Budget Statement — House of Lords, 2015-03-25
Topic: Macroeconomics
David Edward Lea (Labour, Centre-left): My Lords, in following the noble Lord, Lord Thomas of Gresford, and his mention of the hustings, this of course is not a Budget in any normal sense of the word. Who is going to have a copy of the Finance Bill? Where is it? Well, quite, thank you—it is sitting on a table. What is actually happening is, as my noble friend Lord Whitty said, that the Chancellor has made an election speech. When my noble friend said that, I thought that it was a statement of the obvious—until I realised that that was not the election he was talking about. My noble friend was talking about the election for the next leader of the Conservative Party. That is the election that matters—and we should get focused on our realities here The only real thing that it seems to me is happening in the economy at the moment is the extraordinary and sudden decision that all these pension pots—annuities—can be spent just as you like. Okay, set the people free, but I have to ask a rather relevant question in terms of our savings ratio, wealth and poverty and so on. Savings are very much a factor in the distribution of income and wealth. Indeed, you could treat the state pension as part of the distribution of income and wealth. Donkeys years ago, I was a member of the Royal Commission on the Distribution of Income and Wealth, and I know that these things are not unimportant. If everybody can blow their pot when they feel like it, is that really what the Government want? What is the latest on this focused advice that we keep reading about that is going to ensure that people do not just blow their pot, if I can put it that way I was very struck by a point made by the noble Lord, Lord Taverne, which had not been made hitherto—namely, that of the scenarios which may emerge after the election, by far the most damaging is that of a weak Conservative Government playing to their Back-Benchers who want a quick referendum on Europe, with that referendum being badly handled due to the time factor. Given that time factor, the referendum will not follow a real renegotiation, and we know that the different countries in Europe have different timetables as regards elections If all that went wrong, Scotland could say goodbye to England in order to stay in Europe and we would lose many billions of pounds’ worth of Chinese investment et cetera. This Conservative Government, and their successor, if that fate befell the country, would go down as about the most disastrous Administration since one that we had in Anglo-Saxon times. However, I do not need to take that historical analogy any further. That scenario would mean that we would be out of everything. We are only half in things at the moment. We have to engage with the rest of the world via Europe very much more intensively than we are doing, using European benchmarks for much of what we do. My main point concerns the connection between the low productivity problem and the trade balance problem. I think that I have told the following anecdote once before in the Chamber. Someone I know quite well who runs an engineering company in Britain wants to take over a Swedish company. So off he goes to Gothenburg, where a buffet smorgasbord lunch is served and he is invited to say a few words. The person sitting next to him then says a few words along the lines of, "I am the chairman of the works council. Mr Struthers, if you take over our company, I would like to know how you will ensure that this will help us increase our world market share". On the plane home, Mr Struthers thought about this and said to his colleagues when he got home, "You know, these works council chaps in Stockholm asked me an extraordinary question—namely, whether we had worked out, if we took over their company, how this could be conducive to the company increasing its world market share. Nobody in Britain has ever asked me that question" I thought that summed up a very necessary connection between the lack of involvement of workers and the huge tale of low performance. I do not mean low performance only in terms of productivity but also in terms of wages, because whatever theory of value in production you adhere to, it is certainly the case that in our national income accounts, low productivity and low pay equal low gross product. I do not buy that myself. I can cite the opposite argument and see whether anyone in this Chamber believes it. Over the last five years, FTSE 100 chief executive officers have seen their real earnings rocket by 26% —an astronomical rise compared with the years of pay cuts that everyone else has had to endure. Of course, such people in our type of capitalism—there are other types of capitalism in northern Europe—seem to think that accountability is only to shareholders, which has led in some strange cases to boards operating as cabals. That is something that a Labour Government will change, not in a revolutionary but an evolutionary way—and that change will start in June of this year Finally, I stress the importance of worker training in improving performance. Only 10% of our employers employ apprentices, compared with three to four times as many in some other countries. In fact, about one-third of employers do not carry out any training at all. That could not possibly happen if we had works councils involving both employers and workers. It constitutes a great gap in our arrangements in this country. As a former trade union official, I suggest that many council members should be elected on the basis of their trade union affiliation. I very much believe that this issue will be central to the policy of the incoming Labour Prime Minister. I trust that he will pursue this initiative and set up a unit in the Cabinet Office reporting to No. 10. Employment, productivity, labour market issues and world market share would be the central focus of such a unit. That focus is totally lacking in the present Whitehall structure.