Cost of Living: Public Well-being

Lord Monks Excerpts

Thursday 20th October 2022 Lords Chamber

[Lord Monks (Lab)]

My Lords, I thank my noble friend Lady Drake for her characteristic enterprise in securing this debate at this particular time. Not many people will envy the Chancellor of the Exchequer at the moment, as he wrestles with shifting the trajectory of the economy from the feckless spending of his predecessor to what looks like a big bout of painful austerity, with cuts, cuts and more cuts coming our way. As a result of the calamity of the last few weeks, we are poorer, shakier and more feeble. That is bad news for all of us who care deeply for the future of the country. We know from experience who suffers most in periods of austerity, and references have been made to this by previous speakers. We know it is the poor, the old, the young and people who were on the breadline before the crisis and who now face the avalanche of soaring food, housing and energy prices—a devastating prospect. This time it must be the comfortable who step forward and carry the heaviest burdens, not the vulnerable and hard pressed.

For sure, some of the reasons for this are global, as the Government claim. But not all are; some we know are home made. Step forward the team of ignominy—the European Research Group, the Institute of Economic Affairs and the Adam Smith Institute—all of whom have earned a place in the dock for the Truss-Kwarteng calamity. The great irony is that the team of ignominy believed that they were taking back control, as they promised in the EU referendum of 2016. Under their blueprint, we would shake off the EU’s shackles, jettison Brussels’ constraints and become sole masters of our destiny. Yet, “Take back control” was always a delusion and the Government have now been blasted by a reminder that there is no such thing as pure sovereignty. Of course, it was not the EU that dictated a whole new policy direction for our economy; it was the money markets. They have taken back control—not for the first time in British economic history.

The UK has just learned the hard way that it cannot announce £43 billion of unfunded tax cuts as a time of high debt and rising inflation. The markets would not have it and acted brutally to remind the UK of some painful lessons. Many of us across the political spectrum hoped that we had seen the end of post-imperial delusions about the UK as a world power, able to be fully sovereign and free of external constraints. We hoped those days were over. We were wrong; the delusion is alive. It was the underlying principle of the leave campaign in 2016. It was central to the Truss leadership campaign, and it shaped her first few weeks in office. It is a vain dream. Just as Suez made us face our military and diplomatic limitations, so should the Conservative Party stop using nostalgia as its guiding star for the future.

I have three suggestions for the Chancellor on public well-being. First, make sure that the vulnerable and poor do not bear the price of austerity. This is a national crisis, and we need to approach it with the same “all in it together” spirit that we have displayed in previous crises in our history.

The Chancellor could start, for example, by opening discussions with the TUC and following the example of ex-Chancellor Sunak when the furlough scheme was introduced. I think all sides in those talks were surprised by the positive outcome. This would be more practical and useful than introducing yet another anti-trade union law, in the form of the Bill that is to be published. The current Chancellor has taken a fresh perspective on things; he should now attempt to stop this Government smacking the unions. Specifically, the Chancellor should prioritise benefit claimants, particularly those on universal credit, and increase the real value of UC, as was done in the lockdown. That was important then and would be important now. That was a recommendation, by the way, of the Economic Affairs Committee of the House of Lords.

Secondly, the Chancellor should protect our already creaking public services. Whether it is health, social care, education, benefits, the police and justice, prisons or many others, they are all struggling and are ill equipped to cope with a new period of austerity. It is tax that must take the strain to avoid a further deterioration in our public services. The financial burdens must fall on those best placed to pay.

My final suggestion is that, having carried through Brexit—a decision I still bitterly resent, by the way—we must get Brexit done properly by aligning the UK very closely with the EU single market. Our export performance has been woeful since Brexit. Firms, especially small and medium-sized enterprises, have given up trying to export to the EU because of the hassle and red tape involved. The existing treaty is not working, not just in Northern Ireland but between Britain and the EU generally. We need to reset the relationship with the EU and do it quickly. There is much to do, particularly by the rich and comfortable, to help poorer citizens on low pay and benefits, who are more dependent on public services, to get through this crisis. Let there be no more wallowing in past glory. In his Statement in a couple of weeks, the Chancellor must relegate nostalgia to the Last Night of the Proms.