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.

Budget Statement

Lord Suri Excerpts

Wednesday 23rd March 2016 Grand Committee

[Lord Suri (Con)]

My Lords, I was very impressed with the speech from the noble Baroness, Lady Knight, about her successful career in both Houses. I wish her good luck and a long life. All noble Lords can learn a great lesson from her.

I thank the noble Lord for securing time for this debate. As any businessman will tell you, cutting taxes is one of the best ways of generating growth in small and medium-sized enterprises. I still remember the 1987 Budget from the noble Lord, Lord Lawson, and the positive effect of its tax cuts.

A tax on profits is, in my view, an extremely distorting tax. From the employer paying wages to the profits of a private firm, money is taxed by VAT, income tax, various levies, national insurance, business rates and many other minor taxes. Corporation tax is another unnecessary layer of complexity. Profit is not a dirty word. It allows employers, like me, to invest in more productive capital. It lets me pay wages and take on new staff and cut unemployment. The Chancellor’s consistent cutting of corporation tax is the correct course of action and I can only hope this will continue until the tax shrivels away altogether.

Productivity is another area of concern. Across the rich world, there appears to be a post-crash trend rate of growth well below what would be expected at this point in the business cycle. The easy gains have been made already and the Government will need to do more to generate rises in productivity. Without this, the rapid acceleration of living standards that we have all enjoyed is in danger of shuddering to a halt. I welcome some of the new measures introduced this time last week.

Academisation has a proven track record in improving the standards of schools. I have been a supporter of the devolution agenda for this very reason; namely, that service users and employees often know better than service providers. Allowing headmasters to hire staff and set pay scales is far better than using local authorities. Combined with an extra hour at school, I hope that this will provide employers with a better educated workforce, which is what we need if we are to own the industries of the future, like biotechnology.

I will finish on this point. We have a referendum on the European Union coming up. For all its faults—and there are many that the renegotiation did not address—we must vote to remain. The EU is the biggest single market in the world, with 500 million people to buy our goods and services. Almost half our exports go to the continent. We now have opt-outs from the euro and Schengen. Our European partners have accommodated us to the extreme, and we must appreciate what they have done. It may be the case that we are now the fastest-growing major European economy, but when we joined, we were the sick man of Europe. Times change, and working with allies is the only proven path to achieving success in an ever more globalised world.