Queen’s Speech — House of Lords, 2021-05-12
Topic: Macroeconomics
Peter Hain (Labour, Centre-left): My Lords, I also enjoyed the two excellent maiden speeches today, and I reassure my noble friend Lady Blake that, even as an ardent Chelsea fan, I too think Leeds should be in the Premier League By the end of this year the economy will still not be back to where it was at the beginning of last year, even according to optimistic forecasts such as that from the Bank of England. We will not know till next February how far short of its pre-pandemic level GDP fell in 2021 and how much lost ground we still have to make up. But breaking free from lockdown and bouncing back to pre-pandemic levels of economic activity sometime in 2022 present a far simpler challenge than delivering sustained growth between now and 2030 Right now the economy is suffused with spare capacity and eager to get back to work. What is missing, as the Resolution Foundation think tank has pointed out, is a clear path to prosperity. The Queen’s Speech presented platitudes about freeports, planning reforms and new rules for public procurement, but could not conceal the fact that our starting point is weak, the legacy of decades of inadequate investment The evidence on productivity, skills, infrastructure and superfast internet links tells its own sad story. Following Labour’s investment 10 years ago, the number of new apprenticeships in England exceeded 520,000; last year it was only 320,000. In the World Economic Forum’s latest league tables Britain came 21st for the quality of its port infrastructure, 36th for road infra- structure, and 79th for its number of fibre internet subscriptions. This is not a firm foundation on which to develop a strong economy, one able to generate faster, fairer, greener growth. It smacks more of make do and mend, not a 21st-century economic powerhouse. Like once proud Premiership clubs that spent big on property but failed to invest in new players and suffered repeated relegation—names such as Bolton Wanderers and Wigan Athletic come to mind—the British economy has been steadily slipping down the league table. Yesterday, Canary Wharf; today, "Canary Dwarf" The lack of clarity about Britain’s economic prospects is reflected in claims made by Ministers. The Chancellor says that his March Budget gives the economy a big boost this year; what he has really done is to slow the rate of fiscal withdrawal in 2021 and speed it up in 2022. Only in Tory Treasury-speak does withdrawing fiscal support at a slower rate count as a bigger fiscal stimulus. The Chancellor still plans to withdraw 90% of the 2020 stimulus by the end of 2022, and he intends to begin pulling the plug on the furlough scheme and the business rates holiday for hospitality businesses only nine days after the end of the Government’s road map. That will be six weeks before he learns from the Office for National Statistics what happened to GDP in the second quarter of this year Whatever happened to the Prime Minister’s pledge to lead a "data-driven" Government? What became of the Chancellor’s claim to be "going long" by backing recovery well beyond the end of the road map? Perhaps events will prove the Bank of England’s latest forecasts right. The economy might make a relatively quick recovery over the next 18 months, but the Office for Budget Responsibility expects growth to drop below 2% per year after 2022. This would simply mark a return to the pathetically poor performance of the austerity years of George Osborne and Philip Hammond The Queen’s Speech lacks clarity and ambition. Ministers talk a good game about levelling up and increasing capital spending on public infrastructure for years to come, but when the Institute for Fiscal Studies points out that the March 2021 Budget made some £16 billion of cuts to current public spending relative to the Chancellor’s pre-Covid spending plans, Ministers hide behind a smokescreen of technical mumbo-jumbo about inflation. The Government’s efforts to turn the economy around and set it on a new growth path pale in comparison with the audacious stimulus measures taken by President Biden. His is an example well worth following—but, sadly, this Government’s miserly economic agenda fails miserably to do so.