Industrial Strategy

Viscount Hanworth Excerpts

Thursday 1st February 2024 Lords Chamber

[Viscount Hanworth (Lab)]

My Lords, Britain is in decline. To avert that decline, we need a comprehensive and sustained strategy for encouraging investment in our publicly owned social infrastructure and in our economic infrastructure, which is predominantly in private and corporate ownership.

We need to spend money to revive the social infrastructure and the services that it sustains. This raises the question of where the money should come from. The answer is that it must come from taxes. This is a truth that becomes increasingly difficult for political parties to acknowledge as an election approaches.

The revival of public infrastructure will not be enough to restore our economic prosperity. Private industry must also meet the challenge of investing in new technology and new factories. There has been a dire lack of industrial investment over many years.

The hope is entertained that this deficit can be overcome by dint of foreign investment in the UK. A recent report by the noble Lord, Lord Harrington, extolled the virtues of this recourse while regretting that, in consequence of Brexit, there has been a modest decline in the value of such capital inflows. The assertion that such investment is unequivocally favourable to our economy must be challenged. Direct foreign investment is virtually synonymous with the sale of our assets to foreign owners.

The large inward capital flows we have experienced over the years have had the effect of easing our balance of payments deficits. They have also been immensely profitable to the City of London, which has mediated them. They have also had the effect of sustaining the demand for sterling in the international markets, and of elevating its value. This has been one of the prime causes of our economic distress. Our goods have become too expensive to compete in foreign markets and our industries have wilted in consequence of a lack of demand for our exports.

Steps should be taken to reduce the value of the pound in the currency markets. This can be achieved by purchasing foreign currencies when the value of the pound exceeds certain levels. The effect would be to make British goods more attractive abroad. This would stimulate our industrial sector by increasing our exports. The process of recovery will be protracted. It might have the same duration as the processes of industrial decline that we have experience since the 1960s.