Autumn Statement 2023

Lord Jackson of Peterborough Excerpts

Wednesday 29th November 2023 Lords Chamber

[Lord Jackson of Peterborough (Con)]

My Lords, it would be churlish not to admit that the Government have faced some very difficult headwinds with the Covid pandemic and Ukraine. That is, of course, the economic background to the Autumn Statement. But this Autumn Statement is rather like a Christmas gift from an eccentric aunt—I have really tried to like it, but I just cannot. To paraphrase Walter Mondale in 1984: “Where’s the beef?”

It is very much an incremental Budget and does not seem to have a coherent, long-term narrative. I cannot work out, in fact, if it is the apotheosis or the coda of social and economic liberalism. Yes, there are some good parts—the 110 growth measures, the work capability assessments to get people back into meaningful work, the increase in the national living wage, pension fund reforms and the permanent full expensing of capital allowances—but that is against the background of huge demographic change, low productivity, low growth and a lack of meaningful reform after 13 years in social care, housing, planning, the National Health Service, government and the Civil Service. Of course, stagnant real wages are the largest reduction in living standards since the 1950s—under a Conservative Government.

Indeed, there are other good measures as well, such as the national insurance contribution changes, but even that is a sleight of hand by frozen allowances and fiscal drag. It is actually giving a tax cut via further borrowing, which was deprecated just a year ago when the same people criticised Liz Truss and her Administration. Debt will remain high, at 93% of GDP by 2029. On tax, we will be bringing an extra 4 million people into income tax in that period, and 3 million into the top rate. On public expenditure, our proportion of GDP will still be approximately 43% by 2028-29.

I will just challenge the Minister on a specific issue. The Resolution Foundation maintains that the spending power of unprotected departments, such as the Ministry of Justice and the Home Office, will be cut by 16% in the next five years. I think that is unsustainable for the delivery of public services, and I say that as a Thatcherite Conservative. Just today, the OBR said that there were no public spending plans beyond 2025, and that is a very worrying issue for any Government who are elected. Perhaps the Minister will answer that point later.

Economics is about the efficient allocation of resources, so I will mention three sins of omission and commission when we are talking about tough choices. The first is the triple lock. Paying 8.5% in pensions to people, many of whom have a very high disposable income, and uprating in line with inflation—effectively bribing a cohort with £30 billion—and making a capital transfer of funds from young people to older people is unfair, unsustainable and, frankly, cynical politics. I think that the Chancellor will look at that issue in the Budget in 2024.

I also need to make the point about immigration. We have increased the number of people in England and Wales alone by 3.3 million in the last 11 years. The most damning statistic in the Green Book is that per capita GDP is actually going down this year because we have so many people coming into the country, sharing the admittedly modest increase of 0.6% of GDP. That cannot be right. Immigration is important and is to be supported if you have a plan, but the net immigration figures of 672,000 announced last week are not a plan. The figure in 1997 was 107,000, and even in 2010 it was 294,000.

We must do something about the liberalised international student regime. There has been a 40% increase, to over 200,000, in work visas given to dependants. The definition of skilled work is now meaningless. Even the Labour Party is ridiculing this Conservative Government for the salary threshold policy, which is completely wrong. Yesterday, S&P Global research showed that less than a quarter of those coming to this country in the last year or so have come seeking work. It is an unsustainable position.

I know big business is addicted to cheap foreign labour, but it embeds welfare dependency, destroys social solidarity and cohesion, and is corrosive of democratic legitimacy when you have stood for election saying that you are going to reduce immigration. It kills incentives to train resident workers, to innovate and to improve productivity. If uncontrolled, unmitigated immigration is such a great thing, why is growth so flat and productivity so poor? There is no evidence that the level of immigration is anything other than cost-neutral. Most new migrants, particularly recently, are in fact net recipients of public expenditure and not contributors. They are an overall net fiscal cost. I certainly welcome the prospect of emergency legislation to address these issues urgently, but it may be too little and too late.

Previous speakers have mentioned welfare. Our system is broken. We will be spending £30 billion on universal credit in the next five years—a 40% increase. There will be 3.4 million people on sickness benefits. In 2010, 3,000 people each week were found by work capability assessments to be unable to work. That figure is now more than 35,000 a week; it is an unsustainable position. Demographic change and the triple lock mean that the system is creaking and falling apart.

In conclusion, whatever Government are elected next year, immigration and welfare must be a priority for tough choices to save our economy and public services from being overwhelmed. This Autumn Statement could have been a catalyst for those long-term decisions, and I hope that they will be taken into account in the Budget. It pains me to say that this was a very sad missed opportunity.