Autumn Statement — House of Lords, 2015-12-03
Topic: Macroeconomics
Simon Haskel (Labour, Centre-left): My Lords, I say to the noble Lord, Lord Wakeham, that I have an American wife My noble friend Lord McFall spoke of a plethora of Chancellor’s Statements. He is absolutely right. In July, we were told to expect severe cuts in public spending; three months later, a small improvement in tax income is forecast, and this during an October which official figures show to be the worst for public finances in six years. The improvement is based not on healthy growth, as the noble Lord, Lord Shipley, pointed out, but, according to the OBR, on rising consumer credit—but never mind. Multiply this small expected rise over five years, and we are £27 billion better off. Wonderful The noble Lord, Lord Carrington, calls this luck. I call it creative accounting. It is the kind of accounting that I remember contributing to the collapse of industrial giants such as ICI and GEC. It is the kind of accounting which eventually led to the creation of the Investor Forum and the Financial Reporting Council to watch over it. It is wrong, it is dangerous and it is short termist. I suspect that the Chancellor and the Minister know this and have used it as an excuse to slow down austerity; to slow it down to Labour’s speed, if you like. However, universal credit will eventually do what the intended cuts in tax credits tried to do, but later. Even so, some low-income couples with three children will lose out now, so will single parents with one child working part time on the national minimum living wage, and women are again disproportionally adversely affected by the cuts. Is this balancing the books on the backs of the poor, as the noble Lord, Lord Shipley, suggested However, the noble Lord, Lord Carrington, and the right reverend Prelate told us to aim for a high skill, high pay, high tech, low welfare economy. How are we going to get there? In July, this journey was outlined by the Minister in the Government’s paper Fixing the Foundations: Creating a More Prosperous Nation. Well, I failed to find any mention of that in this Statement four months later. There is a passing mention of productivity on page 6 saying that it is growing, but we still lag behind most of our competitors. What the Chancellor did not say is that the OBR has revised down the growth in productivity next year and the year after that. So is that productivity paper history? Is it another victim of short termism? We must not let that happen. The Minister laughs. I think it is a serious matter because otherwise the rising national minimum wage will lead to serious job losses if it is not matched by rising productivity. If the route to increasing prosperity is productivity, surely the Statement should have said so The various changes should be put in the context of raising the nation’s productivity over the long term in the sense of the modern tangible and intangible world of work instead of in the context of short-term politics. For instance, the Autumn Statement commits to protecting the £4.7 billion science budget in real terms up to the end of the Parliament, but this needs to be within the culture of productivity to show that the culture is alive and well and that the state is engaging with industry in a positive way to rebalance the economy. This kind of government expenditure crowds in private investment; it does not crowd it out, as the noble Lord, Lord Carrington, suggested At the beginning of a five-year term, this Statement should have been forward looking. It should have been creative and pointed the way to a high wage, high skill, low welfare economy which unites us; it should have promoted productivity that in the long term is creative. Instead, the Government’s brand of austerity is short-term, divisive and destructive. What a lost opportunity.