King’s Speech

Lord Mandelson Excerpts

Monday 13th November 2023 Lords Chamber

[Lord Mandelson (Lab)]

My Lords, I will focus on economic growth and the need for investment to achieve this.

Weekend reports suggest that the Government intend to cut business taxes in the Autumn Statement by extending the tax deduction for companies’ investment in IT equipment, plants and machinery. I can see the case for this and for restoring tax relief on companies’ research and development, rather than the mooted cut in inheritance tax. We need to recognise that alongside the hard Brexit that this Government foolishly engineered, long-standing low investment in our economy is a root cause of our dire economic state, which the noble Lord, Lord Bridges, accurately described. Raising levels of public and private investment in the economy will be the central challenge of a Labour Government, if elected. I commend very warmly what my noble friend Lord Livermore had to say on this subject.

Unless we in this country shift from low to even moderate levels of investment by comparison with our competitors, we will simply not get out of the deep economic malaise we are in. I believe that every policy should be judged in this light: does it aid economic growth or not, and is it likely to attract and stimulate additional investment or not?

Where I part company with the Government is in imagining that adjusting tax allowances is anywhere near sufficient to create the stimulus for investment and propulsion that our economy needs. For this, we need a much bigger growth plan, in which the Government play a more active role alongside the private sector; which takes advantage of the new market and business opportunities connected with the energy transition that is under way; which draws on and commercialises key parts of Britain’s science and technology base; and which leverages the underexploited university research and human talent that exists across the UK’s nations and regions.

Science and technology are the lifeblood of the 21st-century economy. They will not only solve our biggest climate and societal problems but, if we successfully unlock our world-class scientists and technologists, build new businesses and supply chains that are the seed corn of our future growth. We are already doing well; but imagine how much more we could achieve if we actually planned for success—not just for one Parliament but spanning two and more, as other successful countries do.

Every aspect of such a plan requires the delivery of higher levels of private investment. It is a generational challenge, but the point is that private capital is mobile; it has options and we are in a global competition to attract it. Other countries are falling over themselves to win that race and, too often, the UK appears on the sidelines, having indeed sidelined itself at times.

We have done great damage to our international reputation through the chaos of the last seven years. I was in the United States last week and I heard this first hand from American investors. I am afraid that, despite all the advantages we have—geography, language, rule of law, our science base, our first-rate business and professional services and many more—our once well-earned renown for quality of government has been replaced by a reputation for policy irrationality, political instability and chaos at the centre of government.

We have to make the UK a competitive place to attract private investment. We are not the biggest economy, and we are going to compete not by writing large cheques but by demonstrating a clear long-term strategy, regulatory stability, clear industrial priorities and a laser-like focus on the total business environment, including our offer on taxation, careful labour market reform and skills.

All this is not going to be easy. There are no quick fixes for the situation we have got ourselves into. We face the most challenging economic circumstances since the 1970s. But, in my view, there is huge opportunity and, I hope, good will available to a future Labour Government who approach these challenges with a mixture of zeal, focus and good sense.