Autumn Statement — House of Lords, 2015-12-03
Topic: Macroeconomics
Bryan Davies (Labour, Centre-left): My Lords, this has been an excellent debate. We thank the noble Lord, Lord Carrington, for introducing it. I think it was Gary Player who said that the more he practised, the luckier he got. I am not sure that I can attribute those virtues to the Chancellor, but certainly we are very grateful to the noble Lord, Lord Carrington, for both securing this debate and for his introductory speech which kicked off the issues in a very interesting and able way The Government have long boasted of their long-term economic plan but have proved themselves quite incapable of sustaining it. The House will recall that the Government now propose to put the accounts into surplus by 2020. My noble friend Lord McFall indicated that the OBR thinks that the Chancellor has a 50% chance of meeting that objective. But since the Chancellor also promised to have eliminated the deficit by this year, it is really rather difficult for many of us to sustain his credibility when it comes to managing this economy. As my noble friend Lord Haskel indicated, there seemed to be elements of creative accounting with regard to the Government’s expectations and predictions for how their long-term economic plan was meant to work out Of course, the Autumn Statement was notable rather less for anything to do with planning and rather more for some pretty sharp U-turns—welcome, of course, but little credit to the Chancellor. The pressures that built up from the public and the professionals about the potential cut-backs in policing in these dangerous times, when already 17,000 officers have been lost to the force over recent years, were pressures that the Chancellor eventually succumbed to The other U-turn was occasioned by this House, to its everlasting credit. I heard what the noble Lord, Lord Wakeham, said. There is much to debate on this. I know that my side will conduct themselves as constructively as possible in those discussions but let the noble Lord, Lord Wakeham, be under no illusion. The Government start off on the wrong foot. Six hundred years of Conservative majority in this House ought to make them rather wary of seeking to reverse a majority against them at the first serious instance. I hope we will have some constructive discussions on that but they are not going to be easy ones The Government still intend to savage the welfare budget, even though they have abandoned their position on tax credits. The projected cuts to universal credit over the next five years indicate that the Government are still victimising the poor. As the noble Lord, Lord Shipley, said, why is it that the poor are meant to pay the price of the problems that the Government face? It used to be the shirkers, those who were on benefits. Now, because the Government have extended the cuts to those who do not have enough to live on but actually work, we do not hear quite so much of that argument. It is quite clear that the problem for so many of the poor is that they are in badly paid jobs which cannot sustain their living standards, and there are far too many people in jobs who would welcome longer hours but cannot secure them. That helps to ensure that their living standards are very low It is also the case that productivity is heading downwards. If the Chancellor really is intent on concentrating on the longer term, rather than the immediate, short-term needs of the economy, he ought to address himself much more forcefully and effectively towards productivity, which remains a great weakness of the British economy. We are still substantially behind other countries in the G7. The forecast is that productivity will actually head downwards over the next few years. The Government have got a great deal to do If the Government can guarantee that their levy will produce a greater number of highly valuable apprenticeships in industry, that is certainly a step in the right direction. But up until now they have been preoccupied with counting the number of apprenticeships rather than evaluating their worth. In the mean time, in another aspect of the skills economy, the Government are bent upon destroying those forces which could help to improve our skills. Further education, the unprotected part of education, has already taken a very substantial number of cuts in its provision and is due to take more under this Government, who guarantee only cash increases rather than real-terms sustainability. It means, as was indicated in the debate, that we may well see a number of our colleges close at a time when they ought to be providing the skills that are needed It is so obvious that to effectively expand the construction industry, we ought to expand it on the basis of British skilled workers. From what one can see at the present time, if the Government really are going to improve the question of housing—the noble Lord, Lord Young, pressed on this and indicated areas in which they could address themselves to fresh possibilities—they have to get themselves out of a position where they preside over the worst housing record for nearly a century. At the moment the industry looks to foreign skills. That is why the OBR has indicated that, of the very substantial number of jobs that will be created in our economy over the next five years, a great deal will go to those who immigrate into this country. What kind of world are the Government living in if they are ensuring that employers still look abroad for skills while the nation is greatly concerned about the opportunities for our own people and the overall level of immigration? I hope that the Minister will address himself to the fact that there appear to be predictions of 1.5 million more jobs being created but immigration going up by 925,000. The Government certainly have to answer this case. If they have this long-term economic plan, it ought not to be difficult for them to address these issues rather than concentrate on the issues which largely preoccupy them Of course, we all recognise not just the weakness of provision in social security but the real worries with regard to the health service, particularly the fact that the health service is dogged by hospitals being unable to place in social care those patients who are ready to leave hospital because of the devastating impact on social care of the cuts that the Government are enforcing. That situation is predicted to get worse so I hope the Minister will respond to the issues I have raised, which embellish the questions that the noble Lord, Lord Skidelsky, asked of the Minister—in only a four-minute speech. I used a rather longer speech last time to ask similar questions. I was not entirely satisfied with the answers. Perhaps I will have greater luck today I will finish with one obvious point. Austerity is not mandatory. It is not an economic necessity. It is a political choice and this Government persist in this choice and ask others to pay the price. That is why 3 million people who are in work are actually underemployed because of the kinds of jobs they can get. As for rebalancing the economy, manufacturing employment dropped by 10% over this last period. The Government have done absolutely nothing about the catastrophe of the steel industry. You would think that a right-wing, capitalist Government could not ever do anything about industry because their tenets are that they must do for success. Tell that to President Obama—the American car industry was in the most desperate straits and the federal state bailed it out. British industry looks for greater support from this Government than anything that is on the horizon.