Economic Growth

Lord Davies of Brixton Excerpts

Thursday 23rd January 2025 Lords Chamber

[Lord Davies of Brixton (Lab)]

My thanks to the noble Lord, Lord Farmer, for initiating this debate, which has been interesting although not always enlightening. I was tempted to talk about pensions, as raised by the noble Baroness, Lady Swinburne, but we will have other opportunities to debate that. I will simply say that it is a lot more complicated than that.

I speak as an unreconstructed Keynesian with a side order of Joan Robinson—I will come back to that in a minute—but, first, it is preposterous for those on the other side to lecture us on the UK’s poor economic performance. They were in power for the last 14 years. As explained by the noble Lord, Lord Desai, who is not in his place, they cannot shift the blame to anyone else. Perhaps the Liberal Democrats could take a little share of the blame, but they may be reformed sinners. They also try to claim that the ups and downs of short-term statistics over the last few weeks is in some form the fault of this Government. Well, to use the tired analogy, it is like the supertanker heading for the rocks. They steered it towards the rocks, we are steering it away and the move is starting.

I mentioned Joan Robinson because I want to quote from a book by the Chancellor, Rachel Reeves, about the women who made modern economics. She states:

“Keynesian economics as developed by Robinson is still relevant for policymakers today, and I would argue that the poor performance of the UK economy since 2010 owes a lot to the failure to heed the lessons of Keynesian economics. When David Cameron and George Osborne became prime minister and chancellor respectively in 2010, they embarked on a programme of austerity that went against everything that Keynes (and Robinson) would have advised”.


Subsequently, she says:

“Welfare spending was cut, public sector wages frozen, departmental budgets for everything except the NHS cut”.


She concludes by pointing out:

“The economic recovery which was picking up steam at the end of 2009 and into 2010 was stopped in its tracks. Economic growth stalled and productivity tumbled”.


That is the record of 14 years of Conservative Government. They come here today and lecture us on the failure of the present Government. Let us see. I hope my noble friend will be able to assure us that we will not be adopting the policies of 2010 from the coalition and that the policies we introduce will achieve the economic growth that we require.

I conclude with a final comment on the contribution from the noble Lord, Lord Agnew—not the substance; I look forward to his joining us on the Economic Affairs Committee and some interesting debates. He said, in effect, that 10,000 millionaires were leaving the UK each year. Well, I have to admit that I am a millionaire. I live in central London. I have a house that is worth more than £1 million. Using the tired old trope of millionaires is meaningless. A vast number of millionaires have been created. I suspect that we are going back to the time of our childhood, when £1 million was a lot of money. It is not any more.