Economy: Spring Statement — House of Lords, 2018-03-15
Topic: Macroeconomics
Simon Haskel (Labour, Centre-left): My Lords, I feel sorry for the Minister. It must be embarrassing having to speak to a Statement the words of which are largely irrelevant to most people’s concerns. The Chancellor speaks of light at the end of the tunnel. Stagnant wages have eroded the public belief that this light can lead to broad-based prosperity. People believe that all it now does is add to inequality The Treasury said that the Spring Statement is not a Budget but a response that it is obliged to make to updated OBR forecasts, so what is the point of this Statement? We need a Statement that speaks to public anxieties and insecurities. That is why we are here. We are not here to have a selective debate about many economic forecasts. For instance, the Chancellor spoke of improved productivity. He must have been referring to output per hour because output per worker is virtually unchanged What are all these anxieties and insecurities that we ought to be dealing with? First and foremost must be the crisis in public services, services delivered by Whitehall and, perhaps more importantly, those delivered by local authorities. We all know that austerity has left these services much reduced, with most local authorities—of all parties—in severe financial difficulties. This means that local government is facing an even bigger funding gap by 2020. Already it is unable to fulfil its statutory duty on nearly half the children’s services it has to provide. More than 1 million elderly people are living with their care needs unmet, and local authorities are finding it difficult to recruit staff because pay does not meet rising costs The public want to hear what the Government are going to do to end this crisis. Yes, local government can put up car parking charges and can keep more of business rates, but this is minor. It needs to be allowed to do things such as charge more on expensive properties or second homes, or be able to borrow more to build more council houses. Perhaps we will have to pay social insurance to help fund the care of the elderly. We may even have to have road pricing. We are a relatively low-taxed country and some forms of higher taxation may indeed be inevitable. We need solutions not debates Meanwhile, in April spending and social security cuts will affect 11 million families. Three-quarters of the scheduled welfare cuts have yet to take place. Small improvements reported in the Statement are not going to compensate. What we need in the Spring Statement are some ideas of how we are going to deal with this. For instance, do we really need a cut in the banking levy? The Chancellor wants to consult about VAT on internet sales and on tax paid by the big technology companies. We have been consulting on this, to my knowledge, for five years. What we want to know is what is to be done. The Chancellor wants to consult on terms of payment. To my knowledge, we have been consulting on this for 25 years. I ask the Minister: who else is there left to consult? We now have a Small Business Commissioner. It is his job to deal with this and stop companies delaying payments as a matter of policy to conserve their cash flow—companies such as Carillion which use this policy to conserve their cash and pay in 120 days. Again, it is action we need, not consultation The other major anxiety is about jobs. Real wages are falling because wage growth is lower than inflation. Yes, the GDP was higher than the 1.5% predicted but it still leaves wage earners worse off. Yes, there is growing employment but much of it is insecure. Good jobs demand new skills, new attitudes and new investment. Instead of just updating OBR figures, why cannot all these anxieties and all these consultations be given a lot more meaning and effect by putting them in the context of our industrial strategy? That strategy was designed to deal with these issues, to improve our productivity, our investment, our infrastructure and our skills Hundreds—perhaps thousands—of people responded to the Government’s Green Paper and helped contribute towards the industrial strategy that is intended to promote our economic growth and improve our standard of living and our quality of life. Yet the Statement is virtually silent on this. Instead of reporting on the OBR forecast, why do the Government not use the Spring Statement to give us a progress report on the industrial strategy? That would have a lot more meaning for people. This is what is relevant to people’s concerns, particularly at this time when it is becoming ever more apparent that, whatever the outcome of the negotiations, Brexit is going to make us worse off by knocking a couple of per cent off our GDP We have been told several times that the Chancellor needs to keep a reserve in case Brexit goes wrong. Of course, we all know the answer to that. The real problem is that the economy is not doing as well as it should. So can we please have more concentration on the industrial strategy and less on austerity, because one seems to be cancelling out the other? In this Statement there are no big ideas as to how we are going to deal with these problems. We need a Spring Statement that explains how we can maintain the fair society and the strong economy that we all seek.