Future of Work — House of Lords, 2017-10-12
Topic: Macroeconomics
John Patten (Conservative, Centre-right): My Lords, I shall have to be quick. There is nothing new in economic history in the ups and downs that we face at the moment, so we must be very careful when predicting what next and risk causing public or political alarm. So often, well-meaning research or better-meaning think tanks come up with scary predictions that fail the test of time. In the 1970s, we had the MIT-sponsored Club of Rome report The Limits to Growth, which saw us living in a limited, closed economic system likely to collapse round about now. That does not seem to have happened. Wait for it, new readers: it was going to happen because Governments would act to limit or actually stop economic growth, which is no longer a fashionable nostrum from academia. Politicians and experts must exercise great care. I like experts, particularly when they are my doctor or dentist, but it is rather easier for doctors or dentists to get things right in their diagnosis—they get them correct most of the time—than for we politicians or economists. I am not jeering at economists, but their predictive work is very much more challenging. Experts are, or should be, the servants of democracy advising, not dictating. We here in this privileged Palace must respect the democratic desires of people when shaping public policy responses, so people with lower incomes in the UK must be treated with respect. They must not be patronised; rather, they must be given more opportunities to advance, albeit with help from the living wage, benefits or whatever, to the better work to which the noble Lord referred I strongly believe that for adults employment at all ages, when brain and/or bodily health allows, is essential not just for economic reasons but for physical and mental well-being. Last week, the noble Lord, Lord Browne of Madingley, said in London that 70 is now the new 50. That is striking, but true. There is always up and coming angst whether geopolitical, such as about Korea, or technological, such as about the explosive growth of artificial intelligence and robotics, although I predict that we may be a little way off the creation of the first RoboPeer, to which the noble Lord, Lord Knight, referred, and we should beware of ever creating them because I am sure the first thing they would do would be to create a new class of hereditary RoboPeer At present new work is being helped by the unexpected long bull-market run of global stock markets producing stonking returns for workers in their pension funds, in the investment portfolios of our local authorities and into the deep, deep pockets of the Church Commissioners with all those crumbling spires to support. They are all benefiting, but just as markets go up as no one predicted, productivity stutters in the great unanswered productivity puzzle that has dogged all G7 countries since the 2008 crisis. There are lots of theories but fewer solutions to give immediate relief all round, let alone answers to questions such as why the neo-exponential explosion in higher education numbers since the 1960s has not produced productivity gains in parallel. I do not know why, and I wish someone would tell me. There are more medium-term remedies about, such as the Chancellor of the Exchequer’s infrastructure proposals, which I warmly applaud. We certainly need more investment, as he has suggested, and there may be much to be said—I pick my words very carefully and am not misspeaking here—for a holy alliance between trade unions and investors, whether institutional or retail, who feel that companies should be investing more and should stop buying back their own shares, a form of financial engineering that consumes a company’s economic smoke. It drives up its share price for sure, but equally certainly it greatly benefits the executives whose annual rewards shoot up when their share price targets are beaten. In this, combined with the increasing trend for short-termism introduced by the new quarterly targets for company performance, may well be found the seeds of future problems grown out of the current pandemic cult of short-termism in some, although not all, of our companies I am much more concerned about the impact of this stuff on what Matthew Taylor—I agree with the noble Lord, Lord Knight of Weymouth, about this—calls "good work" than about some new banking crisis. At the moment, our traditional joint stock investment banks are more regulated than they have ever been before and I do not think the risk of any systemic breakdown is high at the moment. There is a much greater likelihood that traditional joint stock banks, with their ageing, constantly patched, endlessly rebooted IT systems, with bits being bolted on in replatforming, are going to suffer terribly from the new cloud-based technologies and agile, starting-from-scratch new banks, like the globally dominating tech giants, the inherently scalable new worlds of Alphabet, Amazon, Microsoft and the rest. They are bringing new work to the UK in new settings, and that should be greatly welcomed As we struggle to explain the stutters of productivity —and if we cannot explain, then we cannot produce policies—we must all realise that the most important thing is that policy responses, whatever they are, should be enabling, not directive or dictatorial.