Queen’s Speech — House of Lords, 2022-05-16
Topic: Macroeconomics
Questions: 2050—I am just 100 years out. Even if we get to that, a lot of countries in the world will not. Two things follow from that. The first is that climate change will not be significantly improved. We in this country produce 1% of the world’s emissions, so if we have all the struggles and make the vast expenditures but other countries do not, we will not have achieved anything so far as climate change is concerned Secondly, if we have spent an enormous amount of money improving our electricity and getting it all done, our electricity will almost certainly be more expensive than it is in other countries. There is a danger we have to watch, as the heavy industrial users of electricity will build their factories in other countries, not in those that have spent all that money on this. We have the time to deal with this, but we have to be very careful that that is not the end result of what we do.
Richard Denison (Crossbench, Unknown): My Lords, the spectre of stagflation is a stark reminder of the need to generate real economic growth, especially in challenging times. This, of course, is the only way to finance government spending in the long term so, as I listened to the Queen’s Speech last week, I was looking out for a coherent economic strategy to underpin the very first line of the Address— "Her Majesty’s Government’s priority is to grow and strengthen the economy"— but, amid the sea of 38 Bills in the new parliamentary programme, I am afraid that I struggled to detect such a strategy The Prime Minister’s call "to turbocharge the economy" is rather hollow without a fully firing economic engine. Indeed, it has echoes of the much-vaunted "oven-ready" Brexit deal which, it turned out, lacked some very basic ingredients or, some might say, a functioning oven As the noble Baroness, Lady Kramer, pointed out, to boost living standards in real terms, we need sustained growth in productivity—something we have not seen in more than 10 years. Since 2010, the UK’s productivity as measured by GDP output per hour has grown by just 4%, according to the OECD. Let us put this in context. France saw an 8% gain in productivity over the same period, Germany almost 10%, the US more than 10%. Current UK productivity lags both France and the US by a deeply troubling 15% I ask the Minister what lessons, if any, the Government are drawing from other countries and how that might inform their policy in such a crucial area. We must urgently solve the productivity puzzle, not just to generate real economic growth at home but for global Britain to compete effectively in world markets. Our current exports are down by almost 20% on pre-pandemic levels. In business, which is my background, we are taught to turn threat into opportunity. Although the recent slide of sterling against the dollar will add to imported inflation, it makes British exports that much more competitive in Asia, the Middle East and the Americas. We need to seize such opportunities Above all, we need a more qualitative approach to economic strategy. The Prime Minister says, "jobs, jobs, jobs is the answer." Aside from his questionable syntax, I fear that he misses the point. The UK economy has generated plenty of jobs—unemployment sits at just 3.8%—but it is delivering low growth and record trade deficits Ask employers: they will tell you that there is little point in creating more jobs if you cannot fill existing vacancies. There is an acute shortage of both skilled and unskilled labour across the country, and that is damaging economic growth. By improving the productivity of our workforce, pay rises are earned and reflect increased output, rather than being inflationary. Yes, many factors impact productivity, including business investment—which, in the UK, has fallen to critical levels—infrastructure, technology, education and training and, now, working from home, but that is why you need a joined-up approach, a coherent strategy I have time to touch on only one of these factors, which is education: educating and training our workforce of the future. Back in his Autumn Statement, the Chancellor told us that per-pupil funding will return to 2010 levels in real terms by 2024, so we are talking about 14 years to return to where we were in 2010. Over this period, public spending on health will have increased by over 40%, compared with a nominal 2% for education. That is not investing in our future. We should take a leaf from the private sector, which lives or dies on productivity, profit and loss, return on investment and, above all, competition. Government policy should align itself far more closely with those factors in order to generate real and sustainable economic growth.