Economy: Growth

Lord Davies of Oldham Excerpts

Thursday 31st March 2011 Lords Chamber

[Lord Davies of Oldham]

My Lords, it is a delight to follow that constructive contribution from the noble Lord, Lord Mawson. It was partially trailed by my noble friend Lord Layard, who indicated this aspect of social capital is something to which the Government should pay attention with the concept of the big society. I hope that the Minister will address himself to that point. Of course, these contributions are a reflection of the fact that we all owe an enormous debt to my noble friend Lord Hollick for choosing this as a subject for debate today. It has given the House an opportunity to be constructive and thoughtful about positions for the future in circumstances where we all appreciate that the country faces tough times ahead. It is important that we are able to chart the routes to the future which promote the well-being of our society. Typically, my noble friend Lord Hollick indicated in his speech potential areas of entrepreneurial growth to which I hope the Minister will respond.

Also in the debate, we had five maiden speeches in which all noble Lords rose to a significant challenge today. They had to express, as we all feel, the privilege of being Members of this House and of having the opportunity to address your Lordships. They wanted to make sure that they made their constructive contributions to this serious and important debate today, and they had to do all that in four minutes. I hope that the House will be more generous to all those noble Lords in future when they make their contributions, but I congratulate them all today on the way in which they presented themselves to the House. We all look forward to hearing from them in the very near future; at greater length, I hope.

As my noble friend Lord Haskel indicated, this is the third economic debate we have had on successive Thursdays. In past weeks, we have somewhat aired our differences of perspective on economic policy. An element of that inevitably underpinned this debate. It was brought to the fore by the noble Lord, Lord Skidelsky, and supported by my noble friend Lord McFall who indicated another perspective that is different from the Government’s—a perspective showing that the Government are taking great risks with the economy and the welfare of our society. Her Majesty's Opposition have been articulate in identifying an alternative route, of which the outstanding feature is that the Government are bent on reducing the deficit within the minimum period of time—a single Parliament. In doing so, they are asking the country to be subjected to cuts that will affect the well-being of large sections of the community. But those cuts also affect the growth potential of the economy.

In this debate, noble Lords have identified where these cuts may do harm to the important, long-term economic development aspects of public investment. I know that the Government stress only the private at the present time. None of us doubts the importance of the private sector in terms of growth, but one cannot set at nought the public sector. Nor can one cut it without engaging on a strategy of some risk.

As a number of noble Lords identified, our education sector will be under great pressure. Our universities will be significantly starved of public resources and will have to depend on the free market in terms of the response of students. We do not know whether that will lead to a reduction in resources for the universities because students are unable or unwilling to pay, and we do not know the impact on recruitment. However, we do know that when these reductions take place the impact on research in our country, and on the development of a great deal of the fundamental basis on which creative activities can take place in the economy, may be seriously hurt.

In particular, it seems that we are the only country engaged on cutting the science budget, while all other countries regard it as an essential investment. We have a significant contribution to make in science and have a prime position in terms of our world role. However, we must be careful about the danger of losing that position as a result of the Government’s strategy.

It was indicated in the debate that we should not underestimate the creative sector, which is an important growth area of our economy. It was referred to by my noble friend Lord Kestenbaum. Creative activity and the genius of British people, which is translated into effective and constructive activity in the media and the whole world of the creative arts, is a growing part of our economy not to be underestimated. It is now approaching 10 per cent of the economy. It depends on training, essential skills and the colleges providing skilled manpower.

As my noble friend Lord Layard emphasised, whatever the difficulties with regard to higher education, we should be extremely concerned that this continues to be a society that undertrains and undereducates a substantial section of the population. That is why the Government’s contribution with regard to the modest number of places in apprenticeships and training schemes is a minute dimension of the need that is required to ensure that we have a population sufficiently skilled to make a contribution to our society and earn their living in this world. Cutbacks in that sector—and colleges are suffering very substantial cutbacks—and the loss of the guarantee to which my noble friend Lord Layard made reference is a very serious blow.

Another dimension of this, our transport infrastructure, was introduced by my noble friend Lord Soley and the noble Lord, Lord Birt. I give due credit to the Government with regard to rail investment and the fact that crucial areas of it are being sustained. But my noble friend Lord Soley is absolutely right when he says that there does not appear to be a concept of an aviation policy when aviation is bound to play a very significant role in the economy. The noble Lord, Lord Birt, also, identified our difficulties with regard to road.

Another dimension on which I give the Government credit is the Green Deal. They are continuing policies which the previous Government adumbrated, but we are looking forward to the whole development of house insulation and improvement with regard to conservation of energy in the home. The Government deserve credit for their commitment in that area. But as my noble friend Lady Worthington indicated, it is not so certain that the commitment to the green bank and the whole environment development is so secure.

There are tough times ahead. We all recognise that the nation has got to identify areas of potential growth. But I emphasise this one other dimension, which my noble friend Lord Wood introduced into his all-too-brief speech, when he reflected on the concept of fairness. If we are all in this together, there must be some concept of fairness across society. It will not do that the Government rely upon the failed Project Merlin for their temporising with regard to the banks and their pathetic gestures towards seeing the banks make some reparation and take some responsibility for the disasters of the past, while pursuing policies with regard to social cutbacks which hit so adversely the least well-off in our society.

I am grateful that today we have moved from a position of significant division to one in which there have been some very constructive proposals on growth. I hope the Minister will be able to give us encouragement that he intends to pursue the majority of them.