King’s Speech (4th Day)

Lord Birt Excerpts

Monday 22nd July 2024 Lords Chamber

[Lord Birt (CB)]

My Lords, we are at one of the most challenging moments for government in modern times, with high debt and taxation on the one hand and chronic underperformance in every part of the public realm on the other. Unsurprisingly, the public has become exceptionally disaffected, as we have just all witnessed. Turnout for the election was the second lowest since 1885. The share of the vote both for the Conservatives and the SNP almost halved; between them, they lost almost 300 seats. In the most striking sign of protest, Reform went from nowhere to a 15% share. We should not forget that the Lib Dem’s share of the vote barely changed from the 2019 election, or that although Labour gained handsomely in Scotland, there was no increase in its share of the vote in England. This mightily disaffected electorate is indeed hungry for change, yet it is simply impossible for a new Government quickly to put right all that is wrong.

Here lies a great danger: the politics will cry out for plenty of activism and for early signs of progress, but if we are to fix all that is broken, we need to embark in every single area on a long and most carefully considered journey. Of all the myriad issues that confront us, improving economic growth and productivity is by far the most critical, as it is the only way of materially improving both personal prosperity and our failing public services. But we cannot just sloganise about investing in AI and bioscience, vital though they are. We lack, and desperately need, a deep diagnosis of what is holding back the whole of our economy if we are to grow.

We should begin by trying to understand, for instance, why Germany and France have far higher productivity than we do. German workers, for instance, produce 17% more GDP per hour worked than those in the UK. One possible reason for this glaring gap—the noble Lord, Lord Inglewood, touched on it earlier—is the success of Germany’s Mittelstand, or SMEs, which produce a far higher proportion of Germany’s GDP than the UK’s own mid-ranking companies, which, though far less productive, provide 60% of UK jobs and are at the very heart of our working economy. We also need to understand, as the noble Lord, Lord Monks, raised earlier, what is driving our significant regional imbalance. London’s productivity, for instance, is an extraordinary 80% higher than the UK’s as a whole.

There are many other possible factors contributing to the UK’s lower economic performance. First, by common consent—much mentioned today—we take for ever in the UK to do anything where planning permission is needed. This must change. Secondly, the ONS reports that a remarkable 11 million Britons of working age do not have jobs and are therefore not contributing to the economy. Thirdly, our systems for meeting the skill needs of the economy at every level are lamentable; we have 1 million job vacancies and pronounced skill shortages in every sector, in almost all categories of skill. The noble Lord, Lord Mair, earlier emphasised one particular area. Shockingly, nearly 1 million of our young people aged 16 to 24 are not in jobs, education or training, and are not therefore acquiring the skills that our economy so desperately needs—fingers crossed for Skills England.

Fourthly, to echo the right reverend Prelate the Bishop of Leeds and others, we have by far the worst road and rail infrastructure of any major country, underinvested in for over half a century. I hope the new Government will produce a comprehensive long-term plan—many have mentioned this—for effectively travelling within and between our major industrial areas, both by road and by rail. I hope too that Labour will eventually resurrect its original vision for HS2, framed during its previous term in office, noting that, in the meantime, China has created an HSR network of around 40,000 kilometres and Spain one of 4,000 kilometres, while the UK has still not moved past a miserable 109 kilometres of HSR. The noble Baroness, Lady Randerson, will agree with that point, I am sure.

Finally—this is not an exhaustive list—in an act of extraordinary self-harm we have exited one of the world’s big three economic blocs, removing ourselves from a huge single market that we were chiefly instrumental in creating. In the process, we have introduced unwelcome complexity into much of our trading. Goldman Sachs estimated recently that our economy is now 5% poorer as a direct result. Plainly, we must do all we can to optimise the trading relationship with the EU for the benefit of both parties.

In sum, we need to analyse and to address all the many possible causes of our low productivity if we are to grow and to prosper. I hope the Minister will agree.