Budget Statement — House of Lords, 2017-03-14
Topic: Macroeconomics
John Stephen Monks (Labour, Centre-left): My Lords, it is a pleasure to follow the noble Lord, Lord Willetts, and pay tribute to the stimulating work being done by the Resolution Foundation, of which he is chairman. I hope that other noble Lords opposite have taken note of his speech. It would be a pleasure to hear rather more of its kind in this House, particularly from those Benches This debate takes place against the backcloth of our risky exit from the EU single market, now compounded by Scotland’s possible exit from the UK, which is also hugely risky. The UK’s economy, including Scotland’s, will be in the eye of consequential political storms, buffeted by multiple cross-currents and uncertainties. How robust is our economy going to be? Bill Clinton’s advisers famously said: "It’s the economy, stupid", that motivates voters. Not at the moment, it is not. Politics is overriding economics; hearts are ruling heads; nationalism is trumping common sense. This is very evident in the reckless decision that we are making to leave the single market and the customs union—this hard, clean Brexit. It is also evident in Nicola Sturgeon stirring up the Scottish independence question at a time of exceptional fragility for Scotland’s economy. On current form, an independent Scotland’s first act could well be to seek a bailout from the IMF We have to look squarely and honestly at our economic situation. As we have just heard, the millennial generation is earning rather less than its parents. Average living standards have been stagnant since 2008 and are forecast not to increase for several years, with the main burden falling on low-income households. As the Chancellor—and the Minister today—has recognised, the UK has embarrassingly low productivity levels. Although I welcome what has been said about boosting technical training, I look in vain for steps to stimulate business investment and longer-term perspectives in company management. The Chancellor has, apparently, killed off the Prime Minister’s plan to provide for workers to serve on company boards. This is a bad mistake. As the Bank of England found recently, three-quarters of companies put investment behind mergers and acquisitions and paying dividends. Short-term profit maximisation, linked to excessive executive pay, still rules in too many of Britain’s boardrooms—and it is getting worse. Worker representation at board level would help counter that In the 40 years to 2007, investment growth averaged 5% a year. For the eight years since the crisis, it has limped along at 1.5% a year. We have to add to that mix the fact that many of our best businesses are foreign owned. From investment banks to car companies, from energy companies to football clubs, overseas ownership is now extensive. Many came here to participate in the single market and they are becoming more and more agitated—rather quietly, in my view—about the risks of the UK leaving that market and crashing over the cliff of no agreement with the EU. I understand that they are employing armies of consultants to assess their options. I wish they would articulate more forcefully their concerns about the current situation and what they fear. They have been too deferential and tactful in public. I bet they would not be like that if a Labour Government were in power We have enough problems without self-inflicted ones. We know about the pressures on the NHS; about the huge problems in social care; and that tax revenues fail to cover our spending at governmental level and in the case of many households. We live on tick at many levels in our economy—and it seems to me that this is more likely to get worse than better. We see public services under strain and stress. Zero-hours contracts in the labour market and bogus self-employment, which the noble Lord, Lord Willetts, hinted at in his contribution, are surging. We should remember that a zero-hours contract often means for an employee or a worker zero loyalty to the firm for which they work or by which they are employed. That is not the basis for quality or better productivity Employment growth apart, our economy is fragile, so my call today is for the Government as a first step to revisit their decision to quit the single market and the customs union and to try to stay in it, perhaps initially as a transitional, provisional measure pending the negotiation of a comprehensive trade deal. This step would cut at a stroke the number of uncertainties. My message today is, "Save us from that clean, hard Brexit".