Autumn Statement: Economy — House of Lords, 2016-11-29
Topic: Macroeconomics
Bryan Davies (Labour, Centre-left): My Lords, this has been an excellent debate, but somewhat mistitled. It is not in the light of the Autumn Statement, but in the shadow of the Autumn Statement and Brexit. That has been the theme of this debate. Even the more optimistic outline that the Minister put before us has been countered by a range of real anxieties expressed widely across the House Although the Minister did an excellent job in indicating that the objective is to create an economy that works for all and one in which all will share in its prosperity by making their contribution to improved productivity, what was missing from the analysis was how to arrive at that point. There was no confession that there have in fact been six wasted years in the pursuit of an austerity programme that, while it has had an impact on the deficit, has done so at enormous cost to the economy, and of course with low growth rates. They are so low that the Government have now decided that they have to relax their fiscal objectives and be prepared to borrow more in order to bring some element of growth into the economy, which will be the basis of increased prosperity in this country. As my noble friend Lord Livermore pointed out in his speech at the opening of the debate, on which I congratulate him, there is a whole range of acute difficulties facing the Minister given his suggestion that the Autumn Statement brings good tidings for all sides The shadow that has been present over the debate is of course the shadow of Brexit. As the OBR indicates in its paper, Brexit is going to have a very significant impact on growth and the public deficit, and it is extremely difficult for the OBR to be totally confident about its predictions because its legal obligation is to reach such predictions on the basis of clear government policies. However, as has been indicated by noble Lords on both sides of the House, when the OBR asked the Government about their policies, answer was there none. The Government are in an extraordinary position in which they are not prepared to disclose any area of policy relating to Brexit—apart from Nissan. We have never worked out just what it is that Nissan will benefit from, but there seem to be some assurances, perhaps also for the rest of the car industry, for manufacturing as a whole and in fact for the rest of the economy. The nod and the wink that one can take from Nissan is the basis for the future of the Government’s negotiations on Brexit. We shall see, and of course we hope that they are hugely successful, but we must recognise that the international perspective presents us with great difficulties It is not easy to talk about our friends in Europe because the only people who are coming forward at the present time seem to be expressing some pretty severe criticism of the British Government. But if we look to our oldest friend and ally across the Atlantic Ocean, we might have some difficulty being overwhelmingly optimistic there. I do not know because I am no better versed than anyone else on just what to take seriously about President-elect Trump, but if I was asked to suggest one commitment to which he might adhere when he takes office, the element of protectionism might run strong: making America great again by sealing off other competitors. That is not exactly the best context in which Britain should be putting itself on the world stage, having left the advantages of a very significant market and hopeful that we can make up for that through fresh trade agreements elsewhere It may be that the Government feel that it is possible that Brexit will turn out to be much better than some fear. However, what is almost undeniable is that we are bound to live through this period of uncertainty. We are all aware that one of the greatest dangers to the economy is a period of uncertainty. That is what deters investment and what afflicts the population with a somewhat more pessimistic view than they otherwise would adopt. It creates difficulties for us all. What has been established in the debate is that the Autumn Statement abandons the long-term economic plan—so long term that it survived six years—and we are going to have a plan on productivity. The noble Lord, Lord O’Neill, who often responded to debates in this House by educating us on the difficulties of increasing productivity, gave a speech of great interest and relevance to the debate, but which somewhat veered away from dealing with productivity. I am not surprised. As the debate developed it became clear that although the Government have a nice title for their scheme for the development of productivity, the challenges that face us in improving productivity are great. The noble Lord, Lord Skidelsky, identified them with some precision This is against a background where, for the past six years—in fact, since the period of the financial crisis—the Government have been running a low-wage and poor-jobs economy. It is not surprising that productivity registers pretty poorly on the scales as a result. On this, the Government have stayed true to the past. There was bound to be some degree of continuity, not least given that, although certain Ministers went, certain Ministers survived. Some prospered, such as the Prime Minister and the Chancellor with his elevation. I do not know whether the noble Lord, Lord Young, regards this as a vast improvement on his previous role in the Commons. We think it is because we are glad to have him here and we hope he enjoys it. But my goodness, he should not anticipate that he will get an easy ride on economic debates, as he will have recognised this evening A series of questions has been addressed to the Government, but one relates directly to the fact they have continued their bad ways. They are setting out to make sure that the less well off and those on benefits are the ones to pay the really savage price. That was the charge made by my noble friends Lord Livermore and Lord Hain, but most significantly by my noble friend Lady Hollis. She identified just what the impact would be of the persistence of the freezes of benefits contained as part of the relics from the past, which are continuing into the early years of this new Administration, and of the determination to ensure the amount of money spent on benefits is kept down to the levels the Government approve of, which are mercilessly difficult for those seeking to cope with them The right reverend Prelate the Bishop of Portsmouth identified that we have to think about equity and fairness. If we are to get through these difficult times—I do not think there is anyone, even the most optimistic of Conservative supporters, who does not recognise that there will be some pretty stiff challenges ahead—would it not be better to have a nation that is united in the objectives and wished to follow a common plan of recovery? How is that possible to achieve when the Government are pursuing their old strategy of making those who have the fewest resources pay the heaviest price Of course, there are good things in the Autumn Statement. My noble friends were kind enough to indicate that they appreciated aspects of the housing strategy, although we all want assurances that any housing strategy will include affordable homes in large numbers, otherwise it will not be a housing policy that meets the dire needs of so many of our people at the present time, including the young. One aspect of the debate that was perhaps covered only tangentially is the fact that, whether we like it or not, most of us here are of one generation and an awful lot of people who are suffering in our economy at the present are at least one generation below us, if not two. Are we being fair to younger people? Housing is critical, because we know that, at present, apart from the well endowed or those supported by wealthy parents or grandparents, getting on to the housing ladder is phenomenally difficult for those with limited resources and earning power. We cannot solve our housing problem unless we deal fairly with those, too This has been a debate in which every line that I wrote and had ready to deliver to the Minister has been covered more than adequately by contributions from all noble Lords, who have thought deeply about these issues. The Minister will recognise anxieties on his own side regarding the position that he has to defend this evening, but they are as nothing compared to the position of Her Majesty’s Opposition. All noble Lords on my side set out clear priorities which the Government ought to follow. We have no obvious faith at the present time that these will be followed by the Government in these crucial few months.