Lord Northbrook (Con)
My Lords, Her Majesty’s gracious Speech is full of good intentions. The first paragraph states that
“Her Majesty’s Government’s priority is to grow and strengthen the economy and help ease the cost of living for families.”
The second paragraph states:
“This will be underpinned by a responsible approach to the public finances, reducing debt while reforming and cutting taxes. Her Majesty’s Ministers will support the Bank of England to return inflation to its target.”
So far, so good. However, the economic situation on the ground is far from satisfactory, with the cost of living crisis continuing to grow and inflation continuing to rise.
More immediate measures are required to tackle these crises. I am not normally in favour of a major tax rise, but, when you see companies such as BP using its surplus funds not to invest in new exploration but instead returning cash to shareholders, it seems right to me to make a one-off levy and use the proceeds to support those most affected by rising energy bills. I also like the idea advanced by the noble Baroness, Lady Kramer, of cutting VAT for a period. I deeply regret the national insurance rise and am nervous about the universal credit change.
Rising food prices are a much more difficult area to tackle. The Ukraine crisis has had a major effect on wheat prices, and the recent news that India is banning wheat exports will add to the problem. The Government’s policy of encouraging land to be taken out of food production seems perverse when we are going to need to be more self-reliant for our food supply. When I moved an amendment to the Agriculture Bill proposing that UK food production should be supported, it was opposed not only by my own party but by Labour. But if we produce more of our own food, we may have better control over some of our food prices.
The issue of inflation is much more complicated, but, like my noble friend Lord Forsyth, I believe that the Bank of England has been asleep at the wheel on it. In September last year, when inflation was already double the Bank’s target, I listened to the governor making an unimpressive speech to the Society of Professional Economists. He said:
“Our view is that the price pressures will be transient”.
On quantitative easing, he asked
“what impact do you get from continuing purchases in market financial conditions, and particularly at a time when inflation is rising as it is?”
He argued that QE should continue
“because we regard the current upturn in inflation as transient, our view on the continuing role of QE is conditioned by our forecast in August that had inflation returning to target within an acceptable period of time.”
Even without the Ukraine crisis, this was a complacent view, and I believe that, even without the benefit of hindsight, QE should have been discontinued before now. As I said in a debate on the Spring Statement, we should have paid more attention to the out-of-control money supply situation.
Moving to Bills proposed, I support the Levelling-up and Regeneration Bill and the reform of the planning system to give residents more involvement in local development—as long as this does not produce a deadlock in any sensible local business planning projects. I also support the establishment of the UK Infrastructure Bank in legislation. This is with the proviso that it does not emulate the British Business Bank’s handling of the disastrous Covid loan scheme. I support the Procurement Bill and agree with the inclusion of measures to simplify public sector procurement to provide new opportunities for small business.
I note with interest the financial services and markets Bill, which the Speech states will
“strengthen the United Kingdom’s financial services industry”.
But how will it ensure that it
“continues to act in the interest of all people and communities”?
I welcome the genetic technology Bill seeking to encourage agricultural and scientific innovation at home. Declaring my interests in the register, I also support its intention to unlock the potential of new technologies to promote sustainable and efficient farming and food production.
Finally, I wish to register my strong objection to the possibility of scrapping the Northern Ireland protocol. Does the Minister not believe that this could lead to a very damaging trade war with the EU, which would be very bad for our economy at such a difficult time?
Are the Government in control of the situation? Like my noble friend Lord Bridges of Headley, I have my concerns. Economic growth is slow, and plans to increase it are vague. A huge burden of debt interest still exists, with a danger of stagflation and wage-price inflation, including the costs of infrastructure projects such as HS2 being out of control. Overall, the Chancellor must urgently take steps to tackle the cost of living crisis.