Budget Statement

Lord Razzall Excerpts

Monday 4th December 2017 Lords Chamber

[Lord Razzall (LD)]

My Lords, I am sure that all noble Lords would agree on the speech that the Chancellor of the Exchequer wishes that he could have made when he rose to his feet 10 days or so ago. In his dreams, he would have said that world growth is significantly benefiting the UK economy. In his dreams, he would have said that, as a result, company confidence has increased capital investment significantly in the UK. In his dreams, he would have said that there has been an improvement in the skills base driven in part by huge growth in apprenticeships, which is now feeding through to significant growth in productivity. Of course, he would also have said that the strong pound is reducing the inflation rate—and all those factors would be feeding through to stronger tax receipts. Sadly, noble Lords will be aware that quite the opposite is true.

On the basis of the OBR forecasts, which were set out in his Budget speech, productivity is now in the bottom quartile of all our economic competitors. The growth forecast is way below that of our competitors, with the OBR downgrading the 2021 GDP figures by £45 billion by comparison with the 2017 Budget estimates. The OBR indicates that tax receipts by 2021 will be £28 billion less than forecast.

On the Government’s own admission, a number of factors are applying to the British economy. The Government recognise that our workers lack the necessary technical skills. They recognise that infrastructure spend in the UK is not in the top 20 on World Economic Forum ratings and that R&D expenditure at 1% of GDP is below the OECD average of 2.4%, a figure that we are not aiming to reach until 2027. The Government recognise that the number of apprentices is falling. They say that that temporary fall is due to the introduction of the new procedures on the apprenticeship levy. Well, let us hope so.

Of course, there is some good news. Our creative industries are now worth £92 billion to the UK, which shows a 7.6% growth in 2015-16, twice the growth in the rest of the economy. The creative industries sector is probably bigger than our manufacturing sector, as a result. The drop in the exchange rate, as Brexiteers constantly remind us, has helped manufacturing exports—but, of course, the huge increase in import prices as a result of this drop is now starting to hit consumers, who face no real rise in their living standards for years. The Resolution Foundation says that it will see the largest squeeze on living standards for 60 years. As the noble Lord, Lord Tunnicliffe, has indicated, it is the poorest 20% of families who will be hit the hardest by this.

On the plus side, the corollary of poor productivity is a record high level of employment. It seems that, without any deliberate decision, we have sleepwalked into a world of low-paid jobs rather than improvement of skills and spend on R&D and infrastructure.

The Government’s big idea, I suppose, is the industrial strategy. It is a big idea of interventionist sector deals, which Tories traditionally baulk at—but, in this case, they are wilfully imprecise. Maybe the free market needs a strategic nudge from the Government, but a deliberate lack of detail in a chosen four industries— life sciences, construction, artificial intelligence and automotive—is worrying, and the arrangements with Nissan are, of course, still top secret. Nevertheless, we have to praise the industrial strategy. After all, its grandfather was the noble Lord, Lord Mandelson, its father was Vince Cable and its child is Mr Clark, so we cannot object to it across the Floor, but the proof obviously will be in the results.

There can be no doubt that the most challenging issue facing the British economy is Brexit. Without a successful Brexit, the business confidence and investment necessary to maintain our economy will not take place and it will continue to bump along the bottom as measured against all our economic competitors. We all know what industry wants: manufacturers want a tariff-free environment and a frictionless border. There are examples of that within Europe—for example, Sweden and Norway have an allegedly frictionless border. However, everybody knows that it is not entirely perfect. Companies such as the motor car manufacturers and Airbus want to move their components freely across borders in a tariff-free, frictionless environment. The finance industry wants to sell its services across Europe. The creative industries which, as I said, are now probably bigger than the manufacturing industry, want no restrictions on trade within Europe. Everybody wants the continuation of regulatory systems without necessarily establishing new structures employing tens of thousands of civil servants if we attempt to replicate what we have been used to in the European Union.

Time is lacking. The banks have to make key decisions on whether they relocate some of their functions outside the United Kingdom. The car manufactures have to decide where they will source new models and companies such as Airbus have to decide where they will source the next generation of their planes. Therefore, the ball is very strongly in the Government’s court. Those who advocate a hard Brexit must recognise that if we do not have something equivalent to a single market and the customs union, the OBR forecasts are likely to be grossly optimistic.

Ethical and Sustainable Fashion

Lord Razzall Excerpts

Tuesday 19th March 2013 Lords Chamber

[Lord Razzall]

My Lords, it is not possible to overestimate the importance of fashion design in this country. From Stella McCartney to Vivienne Westwood, we are clearly world market leaders. It is also important that we should highlight the importance of ethical fashion, which was brilliantly highlighted in this House by the noble Baroness, Lady Young of Hornsey, and outside it by Livia Firth, who is better known in this field than her famous actor husband.

We all remember the horrors of Primark, which were referred to earlier. It was accused of exploiting third-world employees to produce dresses that it was cheaper to wear once, throw away and replace with another than to dry clean. However, the big companies have begun to catch on. I commend to the noble Lord, Lord Young, and others—I do not know why I picked on him—the Gucci ecologically 100% traceable bag. It is not black but a burgundy brownish red because this is the best vegetable-sourced colour. The leather is sourced from cows reared without causing deforestation and the handle is made from bamboo that grows like a weed. Gucci may sell furs, but this bag is a start.

It is not only major companies that have caught on. The United Kingdom has Brora, which sources ethically produced fibre from the Mongolian goat and turns it into cashmere in Scotland. It also has People Tree, which started in 2001 and is recognised as a pioneer in fair trade and environmentally sustainable fashion. It both provides desirable fashion and works to improve the lives and environment of workers and farmers in developing countries. UK manufacturers do not just provide jobs. Barbour not only makes all its waxed coats in United Kingdom but is a major donor to charity. It has given away £8 million in recent years, including a recent grant of £1 million to Newcastle University for medical research.

What can the Government do? That is the Question put by the noble Baroness. I am not a great believer in government intervention, but if we accept that demand for high-end value manufactured goods made here rather than in China is good for the United Kingdom, the Government could, first, encourage universities to concentrate courses on manufacture rather than just design; secondly, following the reference to Vince Cable, contemplate the creation of manufacturing hubs, or “catapults” to use the jargon, to encourage manufacturing; and, thirdly, in their export drives, promote manufacturers and suppliers of ethically produced clothing that is made here. They could also, as the noble Lord, Lord Stone, indicated, give a lot of money to the initiative of my noble friend Lord Alliance.