King’s Speech (4th Day)

Baroness Vere of Norbiton Excerpts

Monday 22nd July 2024 Lords Chamber

[Baroness Vere of Norbiton (Con)]

My Lords, as the penultimate speaker, I am well aware that I am all that stands between your Lordships’ House and the person noble Lords really want to hear from: the new Minister, the noble Lord, Lord Livermore. I add my welcome to those of so many others as I pass the torch, and I wish him the very best of luck for the future.

I also welcome the noble Lord, Lord Vallance, and like many will watch with interest his transition to the political side of government. It ain’t easy. But he brings great expertise and experience, and I am sure he will make the transition with aplomb. Last, but certainly not least, I welcome the wise words from my noble friend Lord Petitgas. He brings a deep understanding of the private sector to your Lordships’ House and experience of working at the very highest levels of government. We are enormously fortunate to have him on the Opposition Benches.

Labour put economic growth at the heart of its election campaign as a means of funding many of its promises, alongside a siren call for change. The sheer weight of legislation signalled in the gracious Speech certainly signals significant changes to come. But all change, good or bad, creates disruption and adds friction, and disruption and friction will inevitably be a drag on economic growth.

Change needs to be done carefully, following consultation, and preferably signalled far in advance. So I will be looking carefully at two things: have the new Government consulted stakeholders sufficiently before tabling primary or secondary legislation in your Lordships’ House, and have they considered the impact of proposed changes on economic growth and signalled any trade-offs publicly?

In addition, the last Conservative Government prioritised economic growth too; it is nothing new. Despite the UK economy being battered by a global pandemic and sideswiped by Putin-boosted energy costs, our actions created an environment in which the economy could recover, and recover it has, much faster than almost all main forecasters predicted.

The previous Government prioritised reducing the tax burden on businesses and working people, reforming the welfare system, increasing the productivity of the state, which has still not recovered to pre-pandemic levels—we must do better—and removing excessive regulation. Looking at Labour’s plans, there are hints of a different future for the UK economy: a more interventionist and managerial approach from government, which will inevitably lead to greater regulation and far more regulatory bodies, with the real possibility of “too much, too quickly”. This approach runs the risk of stifling innovation and raising the costs of doing business, particularly for those agile, high-growth businesses that this country is so good at nurturing.

The new Government’s response may be that they are forced to regulate as they are unable to support the change they want with more investment. To back this up, the new Labour Government have spent the weekend out on the airwaves telling us that there is little public money for investment, that the economy is dire, and that the public finances are apparently way worse than they were expecting.

Let us pause very briefly on public spending. The main estimates, which will come before the Commons later this week, seek to approve over £1,000 billion of government spending for this financial year. This is the inheritance the new Government will have custody over—£1,000 billion a year. It is now their choice how they do their priorities. Will they stop spending where it is no longer value for money? Will they identify efficiencies to improve productivity? It is not the case that any spending must always be additive. Sometimes it is okay to look back at the £1,000 billion we already spent every single year.

On the public finances, according to the director of the independent Institute for Fiscal Studies the books are “wide open” and “fully transparent”. Furthermore, Labour has had access to government departments since well before the election, so it is simply not credible or desirable for a new Government to say, “Things are much worse than we thought” and then seek to renege on promises made to the British people.

I have been slightly sidetracked, because I will briefly go back to the gracious Speech. What is it therein that will encourage economic growth? Much has been made of the new deal for working people, the brainchild of the Deputy Prime Minister—but, slightly confusingly, recently co-opted or adopted by the new Chancellor, and now we understand it has been taken up by the Business Secretary. Can the Minister confirm which department is leading on the legislation? The Trades Union Congress has high expectations for this Bill, calling it the

“biggest upgrade to workers’ rights in a generation”.

For my part, I am not sure quite what to expect, but I have not had the ear of the new Labour Government. However, it was helpful for the noble Lord, Lord Woodley, to add a few upgrades that I had not heard of before, so I am looking forward to more detail about this. Perhaps the Minister could provide some when he winds up.

Whatever the final text of the new deal looks like, I hope that the Government will have completed extensive consultation with businesses and their representatives, the third sector and non-unionised workers—alongside the trade unions, of course. I understand that the Government have committed to introducing the new deal legislation within 100 days of being in office. That is by 13 October. That does not leave much time to consult, consider carefully the responses, and adjust the legal text and associated documents accordingly. Then again, I also hear that the Labour Government are committed to delivering the new deal “in full”, so perhaps the consultation bit will be put to one side. Can the Minister shed any light?

It is possible that these proposals will serve primarily to make businesses, the public sector and the third sector more cautious about who they hire and when, causing downward pressure on employment. Does the Minister agree that it is important that the Government recognise publicly the trade-offs and the consequent drag to economic growth and public sector productivity?

So my quest for a silver bullet for economic growth in gracious Speech continues; I have not found it here. Perhaps a better catalyst for economic growth might be the industrial strategy council trailed in the gracious Speech. I read with interest the “mission-orientated industrial strategy” published in September last year: clean power by 2030, data for public good, caring for the future, and building a more resilient economy. Many of these are intangible and hard to grasp. As my children would say to me, “Mum, these are just vibes”.

What is striking is that there is nothing about economic growth in these missions. Reading the fine print, we are told that growth will result from a “spillover” of innovation from meeting these vibey missions. This is probably not enough to get the OBR, or anyone else, to upgrade their growth forecasts. So can the Minister tell me a bit more about this council? I understand that there will be a group of full-time experts on the council. Have these people been identified, and will they work full time on government pay scales?

The primary remit of the council will be to assess the effectiveness of the Government’s industrial strategy and policy implementation. When will the Government publish an industrial strategy and the detailed policy framework for the council’s scrutiny, or will the council first work on the vibes created by the missions? Given the above, I am not wholly convinced that the council will have much of an impact on economic growth in the short to medium term, so my search continues.

A national wealth fund? That sounds like something that will generate economic growth, except that it seems to be little more than a rebrand of existing government structures. Many noble Lords have talked about what will happen to the UK Investment Bank, and I am not entirely sure about the future of the British Business Bank, but we do know that the Chancellor has suddenly found £7.3 billion to invest in this, despite public finances being unexpectedly poor. She did this without a spending review, without a Budget and with no expert external validation from the OBR—go figure.

But enough of this doomsterism; let us do some boosterism. There are two areas where we can absolutely work together. The first is AI. If wisely implemented, it can offer huge gains in both the private and public sectors. We will watch with great interest and support where we can. We want to retain and build on our global leadership in AI, we want to make sure that we build AI safely and, of course, we want to ensure that it is deployed in a trustworthy fashion. The second area is universities. There is a huge amount that we can do to encourage spinouts from universities.

To conclude, the contents of the gracious Speech expose the disconnect in the Government’s thinking, but there are bits of light that we can certainly take forward. To her credit, the new Chancellor did say that she did not expect to turn things around straight away. In the meantime, I am pleased that the last Conservative Government took a number of key decisions that will boost growth, and I expect us to get full credit for that growth, for a little while at least.