Economy: The Growth Plan 2022

Lord Wolfson of Aspley Guise Excerpts

Monday 10th October 2022 Lords Chamber

[Lord Wolfson of Aspley Guise (Con)]

My Lords, I declare my interest as a serving chief executive of a FTSE 100 retail company, a post I have held for 21 years. Understandably, today’s debate has focused on recent government events and the mini-Budget, but it is important to stand back a little from that and reflect on the fact that the pound had devalued from $1.37 in just a year to $1.15 before the Chancellor spoke. Interest rates were rising and were always going to rise.

Although the Government’s recent actions undoubtedly exacerbated the situation, it is important to remember that the cost of living crisis we are experiencing at the moment is rooted in a chronic shortage of goods, fuel and labour. It is essentially a supply-side problem. The pandemic paralysed the world’s manufacturing and disrupted global freight routes. The war in Ukraine piled energy price rises on top of what was already a fragile global economy. To get us through the pandemic it was quite right that we had borrow-and-spend remedies. They were not only desirable but essential to prevent economic collapse, and today they are essential to prevent people suffering too much from the energy crisis. However, demand measures can only target the symptoms of supply-side inflation: they cannot deliver a cure and there is always a price to pay.

If we are to solve the cost of living crisis, it will require bold supply-side measures, and while I welcome the Government’s rhetoric on supply-side reform, I share the concerns of the noble Lord, Lord Newby, and many other noble Lords about the lack of detail. The noble Lord, Lord Kerr, and many others are right that tax cuts alone—although they are in my view welcome—are not going to stimulate growth. Fortunately, there are a number of very powerful measures that can make an enormous difference. Contrary to what I have heard some noble Lords say today, businesses are not in the habit of sitting back and relaxing and not bothering to invest. Believe it or not, we do not need a lot of encouragement, incentives or tax breaks to invest. What we really need is for Governments to stop preventing us investing.

Here, the measures that the Government can adopt are numerous. There is the radical overhaul of our planning system. Here I share the cynicism of the noble Lord, Lord Macpherson, about government’s ability to deliver on this. There is no doubt that the delivery of the homes people want to live in in the places where they want to live and work can do more to stimulate growth in this country than any other measure alone.

The intelligent relaxation of controls on economic migration, as pointed out by the noble Lords, Lord Shipley and Lord Birt, could do an enormous amount to stimulate the economy, perhaps, as I have suggested elsewhere, through a visa tax that would ensure that UK employers employ overseas workers only where there is really no UK alternative.

Stemming the flow of new business regulation and quasi-regulation that wastes so much time and so much money for so little good would do an enormous amount to stimulate growth. Here I stress that I hope that the Government understand that it is stemming the flow of new regulation that will really make the difference; not some imaginary bonfire of existing regulation that we have already learned how to cope with. There is also the liberalisation of trade rules and the repeal of needless tariffs that do nothing to protect British industry.

In addition to these essentially liberating measures, the Government can also save money. The cancellation of HS2 would reduce borrowing and release much-needed materials and skills back into the UK economy. With HS2 costs so much higher than appraised and the benefits so implausible in an online world, surely now it must go.

Supply-side reforms are the key. They will accelerate long-term growth but will also do something else. A determined, reasonable, carefully thought through plan for supply-side reform will do much to restore market confidence in the United Kingdom. The markets will reward this country for the right steps as quickly as they punished us for the wrong measures that we took a few weeks ago.