UK Convergence Programme — House of Lords, 2018-04-16
Topic: Macroeconomics
Susan Kramer (Liberal Democrats, Centre to centre-left): My Lords, in a way this is a slightly poignant debate because, as the Minister has outlined, although the UK reports against the various economic benchmarks for the stability and growth pact, it is not required to take notice of any recommendations of the European Union that might follow from that but merely to promise that it will endeavour to avoid deficit. That is an example of one of the many ways in which the European Union accommodated the preferences of the UK and its desire to pursue some independence in certain areas, particularly the economic—greater than that enjoyed by other countries. It shows the mutual respect that framed the years in which we participated as a full and enthusiastic member of the European Union. When we consider how we have responded to the positive and creative ways of making sure that the most significant needs of the UK were always dealt with in a rational and reasonable way, it makes Brexit even sadder I just want to say a few words. Within the last few weeks we have had several debates on the economy, so rather than constantly repeat their content I want to make a couple of comments. The first is that I am concerned that the Government—weeks later—still have not recognised the significance of the very poor growth forecast for the UK that was presented by the OBR: 1.7% in this fiscal year, dropping to 1.5%. That is at a time when every one of our major export markets is absolutely going gangbusters, with growth in excess of 3%. Rather than take on board seriously the importance and relevance of responding to that issue, the Minister once again stands up and merely quotes reductions in deficit rather than dealing with the fundamental problems that we face Obviously some of those fundamental problems are around productivity. Again, the Government always cite the recent slight improvement in productivity. However, I remind the Government that, if they are minded to cite that again, it was caused by a drop in the number of hours worked—a very worrying warning sign—and not by improvements in output Today, again, we have reports on consumer spending, which continues to decline. Looking at the UK consumer spending index, I see that consumer spend declined by 2.1% year on year in March following a 1% year-on-year drop in February. Those are significant numbers, and they concern not just face-to-face spending—in other words, the high street retailers and shops. We know that there has been a shift from face-to-face spending to online spending, but now, for the first time, there is a significant fall in the online spending numbers as well. The Government have to take this very seriously, rather than simply assume that all is well and that the economy is in a positive state. We know from the many people we talk to that wage pressures are having a significant impact on individuals as they face inflation every time they go to the shops, and that the pressure on public spending has become completely intolerable Before I sit down, I will use this occasion to say once again that the Government have to tackle the lack of public spending in schools, in prisons and, above all, in the NHS and social care. This is the time to put in place a team to look at a dedicated tax to support the NHS and social care. If we do not start to do that soon, and to put in place the appropriate response to the needs of that critical service, we will find ourselves in a dire position Unfortunately, the Minister praised Brexit as the future for Britain, but we know from the Government’s own analysis—we have all gone and read it over in 100 Parliament Street and have heard it in other places —that the forecast is for the UK to function at a significantly lower level than it would have otherwise. We are looking at a dark economic situation, and for the Government to constantly present it as rosy takes away any confidence we can have that they will tackle these fundamental and underlying problems.