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.
John Horam (Conservative, Centre-right): My Lords, I am sorry that I cannot follow the noble Lord, Lord Wigley, down the path of Welsh affairs, not being Welsh, although I will say that the Senedd parliamentary building is one of the finest I have ever seen, as parliamentary buildings go. Of course, the architect was an Englishman, or Anglo-Italian: Richard Rogers I want to say something about the cost of living crisis, which is really severe, particularly for poorer households. The Government must take some urgent action to deal with this matter. First, as the noble Lord, Lord Low of Dalston, pointed out in his sadly foreshortened speech, benefits under our system went up by only 3% when inflation was already at 7%. On that alone, poorer households are worse off. We need therefore to look at the whole range of benefits affecting poorer people, particularly to have them well targeted. Universal credit needs to be looked at again immediately. I know this is difficult because it is hard to change universal credit during the 12-month period. There are also people transferring from other legacy benefits to universal credit as we speak—during this year. None the less, it has to be done, because we cannot wait for people in poorer households to be recompensed properly Secondly, there is a case for looking at some move to reduce the increase in energy prices, perhaps with some windfall tax on the energy companies, as in the proposal which the Labour Party has put forward. As the noble Baroness, Lady Kramer, pointed out, those companies are awash with cash: £8.5 billion is going into share buybacks, which simply means that they have so much money they do not know what to do with it and are giving it back to their shareholders. Some of that should be sent towards those who are suffering the higher energy prices, since those are massive. Neither of these things can wait until October. They must be done as soon as possible, and certainly before this House rises in July In addition, we need to look at a wider issue; namely, some straightforward Keynesian move to stimulate the economy. Classically, in this situation you would reduce VAT. Those who are of my age will remember that when VAT was first brought in by Lord Higgins in 1973—sadly, we no longer have the benefit of his wisdom here—it was with an automatic regulator, so that you could put VAT up or down according to the state of the economy. It is perfectly possible to do that, classically. Therefore, there is a case for reducing the 20% level of VAT to 17.5%. Sadly, there would be a big price for that, as it would cost £19 billion, which is something that the Chancellor may balk at. Instead, he may therefore go for a reduction in income tax, as a penny off its standard rate would cost only £5 billion as opposed to the £19 billion for a meaningful VAT reduction. I hope that will follow sensibly in the Autumn Budget to augment the other measures I have suggested This will of course mean an increase in our debt. Debt is already running at roughly 100% of GDP, which is extremely high by historic standards, but the fact of the matter is that all countries are in the same position: Canada, America, Japan, France and Italy all have higher deficits as a percentage of GDP than the UK, so we are not an outlier on this. We should never be cavalier in looking at debt. None the less, we can afford to take the sort of measures that would particularly help the lower-paid households which I have described. That is urgent and should be firmly and right centre in the Government’s sights.