Budget Statement

Lord Eatwell Excerpts

Friday 12th March 2021 Lords Chamber

[Lord Eatwell (Lab)]

My Lords, in these very uncertain times, it is inevitable that some of the Budget measures will prove an unexpected success and some an unexpected failure. So, instead of dealing with detail, I will focus on the inspiration and what the Budget tells us about the Chancellor’s thinking—his economic philosophy, if you like.

Fortunately, that philosophy is summed up in the Budget speech:

“The only reason we have been able to respond as boldly as we have to covid is because 10 years of Conservative Governments painstakingly rebuilt our fiscal resilience.”—[Official Report, Commons, 3/3/21; col. 255.]


Note that he said: “The only reason”. For the Chancellor, the prime objective of government policy must be fiscal resilience—the heartbeat of austerity. There was no mention of the impact of those 10 years on public services desperately understaffed as the pandemic hit, no mention of the lack of 35,000 nurses in the NHS—indeed, no mention of the NHS at all—and no mention of the fact that we entered the pandemic with a little over six intensive care unit beds per 100,000 population, compared with double that number in France and Italy and five times that number in Germany.

For the Chancellor, fiscal resilience is paramount and the unique determinant of economic success. Hence the grandstanding on future tax rises in the Budget. For the future is to be dominated not solely by higher taxation but by cuts in government spending on top of the cuts already announced in the autumn. These are deemed necessary to pay off the debt. Overall, it is deflation in excess of £30 billion a year—year after year. How well founded is the Chancellor’s assertion that austerity is

“The only reason we have been able to respond”?


As is evident from the OBR report, the increase in government spending to counter the pandemic was funded almost entirely by the Bank of England. Does anyone really believe that the Bank would have refused to fund the increase?

Is the Chancellor right to suggest that fiscal resilience should be his principal objective, or is his obsession distorting the Government’s entire approach to economic policy? Let us be clear: the prime objective of government economic policy should be the management of demand for the nation’s real resources, labour and productive capacity. The Government should set fiscal policy to ensure the very best use of resources today and development of resources for the future. If this involves more debt, then that is the best economic decision; if it involves more taxation, then that is the best decision. The role of taxation is not to pay off the debt but to be part of a balanced programme of fiscal and monetary policy to stimulate the real output needed for the achievement of the Government’s goals: health, education, defence of the realm, decent living standards, tackling climate change and so on.

Of course, the mixture of taxation, spending and debt decrease or increase may have other consequences that must be taken into account. For example, the OBR demonstrates that quantitative easing has lowered the maturity of UK debt, making it more interest rate-sensitive. That is serious. There may be other effects in the money markets. For example, holders of government bonds may come to believe that current policy will increase inflation. It does not matter whether the belief is true or false; if the result is that they sell off bonds, interest rates will tend to rise. Given his important responsibility of managing expectations, there is market danger in the Chancellor’s suggestion that fiscal resilience should be the paramount goal.

If, instead, we view the Budget through the lens of a programme of monetary and fiscal policy that secures the highest real output, some key consequences emerge. In a speech last week, the Governor of the Bank of England defined the ideal post-pandemic economic policy: the cost of the Covid shock

“has to be managed, and it will be easier to do that with a higher trend rate of growth, boosted by stronger investment.”

Have the Government provided a plan for stronger investment? The approach in the Budget is best characterised as, “There’s a problem, so throw money at it and hope it works. There’s a lack of investment, so throw money at super deduction for two years.” The result is spelled out by the OBR: long-term investment will not be increased, just shifted around. There will be a two-year boost to take advantage of the subsidy, then a decline. For companies to invest, they do not need super deductions; they need the prospect of growing demand for their products. What does this Budget offer them? Miserable rates of demand growth: 1.5% in 2023, 1.6% in 2024 and 1.7% in 2025—no long-term strategy for investment.

Similarly, there is a housing crisis. Let us throw money at it in the form of stamp duty holidays and a mortgage guarantee. The result? Sharply rising house prices and a few more houses. Has the Chancellor not noticed that house prices have risen by 8.5% in the midst of the worst recession of modern times? There is no long-term strategy for housing.

So, where is the plan for investment? Well, there is what I can only describe as a PR brochure, Build Back Better: Our Plan for Growth, published by the Treasury. It is full of wonderful, glossy photographs and a lucky dip of proposals on infrastructure, skills, innovation and the environment, but the photos fail to disguise the fact that there is no unifying framework, a complete absence of any plan for implementation or monitoring, no institutional oversight and no evidence of consultation —nothing to encourage the commitment of private investment, and no strategic thinking for an investment decade. How could there be when fiscal resilience and spending cuts have to come first?

The pandemic has imposed a massive cost on the British economy, the real cost of lost output, lost jobs, furloughed idleness and collapsed businesses, the highest death rate in the G7 and the biggest fall in production. But there is an economic opportunity. New thinking can define a break from the policies of the past 10 miserable years. Just as, after the war, Britain built a better society, we can build a new economy and a new society now, but only if monetary and fiscal policy are the servants of a building programme; not if, as for the Chancellor, the real economy is to be squeezed in the service of outdated fiscal orthodoxy.

Financial Services Bill

Lord Eatwell Excerpts

Committee stage & Lords Hansard
Wednesday 3rd March 2021 Grand Committee

Moved by

[Lord Eatwell]

49: After Clause 30, insert the following new Clause—
“Review of penalties for insider dealing and financial services offences
(1) Within six months of the day on which this Act is passed, the Treasury must commission a review of penalties for insider dealing and financial services offences (“market abuse”).(2) The review under subsection (1) must include statistics relating to—(a) the perceived level of market abuse,(b) the number of arrests for market abuse, and(c) the number of successful convictions for market abusein each of the last five financial years.(3) The review under subsection (1) must also contain a summary of steps being taken by Her Majesty’s Government to ensure market abuse offences are identified and punished. (4) Within one month of the review under subsection (1) being completed, the Treasury must—(a) lay the document before both Houses of Parliament, and(b) make a statement responding to the review, including a declaration of whether and how the Treasury will act to—(i) increase the resources available to those charged with investigating market abuse,(ii) modernise and reform the United Kingdom’s suspicious activity reporting regime, and(iii) ensure greater consistency in the intensity of supervision across different parts of the financial services sector.(5) After the requirements under subsection (4) have been met, the Treasury may by regulations enact such reforms of market abuse provisions that are identified in the review.(6) Regulations under this section are subject to the affirmative procedure.”Member’s explanatory statement
This probing amendment seeks to understand what steps the Government is taking to improve identification and punishment of market abuse. It asks for the Treasury to outline proposals for enacting recommendations from a 2018 evaluation by the Financial Action Task Force, the global money laundering and terrorist financing watchdog.

[Lord Eatwell (Lab)]

My Lords, we now come to the section of the Bill that introduces measures to deter financial crime, whether insider dealing or money laundering. None of us in this Grand Committee can be content with this country’s attempts to limit financial crime. Headlines that cry that London is the “money laundering capital of the world” may embody journalistic exaggeration, but, sadly, they are not that exaggerated.

I will first speak to Amendment 50 in my name and then turn to Amendment 49 in the names of the noble Lord, Lord Tunnicliffe, and myself. I admit that Amendment 50 is constructed in a rather peculiar way, and I am grateful to the clerks for that ingenuity and for allowing me to make what I believe to be an important point concerning money laundering legislation.

The measures in Clause 31, to which Amendment 50 refers, derive from the EU fifth money laundering directive and the UK response to the examination of UK anti-money laundering measures by the Financial Action Task Force. An important outcome of the FATF examination was Her Majesty’s Government at last announcing measures to deal with the scandal of Companies House.

One of the political puzzles of the past 10 years is that Conservative Prime Ministers have regularly referred to the register maintained by Companies House as a gold standard, a beacon of openness and an example to the rest of the world. In fact, the manner in which the register is constructed is the key element in those headlines that describe London as the money laundering capital of the world.

The scandal derives from the fact that Companies House does not verify the beneficial ownership of companies registered there. Companies House is a library in which any shameful book can be deposited. There are so many shameful books that have been deposited, and that is a matter of record. Just to take a couple of the more colourful examples, the Mafia managed to set up one UK firm with a director named as Ottavio Il Ladro di Galline—Ottavio the chicken thief. His occupation was listed in Companies House as truffatore—fraudster. Another company had an address that translated as “Street of the 40 Thieves”. At the moment, the Companies House register includes almost 4.5 million UK businesses, but it operates in much the same way as it did 150 years ago. That means that criminals have been able to set up seemingly legitimate shell companies without even the most basic identity checks.

Consider the case of Mr Kevin Brewer. A few years ago, he launched a campaign to expose how easy it is to fake British company records. He decided in 2013 to register government Ministers, including Vince Cable—the then Business Secretary—and the noble Baroness, Lady Neville-Rolfe, as the directors and shareholders of fictitious companies. The idea was to prove how anyone could form a company in the UK in any name or address that they wished. He used an online service offered by—you guessed it—Companies House. He then owned up. As a result, he was prosecuted by Companies House and fined £12,000. The Government issued a triumphant press release, which is still available on the government website, headlined:

“UK’s ‘first ever’ successful prosecution for false company information”.

It is the only prosecution in 150 years.

A study published by Transparency International in November reported that British shell companies were implicated in nearly £80 billion of money laundering scandals. On top of that, the anti-corruption group Global Witness reported in 2019 that more than 336,000 companies did not disclose their beneficial owner. It also found that more than 2,000 company owners were actually disqualified directors—people who had previously failed to meet their legal responsibilities and were banned from directorships in the future. A further study by, among others, my colleague, Professor Sharman of Cambridge University, found that it was impossible to establish a shell company in the Cayman Islands, the Bahamas or Jersey but it was easy to do it in London.

It should be clear that an open register, as we have in the UK, is no protection against financial crooks. Protection is provided only by verification and regular reverification of beneficial ownership by skilled forensic accountants. At last, in September of last year, under continuing pressure from the Financial Action Task Force, the Government published a document entitled Corporate Transparency and Register Reform. The Minister, the noble Lord, Lord Callanan, wrote in his foreword to the document that Companies House procedures, or lack of them, resulted in,

“Shell companies … set up for no other purpose than to launder the proceeds of crime – committed both here and overseas.”

The noble Lord, Lord Callanan, recommended verification of company data. However, the document contained an ominous sentence:

“This document sets out the actions the Government intends to take in response, subject to funding being agreed”.


Amendment 50 would simply require the Government to keep Parliament up to date with what is happening. After all, this is the biggest money laundering scandal to which the UK has been subject. When will this country acquire an honest register? How much funding has been agreed? Is it enough? When will the entire Companies House register—the whole register—be fully verified? I hope that the Minister will be able to tell the Grand Committee that initial funding has already been agreed, that future funding will be forthcoming and, to ensure that the momentum is sustained, that the Government will be happy to accept this amendment and report regularly to Parliament on the progress towards a fully verified register of beneficial ownership. The Government owe that to everyone who has been betrayed by the lax approach to money laundering.

I now turn to Amendment 49, which takes a wider perspective, seeking a thorough review of Her Majesty’s Government’s efforts to limit insider trading and market abuse, so providing a firm foundation for the measures outlined in Clauses 29 and 30 of the Bill. The rationale for such a review can be stated in brief as this: what is the point of Clause 30; what is the point of increasing the penalties if there are almost no convictions? Hundreds are prosecuted every year for fiddling a few quid from social security; you can count the annual number of prosecutions for crimes in high finance on the fingers of one hand. Consider this comment, published in the Financial Times on 3 November 2019:

“The FCA has previously been accused of taking a light touch approach to white collar crime. A freedom of information request showed the regulator prosecuted just eight cases of insider dealing, securing 12 convictions, between 2013 and 2018.”


There were 12 convictions in five years.

It is not as if there is no financial crime about. Consider this further story, published in the Financial Times on 10 September last year:

“Britain’s financial regulator”—


the FCA—

“is still working on a high volume of investigations into potential wrongdoing by firms and individuals, but delivering a relatively low proportion of clear outcomes at an increasing cost, according to new data.”

The Financial Times continues:

“the Financial Conduct Authority’s annual report provided details of its enforcement actions in the year to March 31 2020, and showed 185 cases were concluded in that period, leaving another 646 ongoing. In the previous year, 189 cases had been closed, leaving 647 open. However, despite this persistently high caseload, only 15 investigations resulted in financial penalties being handed down in the latest 2019-20 period — down on the 16 cases that led to fines in the two previous years.”

So what is going wrong? An important clue is to be found in the section of the 2018 report of the Financial Action Task Force dealing with the substance of UK measures to deal with money laundering and the financing of terrorism. The report states that, with respect to the UK Financial Intelligence Unit, which is the financial division of the National Crime Agency:

“The UK has pursued a deliberate policy decision to limit the role of the UKFIU in undertaking operational and strategic analysis. The UKFIU suffers from a lack of available resources (human and IT) and analytical capability which is a serious concern considering similar issues were raised over a decade ago in the UK’s previous FATF mutual evaluation. The limited role of the UKFIU calls into question the quality of financial intelligence available to investigators.”


Is it not the case that the surest way to deter criminal behaviour is to increase the likelihood that the criminal will be caught? I ask again: what is the point of increasing sentences while, at the same time, reducing the capacity to catch the criminals? When the Minister replies to this debate, will she explain why:

“The UK has pursued a deliberate … decision to limit the role of the UKFIU in undertaking operational and strategic analysis”?


Surely now is the time for a thorough investigation into the Government’s persistent failure to prosecute crime in our financial services industry. Accepting Amendment 49 will be a start. I beg to move.

--- Later in debate ---

[Baroness Penn (Con)]

My Lords, I happily acknowledge that point. The point I was trying to make is that even with that slightly broader definition of the use of financial services, a “failure to prevent” offence for broader economic crime is one that people would want to apply in a broader context. I appreciate that the scope of the Bill defines how amendments may be written, and that takes me back to one of the reasons that my noble and learned friend Lord Garnier predicted I might give for resisting this amendment: that this is not the right Bill for it.

[Lord Eatwell (Lab)]

My Lords, this debate has evidenced considerable concern from all sides of the Grand Committee at the level of financial crime and the apparent inability to tackle it in this country in a consistent manner. I am afraid that the Minister’s reply did not provide any reassurance. Indeed, there seemed to be an enormous amount of long grass in evidence into which various reviews and considerations were being kicked.

Before commenting on the Minister’s reply to my amendment, I shall comment on the amendment by the noble Lord, Lord Holmes, on KYC. I entirely sympathise with his point about a modernised means of identification, but I am afraid he will come up against what seems to be a most peculiar British national aversion to any comprehensive means of identification. Therefore in KYC we rely on documents such as utility bills that were never designed for this purpose. The debate over a vaccine passport is running into the same national aversion. However, I wish him well because he is on the right track in what he is attempting to do.

I was also enormously impressed by the amendments in the name of and the speech made by the noble and learned Lord, Lord Garnier. I cannot understand why the notion of failure to prevent, which he described so clearly that even a non-lawyer such as myself could understand it, can apply to bribery and tax evasion but not to other financial crimes. The Minister did not really address that lacuna in her reply.

Turning to my two amendments, first, the UK’s approach to measures against financial crime is underresourced, scatter-gun and generally ill directed. The evidence is clear in the extraordinarily low number of prosecutions. I therefore feel that there is an urgent need for a major reconsideration of this matter. I hope that the review referred to by the Minister, to be conducted by Her Majesty’s Treasury and the FCA, will produce something concrete and effective—for a change, I must say.

On beneficial ownership, I was amused by the point made by the Minister that, because of the peculiar structure of my amendment, I was somehow letting the private sector off the hook. That was not my intention, of course; it was about the necessity of getting the argument in the Bill. However, I was really disappointed to hear her repeat the discredited support for Britain’s so-called wonderful public beneficial ownership open register. This public register is inaccurate, misleading and shelters criminals, and I am surprised that she is so enthusiastic in her support for it. I hope that the committee that scrutinises financial matters, which we discussed earlier in this Committee, will be able to keep an eye on developments in the prosecution of financial crime and the provision of a proper, verified beneficial ownership register. I hope that it will push these matters forward and not let them disappear into further reviews.

In the meantime, I beg leave to withdraw Amendment 49.

Amendment 49 withdrawn.

Spending Review 2020

Lord Eatwell Excerpts

Thursday 3rd December 2020 Grand Committee

[Lord Eatwell (Lab) [V]]

My Lords, the spending review was a revelation. It revealed how the Chancellor will shape policy over the coming years. The first revelation is found in the Chancellor’s statement that

“our economic emergency has only just begun.”

Mr Sunak spells out the emergency: debt is

“clearly unsustainable over the medium term.”—[Official Report, Commons, 25/11/20; cols. 827-28.]

It is clear that Mr Sunak regards government borrowing, necessary as it may be in the face of the pandemic, as a burden on future generations. This is economic nonsense, and the foundation of the austerity that has done so much damage to Britain.

Of course borrowing will need to be repaid—but to whom? Taxes are raised from British citizens to repay the debt owed to other British citizens. What borrowing and the repayment are all about is the distribution of income: funds being transferred from one group of citizens to another group. Mr Sunak has made clear who he expects the funds to come from. The first in line to pay off the borrowing are the public sector workers whose pay has been frozen.

However, in so far as the Government borrows from foreigners, the borrowing can create a future burden. When funds are repaid, spending power is transferred abroad. That is why the OBR estimate of the increased foreign borrowing associated with Brexit is so worrying. Here lies the second revelation. In his review of the coming economic emergency, Mr Sunak fails to mention Brexit at all. For Mr Sunak, Brexit is the love that dare not speak its name. Yet the OBR makes it clear that the scarring from leaving the European Union with a deal is worse than the long-term scarring by the pandemic. If we leave without a deal, the scarring will be twice as bad. Yet from Mr Sunak, not a word about a policy that will add more to government borrowing in the medium term than will the pandemic. Has there ever been a more irresponsible Chancellor of the Exchequer?

Covid-19: Economy

Lord Eatwell Excerpts

Thursday 4th June 2020 Lords Chamber

Moved by

[Lord Eatwell]

That the Virtual Proceedings do consider (1) the economic lessons learned from the COVID-19 pandemic, and (2) the measures necessary to repair the United Kingdom economy.

The Motion was considered in a Virtual Proceeding via video call.

--- Later in debate ---

[Lord Eatwell (Lab)]

My Lords, to repair the UK economy, we must learn the lessons of the past dreadful months. The new normal cannot be the same as the old normal. We are today enduring the second major economic crisis in 12 years. The global financial crisis of 2008-9 saw UK income fall by 5% in one year, and the government deficit rise by £110 billion. In due course unemployment rose to 8%. This year the Bank of England expects GDP to fall by 14% in one year and the government deficit to rise by £250 billion. Unemployment will soar to 10% or more as the furlough scheme winds down; that is about 3.5 million people unemployed.

In 2008-9, thanks in no small part to the efforts of my noble friend Lord Darling, the financial system was stabilised, the decline in GDP was arrested and by the first half of 2010 the UK economy was growing at an annual rate of a little under 3%. We won the war; but we lost the peace. The coalition Government’s austerity budget of June 2010 killed the recovery stone dead.

The past 10 years have been the worst decade for the economy since the war. Productivity stagnated, real household income barely grew at all, inequality rose inexorably, local government and social services were starved of resources, and persistent underinvestment meant that the NHS had to take on the pandemic in a seriously weakened state. Now we are fighting a battle against Covid-19. Talk of a trade-off between beating the virus and boosting economic recovery is seriously mistaken. Without an effective lockdown or an effective “test and trace” system, the economy will not recover. With ineffective measures and many new cases every day, most people will stay at home. The idea of cash-strapped workers being forced back to work in unhealthy conditions is abhorrent. You cannot restart the economy without having the virus under control.

How, then, do we assess the cost of this disaster? The cost is not the £250 billion increase in the budget deficit. That is the financial consequence of government policy; it is not the economic cost to the British people. The real cost of the shutdown is the loss in real GDP, right now and in the medium-term future. It is the loss of the output of goods and services resulting from people being forced to stay at home, retail and hospitality being forced to close, airlines and factories falling idle, the collapse of companies that are vital parts of the supply chain, and so on.

A fall in output of 14% means that, on average, the income of every man, woman and child will go down by 14%. That is a cut of more than £4,500 in the disposable income of the average family this year. We all know that the cut will not be spread evenly, on average. Unless something is done, even greater costs will be borne by those who, through no fault of their own, have lost their jobs or lost their businesses—everyone whose source of income has disappeared. In these circumstances spending by the Government to sustain demand, support employment and enable firms to survive is not a cost to society at all. If the increase in the national debt reduces the loss of real GDP, that is an economic and social gain. It is not a cost; it is a benefit.

Of course, the Government’s financial measures will not be costless if they in turn have a reverse effect that leads to a reduction in GDP. Given the increase in national debt, the “deficit hawks” will demand a new austerity to pay for it all. They should be ignored. The deficit will fall steadily as production levels are restored. The debt-to-GDP ratio will likewise fall over the years ahead. Further austerity will just add to the terrible cost of the pandemic. Of greater concern is the likelihood of negative feedback from the financial services industry, enforcing bankruptcy, especially on small and medium-sized firms, and further depressing output.

Our financial sector places the highest premium on liquidity—on the ability to get its money back easily. Banking logic will be to foreclose on non-performing loans, forcing viable companies out of business. The measures that have been put in place by the Government to protect industry are a temporary band-aid. The loan schemes are loading up company balance sheets with debt. It is estimated that around half of them will default, deepening the recession. There is no path to recovery that is paved with bankruptcies.

As and when the economy does begin to recover, the Government will be faced with significant fiscal management challenges. It will need to relearn forgotten skills in managing tax-and-spend to secure the largest possible output and the flow of resources to where they are needed most. Carefully sustained demand pressure is needed to provide a profitable platform for reconstruction and recovery, and to leave space for the Bank of England to concentrate on the maintenance of financial stability. We must abandon the pretence that minimal interest rates and quantitative easing stimulate output. Instead, they wreck pension schemes, push up house prices and stimulate the Stock Exchange.

What have we learned about our economy and society in the past four months? We have learned that our NHS is not funded in a sustainable manner so that it can protect us. We have learned that our social care system is neglected, fragmented and underfunded. We have learned that the unemployment and benefits system is unable to safeguard livelihoods when incomes collapse unexpectedly, particularly for those in the gig economy or the self-employed. We have learned that malignant inequality is manifest not only in income, housing, and opportunity, but in death from the virus. We have learned that our system of government and politics fails to produce the co-operation needed to prepare us for the next crisis.

We have also learned the damaging consequences of current economic policies. Governments have steadily removed the regulations and norms that provide protection when the lifeblood of our society is threatened, whether that lifeblood is biological, environmental or economic. In the pursuit of short-term efficiency, we have created a world more easily prone to shocks, but with fewer buffers to cushion those shocks. Pandemics are today not just biological; they are economic and environmental too. In sum, we have learned that our economy and our society are not resilient. Resilience will require a new form of political economy.

Every company manager worth their salt has a disaster recovery plan prepared for his or her firm, but only the state can protect us against the consequences of systemic disasters. We learned that in the 2008 financial crisis, and we are learning it all over again today. We must begin by building resilient social services —notably, but not exclusively, the NHS and social care. That includes restoring the local public health system that has been disabled by the 60% cuts to local authority budgets in the past decade. The Government’s emergency grants cannot re-magic that sort of capacity overnight. No wonder it is proving so difficult to implement an effective test and trace system. Resilient social services will require well-trained, well-paid essential workers. Can the Minister explain why, when Britain was hit by the virus, the NHS was short of 50,000 nurses?

Ensuring a resilient labour force will require short-term and medium-term action. A recent report from the London School of Economics reveals that what it calls the “Covid generation” was already suffering falling real wages, fewer opportunities, and stagnant or declining living standards. Now that the crisis has drastically worsened economic and education inequality, young people are even less likely to climb the income ladder and less likely to fulfil their potential, regardless of their background. Are the Government prepared to introduce a job guarantee scheme for those facing long-term unemployment and catch-up tutoring for disadvantaged youngsters? The Bank of England is the backstop for the financial sector. Will the Minister tell us what will now be the employment backstop for Britain’s youth?

Rebuilding our economy will require a resilient financial system, by which I mean not just stable financial markets but a financial system that does its proper job in funding and supporting industry—supporting the production of the goods and services on which our standard of living depends.

All noble Lords will be painfully aware that the Government’s management of the pandemic compares very poorly with that of Germany. In Germany there have been around 7,500 deaths; in Britain there have been 50,000-plus. The economic comparisons are also disheartening. Similar amounts of government funds were provided in Britain and Germany to support small and medium-sized firms. In Germany the funds flowed readily; in Britain they did not. The reason was the superior German pipeline. The banking system there is accustomed to investing in industry, aided by public institutions. In the UK, the banking system proved once again that it is not up to the job.

What will the Government do to ensure that small and medium-sized industry can invest and grow, confident in the availability of the sustained, resilient financial support it needs? Does the Minister agree that what is needed at all levels of industry is not more debt but more equity? What principles would guide the Government to provide the equity support that British industry, large and small, desperately needs?

Of course, Britain is not alone in facing new economic challenges; the global health emergency is also a global economic emergency. Achieving a resilient Britain demands a resilient international trading system, but world trade is forecast to contract by 34% this year. The pandemic has exposed severe weaknesses in global production and trade, just as the crisis of 2008 exposed severe weaknesses in global financial markets. Countries are turning in on themselves. Facing a hostile United States, the WTO is falling apart, with its director-general resigning a year ahead of time. After the 2008 crisis, a massive international effort, led by Gordon Brown, put in place a regulatory system capable of stabilising international financial markets. How do the Government plan to rebuild Britain’s trading relationships in a more resilient manner?

Finally, we all must recognise that a resilient economy must be a sustainable economy. Just as the pandemic, serious though it is, is but a warning of other potential biological disasters to come, the floods of winter, the heatwaves of summer, the melting of the ice caps and the fires in Australia are but the warnings of environmental disasters to come. We are woefully unprepared. The pandemic is an alarm call—a warning that we must build a more resilient economy. That will not be easy to do or to sustain. Resilience will cost money, and the pressures of competitive markets and short-run economic efficiency will erode our commitment to prepare for the shocks that will occur, at some unknown date in the future.

We must forge a durable public and political consensus behind resilience, otherwise short-term economic priorities and electoral cycles will soon get in the way. As the emergency fades in the memory, the stocks of PPE will again be slowly whittled down, the NHS squeezed again, social care returned to being a national disgrace, local public health officials starved of resource and experts ignored, and inequality will be on the rise. This must not happen again. We must win the war, and this time we must win the peace.

--- Later in debate ---

[Lord Eatwell]

My Lords, I am grateful to all noble Lords who have contributed to this debate. There were so many interesting, albeit short, interventions. I have one major comment, but first, I express concern at the Minister’s use, three times, of the phrase “sustainable public finances”. That sounds very comfortable, but it is the weasel word for austerity. Whenever anyone hears that phrase, the alarm bells should ring.

My general comment is that what many noble Lords looked for was vision—a vision of a resilient economy. In the public sector, that is easy to define. It means building up what the noble Viscount, Lord Chandos, called “redundancies”, meaning the excess capacity to respond to emergencies such as the one that we are suffering at the moment. However, in the private sector, it means a regulatory framework which ensures that private firms sustain the level of capacity which will enable them to respond effectively to major crises. In the financial sector, stress tests are required, and those stress tests test redundancies; they test the capacity to respond to major shocks. We need a wider view of resilience and redundancy—in that specific use of the word—to ensure that in our economic future, we can deal with the major biological, environmental and occasionally economic shocks that will inevitably come.

I thank the Minister for his summing up and look forward to hearing his response to my questions. Thank you.

Motion agreed.