Economy: The Growth Plan 2022

Baroness Wheatcroft Excerpts

Monday 10th October 2022 Lords Chamber

[Baroness Wheatcroft (CB)]

My Lords, first I welcome my friend, the noble Baroness, Lady Neville-Rolfe, back to the Front Bench.

The Chancellor was absolutely right when he said that the only way to sustainably raise the living standards of our nation is to confront the challenge of our lifetime: to raise productivity. He was right when he talked of the need to lift skills, improve infrastructure and speed up the planning process. However, that was Chancellor George Osborne in 2015. The Prime Minister and her Chancellor talk about their decision to go for growth as if they have had a unique revelation. On the contrary, successive Governments have talked this talk. The problem has been delivery.

There have been numerous initiatives. George Osborne cut corporation tax and raised the investment allowance, just as Kwasi Kwarteng has done. It did not increase investment levels. He announced the creation of 26 new or extended enterprise zones. The productivity gap remained. Nevertheless, we are now promised dozens of investment areas. Business was not crying out for tax cuts or gimmicky zones. Even the president of the CBI has said that cancelling the planned increase in corporation tax was not a particular demand of his members—albeit that the noble Viscount, Lord Trenchard, was keen on it.

Business needs a skilled workforce and efficient infrastructure; that is the key to bridging the UK’s productivity gap and growing the pie. But our education system ranks only 15th in the OECD’s league table, behind countries such as China and Japan, but also behind Estonia and the Netherlands. Our best schools are brilliant but, through the Peers in Schools initiative, I have been into secondary schools which in the staff room the staff refer to as “secondary moderns”. I have been into a secondary school where the headmaster told me that his first task was not so much educating his pupils as providing them with some stability in their lives. The skilled workforce, on which bridging the productivity gap depends, needs a better education system than the one that we have.

The need for serious infrastructure investment remains. This country has a national productivity investment fund. Its contributions to improving infrastructure include extending passenger waiting areas within Derby bus station and a new pedestrian cycle crossing in Middlesbrough. Competing with modern China or Korea will need a little more than that. Perhaps the Minister could tell me what the national productivity investment fund is doing now.

Business also craves stability. That has certainly not been enhanced in recent weeks. Incentives for long-term investment might help. Some countries enable companies to reward long-term investors with enhanced voting rights. The UK will not countenance that. Business also needs a stable community if it is to flourish. The inequity now evident in our society is threatening that stability.

The mini-Budget fiscal event was crazy. The withdrawal of the 45% tax rate was simply crass, from every point of view. The noble Lord, Lord Frost, in welcoming the growth strategy, invoked the name of the late Lady Thatcher, but that devotee of good housekeeping would never have countenanced the idea of borrowing to fund tax cuts. It took her nine years to reduce the top rate to 40%. Even if this Government have the right recipe to grow the pie, it will take years to bake it.

In the meantime, to get anywhere near that promised plan to bring down debt in the medium term, there will have to be vicious cuts to public spending; or does everything depend on what is written on page 17 of the growth plan:

“The financial services sector will be at the heart of the government’s programme for driving growth across the whole economy”?


A “deregulatory package” will

“unleash the potential of the UK financial services sector.”

Can they have forgotten 2008?