Budget Statement

Lord Risby Excerpts

Wednesday 3rd November 2021 Grand Committee

[Lord Risby (Con)]

My Lords, I applaud the right reverend Prelate on her valedictory speech, which I thought was a wonderful combination of common sense and compassion.

A year ago, perhaps the only way to have had any forecasting credibility regarding the environment for the recent Budget would have been to say nothing at all. Nobody could possibly have forecast such a rapid economic rebound, with labour shortages, rising wages and inflation, higher property prices and positive stock market valuations, and even some recovery in the pound sterling. It is all precisely the reverse of what every observer and commentator expected.

There are now clear Budget pointers to try to create a more enduring economic base. Historically, this has been best understood in Europe by Germany, which since the 19th century has had a sophisticated and innovative training base that has substantially avoided the technical and vocational divide with universities that has existed here. The lifetime skills guarantee put in place last year will upgrade vocational and technical education. Upskilling our workforce is essential in diminishing our poor productivity performance, and now there is additional action with new, focused investment in apprenticeships and traineeships in this Budget.

It is to be regretted that we have some of the world’s finest educational institutions juxtaposed against millions of our fellow citizens who deserve and need more life opportunities. In this spirit, I particularly welcome the Multiply programme to improve basic mathematic skills.

It is perfectly true that despite overall real-terms spending increases over 10 years pre-pandemic, there were sectors in our country which were put under constraint and pressure, but we mercifully entered the Covid pandemic with our finances in near balance, and we can be grateful that this was the case—otherwise the comprehensive, considerable support by the Government during the pandemic would simply have been impossible.

I note the new fiscal rules which have been introduced in this Budget in an attempt to give assurances and to restrain any excessive public spending and the national debt by stipulating limits, as in the Charter for Budget Responsibility. Some of your Lordships may be sceptical about these sorts of objectives. I recall that a previous Chancellor introduced something called “golden rules”, which were in practice far from golden. However, there is a clear and necessary intention that underlying UK debt will be falling by the third year of the forecast period. Of course, rising interest rates and anaemic world or domestic economic activity could undermine this objective, but it makes absolutely clear that this will be, and has to be, a period of spending restraint which, we hope, can begin to assist in reducing our now high tax levels.

If we were to make some obvious observations about the structure of our economy, we would point to the dominance of our service sector, especially financial services, and our overall weak relative export performance historically. During the pandemic, the British economy suffered because of its overdependence on the service sector. The simple truth is that many countries are reluctant to open up foreign investment and activity by banks and insurance companies, for which we have particular expertise.

The noble Lord, Lord Fox, referred to the importance of the consumer, but the United Kingdom has had an economy disproportionately propelled by domestic consumption rather than exports overall. This calls for a change, and this is now being recognised. For a number of years, as one of the Prime Minister’s trade envoys, I have witnessed a transformation of our export efforts. This is critical and should involve no party-political divide. Today, UK Export Finance is successfully financing exports and even provides money for companies abroad to get financing as long as they purchase British goods and services. Happily, there is now much greater structural coherence with overseas aid and development in the Foreign Office and the success of our embassies in many countries in working with chambers of commerce. Now it is a sophisticated operation whereby it is easy to access British goods and services with backup and access through the Department for International Trade. Over time, all this will help to rebalance our overall economy. This is surely the lesson of the past two years. I welcome the announcement of an enormous increase in R&D to come and the much needed upgrading of our digital infrastructure to enhance the base for better export performance and to help commercialise our inventive capabilities.

Many of our trade agreements have perforce been continuity agreements, but they are an important start to boost commercial and industrial activities in geographical areas of higher growth. The innovation and entrepreneurship specifically targeted in this Budget, such as the new British business bank and the global Britain investment fund, coupled with a more liberal visa regime to attract more highly qualified people to rapidly growing businesses, indicate the need and seriousness of the commitment to regenerate our economy. My noble friend may wish to elaborate on that.

It is worth noting that for the first time the combined GDP of the Commonwealth, which has so much potential, exceeds that of the EU. If we accede to the CPTPP then this grouping of countries will have an ever greater share of global trade, showing the clearly evolving patterns of global trade and commerce.

Within the inevitable post-pandemic limits of any Budget, the Chancellor has attempted to give continuing support by increasing the national living wage, focusing on upskilling and stimulating new entrepreneurial activity and export promotion—a huge challenge indeed.