Economy — House of Lords, 2015-09-10
Topic: Macroeconomics
Malcolm McEacharn Mitchell-Thomson (Conservative, Centre-right): My Lords, I am a little confused. I am not sure what austerity is. I do not see abject poverty around. Therefore I will use what the Financial Times says as an introduction: austerity marks a period of adverse economic conditions where the Government cut their spending or increases taxes in order to reduce their budget deficit The factors that I considered when I was in the banking world are rather favourable. The pound is strong and stable. Our balance of payments is reasonable because of services, but we have always had a balance of payments deficit on manufactures and that is agreed year after year. But when you look at that balance of payments deficit on manufactures, you realise that many components are already imported. So if you try to search through the pattern, you want to look and see what is wrong, or whether you can prove what is wrong At the other end of the scale, we have vast sources of wealth in other parts of the world looking for investment. I know that my noble friend Lord Howell has visited some of the major funds around the world. They have visited me, too, and they have asked what opportunities there are for investment. Well, there are not many requirements from the United Kingdom other than new infrastructure. Our balance of payments deficit has not caused us any problem, the universities are doing well, technology is in the forefront of activities, and it is a question of where and what direct investment we should be encouraging more of into the United Kingdom and in what sectors. I am asked regularly during my international trips, "What would you invest in?". In the early days, suggestions were made to me that they should invest in the automotive industry, which I thought would be a complete waste of time. I never realised that the automotive industry in the United Kingdom had virtually fallen into foreign ownership So what is foreign ownership and where are the problems at the moment? I detect that those economic minds I see around me—for whom I have great respect; I used to study some of their papers—are perhaps at a loss to find any reasonable conclusions as to what the Government or Governments should do next. Our balance of payments is not a difficult one: we have, as I say, the surplus on services and that surplus will continue So I ask the Minister: what is wrong? I spend most of my life internationally and find great respect for the United Kingdom these days. Probably one of the weaknesses is that everybody wants to come and live here. One factor that comes up is the element of personal taxation, which is unfair if it is levied upon the British and not upon foreigners, but this is more of a social issue. Therefore we find that the investment that comes in is not necessarily direct, but comes through all sorts of corridors. There is no pressure on the pound sterling, there is no pressure on inflation. There is pressure for a slightly better bus service and fewer strikes in London. But when you are confronted by some of the sovereign wealth funds who say they would like to invest in our country and ask what our future plans are and what major exciting projects they could invest in, the answers are not necessarily there. So I have no concern at all. In fact, I am worried that I cannot find a worry—and maybe some noble Lords could demonstrate what is wrong. It is not a party-political issue. In general, those who come out of university are finding jobs. The training schemes are getting better and better. The arguments seem to be only about major jumbo projects about where we should put an airport, which international people cannot understand. I would like someone to say, "What do we need money for?"—because I am not sure.