Spring Statement — House of Lords, 2019-03-20
Topic: Macroeconomics
Bryan Davies (Labour, Centre-left): My Lords, this debate is occasioned by an event called the Spring Statement, which has scarcely been a fiscal event. There were no significant changes to the tax system, and only a small number of spending measures, forming not an economic strategy but almost an emergency response to the failure in government services long experienced by the British people, who are now complaining stridently about it Of course, as my noble friend Lord Hain pointed out, the Chancellor’s reasoning is that the Brexit shadow is still as dark as ever over the British economy. That makes economic forecasting exceptionally difficult—a position readily acknowledged by the OBR, which based its forecasts on an orderly Brexit, while warning that a disorderly one would have a severe short-term impact. We are nine days away from decisions on leaving Europe, and we have not heard any announcement this evening about what the Government’s strategy is. We are as much in the dark over Brexit as we have been—and the whole country has been—for months and months. Whether it will be a disorderly Brexit we do not know, but we certainly do not have an indication that the Government are in control of events and their policies The tentative forecast put forward by the OBR does not give the Government a great deal of credit. As noble Lords across the House have recognised, growth forecast has been reduced from 1.6% to 1.2% following nearly a decade when growth has been low. That is as good a measure as one can have of the Government’s failings. The OBR continues to stress that weak productivity growth is at the heart of the problem, and noble Lords in this debate have contributed to those considerations If, as we have had over the past decade, we have the lowest wage growth for more than a century, when investment has been low compared with other advanced countries—as my noble friend Lord Davies of Stamford emphasised in his speech—and the Government fail to hit their expressed targets, it is not surprising that there is a lack of confidence and an acute problem in the British economy. After all, austerity is an ideological objective rather than an economic necessity, and we have been governed by that for a decade. It has dominated government policy over this period, the consequences being low investment and low growth rates. The Chancellor makes a tentative prediction that wage growth will at last be above inflation, but we have had a decade in which the growth in wages has been the lowest for more than a century. Is it a surprise therefore that demand in the economy at present is in an unhealthy position? When I say unhealthy, I mean that what demand we have seems to be correlated by the significant growth in household debt. We have been in this situation before and it is not one which encourages stability or any reason for congratulating the Government On the Government’s basic competence, the chief financial objective in 2010 of the Conservative Chancellor at that time was to balance the books by 2015. We all remember the long-term economic plan. However, despite all the hardships caused by this policy of austerity, this Chancellor does not expect the objective to be realised until 2025. The decade of austerity has brought havoc in public provision, with the stress so great in some public services that the Chancellor has been obliged at this stage to apply a minor sticking plaster to acute wounds. We see the police budget increased by £100 million—a tiny fraction of the overall police budget—but it is meant to indicate to a disbelieving population that it will address knife crime satisfactorily. The Government continue to deny that there is any significance between the reduction in police numbers and increased crime rates, especially knife crime. They say that it has nothing to do with fewer policemen in action The Chancellor managed to conjure together token additional grants for schools to address the school crisis which is causing such discontent among parents and teachers alike. The Chancellor’s phrase was that he was going to apply small remedies to the problem. We all know that the educational system is in crisis. It used to be enough when parents expressed their concern. Then we got accustomed to older students, sixth-formers and so on expressing anxiety. We certainly got very used to the teachers expressing their anxiety about school funding. Now the children are making the argument to the Government. Is that an indication that the policy of austerity has gone too far It has not been mentioned much in the House today, so I am grateful to the noble Earl, Lord Listowel, for emphasising the problems where children are concerned. In social policy we have seen the continued erosion in the value of tax credits and social benefits, which is to continue for the foreseeable future. The problems with universal credit remain a major feature in the lives of so many of our less well-off citizens. Furthermore, there has been no mention this evening about the very desperate people—generally young people—who sleep rough The noble Baroness, Lady Thornhill, emphasised her anxieties about the services provided by local authorities, and said that the system of financing local government was broken. Did anyone—there are plenty of people from that party in this House—anticipate that it would be Conservative county councils, namely Northamptonshire and Wiltshire, that would complain about their inability to provide basic statutory services? That impacts greatly on those most dependent on such services—often those in our society with fewer resources. Finally, we have had the signal that the Government are making such a success of increasing employment. What the Government have created is large numbers of workers on low pay and long hours and in precarious employment. That is why productivity is not reflecting the buoyancy of employment. The figures look good from the perspective of the Government and elite staff but, for many, employment is based on severe job insecurity. Nearly 3 million people are working for less than 15 hours per week, and one in nine have insecure jobs Our society is evolving the need for a more skilled population. With regard to enhanced skills, whose importance we all recognise, there have been government failures in both education and training. Policies are clear for all to see. The cutbacks in schools and further education have produced protests. Colleges, which traditionally provide a crucial opportunity for young people to gain specific employment skills, have had their budgets cut by almost a quarter since 2010. That is how far-sighted the Government are about our manpower needs A future Labour Government will pursue an entirely different strategy from the failed economic policies of this Government. We will end austerity and make the wealthy pay their fair share to strengthen the public services on which we all rely. We will establish a national investment bank and a network of regional development banks to support small and medium-sized enterprises and upgrade Britain’s infrastructure. We will introduce a financial transaction tax, to curb speculative behaviour that threatens economic stability. We will establish a strategic investment board to guide private investment towards productivity-enhancing and green productive lending. We will reform company law to provide worker representatives on boards, and mandate a maximum pay ratio of 20:1 in public companies and companies bidding for public contracts We will seek to increase investment in our key industries and will ensure a close relationship between the financial sector and the world of manufacturing and productivity. We will improve our public services, particularly education, which is so crucial to skills enhancement, and guarantee that the health service obtains the resources required. We will create a fairer society where those on lower incomes and welfare share in the increased prosperity of the nation. This Government have a disreputable past based on austerity, a totally incompetent present illustrated by the Brexit fiasco and no vision of a better future for our people, which this inadequate Spring Statement clearly demonstrates.