Economy: The Growth Plan 2022

Lord Birt Excerpts

Monday 10th October 2022 Lords Chamber

[Lord Birt (CB)]

Announcing unfunded tax cuts in the Government’s mini-Budget was all but universally condemned. There was no advance consultation, no leaning on expertise. The Permanent Secretary to the Treasury was summarily fired, the OBR’s offer of a forecast waved away. This appeared a back-of-the-envelope, “we know best” plan.

The immediate consequences of course were dramatic. The Bank of England was selling UK debt one moment and buying it back the next. It had to mount a massive and costly rescue of pension funds. We experienced a rapid rise in interest rates, impacting both individuals and business. The estimates of the future level of government debt ballooned and the cost of financing that debt rose to 4% and is still rising.

The impact of all these factors on redistribution will be chaotic; the full consequences ahead for public services are still unknown. The rationale, of course, was growth, and we all want more growth. The World Bank published a league table of growth rates for the G7 countries from 2008 to 2021. Is Britain in the relegation zone? No. In fact, we are near the top; we are third, behind the United States and Canada, and ahead of Germany, France and the rest—hardly a crisis.

The US is clearly top of the tree with a 1.9% average annual growth rate versus our 1.1% over that period. So, yes, it would be nice to be up there with the US—but how? Where is the analysis: not another back-of-the-envelope plan but a deep and evidenced diagnosis to help us understand what really stands in the way of higher growth in the UK? The notion that stimulating the economy at a time of full employment and high inflation will do the trick sustainably is widely condemned and wide of the mark.

One requirement for growth is clearly investment, yet we have now spooked the markets. Investors have a global perspective: they look for opportunity but will shy away if we fail to offer them reliability and stability too. Beyond that, what can government do?

We know that we have vast labour and skills shortages across the economy: crops unpicked, short-staffed restaurants unable to open on the days they used to, and too few doctors and nurses. I know from my own exposure to the real economy that we are short of many more skills—for example, data scientists, digital marketeers and engineers. The Institution of Engineering and Technology estimates a current shortfall of 200,000 across the economy. We need a massive drive to bring our system of education and skills into line with the UK’s economic needs.

Moreover—I experienced this very strongly myself—modern workers no longer live just down the road. Executives and specialists often fill jobs hundreds of miles from home, travelling huge distances each week to reach their work, crashing locally mid-week. Other workers commute long distances daily, and all travel to and from work unproductively in our crowded country, on the worst road and rail infrastructure in the developed world.

Addressing these and other problems will improve the trend line of UK growth, but problems largely ignored for decades will take decades to put right. The notion that we can suddenly accelerate beyond the US to a sustainable annual growth rate of 2.5% is manifestly unachievable. The sooner the Government come back down to earth and face reality, the better for us all.

Northern Ireland Protocol: Grace Period

Lord Birt Excerpts

Wednesday 10th March 2021 Lords Chamber

[Lord Frost (Con)]

This Government are working extremely hard to ensure the fair and free flow of trade between Great Britain and Northern Ireland. We have provided more than £200 million to support businesses through the trader support service and processed declarations for over 200,000 consignments. Some 34,000 businesses are registered and 98% of declarations are handled within 15 minutes. An EORI number is part of the requirement to trade now that we have left the customs union, but we are doing our utmost to ensure the free flow of trade between Great Britain and Northern Ireland as the protocol requires.

[Lord Birt (CB) [V]]

My Lords, I was heavily exposed to the Troubles across the whole span of my broadcasting career, so I am particularly alert to the delicacy of the current situation in Northern Ireland. The Governments of John Major and Tony Blair invested enormous political capital in resolving the tensions there. Will this Government?

[Lord Frost (Con)]

I thank the noble Lord for his question. Our overriding aim is to protect the peace process in Northern Ireland and the Belfast/Good Friday agreement. That is an avowed and primary purpose of the Northern Ireland protocol. As we implement the protocol in a pragmatic and proportionate way, we do so very mindful of the considerations he has in mind and protecting all aspects of the peace process.

Space Industry

Lord Birt Excerpts

Thursday 4th March 2021 Grand Committee

[Lord Birt (CB) [V]]

My Lords, I declare an interest as, until recently, vice-chair of Eutelsat. LEO—low earth orbit—satellites have high potential. Unlike geostationary satellites, they have low latency and universal reach, enabling instant broadband communication anywhere on the planet. But OneWeb, the LEO player in which the Government recently acquired a stake, has no track record, limited capability and went bust. How will OneWeb compete against other LEO players including Elon Musk, Amazon, China and the EU’s flagship project? How will OneWeb finance the massive rollout needed and acquire the capability to enter markets and reach customers? I ask the Minister: when will the Government finally articulate a long-term vision and plan for OneWeb?

EU-UK Trade and Cooperation Agreement

Lord Birt Excerpts

Friday 8th January 2021 Lords Chamber

[Lord Birt (CB) [V]]

My Lords, in 1945, Clement Attlee seized the moment and created the welfare state. In 1979, Margaret Thatcher rose to the challenge of superinflation, industrial strife and a broken economy.

In 2021, we face equally mighty challenges. As a nation, we are divided as rarely before. The union is under threat not only in Scotland but now, I suspect, with its new and unique status, in Northern Ireland too. Our public services are still depleted from the impact on the public sector of the 2008 financial shock. After a half-century of underinvestment, we have the worst transport infrastructure of any developed economy. We face massive housing shortages in both the public and private sectors. We have skill shortages at every level of the economy, from fruit pickers to roofers to data scientists. Yet the OBR’s November pull-together of the views of external forecasters such as the World Bank, the IMF and the OECD indicated that, with a trade deal of the kind just signed, the UK can expect a long-term reduction in GDP of 4% versus the current trend. Moreover, the pandemic will leave us with a debt mountain to clear, and we face the monumental task of meeting our net-zero goal.

We now need to put Britain back on its feet again. That will need considered, grounded, long-term policies, engagement and consensus building. That will all take a very long time indeed. We are in for a long haul.

Budget: Economic and Fiscal Outlook

Lord Birt Excerpts

Tuesday 5th May 2020 Lords Chamber

[Lord Birt (CB)]

My Lords, a disastrously infectious and pernicious virus has rendered obsolete both March’s Budget and February’s OBR outlook. That is because, as we know, every month that the lockdown continues we are losing around one-third of our GDP—the wealth that together we create, which finances our individual life choices and funds the NHS and every other public service. Without wealth creation, we are destined for public and private impoverishment. Around one-third of our workforce is now furloughed and an estimated 60% of our households have no savings. We cannot borrow for ever—or even for long—to fund the current massive shortfall in government revenues.

We and other western countries were slow to respond to the virus. We need a surer touch in emerging from the lockdown. We must first reduce new cases to low numbers, as Germany and New Zealand have done, and then we need a capability at scale to test, trace and isolate. South Korea—a nation our size—is the exemplar here, experiencing only 250 deaths. All the while, we must maintain a standby capability for fear of a second wave.

In emerging from the lockdown, we must recognise that every business is singular: with a unique mix of suppliers from home and abroad, a unique mix of customers, and a unique offer of products and services. Every business has been affected differently by the lockdown, and every business will have to design its own unique route out, consistent always with a tireless concern for the safety of its staff and customers.

Even then, world markets will be uncertain. China is back at work, but its consumers are not yet spending. The US has 30 million new jobless. This will remain an unsettled world until science can come to our rescue with a treatment or a vaccine. I fear that we will certainly and quite soon need a fresh OBR outlook and a new Budget. But in the meantime, we must do everything we can to put business back on its feet again. Back to work we really must go.