Autumn Statement 2023

Lord Tugendhat Excerpts

Wednesday 29th November 2023 Lords Chamber

[Lord Tugendhat (Con)]

My Lords, like other noble Lords, I welcome my noble friend to her new position, and I am also very pleased at the Chancellor’s decision on full expensing. When he introduced that measure earlier—I cannot remember exactly when—I argued that it would be fully effective only if it was made permanent, and I am delighted that it has been. It is the single best way to encourage capital investment available to him at the present time.

I also welcome the cut in national insurance payments, for precisely the reasons set out by the noble Lord, Lord Macpherson. There is one other thing I welcome very much. As a former chairman of the Imperial College Healthcare NHS Trust, I welcome the Chancellor’s imaginative decision to award it, along with Imperial College, £5 million to establish an Alexander Fleming centre to mark the centenary of the invention of penicillin at St Mary’s Hospital in Paddington. This sort of gesture is modest in financial terms but makes, I think, a big impression on those involved. It is a particularly welcome one on this occasion.

I want to devote my speech mainly to talking about how public expenditure and taxation are discussed in relation to GDP and the implications for policy, whether under this Government or under another. As my noble friend Lord Frost indicated in his speech, it is constantly pointed out that they are at the highest levels since the post-war years, as if this was some sort of historical aberration and a bad thing that needs to be put right —they are in fact not out of line with other similar countries. I believe that the approach epitomised by my noble friend Lord Frost is very much the wrong one. They are at these levels because we are in a situation very similar to the post-war period, by which I mean that so many of the problems our country faces, like other similar economies, are big state problems. That is to say that they are problems that primarily require government action and government expenditure to be progressed, let alone resolved. Unless that action and expenditure are forthcoming, the private sector will not be able to function effectively.

These problems are well known to us all. They are the consequences of climate change; the impact of the ageing population on the NHS, social services and the public purse generally; the need to renew our crumbling infrastructure, as well as to prepare it for the digital age; the need to rebuild our defences; and the need to prevent public debt running out of control. To get a grip on this list requires the Government to spend money and to raise money. Nothing has done more damage to the present Government’s reputation than the widespread perception that this country is not working properly. That is because too often it is true. It is because the battle is being lost on too many of these problems that growth is held back and the country is not working as it should. It is not a case of having to choose between public and private: the private depends on the public.

I hope we can stop obsessing about the weight of the overall tax burden and the proportion of public expenditure to GDP. Instead, we need to consider far more carefully how to spread the tax burden fairly and how best to use it to encourage those economic and social projects and activities that will enable our country to be more competitive and a better place to live in. Some taxes certainly can be cut, but others must yield more.

Finally, a serious Government need also to be frank with the public about which public expenditure programmes outside the protected departments they intend to prioritise in the coming years and the costs involved. With an election looming within the next 12 months or so, this Autumn Statement does not do that, and nor does the Opposition’s response. A big test of whoever is in charge after the election will be the extent to which they are willing to be frank on these matters.