The Economy

Lord Suri Excerpts

Thursday 28th April 2016 Lords Chamber

[Lord Suri (Con)]

My Lords, many in this place see the role of the Government rather differently than I do. The Government should be the body that stimulates private enterprise, not crowd it out of the business of catering to consumer needs. It is true that borrowing costs are at an all-time low, but this should not be seen as a tempting treat for the Government to reach out and grasp. The reason for this is international uncertainty and high levels of volatility in a number of sectors, particularly commodities. This country is not immune to those risks: as a highly open economy, with trade heading to every continent, we are at the confluence of global economic forces.

Piling up debt might seem to be a good idea, but if we are to weather the next storm, we will need to be prepared. Our debt levels are still extremely high, at about £1.5 trillion, rising to £1.7 trillion by the end of this Parliament. Government, in order to incentivise investment from the private sector, must start implementing major supply-side reforms. I welcome corporation tax cuts, which will help my business grow and take on many more youngsters, and also cuts to capital gains tax. Analysis on both indicates that higher revenues will be flowing into the Exchequer, due to heightened economic activity. There is still more to be done, and some relatively inexpensive tweaks may help to improve productivity, such as the Education Secretary’s plan for academisation. These are all long-term strategies, and the Treasury has indicated that it is looking at these structural reforms. However, I hope that noble Lords will allow me to talk about the most significant risk to our economy and stability in the short term.

The figures released yesterday make for fairly disappointing reading. Growth is still present but has slowed to 0.4%. The economists at the Office for Budget Responsibility have claimed that this is nothing to do with the EU referendum and have put it down to poor productivity, weak exports and falling industrial production. While the economists will have access to far more data and training than I do, I can say that this is not a pattern I see in the real world, away from charts and graphs. The EU referendum is causing real uncertainty to the owners of businesses like mine—no wonder, given that our relationship with the largest export market, to which almost half of our exports go, is in huge doubt. I am old enough to remember the days when we were not in the European Community, as it was then. Transporting things was hard enough, and the tariffs were even worse: to get lorries past borders required kick-backs, although I believe it was called “coffee money”.

The reason I admired Thatcher so much, and the reason I have supported and campaigned for my party for more than four decades, is that she and others understood the value of a completed single market.

I understand that the service providers might quibble over this, but my work is selling goods and I can vouch for how good the single market is, removing tariffs and letting me sell across the continent. If we want to complete it, we must roll up our sleeves and get stuck in, not flounce off saying we tried and failed. Leading from the front is the British way. I hope the slow-down in growth from the mere uncertainty over leaving will help the British public to understand the severe financial repercussions of leaving.

Hard figures may be more useful to the public than the Treasury’s latest report. With almost 200 pages of dense analysis, the algebra was beyond me and, perhaps, many others in this House and the other place, but all credible economic surveys simulating the costs of Brexit show a sizeable loss in national wealth, bargaining power and trade. The leader of the free world agrees with these predictions, as we saw last week, and voters will, I hope, choose heads over hearts.