Spending Round 2019 — House of Lords, 2019-09-25
Topic: Government Operations
John Davies (Labour, Centre-left): My Lords, I want to make three points. The first is not about the spending review at all; in that, I shall be following a precedent already established in this debate. It seems to me extraordinary—completely mad—that we should summon Parliament because there is a major constitutional crisis and then for Parliament not to discuss it. We should not be talking about the spending review today; we should be having a debate on drawing the right lessons from the constitutional crisis. Ministerial Statements, in which Ministers can answer questions with well-prepared, brief, non-committal and necessarily limited responses, are no substitute; that is not a proper debate. We need a situation in which the feelings of the country can be expressed through Parliament about the traumatic experience we have been through. It is our greatest constitutional crisis—actually, our only constitutional crisis—since 1789. We should certainly pause and think about it If a visitor from Patagonia asked any of us what the British political system was about or consisted of, we should probably say at least two things: that we believe in the rule of law, which means that everybody is subject to the law and everybody is equal before the law; and that we have a parliamentary democracy. No one in this House would disagree with either of those two answers to that question. A couple of weeks ago, the Prime Minister put it about through Mr Cummings that he was not subject to the law—indeed, that he proposed to break it. That was unprecedented in our history. As for parliamentary democracy, it cannot exist if the executive branch feels that it wants to get rid of Parliament because it is a bit of a nuisance—simply to suspend Parliament by Prorogation for however long the Prime Minister of the day may want. That is not a parliamentary system; it is despotism with a purely ornamental parliament. There are lots of examples in history and in the present world of that sort of political system, but it is not one that any of us would want to identify with. But Mr Cummings was not putting around dark hints about that; the Prime Minister himself was committed to the idea of a Prorogation that we know now was illegal We have come very close to a precipice. I feel a wonderful sense of relief that we have not fallen over it, as we could well have done so without really being conscious of the political and constitutional consequences of what we were doing. It would have been very difficult to retrieve the position. That is my first comment, which has nothing to do with the spending round, as colleagues will have noticed Let me turn to the spending round. A classical way of making yourself popular in this life is spending a lot of money. If you can spend a lot of money at somebody else’s expense, you are doing very well. That is what the Government are doing, to try to create popularity. Of course, some of their causes are very good ones—defence, the NHS—so the Government are being quite successful, according to the opinion polls. I am, however, very frightened by the whole process. One of the two key figures has been mentioned already this afternoon: we are increasing public spending by 4% per annum. The whole House will be aware that the rate of growth of output in this country is not 4% or 1% but less than 1% per annum. Which of us would run a business or our family’s budget based on spending 4% more every year when one’s income is increasing by 1%? It can lead to only one outcome—a very difficult one. States do not go through the bankruptcy court, but we know from our experience in the 1970s what happens if we overspend Public debt in this country has now reached a frightening level. For 20 years before 2010, public debt was 40-something per cent of GDP; it varied between the low and the high 40s, but it always stayed in the 40s. It is now nearly 100%. That is an absolutely terrifying turnaround. Then you have a position where the Government are proposing now to go ahead with these spending plans, without any clear forecast of what the economic rate of growth will be. I totally agree with the comments that have already been made and I never make economic predictions, but it would be a brave man or woman who excluded the possibility of a recession in the event of a hard Brexit. There could be a recession in other circumstances as well; there is an awful lot of investment already flowing out of this country, which is extremely worrying. The Bank of America has moved hundreds of its staff, most of whom earn hundreds of thousands of euros every year, to Paris and installed them there. That is one small example, but there is a big loss of demand. There are people setting up in financial services in Amsterdam and Dublin in preparation, not just for a hard Brexit but for any Brexit. We are being very complacent at the moment and the Government are being utterly irresponsible in committing themselves to this level of spending without having the courage to answer the question about what they predict the rate of growth of the economy will be in the future My third point is about Brexit, but also about Brexit and public spending. The British public have been defrauded over Brexit in a number of contexts, not least over public spending. Many of the public were persuaded by Mr Johnson’s dishonest campaign that Brexit was a cash generator and that we would get lots cash out of Brussels, including £350 million a week—or whatever it was—for the health service. In fact, we now find that, far from being a cash generator, it is a very considerable consumer of cash. We are having to spend hundreds of millions subsidising Welsh farmers, particularly lamb farmers, who would otherwise go broke. We are spending billions on subsidising Scotland to protect it from some of the potential impact of Brexit. We are spending a lot of money in Northern Ireland for the same purpose. This includes overt bribes for the DUP, which, as the House knows, I deeply disapprove of. It is a form of corruption and nothing else, and nevertheless very expensive There may be many other such things, but then there is the obscenity of spending £140 million, I believe, building a vast lorry park in Dover. This kind of expenditure does not yield a penny in increased output and it is not, under any circumstances, an investment. On the contrary, it is part of simply making our commerce —our external trade—more difficult and expensive. It is an anti-economic move and a way of spending money to deprive the public of future wealth, rather than spending money to try to enhance future wealth. It is a crazy policy, and one that involves, as I said, the defrauding of the British people, who were led to believe one thing about Brexit and are now, sadly and uncomfortably, discovering something very different.