Queen’s Speech

Debate between Baroness Noakes and Lord Lea of Crondall

Thursday 5th June 2014 Lords Chamber

[Lord Lea of Crondall (Lab)]

My Lords, after that Panglossian account, I wonder whether the noble Lord who has just spoken was knocking on the same doors as I was a couple of weeks ago. Many Labour politicians who were knocking on doors found a deep sense of insecurity right across the country, apart from in London, where the experience is generally not the same as that of the rest of the country. All the statistics show that—not least the fact that house prices in London are double the rest of the country. The rest of the country more or less moves together.

There is no easy way to fix this, but fix it we must because otherwise we will be left in the position of those people on the continent who remember the 1930s. I remember that when I was on the Bruno Kreisky commission on unemployment in Europe one wise old bird said, “Well if people don’t believe that politicians can do anything about their insecurity in employment, why do we need any politicians?”. That has dangerous implications. I do not want to exaggerate, but the malaise is not unrelated to some of the types of data that we have been hearing about. I will give two examples.

Involuntary temporary and part-time work is growing, but the actual numbers are startling. I was going to say, “Hands up who know that the ONS has shown that these categories of involuntary temporary and part-time work have risen by 66% and 103% respectively since 2008”. A new analysis by the ONS of zero-hour contracts shows the scale of insecure work. There are 1.4 million such contracts—or 2.7 million if the 1.3 million contracts for people who are reported as doing no work over the two-week time period used for the analysis are included.

There is another example of an unjustifiably satisfied gloss being put on the state of our economy at the moment. I pick up the point that arose from a remark by the noble Baroness, Lady Noakes, with whom I always enjoy crossing swords on these occasions. It is true, as she said, that no major advanced economy has grown as fast as we have in the past 12 months. But the explanation for that is very largely that, in the vernacular, if you dig a bigger hole, you have to grow faster to get out of it. I will give you the statistics. If we look at the total position of the British economy and the German economy from the same benchmark starting date of the same quarter of 2008, our position as of April is that we are still two thirds of 1% lower than before we fell off the cliff. We are still below the peak. Germany, from the same benchmark starting date, is now 3.83% higher than before the peak. That is the relevant statistic—not how fast we are growing in one or two quarters at the present time, welcome as that is.

[Baroness Noakes]

I am fascinated by what the noble Lord said. Could he remind noble Lords under which Government the hole was dug?

[Lord Lea of Crondall]

It was Lehman Brothers what dug the hole, if we want to get to that level of sophisticated debate. Gordon Brown was the most courageous statesman in the world in stopping it being even worse than it was. The noble Baroness represents the flash boys in the City and so on as part of the ideal economy, but I would say that it is those people what created the crash. Unless there are any more questions I will proceed.

We had a 7.2% fall from the peak, as I think my noble friend Lord Adonis pointed out.

One party in the coalition Government was the party of Disraeli, who famously referred to one nation. We are losing a sense of one nation and I would like to hear a little more from the Benches opposite about whether they do not think that there is a deep, chronic problem now in talking about one nation. Of course, there are three or four dimensions of it. There is the regional dimension, which I will come to, and top-down, education and social class. We all know that you can measure all the interactions until the cows come home. However, it would be foolish to deny the absolutely extraordinary change in the degree of inequality in this country over the past few years. We have now gone back to before 1945. I am holding up a graph which normally hangs on my wall. It looks like we are climbing Mount Everest, having last seen a similar peak of this ratio before the Second World War. That is not conducive to one nation or to a healthy economy.

I want to talk a little about the structural problem that is reflected in the contrast between the two economies in the United Kingdom: the London economy and the non-London economy. All the figures for the non-London economy of the UK correlate to some extent and show that the London economy is nothing like that of the rest of the UK. A brilliantly argued and well researched report by Deutsche Bank Securities published last November reached the conclusion that,

“there was less correlation in growth patterns between London and the rest of the UK than between the different members of the eurozone”.

It is hard to believe that, but it is pertinent to another point that will immediately become obvious. What are the implications of this? How many people in this House, particularly those on the Benches opposite, which have one or two more Eurosceptics than there are on the Labour Benches, have argued that the economic growth patterns seen in the eurozone mean that it is not possible to have a single monetary policy or any sort of economic governance? Based on that criterion, what if I were to say that we cannot possibly govern the United Kingdom? Would it be said in this House that we cannot possibly govern the United Kingdom?

Energy Bill [HL]

Debate between Baroness Noakes and Lord Lea of Crondall

Tuesday 8th February 2011 Grand Committee

[Lord Lea of Crondall]

I am comparing the price elasticity of home heating with the price elasticity of petrol for your car. That is my main point. It is precisely because people do not generally in this country freeze to death that price elasticity is different.

It is necessary to note that, in practice, the people at the bottom are stopping motoring. There is another statistical problem, or fallacy, built into the ONS statistics. Because they have disappeared from the statistics, it does not look as if the detailed distribution for motorists is as bad as it was. It is rather like saying, “The working class can no longer go to the Costa Brava for their holidays. We do not want that riff-raff going there anyway”. They are out of the statistics and they are out of the motoring statistics. This is another problem with the idea that we can easily use the price mechanism to determine consumption, even though in an ideal world it might be somehow very nice if there was a big reduction in motoring or airline expenditure. As I said in an earlier intervention, the logic is to have the same market externality carbon price, whether it is for aviation or for anything else. But how do you deal with the poverty effects on home heating?

I have three other points. At Second Reading, I used the phrase, “hypothetical hypothecation”, which will not get wider circulation in the bar in Burton upon Trent. We need a statistical picture which would be revealed by hypothetical hypothecation—I will not use the word again I can assure you—but would be quite separate from the actual amount of recycling of revenues within the system to deal with the actual regressiveness.

On the consultative forum, people will ask themselves intuitively, “Where is all this money going?” There is an extent to which we want to say that it is obvious how we are going to spend it. My noble friend Lord Prescott always used to say, “It doesn't matter if someone is charging £50 to drive 100 yards down Piccadilly in a Rolls-Royce. You can throw £50 notes out of it and that will satisfy the Rolls-Royce driver”. But Ken Livingstone or somebody like that would put it all into new buses. That is hypothecation. There is implicitly some undercurrent of the need for hypothecation—with a less fancy word—in what we are talking about. We need a statistical picture that would be revealed by hypothecation even though that is separate from the actual amount of recycling of revenues.

Finally, on fiscal arithmetic, there is a price floor for carbon, which is currently £15 per tonne. The power industry argues that the price needs to be about £35 a tonne to provide a viable return and the noble Lord, Lord Stern, for his part, is in a different fantasyland with an assumption of £75 a tonne at 2010 prices to make his scheme work.

Putting all that together, we have to take a crack at what I am saying in my first amendment so that there is no doubt that we have an agreed statistical basis. Who is going to agree it? That is the second amendment. A consultative body, I might be told by the noble Lord, Lord Marland, is not going to be flavour of the month with a coalition Government who is scrapping public bodies right, left and centre. However, I will make a practical point that even the Government’s own philosophy on the Public Bodies Bill is that it is not supposed to be the slaughter of the innocents. It is supposed to be ostensibly the slaughter of those who are not fit for purpose. I radically disagree with some of the conclusions that they make about that, but fit for purpose this would be. It would have a very clear purpose to get agreement, understanding and therefore some ownership of buy-in on behalf of their constituents—in every sense of that word—and all the different stakeholders in the country.

We have got to a point where this will literally begin to make sense in the bar in Burton upon Trent. It is those people who will complain about the price of heating, petrol, congestion taxes, parking taxes or whatever. This is where the regressiveness issue provides a bridge with the consultative stakeholder forum I referred to on Amendment 37B.

I should leave it there. I thank the noble Lord, Lord Marland, for his co-operation in getting some of these statistics sorted out with the department and the Treasury. I beg to move.

[Baroness Noakes]

My Lords, I rise to support the principle behind the amendment of the noble Lord, Lord Lea of Crondall. I am not sure that the wording is easy to follow because it starts with the term “fiscal instruments”. The noble Lord went on to talk about a lot of the things that are leading to increased energy prices. He referred to the document put out by the department last summer showing the impact of policies on prices. Most things that have an impact on prices are not fiscal instruments in the way that you would customarily describe them in the sense of specific moneys going in or out of the Treasury. They are items that are borne by the energy companies and passed on to consumers. At the heart of what the noble Lord, Lord Lea of Crondall, was talking about is an important issue: there is a complete lack of transparency on the impact of the Government’s various energy policies and the way in which they impose costs on the energy sector, which are in consequence passed on to consumers. It is important that we have greater transparency.