Queen’s Speech — House of Lords, 2019-10-17
Topic: Macroeconomics
Karan Bilimoria (Crossbench, Unknown): My Lords, just today, the Chancellor, Sajid Javid, wrote: "A decade after the financial crisis, the warning lights are once again flashing on the global economy. Some of the causes of this are international—mounting trade wars are raising costs and undermining certainty" Just this month, the IFS published its green budget. A Library briefing refers to it, stating very clearly that, "the global economic outlook has deteriorated due to developments in the Chinese economy and the ‘trade wars’ initiated by Donald Trump … The outlook for UK growth is likewise weaker, partly due to global trends but more importantly due to uncertainty surrounding Brexit. This uncertainty has been ‘especially damaging to business investment’ … ‘Whether—and if so how and when—the UK leaves the European Union will be perhaps the key determinant of growth over the next few years’" Today, just as this debate started, we heard about the major step that a deal has supposedly been agreed. Will it get through the House of Commons The briefing also says: "The form of Brexit will also affect the path of government borrowing and debt … the IFS suggested that even a ‘smooth Brexit’ will lead to borrowing which exceeds the ‘fiscal rule’ of 2% of GDP. Under a no-deal scenario, even one it describes as ‘relatively orderly’, the IFS said that government debt would climb to almost 90% of national income for the first time since the 1960s" That is what is scary I was recently appointed vice-chairman of the CBI, which—along with business in general—was very pleased with the spending review announced by the Government in September. The CBI states: "Business welcomed the focus on education and skills funding" However, overshadowing everything is Brexit. The CBI speaks for 190,000 businesses and states: "The impact of no deal on business, the economy and UK prosperity will be enormous and must be avoided", at all costs. It goes on: "Businesses can prepare for no deal but cannot be protected by the impacts they can’t anticipate or prepare for" The unknowns are unknown and I personally, from my business point of view, am terrified of the unknowns that a no-deal Brexit might bring. Business does not want no deal, Parliament does not want no deal and the country does not want a no-deal Brexit As for red tape, the CBI states: "18 out of 23 sectors analysed in the CBI’s Smooth Operations report identified ongoing regulatory alignment with EU rules as critical to the UK’s future relationship with the EU" Fifty per cent of our trade is with the EU so, if we want to carry on doing business with it, we must have regulatory alignment. When she started the debate, the noble Baroness, Lady Vere, spoke about wanting a strong, secure and prosperous nation. We are totally behind her in that On taxation, the Library briefing states: "The Government has previously announced that the main rate of corporation tax will reduce from 19% to 17% on 1 April 2020" In his concluding speech, can the Minister confirm that that will still happen because, as the briefing states, the former Chancellor, "George Osborne, argued that corporation tax is ‘one of the most distortive and unproductive taxes’. He said that the cut would benefit over one million businesses" I presume that the current Government continue to agree with that. Leaving the European Union is no excuse for lowering taxes. We can do that anyway; we do not have to leave the European Union to do so. Ireland’s rate of corporation tax is 12%, which is far more competitive than ours In her excellent speech in yesterday’s debate on the gracious Speech, the noble Baroness, Lady Quin, made the point that, "we export twice as much to Belgium as we do to India".—[Official Report, 16/10/19; col. 128.] As founding chairman of the UK India Business Council, I can say openly that, under the previous Prime Minister, our relationship with India was at its lowest. Now is an opportunity to rebuild that relationship, built by Tony Blair, Gordon Brown and David Cameron. Now, with Boris Johnson, I am sure that we will continue to rebuild it. I hope we will send a major delegation to India soon to make that point In total, the Commonwealth today, with over 50 countries, including India, makes up less than 10% of our trade, compared to 50% with the EU. We keep talking about doing a free trade deal with the US so quickly. It has just been announced that our whisky exported to the US will be taxed at 25%—before we even start any negotiations. The US representative said very clearly that even in negotiations on a free trade deal or trade agreement it will apply. They will make no exceptions. These trade agreements are really difficult The Government intend to roll over existing trade agreements we have through the EU, making up almost 17% of our trade on top of the 50% we have with the EU itself. Could the Government tell us how many of these will be automatically rolled over during the implementation period, let alone in future My noble friend Lord St John spoke eloquently about the environment and how technology is so important in meeting that 2050 net zero target. At the University of Birmingham, of which I am proud to be chancellor, we have now developed a model hydrogen train. It is that sort of technology that we need to be working on. It is great news that this country is ahead of the game. We have for the first time, in the last few months, used more energy in this country from renewable and non-conventional sources. That is fantastic; long may it continue. Coal, which used to be our main power-consuming source, is now at less than 5%. We are a model to the rest of the world When it comes to dealing with India, I congratulate the Government on bringing back the two-year post-graduation work visa for international students. Bravo! We have been fighting for that. I helped introduce it here in 2007-08. It was taken away by Theresa May in 2012. Seven years it has taken us, but we have got it back. The interest in India is already up by 50% in many universities, which is fantastic. The Government need to do more. Will they continue with the industrial strategy target of R&D at 2.4% of GDP? We have to do that: Germany is at 2.8%; the USA is at 2.8%; Israel is at 4%. Let us do it. Can the Government commit to that The Minister spoke about security. I have been banging on about the 20,000 more police officers; I thank the Government for bringing it back in. Sad statistics have just come out today that violent crime has continued to increase, so that is wonderful news Fishing was in the gracious Speech. The reality is that the EU wants access to our waters, and we will probably have to grant that because 75% of our fish is exported, the majority to the European Union. These are the realities I would go so far as to say that, if this deal goes through, we will go into a long implementation period. It may go on until 2020, for two more years or, as my noble friend Lord Macpherson said, for a decade. My noble friend Lord Kerr said that we have put the cart before the horse. This withdrawal agreement covers just three things: the rights of citizens—UK and EU—£39 billion and the Northern Ireland situation. The real work is still to come. The political declaration has all the agreements on space, security and movement of people that we have to negotiate in the years to come. Our priorities have to be preserving our union, our relationship with the EU and our global relationship with the US, China, Japan, India and the rest of the world. By the way, there was no mention of entrepreneurship in the gracious Speech. We must continue to be a champion of entrepreneurship; this country is wonderful at it I conclude with the Chancellor, Sajid Javid, who said in his article today: "Britain is—and will always be—an open economy" We are a leading member of the G7 and the G20, a permanent member of the UN Security Council and a leading power in NATO. If we continue to have close alignment with the EU, wow, this country has a huge future.