Queen’s Speech — House of Lords, 2017-06-26
Topic: Macroeconomics
Susan Kramer (Liberal Democrats, Centre to centre-left): My Lords, many powerful speeches have made across a range of issues and I confess before I start that I have absolutely no hope of doing this debate justice. The debate was opened by the noble Lord, Lord Callanan, and I join others in welcoming him to his role on the Front Bench. However, he described an economy that I think almost no one in this House recognised. He quoted a figure of 2% growth for the UK economy this year. Perhaps I may say to him gently that that figure was binned months ago. The British Chambers of Commerce has today given its forecast for this year of 1.5% growth, dropping to 1.3% next year, and the term now being used is "stagnant". Part of that is the impact of Brexit—its uncertainty and the expectation of job disruption, export losses and the cost of the devaluation of sterling. It is certainly not the picture that the Minister addressed. A number of other speakers, including the noble Lords, Lord Eatwell, Lord Hain and Lord Howarth, and my noble friend Lord Thurso, questioned his analysis of the economy I want in particular to pick up on an issue that was raised by the noble Baroness, Lady Altmann. It is often overlooked but it is crucial. I refer to rising consumer debt. The Minister will know from IFS reports that repayment of consumer debt is now taking a bigger bite out of personal income than it did in the run-up to the 2008 crisis. That number is completely unsustainable. The buoyancy, or bubble, that we saw in economic growth shortly after the Brexit period was fuelled by consumer spending financed in turn by unsupportable and unsustainable consumer debt. This is an issue that ought to be addressed and I wish we had seen more about it in the Queen’s Speech and, frankly, in other proposals being put forward by the Government I also want to take this opportunity to welcome the two Members of your Lordships’ House who have made their maiden speeches today, the noble Lords, Lord Mountevans and Lord Colgrain. They were superb speeches, but it was interesting that both noble Lords talked about their experience in the City. That is highly relevant as we reach the point where we address the issue of Brexit, a subject that has probably been understated in today’s debate. There may be a certain exhaustion around it, but perhaps I may point out that the City of London and the financial services industry, described so eloquently by both our maiden speakers, are the major underpinning of the whole of the British economy. They are very much at risk as we enter the Brexit process This House will be aware than many organisations, having found that they got no sympathetic ear from the Government, have progressed with making their own plans. Most of the major American players have now identified a new European headquarters—it might be in Dublin or Luxembourg; some have identified two major European headquarters—to which they will begin to transfer business. Lloyd’s of London has opened, or is in the process of opening, its EU headquarters in Luxembourg. The small players—the fintechs—are part of the future and were mostly pan-European from the day they were conceived. One third of them were founded in, or have CFOs from, continental Europe. They have all started making their plans and have begun that process of shifting, not in great numbers, initially, but giving themselves the opportunity to gradually, salami slice by salami slice, decide where they can best put their business to serve their critical European clientele. Strangely, no one referred to the decisions by the European Central Bank, soon to be ratified by the European Parliament, that will define where euro-denominated financial instruments can be cleared. The European Central Bank has set up a set of rules that are quite interesting because the UK has always argued, "We will never lose this business; Europe doesn’t have the capacity to take it". The European Central Bank has now set up a system that will allow it to grow capacity and shift a piece of business, grow capacity and shift another piece of business, with the UK Government completely unable to intervene in this process in any way whatever. Frankly, some realism needs to be injected into this debate Speaking of that realism, I want to pick up the point that the noble Baroness, Lady Rock, and others made: business has been excluded from this discussion. I say to the noble Lord, Lord Leigh, that the issue for business in the whole discussion about business being listened to is essentially about Brexit, not taxation or regulation. Finally, there is some listening to business: we understand there is to be a council now that will enable various government departments at the highest level to engage with business. The problem is that in many instances, it is too little, too late. Moves have been decided and the beginning of that process is now well under way; leases have been negotiated, HR has gone through various iterations. We have to start being realistic about this, rather than talking as if nothing has happened over the past nine months: we may not have done much, but businesses and the European Union have done a great deal There was one fascinating area of the discussion that I had obviously not focused on to the extent I should have: concerns around agriculture. A number of Members of this House—the noble Lords, Lord Inglewood and Lord Colgrain, the noble Baroness, Lady McIntosh, the right reverend Prelate the Bishop of St Albans and the noble Duke, the Duke of Wellington—talked about the impact of Brexit on agriculture, reminding this House of the need for a workforce and access to European markets, because agriculture in this country is underpinned by its capacity to export to the European Union. The domestic agricultural system survives only because it also has that export opportunity. Those complications have been underdiscussed in this House and I hope they will be discussed more I particularly want to pick up on an issue that was raised by the noble Lord, Lord Colgrain, and addressed by the noble Lord, Lord Plumb: the idea that we could follow New Zealand’s system of restoring our agricultural strength after Brexit. The noble Lord, Lord Plumb, reminded us that this was achieved by much lower standards of animal welfare, health and safety and environmental standards than are acceptable in the UK today—or acceptable, I suspect, to UK consumers. I pick up on concerns about the environment expressed by my noble friend Lady Parminter, the noble Lord, Lord Oxburgh, and many others. There is a deep, underlying concern as we move into the future that we should not use this as an opportunity to water down and undermine environmental standards that our entire community now expects as a fundamental underpinning. There are many other issues that could have been in this year’s Queen’s Speech, from productivity, raised by my noble friend, Lord Razzall, to housing issues, underlined by the noble Lord, Lord Naseby. There is a vast range of crucial issues, including those around artificial intelligence, the new economy, getting companies to invest and productivity. All are missing from this Queen’s Speech. I do not have the opportunity to continue to summarise this but I know that the Minister will look at Hansard and look at that range and depth. I hope we can bring this Government to find a way to address those absolutely key issues and not set them aside for two years, when many are vital to the future of both our economy and our young people.