Defence Funding
Baroness Goldie Excerpts(7 months, 2 weeks ago)
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Baroness Goldie
To ask His Majesty’s Government whether they intend to replicate the approach of the Green Savings Bonds to provide incremental resource to fund the defence capability by issuing a defence bond.
The Parliamentary Secretary, HM Treasury (Baroness Vere of Norbiton) (Con)
My Lords, the Prime Minister recently set out our pledge to increase defence spending to 2.5% of GDP by 2030. That increase starts today, will rise each year and will see defence spending rise to £87 billion a year by 2030-31. This is the biggest strengthening of our defence since the Cold War. The commitment will be fully funded, with no increases in borrowing or debt. Therefore, we have no plans to issue defence bonds.
Baroness Goldie (Con)
My Lords, I thank my noble friend for that response. I of course welcome the Prime Minister’s commitment, which is reassuring and provides a clarity that is much needed. My Question is designed to explore innovative ways of augmenting defence spending and thereby assist the Treasury. The Government vigorously promoted green gilts and green investment bonds to fund green expenditure. If that is an acceptable funding principle for the environment, why is it not for our national security?
Baroness Vere of Norbiton (Con)
As I have outlined, the Government will use existing resources to fund this increase in defence spending, but my noble friend makes an important point: our superb defence industry needs investment. Although the Government are the main customer of the defence industry, as are exports, these are of course private companies and they do need investment. There are some reports that defence is being excluded on ESG grounds. The Government have confirmed and are absolutely committed to the fact that investment in good, high-quality, well-run defence companies is compatible with ESG considerations.
Road Pricing
Baroness Goldie Excerpts(8 months ago)
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Baroness Vere of Norbiton (Con)
As I said in my opening remarks, the Government have no plans to consider road pricing. I really cannot say more than that.
Baroness Goldie (Con)
My Lords, I find it difficult to fault the analysis of my noble friend Lord Young of Cookham, because he points to an inescapable gap in revenue receipts for the Treasury from fuel duty receipts. I have a difficulty in understanding the Treasury’s opaqueness in responding to this analysis, for which I do not blame my noble friend the Minister. Is that opaqueness attributable to fiscal timidity or dogmatic blindness?
Baroness Vere of Norbiton (Con)
My Lords, it is not opacity. What is going on here is simply that a number of options can be taken forward as taxes shift and change over time. All taxes shift and change over time with regard to the amount of money they bring into the Exchequer. The Government have forecasts as to what will happen to fuel duty and are considering all sorts of ideas as to how that would be plugged. For example, noble Lords will have seen that electric vehicles will start to pay VED from April 2025. It will not be at the same level as for an ICE vehicle, but it is right that EVs start to pay their way.
Spring Budget 2024
Baroness Goldie Excerpts(9 months, 1 week ago)
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Baroness Goldie (Con)
My Lords, it is always a pleasure to follow my noble friend Lord Young of Cookham.
I looked back at what I said in November when we debated the Chancellor’s Autumn Statement. At my stage in life, that is a wise precaution—an aide-memoire is helpful. For this non-dogmatic, non-ideological, pragmatic, prudence-supporting and, I hope, compassionate Conservative, the Autumn Statement was an affirmation of my beliefs. I remember criticism from opponents and even some Conservatives. Predictably, the Labour Party found it tame; not spending enough—no surprise there. Some Conservative colleagues found it dull; not exciting enough.
I do not want the steward of our economy to be some flash Harry putting headlines, gimmicks and show above substance and prudence. Nor do I want a wand-waving wizard treating the economy as some giant experimental laboratory. My noble friend Lord Lamont of Lerwick could never have been described as either in his role as Chancellor and, mercifully, neither can Jeremy Hunt, as he quietly demonstrated in November and confirmed with his Spring Statement. The real test is market reaction, which remained stable.
I remember, in the November carping and criticism, that context was a glaring omission. There was no reference to the extraordinary challenges we have faced—the pandemic, energy price hikes and inflation on the back of the illegal war in Ukraine. Because of the steady approach to the economy by the Prime Minister and the Chancellor, I am clear that context is now being acknowledged and that people understand that. They needed, and got, help with soaring energy bills. They know that there is not a magic money tree, but they are benefiting from falling inflation. They have felt the support offered by the measures in the Autumn Statement and can see how that has been built on by the Spring Statement.
Reaffirming the importance of context, the sobering economic reality is, quite simply, in paragraph 1.1 of the OBR’s Economic and Fiscal Outlook, published earlier this month. It gives an objective assessment of the challenges facing the Chancellor, confirming how tight his envelope is—another helpful confirmation of why the last thing we need is either a flash Harry or a wand-waving wizard. That is why I am reassured by the Chancellor’s approach. In case anyone thinks I am wallowing in a warm bath of self-delusion, let us look at the facts.
At the beginning of 2023, we identified three economic priorities: halve inflation, grow the economy and reduce debt. As my noble friend the Minister indicated, inflation has fallen from 11.1% to 4%, the economy has performed better than forecast and outperformed European neighbours, and debt is on track to fall as a share of GDP to 92.9% in 2028-29, so the steady progress predicted last autumn is happening and there is now scope to help further.
As other contributors have indicated they were, I was very pleasantly surprised by and supportive of the NIC changes to both the employee main rate and the self-employed main rate. The combination of what we did in the autumn and what we do now will make a real difference to the working population, with wider benefits, as the noble Lord, Lord Macpherson of Earl’s Court, pointed out. That is why I will certainly support the NIC Bill at Second Reading later. To grow the economy, we have to make it worth while for people to work. We have to let them keep more of their own money. This delivers that encouragement.
We also have to support people in work, get them back to work and encourage new entrants into work, which these measures, plus changes to the child benefit scheme, will encourage. No one likes paying tax, but measures to help working families and be a catalyst to growing the economy justify putting a bit of the load on some of the broader shoulders. The changes in tax treatment of non-doms are sensible and, recognising the extraordinary increases in receipts for the oil and gas sector, extending the energy profits levy to 2029 with the safety valve of the built-in regulator, because it is there, does not seem oppressive.
The other measures that my noble friend the Minister covered are helpful and sensible for business and offer support in still challenging times for millions of households. The continued work on investment zones is spreading benefit across the whole UK.
Looking ahead, and anticipating that a steady hand continues at the Treasury helm, the IMF forecasts that the UK will grow faster than Japan, Germany, France and Italy cumulatively over the next five years. The OBR confirms that the economy grew last year and will be bigger at the end of the forecast period than it predicted last autumn.
We now need to think strategically about opportunities and innovation as to how we find money. I will look at defence spend, and I want to repeat what I aired in the recent foreign affairs debate in this House. This is the most threat-ridden world we have known since the Second World War. We have to work with partnerships and provide leadership. For NATO, that has to mean looking way beyond 2% of GDP.
During these highly charged times, extraordinary measures are called for if we are serious about the defence and security of this country. That investment would be not just to fund potential kinetic military activity; we need to resource intelligence and cybersecurity measures. There is not much point pouring billions into a more productive health service if activity is wiped out by a hostile cyberattack.
For the next term there is an argument, for a finite period, to top-slice the defence budget to give greater certainty about operational capability. I also believe that the Treasury can be more imaginative in how it procures money to fund defence. My suggestion was to consider the issue of patriot bonds. If we can issue green savings bonds and the still popular premium bonds, why can we not replicate that model for defence? I think there is an appetite for it. I realise that the history of war loan stock might make the Treasury shudder, but surely Treasury expertise can find a model that boosts defence funding, balanced with security and an attractive return to the investor. I do not expect my noble friend the Minister to respond to all that, of course, but I ask her to use a sharp elbow when she returns to the Treasury and to point out that this is not a gentle nudge from a friend; it is a cri de coeur as a matter of necessity.
In conclusion, there is one person for whom the Autumn and Spring Statements create a headache— the shadow Chancellor. In November I questioned the problematic £28 billion borrowing pledge. It has now gone. What next? No one knows. Despite the heroic efforts of the noble Lord, Lord Eatwell, Labour’s economic policy and fiscal proposals remain opaque and incoherent. By contrast, the Prime Minister and his Chancellor, Jeremy Hunt, have set the satnav, we are travelling the journey, the scenery is inviting and the destination is exciting.
Autumn Statement 2023
Baroness Goldie Excerpts(1 year, 1 month ago)
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Baroness Goldie (Con)
My Lords, I pay tribute to and welcome my noble friend the Minister to her new place on the Front Bench.
It is a great privilege to speak once again as a Back-Bencher. To minimise anxiety on the part of my noble friend the Minister, let me say that I intend to be very well behaved, a house-trained and biddable Back- Bencher. I shall not indulge in a meandering, auto- biographical valedictory exposition of how I was short-changed as a Minister, because I was not; of how senior colleagues failed me, because they did not; or of how the Government have lost their way, because they have not. My short letter to the Prime Minister made clear that being a Defence Minister requires reserves of energy and resilience that this old bird was finding it increasingly difficult to muster. The time had come to pass on the baton to another incumbent, who I am delighted to say is my noble friend Lord Minto. My letter also made clear my pride in serving this Prime Minister and that I would continue to support him in every way I can. The Autumn Statement is the affirmation of why I offer that support. Let me explain.
I am an old-fashioned kind of girl—a sort of political response to Eartha Kitt. I know why I am a Conservative: you do not come from Scotland and not know that. I know what kind of conservatism I believe in: a free society where everyone is encouraged to optimise their individual talents; a free enterprise economy which can flourish when supported by the state but not obstructed or oppressed by it—my noble friend Lord Howell eloquently explained why that is so important; a society where the state and its offshoots are enablers and facilitators, not a resource-sapping monolith, as is sadly the case in the devolved governance of Scotland; lastly and most importantly, a society where the privileges of these essential freedoms are balanced by a responsibility and a compassion which protects and supports those who, for whatever reason, are vulnerable. So, you will not find me in the tent of ideology and dogma; I am much more interested in pragmatism and delivery of the broad tenets I have outlined.
One of the benefits of getting on a bit is that you have at least seen a lot in life. Experiencing what the big dipper of life can sling at you can be excoriating, but it can also be instructive and enriching. This brings me to context. When I read some of the commentary on the Autumn Statement and listen to predictably partisan criticism from opposition politicians, there is one gaping void: context. When the global financial crash happened in 2008 and a UK bank had to be bailed out, there were consequences. In 2010, the Conservative-Liberal Democrat coalition had to deal with the worst recession since the Second World War. Remember the notorious note from the outgoing treasury Minister—there is no money left—something to which the noble Lord, Lord Eatwell, did not refer in his analysis. And when there is a pandemic, apart from the human cost, for the economy it is the equivalent of another war. The economic cost is high, and thanks to the decisions Rishi Sunak made as Chancellor there was a functioning economy when we came out of Covid. But the measures to ensure that was the case have consequences.
This has all been compounded by the illegal invasion by Russia of Ukraine, which created inflation and a massive hike in energy charges. The Government rightly stepped in to help households, to the tune of nearly £40 billion, but there are consequences. Then there is driving down inflation: absolutely the right thing to do. Some people may never have known inflation running at 25%, as it did under Labour in the mid-1970s; I shall never forget it. It is the most pernicious impoverisher of people’s incomes. So, since 2010 we have had cumulative, not isolated, challenges and all of that is context. A lot of the commentary about the Autumn Statement looks at it in a bubble—there have been echoes of that today —as though it is some semi-detached lacuna with context miraculously airbrushed out. For me, the Autumn Statement was a reassuring manifestation of my conservatism: rooted in pragmatism, demonstrating compassion and in short, doing what you can with what you have got.
The Autumn Statement was also part of an established and carefully calibrated approach to the economy by the Prime Minister and the Chancellor. It was back in January this year that the Prime Minister set out his three economic priorities: halve inflation, grow the economy and reduce debt. We have made progress on all three of these. So, what the Prime Minister and the Chancellor had already created to give us a meaningful “What we’ve got” was the springboard for the next step of doing what we can, which, in reality, has translated much more excitingly into “Look at what we can do!” I find this invigorating, and I could not disagree more with the noble Lord, Lord Howarth.
So, we have a serious approach to keeping inflation falling, a consistent resolve to reduce debt, and a coherent and credible approach to economic growth, building on positive progress through a laser focus on higher productivity. One hundred and ten growth measures in the Autumn Statement, boosting business investment by £20 billion a year—that is what I wanted to hear; but then rightly recognising how searing the cost of living has been, particularly for those most vulnerable and on the lowest incomes. They will benefit from our approach to universal credit and other benefits, 1.6 million households will be helped with rent, and we have honoured the triple lock for pensioners in full. For this Conservative, the Autumn Statement has delivered not just for the moment, but for the future and for the country. It is part of a journey.
Interestingly, the political challenge this poses to the Opposition is already clear. The shadow Chancellor can try to dissect the Autumn Statement in the abstract, but that approach is not credible or rooted in reality. When she embraces the reality, she is confronted by three demons. Demon 1 is a persistent Labour record of economic mismanagement whenever it has been in government. Demon 2 is that the shadow Chancellor says she will do it differently and control inflation, but with no mention of how. Instead, she is going to increase borrowing by £28 billion a year. That is bad news for the economy, flinging petrol on inflation. We need neither and the public will work that out.
Demon 3 really has got pointy ears and big horns, but she has to agree that the Conservatives are taking the correct decisions, so she cannot disagree with much in the Autumn Statement. This poses a lethal question for the shadow Chancellor: what is the point of Labour? This is a question that others may have asked in the past, but I expect more voters to be asking it in the future.
In conclusion, I know the point of being a Conservative. I shall fight the next election as a Conservative and, based on the Autumn Statement, I look forward to winning that election as a Conservative.