The Minister of State, Department for Science, Innovation and Technology (Lord Vallance of Balham) (Lab) (Maiden Speech)
My Lords, it is a great honour to open this adjourned debate on His Majesty’s most gracious Speech. Today’s debate will focus on economic growth, infrastructure and employment, but before I turn to today’s debate I should say that I believe it is customary for new Members of your Lordships’ House to offer some personal remarks.
I start by saying how grateful I am to the many noble Lords of all sides and the wonderful and patient staff here who have already made me feel most welcome. I also thank my supporters for my introduction last week: the Minister, my noble friend Lady Jones of Whitchurch, and the noble Baroness, Lady Manningham-Buller, who has provided advice and support to me on more than one occasion.
My family comes from Cornwall, and I grew up in a small hamlet called Greenbottom, near Truro. My mother came from the Isles of Scilly. However, when thinking about the name I should bear when taking my seat on these red Benches, I decided that perhaps neither Greenbottom nor Scilly were quite right. I plumped for Balham. Some of your Lordships of a certain vintage will recognise it as the famous gateway to the south.
I am a doctor and scientist and have worked in the NHS, academia, industry and government. It is an enormous pleasure and privilege now to be joining your Lordships’ House with its reputation for expertise and wisdom. I am at heart a scientist. Karl Popper said:
“Science may be described as the art of systematic oversimplification”.
He reminded us that
“Knowledge can only be finite, while our ignorance must necessarily be infinite”,
while
“ignorance is not the absence of knowledge, but the refusal to acquire it”.
However, in my time as the Government Chief Scientific Adviser I found that the scientist’s approach does not always align perfectly with that of others. A scientist will often be pleased to find that the results of new experiments showed that what they held to be true was in fact wrong and the world is not quite as they thought it to be. This process of discovery and self-correction is, of course, at the very heart of the scientific method.
I discovered, however, a little philosophical difference. In some political and media circles, changes resulting from new evidence may not always be so readily welcomed. Indeed, they are instead that most dreaded of things: a U-turn. I look forward to welcoming changes based on scientific findings, advances in technology and innovation.
I shall turn to today’s debate, but first I must extend a warm welcome on behalf of the whole Chamber to my noble friend Lord Timpson and my noble and learned friend Lord Hermer, who have been introduced today, as well as to the noble Lord, Lord Petitgas, who will give his maiden speech today and I hope share some of the invaluable business experience he brings to your Lordships’ House. Your Lordships will also hear from my noble friend Lord Livermore, who will wind up this evening. With his deep experience, and the expertise and insight in evidence on all sides of the Chamber, I look forward to the debate ahead.
The programme of legislation put forward in His Majesty’s gracious Speech is, in essence, about potential and how to realise it. Noble Lords will know that talent, energy and ambition are found in abundance right across the four nations of our union, from the Isles of Scilly to the Shetlands. However, they will also know that, far too often, our communities are unfairly held back by an economy that does not deliver for them.
Decades of low growth and lower investment mean that we risk falling behind international competitors, and it is hard-working people who will pay the price. That is why, as we set about the work of rebuilding Britain brick by brick, innovation by innovation, we have made growth our national mission. Without growth, we cannot answer the profound challenges that our country faces. It is growth that will provide the good jobs that hard-working people deserve, improve the public services they depend on and make people better off, and it is growth that the measures set out in His Majesty’s gracious Speech will deliver.
That plan starts with economic stability. We have been clear that we will not risk public trust or market credibility in the pursuit of political convenience. To put it simply, that means no more unfunded spending commitments. Each of the measures set out in His Majesty’s gracious Speech has sound money as its bedrock. Every decision will be shaped by strong fiscal rules designed to deliver a balanced budget and drive down the national debt.
The Budget Responsibility Bill will enshrine that commitment—the fiscal lock—in law, ensuring that every significant change to tax and spending is subject to independent assessment from the OBR. My noble friend Lord Livermore will have more to say on this later. Stability is where we start, but your Lordships should not take that stability to signal a lack of ambition. Long-term growth—growth that involves every person and every community, in a strategic partnership with business—requires change, and His Majesty’s gracious Speech shows that we are ready to turn the page.
Since the global financial crisis, the United Kingdom has been plagued by low productivity. Today, real average weekly earnings have only just returned to 2008 levels. Millions remain stuck in insecure work, and millions more are without work at all; the number of workers inactive due to long-term sickness is close to an historic high. These headline statistics also hide insidious inequalities. The national gender pay gap stands at over 14%, and a quarter of reported sexual harassment takes place at work. This is patently appalling. I am sure noble Lords will agree that, in modern Britain, it cannot continue.
Work must pay, no matter who you are. The employment rights Bill is born from that belief. It will empower British people with workplace rights that are fit for a modern economy by helping more people to stay in work—and ensuring that work puts more money in their pockets. It will not just grow the economy but will ensure that the benefits of growth are felt by all.
A modern workplace is necessary for sustainable growth but it is not sufficient. That brings me to infrastructure. Tomorrow’s economy brings demands, from laboratories and gigafactories to large-scale computers and digital infrastructure, and of course the infrastructure requirements for clean energy. Yet, from roads to railways and reservoirs, Britain’s basic infrastructure is too often the stuff of yesterday. This is not for want of trying. Many businesses have told us that they are ready to build, but burdensome planning regulations and a fragmented investment landscape prevent them from doing so.
In our cities, the sight of brownfield land sitting unused and abandoned is all too common. This House may recall the tale of a £2.5 billion data centre blocked for spoiling the views over the M25. Far be it from me to take a view on the aesthetic merits of one of Britain’s great scenic motorways, but I am confident that we can all agree on one thing: confused infrastructure and investment policies are a brake on Britain’s growth. To kick-start our economic engine, we must remove that brake. In His Majesty’s Gracious speech, we have taken our first steps to doing that.
By accelerating the planning process for housing and streamlining the delivery of major infrastructure projects, the planning and infrastructure Bill will unlock much-needed development at an unprecedented speed and scale. We will also consider how we can remove blocks to the growth of our data-centre sector—the largest in Europe—including changes to planning rules, designating the sector as critical national infrastructure, and introducing a stable regulatory environment to improve security and resilience.
Infrastructure will be a driving force behind our industrial strategy. Guided by the Industrial Strategy Council, which we will put on a statutory footing, this long-term plan will provide business and investors with the certainty and stability they need to invest and grow.
The national wealth fund is anchored in those same values. It will align the UK Infrastructure Bank and the British Business Bank under a permanent institution that provides a coherent offer for business and a compelling proposition for investors. By working closely with regional mayors, the fund will strategically deploy public capital to deliver long-term growth and prosperity for communities in every corner of the country. By mobilising billions more in private capital, its impact will be transformative, creating thousands of good jobs for British people in the industries of the future.
Science and technology can improve the lives and life chances of our citizens by driving economic growth, improving public services, and providing resilience and security. Government has a vital role to play in making that possible. It is only by realising the full potential of technological innovation that Britain’s businesses will succeed, Britain’s public services will modernise and the British people can prosper. Our task therefore is to accelerate innovation, investment and productivity as essential elements of Britain’s industrial strategy. Our approach combines discovery and delivery, opportunity and security.
The strength of Britain’s research sector already provides us with a clear competitive advantage. These islands are home to four of the top 10 universities in the world. We have many more world-class institutions that create the knowledge we need for the future. They act as catalysts and anchors for innovative start-ups and scale-ups. The phrase “Silicon Fen” may lack a certain something, but the story it points to is remarkable. Last year, Cambridge was the most intensive science and tech cluster in the world. It is not just Cambridge: from small satellite manufacturing in Glasgow to compound semiconductors in south Wales, diverse science and tech clusters are creating opportunities for communities up and down the country.
Yet, in each one, the same challenges put prosperity in peril. A lack of laboratory space is stifling the expansion of a life sciences sector which, until now, has been one of our great industrial success stories, employing over 300,000 people and generating over £100 billion in turnover. At the same time, firms are struggling to access the capital they need to grow, and rigid regulation prevents them bringing innovative products to market. If we are to face up to these challenges and provide opportunities for these firms to grow a more productive and prosperous economy, improve our public services and make people better off, we need change.
Once again, the starting point for change is stability. We will scrap short-term funding cycles for certain types of R&D activity, replacing them with 10-year budgets that will provide researchers with an opportunity to form meaningful partnerships with business and to take a long-term view—partnerships that support the cutting-edge research and development needed to remain at the forefront of global innovation.
The economy will not be the only beneficiary, because innovation is an enabler for every one of our national missions. Take artificial intelligence. Today, the UK ranks third in the world for AI talent, start-ups and inward investment. If you go to the so-called Knowledge Quarter—or, as some people call it, the new square mile—in King’s Cross, you can see what those statistics look like in reality. Sandwiched between the station and the Francis Crick Institute—Europe’s largest biomedical laboratory—a new crop of companies is growing out of the coal drops from which Britain’s first Industrial Revolution was born. Goldman Sachs estimates that AI could double the rate of growth since 2010—but that is just part of the picture. Many of the businesses there are harnessing the power of AI to discover solutions to some of our most pressing social and environmental problems.
This is not some distant future. Noble Lords will know that industry is already feeling the impact of the rapid development of large language models. Technologies such AlphaFold, developed by DeepMind, have shown the transformative effect that AI can have. By predicting the shape of almost every protein in the human body, AlphaFold has ushered in a step change in the understanding of disease and the measures we need to tackle it. We can expect to see more examples like this. This is not an opportunity that we can afford to miss. From breast cancer screening and stroke detection to fraud prevention and personalised education, this Government are committed to harnessing the power of AI to transform how we deliver public services and boost living standards right across the country.
To do this, we must champion our domestic science and tech sector; and, in a country where 25% of people struggle to engage with the internet and digital devices and 2.1 million people live largely offline, we must remain relentlessly focused on driving up digital skills to ensure that the opportunities of our modern economy are open to all.
We must also lead by example by delivering modern digital government that promotes the responsible and innovative use of technologies, with public services that are more productive, less time-consuming and, frankly, more in tune with how we live our lives. The public sector must walk the walk as well as talk the talk. My department, as the centre for digital expertise and delivery, has been tasked with making that happen.
None of that, of course, is possible without data. We have committed to creating a national data library that will make it easier to access data, deliver data-driven public services, support research and create opportunities for economic growth, while maintaining strong safeguards. These principles also underpin the new digital information and smart data Bill. Putting digital verification schemes, the National Underground Asset Register and smart data schemes on a statutory footing will accelerate research, innovation, investment and productivity. Improved data sharing and standards will make public services more efficient and accessible. In all of this, we will prioritise protecting people’s data. We will modernise the Information Commissioner’s Office and give it new, stronger powers; and we will introduce reforms to data laws to address the uncertainty that prevents the safe development and deployment of new technologies.
We cannot seize the opportunities of innovation without getting regulation right. Regulators must be equipped to deal with the pace at which new technologies are developing, particularly when they cut across traditional industries and sectors, as they increasingly do. In 2022, more than two-fifths of businesses said that regulation was an obstacle to success. That is why we are establishing a regulatory innovation office. By enhancing regulatory innovation to update rules, speed up approval timelines and co-ordinate issues that span existing boundaries, the office will transform the journey that new technologies take—out of the lab, on to the market and into our lives.
Trust is a central part of this journey. That is why we will bring forward highly targeted legislation to introduce binding regulations on the handful of companies that are developing the most powerful AI models. Ending the regulatory uncertainty for AI in the UK will strengthen public trust, enhance security and boost business confidence.
Nowhere are security risks more apparent than in cyberattacks. In light of last week’s global IT outage caused by a failed software update, ensuring that our digital systems are safe and resilient feels more important than ever. In the last 18 months, we have seen devastating cyberattacks at the Ministry of Defence, the Royal Mail and the British Library. A recent attack on the NHS resulted in thousands of appointments and elective procedures being postponed, impacting health provision right across the capital. The CEO of our National Cyber Security Centre, Felicity Oswald, said earlier this year that these are risks that we cannot afford to ignore. I am sure noble Lords will agree. To reduce the damage from further attacks, we must urgently update our cybersecurity regulations. That is what the cyber security and resilience Bill will do, strengthening our defences and ensuring that digital services that are more essential than ever are protected.
His Majesty’s gracious Speech has set out an ambitious long-term strategy to unlock Britain’s potential. To deliver sustained growth that will bring prosperity and opportunity to every British person we must build strong and secure foundations anchored in an unwavering commitment to fiscal responsibility and rooted in advances in science and technology. With those foundations, the work of immediate change can begin. From employment rights and regulation to infrastructure and investment, our reforms will rebuild Britain’s economy. By combining discovery and delivery, opportunity and security, we will fix our broken public services and make lives better for British people.
Lord Frost (Con)
My Lords, I congratulate the Labour Party on its election victory, which I am afraid was well deserved. I welcome Ministers to the Front Bench, particularly the noble Lord, Lord Vallance; we former officials must stick together.
I listened carefully to the noble Lord’s presentation of government policy as set out in the gracious Speech. I heard that the mission was growth, but I heard little that was likely to deliver it. The planning proposals are obviously the main exception to that, and I wish the Government every success with them. I hope they use the reforms to build useful assets such as houses, roads and power stations, not white elephants like wind farms and solar arrays.
What I heard elsewhere was a plan to continue transforming Britain into a big-government, low-growth, low-energy, corporatist state—an alphabet soup of new bodies, plans and more Government-know-best policies. Just one example is the nice-sounding but, I am afraid, damaging reregulation of the employment market that the noble Lord, Lord Woodley, and others have spoken about: more mandatory pay-gap reporting, the rollback of trade union laws, the boost to the minimum wage, the end to zero-hours contracts, and so on. The Government claim in their briefing to us that the aim of all this is to ensure that
“industrial relations are based around good faith, negotiation and bargaining”.
We have seen what that means from the Chancellor’s remarks over the weekend: it means paying up for fear of the unions. I am afraid that if the Government are paying Danegeld already, two weeks into their term—that is, during the honeymoon—then they are going to have a tormented time in the next few years. Does the Minister—the noble Lord, Lord Livermore, who will wind up—have any assessment of the economic impact of these labour market measures? Can he explain why more regulation will boost productivity and growth?
Beyond that, we have a panoply of new corporate bodies: the Industrial Strategy Council, Skills England, and the new OBR, with its stronger legal status and even stronger powers to put its dead hand on to any attempt to create economic dynamism. We have more devolution, more incentives to local leaders to demand more money from the centre and more talking shops, such as the council of the nations and regions, with their local growth plans.
Above all, we have the so-called national wealth fund. I do not know whether the Government have noticed but we do not have quite as much wealth as we used to, thanks to the disastrous lockdown policy that others have referred to, and our debt is as high as our GDP nowadays. Yes, we have a plan: to borrow even more money and spend it on dubious projects that no one else will fund. We can all play that game: I can remortgage my own house, spend the money on a holiday and claim I have created my own sovereign wealth fund. It may make you feel good, but you would be crazy to think you had created any actual value as a result. So it will prove with this fund.
The product safety Bill deserves a lot more scrutiny than it has had so far, and I hope will get it. The government briefing tells us:
“This Bill will preserve the UK’s status as a global leader in product regulation”.
That sounds good, but read further down and you discover that it is designed to give the Government the power to follow EU regulations and keep Great Britain aligned with Northern Ireland and the EU as regards product regulation, which I have to say sounds a bit less like a global leader.
In passing, the briefing refers to a seemingly new body called “the Regulator”, with a capital R, whose nature and capacity is to be future-proofed by the Bill and which will
“provide national leadership on product safety”.
Could the Minister explain what that body is, how it differs from existing regulators and, more broadly, why he thinks that following the rules of the EU without any say in them is likely to help the economy of this country?
All these measures take us further from the only thing that actually creates growth—that is, free people making their own judgments and risking their own money in free markets. I am afraid that in due course the Government will discover this. Until we get back to that direction and until we start rolling back the corporatist collective state, we will continue to have a huge productivity and growth problem, and we will continue to disappoint the expectations of our people.
The Financial Secretary to the Treasury (Lord Livermore) (Lab)
My Lords, I thank His Majesty for his gracious Speech and all noble Lords for their contributions today. It is the greatest honour and privilege to be closing the debate this evening. Growing up where I did, I was the only pupil in my school year to go to university and I never once imagined that I would be standing at this Dispatch Box in your Lordships’ House. I will never forget that, above all else, politics should be driven by a sense of service to our country, and I will always seek to work collaboratively with all noble Lords, aware at all times of how much there is to learn from the collective wisdom of this House.
I am grateful to all noble Lords for their warm words, and I thank them for their continued guidance and friendship. I pay tribute to the noble Baroness, Lady Vere, whom I have shadowed for the past year. We may rarely have agreed, but I always greatly admired her command of her brief and greatly enjoyed working with her. I am pleased that she is on the Front Bench this evening and that her expertise is still available to your Lordships’ House.
The noble Baroness will know what a huge privilege it is to work in the Treasury, a truly formidable institution. I am delighted to have returned there, some 17 years after I left. I am particularly proud to have returned under the leadership of the first-ever female Chancellor of the Exchequer, who after 800 years has broken one of the remaining glass ceilings in government. It is long overdue.
I join other noble Lords in welcoming the noble Lord, Lord Petitgas, to your Lordships’ House and congratulate him on his maiden speech. His business and investment experience will be particularly relevant to the new Government’s growth agenda, and I look forward to his contributions in many subsequent debates.
It is also an enormous privilege to welcome my noble friend Lord Vallance of Balham to your Lordships’ House and to have had the good fortune to be present on the Front Bench for his maiden speech today. There is no doubt that my noble friend’s detailed knowledge and strategic guidance was pivotal during the Covid pandemic, saving countless lives as a result. He brings a wealth of experience and expertise to this Chamber. I know that he is very grateful for all the kind words that have been expressed to him during today’s debate.
Our manifesto made it clear that sustained economic growth is the only route to improving the prosperity of our country, raising living standards and sustainably funding public services. That is why it is our central economic mission.
As my noble friend Lord Liddle observed, several noble Lords spoke in positive terms about the economic inheritance that this Government face, including the noble Lords, Lord Callanan and Lord Bridges of Headley, and the noble Baronesses, Lady Noakes and Lady Vere. On her first day in the Treasury, the Chancellor received new economic analysis from Treasury officials on the lost growth of the past 14 years. This analysis shows that, had the UK economy grown at the average rate of other OECD economies, it would now be over £140 billion larger. This could have brought in an additional £58 billion in tax revenues in the last year alone—money that could have revitalised our schools, hospitals and other public services.
Instead, as my noble friend Lord Wood of Anfield pointed out, public services have been pushed to breaking point. There is sewage in our rivers and our schools are crumbling. The national debt has more than doubled. Taxes are at a 70-year high, and, according to the OBR’s March forecast, this will be the first Parliament on record where living standards were lower at the end than at the beginning.
It is true to say that many of the crises which we faced during this time were global in origin, but other countries faced those same shocks. The reason we in the UK were hit harder than comparative countries can be explained only by the choices made here at home: austerity which choked off investment, a rushed and ill-conceived Brexit deal and the disastrous mini-Budget, which crashed the economy.
The general election was an opportunity for the British people finally to pass judgment on the economic record of the past 14 years, and they voted overwhelmingly for change. We have begun the work necessary to deliver on that mandate—to fix the foundations of the economy, rebuild Britain and make every part of our country better off.
Our approach to growth rests on three pillars: stability, investment and reform. I turn first to stability, which must begin with respect for our economic institutions. For much of our history the strength of our economic institutions has bestowed credibility in international markets and underpinned our economic success. Politicians who seek to undermine those strengths, as we saw in the last Parliament, play a dangerous game. Under this Government, the Bank of England’s Monetary Policy Committee will continue to have operational independence in the pursuit of its primary objective of price stability, with a 2% inflation target.
Some noble Lords, including the noble Lord, Lord Forsyth, and the noble Baroness, Lady Noakes, criticised the Government’s plans for the Office for Budget Responsibility. The OBR has been praised by the OECD as a
“model independent fiscal institution”.
We will strengthen it for a very real reason, so that there can never again be a repeat of the disastrous mini-Budget which crashed the economy and increased average mortgage payments by some £300 a month. The new Budget responsibility Bill will deliver on the promised fiscal lock. This will ensure that every fiscal event making significant changes to taxation or spending will be subject to an independent assessment by the OBR.
In answer to my noble friend Lord Eatwell on how the fiscal rules will treat various spending scenarios, if he does not mind I will write to him to ensure that I address his questions correctly.
The noble Lord, Lord O’Neill of Gatley, proposed a revised fiscal rule. I agree with him that we cannot continue with the short-termist approach that disregards the importance of public investment, but neither can we ignore the pressing need to rebuild the UK’s public finances. We must maintain an iron grip on the public finances; if we do not, as we saw in the last Parliament, it is families that are forced to pick up the bill. The manifesto commitments that this Government were elected on must be kept to. They include robust fiscal rules, and we will keep to our commitments on tax, with no increase in national insurance or in the basic, higher or additional rates of income tax or VAT. Corporation tax will be capped at its current rate for the duration of the Parliament. If our international competitiveness is threatened, we will act.
On spending, the Chancellor has instructed Treasury officials to provide an assessment of the state of the spending inheritance, and she will present this to Parliament before the Summer Recess. My noble friend Lord Layard asked about the Green Book being used in the spending review, and the answer to that is yes.
The noble Baroness, Lady Bowles, raised the question of investment trusts. The investment trust sector plays a significant role in the UK economy, making up over 30% of the FTSE 250, including infrastructure projects and renewables that can help support the Government’s growth agenda. I continue to believe that the noble Baroness makes a persuasive case for action, and the Government will carefully consider all options available to address the issues she raises. I will be happy to meet her to discuss her Private Member’s Bill in further detail. I am grateful to my noble friend Lady Thornton for saying I can write to her, which I will.
In answer to the suggestion from the noble Lord, Lord Lee of Trafford, regarding NatWest shares, I am afraid I cannot comment on the approach to specific sales of the shareholding, which is commercially and market sensitive. I am grateful for the support of my noble friends Lady Drake, Lord Wood of Anfield and Lord Drayson for their support for the pensions Bill launched by the Chancellor, which was also discussed by the noble Lord, Lord Morse. In addition, the pension schemes Bill will support more than 15 million people who save in private sector pension schemes get better outcomes from their pension assets and support the Government’s mission to deliver growth.
I now turn to how we will unlock private investment in the infrastructure that our economy desperately needs. Britain today is the only G7 country with investment below 20% of GDP, which holds back productivity, as observed by the noble Lords, Lord Bridges of Headley and Lord Birt, and hinders us in the competition for the industries of the future. I agree with the noble Lord, Lord Sherbourne of Didsbury, that it is not in the Government’s gift alone to reinvigorate these faltering levels of investment; the lifeblood of economic growth is business investment. The right reverend Prelate the Bishop of Newcastle spoke of partnership, and I agree with her. A strategic state does have a crucial role to play in partnership with the private sector. That partnership will be embodied, as my noble friends Lord McNicol of West Kilbride and Lord Chandos said, in a modern industrial strategy and a new national wealth fund. A modern industrial strategy—which, to reassure the noble Baroness, Lady Bonham-Carter, and the noble Lord, Lord Berkeley of Knighton, will include the creative industries—enables us to work with businesses to identify those areas where Britain enjoys, or has the potential to develop, comparative advantage, but where there are currently market failures or other barriers that hold back investment.
The noble Lord, Lord Mair, spoke in favour of an industrial strategy council, which we will establish to ensure that industrial strategy policy is informed by a broad and high-quality evidence base and a diverse range of perspectives. To respond in part to the question from the noble Lord, Lord Kakkar, last week the Health Secretary committed to supporting the Government’s growth mission by making the UK a life sciences and medical tech powerhouse. To respond to the noble Lord, Lord Wigley, the Government are committed to securing a competitive and sustainable future for the UK steel industry, and will remain in talks with Tata Steel.
The Chancellor has already held a meeting of the national wealth fund task force to establish the fund, and the national wealth fund Bill will put it on a permanent statutory footing, supported by an injection of £7.3 billion of capital. The new national wealth fund will work alongside business to unlock billions of pounds in private sector investment in the industries of the future. In answer to the noble Lord, Lord Fox, the fund will bring together the UK’s currently fragmented landscape of public finance institutions, including the UK Infrastructure Bank, which, to reassure the noble Lord, Lord Vaux of Harrowden, is already achieving a 3:1 ratio, crowding in additional investment. I say to the noble Baroness, Lady Noakes, that it will continue to operate according to the additionality principle. This will deliver the greater clarity and certainty that firms need to invest. Further details will be set out ahead of the Government’s Global Investment Summit later in the year.
My noble friend Lord Wood of Anfield asked about the risk appetite of the national wealth fund. The UK Infrastructure Bank already engages in concessional activity, and we will keep under review whether it requires any additional levers to support the national wealth fund’s objectives. I completely agree with my noble friend Lord Drayson’s focus on scale-up capital and that we need as a country to improve in this area.
The Great British Energy Bill further supports the Government’s growth mission. It delivers on our manifesto commitment to establish a clean power company designed to boost energy security, decarbonise the power sector by 2030 and create new skilled jobs. I agree strongly with the speeches of my noble friends Lady Young of Old Scone and Lord Grantchester on these points.
We have also immediately honoured our manifesto commitment to end the ban on new onshore wind in England. In answer to the question from the noble Lord, Lord Wigley, I say that the Secretary of State for Energy and Net Zero has said he will examine the current plans for SMRs and set out more detail in due course.
Alongside investment must come reform. I will start with the planning system, the single greatest obstacle to our economic success. Our planning system is a barrier to opportunity, to growth and to home ownership. It leaves far too many important projects tied up in years of red tape before shovels ever get into the ground.
On our first full day in the Treasury, the Chancellor announced immediate action to begin to fix the planning system and help deliver our mission to kick-start economic growth. The planning and infrastructure Bill is part of a once-in-a-generation overhaul of our planning system to deliver 1.5 million extra homes and the high-quality infrastructure fundamental to our ambitions for decarbonisation and—as mentioned by my noble friend Lord Stansgate—growth. To grow our economy, we cannot rely on just a few pockets of the country to drive growth and productivity. I agree with the noble Lords, Lord Heseltine and Lord Monks, that too many areas have been held back because decisions are taken in Westminster, rather than by local leaders who understand local ambitions and strengths. We must push power out of Westminster and empower local leaders to deliver for their communities, through local growth plans and the English devolution Bill.
I agree with the noble Lord, Lord Birt, that our skills system also needs reform; it is one of the most persistent policy failures in the UK. We must invest in our education system to build the workforce of the future. My noble friend Lord Layard spoke passionately about his proposal for an apprenticeship guarantee, which I can assure him will definitely receive further and careful consideration. As a first step, we will replace the apprenticeship levy with a new growth and skills levy.
The current skills system is not delivering the STEM and engineering skills our country needs to strengthen the whole skills system. The Skills England Bill will bring forward a comprehensive strategy for post-16 education to ensure that we can address skills shortages, support economic growth and deliver our industrial strategy. In answer to the noble Lord, Lord Fox, I say that it will start work immediately on an assessment of skills needs.
However, addressing the skills gap is a necessary but not sufficient requirement for economic success. As my noble friend Lady O’Grady of Upper Holloway said, and I say in answer to the noble Lord, Lord Frost, there is now a wealth of evidence that greater in-work security, better pay and more autonomy in the workplace have substantial economic benefits. A more secure and productive workforce is good for business and for working people, because each depends on the success of the other.
This understanding lies at the heart of the employment rights Bill, which the Government will introduce within the first 100 days of coming to power. It will introduce a new deal for working people to ban exploitative practices and enhance employment rights. The plan to make work pay commits to delivering a genuine living wage, ending exploitative zero-hours contracts, ending fire and rehire, and introducing basic rights from day one. We will continue to work closely with business as we deliver and implement these policies. In answer to the noble Lord, Lord Elliott, I say that we remain committed to our manifesto’s long-term ambition of an 80% employment rate.
The plan to make work pay, alongside reforms to the welfare system, will help to reduce the huge levels of economic inactivity inherited from the last Government—mentioned by my noble friend Lord Layard, the noble Lords, Lord Birt and Lord Wigley, and the noble Baroness, Lady Blackwood of North Oxford—with 700,000 more people economically inactive since the pandemic. I agree with the noble Lords, Lord Holmes of Richmond, Lord Touhig and Lord Shinkwin, on the disability employment gap.
The plan to make work pay also forms a major plank of our child poverty strategy. The last Labour Government reduced child poverty by 600,000, while it increased by 700,000 over the past 14 years, so tackling child poverty is a major priority for this Government. The Secretaries of State for Work and Pensions and for Education will co-chair a new ministerial task force to drive cross-government action on child poverty, starting with developing an ambitious new strategy in line with the Government’s opportunity mission, for which I welcome the support of the noble Baroness, Lady Benjamin. This will include delivering the measures in our manifesto to support children and families, including free breakfast clubs in every primary school, expanding childcare, stronger protection for families who rent privately, and action to reduce fuel poverty. Alongside this, we will review universal credit so that it makes work pay and tackles poverty.
To answer a very specific question from the noble Lord, Lord Palmer of Childs Hill, I am told there are no plans to digitise the NCC1 form. He and the noble Lords, Lord Wigley and Lord Sikka, and the noble Baronesses, Lady Benjamin and Lady Kramer, asked about ending the two-child limit, which was not in our manifesto. As I have said, we will develop an ambitious child poverty strategy, but we will also adhere to the manifesto this Government were elected on, line 1 of which says:
“Every commitment a Labour government makes will be based on sound money and economic stability. This is a non-negotiable principle”.
The manifesto commitments we made will be delivered on, and we will not make promises we cannot afford or keep.
I welcome the contribution of the noble Baroness, Lady Kidron, and her determination to make children’s online safety a priority. I am pleased she has welcomed the Government’s commitment so far. There is clearly more to be done to make children safe, and my noble friend Lady Jones has said that she will be happy to meet the cross-party Lords tech team to follow this up.
The gracious Speech also set out reforms to the rail sector, contained in two railway Bills, one of which establishes Great British Railways. The noble Lord, Lord Sikka, asked about those companies whose contracts do not expire in the next five years. Their contracts have clauses that can be triggered so that they expire in that timeframe. In answer to the noble Lord, Lord Fox, the Government are not reversing the decision to cancel the second phase of HS2, but we are committed to addressing key transport connectivity issues across the country that are constraining our growth ambitions. To answer the noble Lord, Lord Bradshaw, individual projects will be considered through the spending review, with a particular emphasis given to those that drive growth. In answer to the right reverend Prelate the Bishop of Leeds, the Government are committed to improving rail connectivity across the north. Electrification and infrastructure modernisation will provide environmental benefits and support economic growth and job creation. Key to this will be completing delivery of ongoing major rail programmes—notably the trans-Pennine route upgrade.
A reset is also needed in our trading relationships, as many noble Lords spoke about this evening. The rushed and ill-conceived Brexit deal has created trade barriers equivalent to a 13% increase in tariffs for our manufacturing sector, and a 21% increase in tariffs for our services sector, as mentioned by the noble Lord, Lord Inglewood. As a result, the OBR has found that long-run GDP is expected to be 4% lower. The European Union is one of our strongest and closest partners and the Government are committed to resetting our relationship—to strengthen ties, reinforce our steadfast commitment to security, and tackle barriers to trade.
In answer to the noble Baroness, Lady Stowell of Beeston, we will work closely with the EU but proceed in a different way from it on AI. In answer to the noble Lord, Lord Holmes of Richmond, the Government will pursue highly targeted legislation to protect innovation. We must, though, tackle the red tape currently holding our exporters back. The noble Lord, Lord Kakkar, asked about visas. We will begin by pursuing our manifesto commitments on a new veterinary agreement, an agreement on touring visas and the mutual recognition of professional qualifications.
The gracious Speech begins the work necessary to deliver on our mandate to fix the foundations of our economy, to rebuild Britain, and to make every part of our country better off. Our approach is founded on the pillars of stability, investment and reform: stability, so we never again see a repeat of the disastrous mini-Budget and the damage it did to family finances; investment, through partnership between a strategic state and enterprising business; and reform, to confront and overcome the barriers to success that have, for too long, held our country back.
We are under no illusions about the scale of the challenge we face. We know it cannot be turned around overnight. There is much more to do, many more tough decisions to be taken, but the work towards a decade of national renewal has begun.