Budget for Brexit expenses. What about all the expenses that have already taken place I conclude on the issue of trade—again, not mentioned much in the Budget. Fifty per cent of our trade is with the EU and another 20% is through free trade agreements via the EU, including now with Japan. Seventy per cent of our trade is FTAs and Liam Fox talks about going after the other 30%, of which the Commonwealth makes up less than 10%—including India, Australia and Canada. We need to do more with those countries, but the Indian high commissioner said very clearly, "Yes, we’ll do a free trade deal with you, but it might take till 2030 and, by the way, it includes the movement of people as well" This Budget is completely overshadowed by Brexit. It is only a matter of time before the British public wake up to the realities, realise that the Brexit emperor has no clothes and we will not be leaving the European Union.