King’s Speech (4th Day)

Lord Vaux of Harrowden Excerpts

Monday 22nd July 2024 Lords Chamber

[Lord Vaux of Harrowden (CB)]

My Lords, I add my warm welcome to the Minister, both to this House and to his new position, and congratulate him on his excellent maiden speech.

I welcome the new Government’s focus on economic growth and stability, as so many others have done, and indeed many of the other steps proposed in the gracious Speech. The debate today covers an enormous range of topics, so I will concentrate on just a couple of areas—one could go on for hours.

I was very excited when I first heard about the proposed national wealth fund. I assumed we would be talking about a sovereign wealth fund similar to those we see in other countries such as Norway. Sadly, this will be a rather less ambitious entity. In effect, it will be just a £7.3 billion extension to the UK Infrastructure Bank’s existing catalytic activities. That is a not a bad thing—indeed, it is a good thing—but I had hoped the new Government might dispense with some of the overselling we have seen in the recent past. It is a disappointment.

The wealth fund will apparently generate £3 of private sector capital for every £1 of public money invested—a good aim, but easier said than done. There is a real danger that, if not executed well, public investment can actually have the negative impact of crowding out private investment, simply replacing private capital that would have been available otherwise.

We debated that concern at length during the passage of what became the UK Infrastructure Bank Act—I see the noble Baroness, Lady Noakes, looking at me—and I urge the Minister to go back to those debates and consider very carefully what was said when designing this fund. Exactly the same issues apply, in particular the importance of genuine operational independence—this should not be just a plaything of the Treasury—and of measuring and reporting on the crowding-in performance. I do not mean measuring the amount of investment made—anyone can spend money—but measuring the actual crowding-in impact that is achieved.

The gracious Speech also includes the strengthening of employment rights. Again, this includes some good things: practices such as the egregious fire and rehire actions carried out so appallingly by P&O need to be stamped out. But we also need to be very careful about the possibility of unintended consequences, as others have mentioned: well-intended changes could end up hurting the very people they are intended to help. I will give two examples.

The first is the equalisation of the minimum wage for younger people. I do not think it was in the gracious Speech, but it has been quite heavily trailed. It has obvious superficial attractions, but that all-important first step on to the employment ladder is already very difficult: 28.3% of 16 and 17 year-olds are currently unemployed. We must encourage employers to take on young people who have no experience. Why would an employer take that risk if they can hire someone with experience for the same cost?

Secondly, I am deeply concerned about removing the two-year period before a claim of unfair dismissal can be made. We should be encouraging employers to take risks in employing people such as those without experience, young people in their first job, people changing careers or older people looking for a job post redundancy. The noble Lord, Lord Timpson, whose appointment I think was inspired, has an admirable track record of employing ex-offenders. We should encourage others to do the same. But this change will make employers, especially smaller businesses, think twice. It may—and probably will—discourage them from taking on people they might see as greater risk, and a probationary period, which the Government talk about, is not the same thing. I am not aware of any evidence of material abuse of the two-year rule. Protections already exist from day one for a wide range of automatically unfair issues. So I urge the Government to listen carefully to businesses, especially smaller employers, before taking such a potentially damaging step.

As we are only allowed to speak on one day, I will briefly raise a matter that might fit better in Wednesday’s debate. It is—predictably—fraud and economic crime. It is relevant today because the high levels of fraud and economic crime that we experience in this country are a genuine brake on growth. I was surprised to see nothing in the gracious Speech addressing this. There are plenty of steps that need to be taken, especially the incentivising of tech platforms and telecoms operators to take action to prevent fraud. I do not believe the Government have yet appointed a replacement for the previous Government’s fraud champion. Could the Minister tell us whether they intend to do that?

The other thing that stands out as missing from the gracious Speech is the whole question of productivity. We cannot have stable growth without improving our productivity. There is not time to discuss that in detail and I know that others will do so later, but it is something that the Government do need to address.

Overall, I welcome the Government’s focus on growth and stability and recognise many good proposals in the gracious Speech, but I urge the Government to tread very carefully to avoid unintended negative consequences and to listen constructively to the comments of businesses, particularly small businesses, before taking some of these steps.