Autumn Statement

Lord Stevens of Ludgate Excerpts

Thursday 4th December 2014 Lords Chamber

[Lord Stevens of Ludgate (UKIP)]

My Lords, I congratulate the noble Lord, Lord Rose, on his excellent speech. The noble Lord, Lord Palumbo, has hit the nail exactly on the head. The figures that he mentioned are completely ignored in most debates on economics and yet, in my view, they will come to haunt future generations.

We all know that the Government inherited an economic disaster caused by a previous Government who consistently, in their later years, ran a budget deficit when a surplus was appropriate, and boasted about economic growth that was partly financed by debt—the same trap that this Government are in. The last Government increased the money supply and oversaw—or did not—poor regulation. The bankers—or, should I say, gamblers?—took over the casino. They should have known better, bearing in mind the absurd salaries and bonuses they received. Sadly as we know, some of their illegal practices have continued for far too long. This must be cleaned up.

However, after four and a half years, we cannot go on blaming the last lot. Where are we now? The Government tell us that we have the fastest growth rate of any of the 28 countries in the EU. Well done for that. However, we also have the second largest budget deficit as a percentage of GDP of any country apart from Greece. We have, therefore, one of the fastest growing rates of national debt of any country in the EU, nearly doubling under this Government. How often do we hear that from the Government? If you spend £110 for every £100 you take in tax, you would expect the economy to grow. If it did not, you would really have a problem.

The Government, in my view, should have cut spending when they came to power. Instead, even on their own forecast, spending increases year on year. Spending is up this year by more than 2%. In Ireland, it is down 30% since its peak, and in Spain, Portugal and Greece by 7%, 8% and 16%. Admittedly, their debt-to-GDP ratios have increased because their economies have contracted. I am not advocating cuts on that scale but it shows that cuts, although very painful, can be achieved.

What did the Government do? They raised VAT and slashed government infrastructure spending. Surely a more effective approach would have been to cut current spending—welfare, for example, where benefits were initially linked to relatively high rates of inflation. Interest on the national debt costs £55 billion a year. The Chancellor congratulates himself on low interest rates, helped perhaps by quantitative easing; the unravelling of that is another story. What happens when rates rise, as they surely must?

However, at least we are not getting the talk of the “end of boom and bust”. There is good news—a large increase in small business start-ups and a big rise in self-employment—but only now are the Government starting to get a grip on benefits, which is not helped by vast and uncontrolled immigration, imposing huge strains on health, education and social services, holding down wages and, therefore, income tax receipts. It is a failure of this Government to control expenditure, immigration and many basic items of housekeeping, which is concerning. Costs can always be cut. Only now do we have proposals to stop those receiving redundancy payments being re-employed with no redress. This is basic housekeeping. I wrote about this to the Prime Minister four years ago; where is the implementation? Then we had the proposal to pass a law on balanced budgets—presumably to embarrass the Opposition. It is just a gimmick, as we all know; one Government cannot bind the hands of another. We cut our Regular Forces when world conflicts and terrorism are on the rise. Surely the saving of just over £2 billion would be better achieved by a cut in overseas aid.

However, much has been achieved—but sadly still not enough—to simplify the tax system. Noble Lords should look at the book I have here on claiming benefits. Written by the Child Poverty Action Group, it contains nearly 2,000 pages. Where is the simplification there? Disappointing as it is incurring debt to finance growth, the Government’s Statement is better than the Labour Party’s alternative, which is spend, tax and spend.