Autumn Statement 2023

Lord O'Neill of Gatley Excerpts

Wednesday 29th November 2023 Lords Chamber

[Lord O'Neill of Gatley (CB)]

My Lords, it also my pleasure to speak in this important debate and, as always, to hear such a vast array of different and generally extremely eloquent opinions, which somewhat intimidates me, despite my role in some of these issues in the past. In that regard, I also welcome the Minister to her new role. Having sat there myself once, I know that it is an interesting challenge.

Reflecting on some of the things that have been said already, I am still stuck in my mind, one week after the Autumn Statement, on aspects of the bizarre gaming that the system has got into. I am not quite sure whether this is what the noble Lord, Lord Dobbs, was reflecting on, but I will come back to that. At the same time, it included a number of measures that really are for economic geeks to wade through, particularly those with real expertise, notwithstanding economics being a miserable or social science. I am not sure if it was 110 measures that I would cite as particularly important. However, they are the ones that can think about the microeconomic issues of some of these so-called supply-side measures.

Indeed, the Chancellor made a point in his speech, and his follow-up media—as referenced by some others—of saying that the OBR had boosted its estimate of the trend rate of growth by an accumulated 0.5% because of the Spring Budget and what he announced last week. By the way, contrary to what the noble Baroness said just said before me, that is pretty miraculous for any country in the world to do if it turned out to be accurate, because long-term growth is driven by the nature of the labour force and its productivity.

However, I will also touch on two other things that have not yet been mentioned at all, I am pleased to say, and in this regard reflect my own current duties—or some of them—as reflected on the register. In my role as chair of the Northern Powerhouse Partnership and being involved in the whole northern powerhouse thing since it started, I really welcome the additional steps to give more mayoral powers to different areas and for a select few—so far—to have potential or theoretical access to the next spending review. I also welcome the news of a devolution deal for Hull and the East Riding after the endless years of struggle to get that through.

Also reflecting my role as chair of Northern Gritstone, the entity that is investing in start-ups coming out of northern universities, I greatly welcome the news of the enhanced powers and role for the patient capital arm of the British Business Bank, in fostering an even greater growth capital culture among our investing institutions—or perhaps a significantly greater culture. I ask the Minister in this regard if the requirement for them to repay a set amount of capital each year has indeed now be removed. If so, this should be of considerable help to giving more genuine aspiration for the BPC.

As touched on, the never-endingly discussed OBR, despite what I have just said, lowered its estimate of trend growth because of some of the underlying issues that cannot go away. However, slightly contrasting to the flavour of the speech by the noble Lord, Lord Dobbs, and almost an analogy with being thrown a favourable VAR decision, the OBR actually decided that things look about £30 billion-plus better than they did in the spring. Of course, in the game that I referred to at the start, this gave the leeway which the Chancellor exploited pretty well. I will not touch on some of the other complications of that, which others have touched on. However, it also means that, come next spring, a VAR decision might go in the opposite way. This would have some very interesting consequences for what would then happen, especially as relates to tax.

I also quickly add that despite the very passionate and often understandable pleas about lower taxes, the UK is the 20th country in the world in GDP per capita. More than half the other countries have considerably higher taxation levels than we do. What matters is how tax is used and how it is spent by the state.

In that regard, let me close with what is increasingly one of my hobbies, if not slight obsessions. I am encouraged by the focus on public sector investment by a number of other speakers. As I have said in this House on many occasions, the UK suffers deeply from poor productivity and low investment spending from both the public and private sectors. In my view, we should use an entity such as the OBR for what it is good at: focusing on things to do with the long-term growth trend and studying truly long-term things. I call for more powers for the OBR to have what it is good at and, in particular, instruction to scorecard regularly and analyse at least 20 of the biggest infra- structure projects that the independent infrastructure commission was set up for. If they turn out not to have multiplier economic benefits and lower debt, they should not happen; but if they do, why on earth are they not happening?