Economy: The Growth Plan 2022

Baroness Fox of Buckley Excerpts

Monday 10th October 2022 Lords Chamber

[Baroness Fox of Buckley (Non-Afl)]

My Lords, I am delighted to welcome the noble Baroness, Lady Gohir, and congratulate the noble Baroness, Lady Neville-Rolfe. One thing that is growing is the strong women brigade in here.

I welcome one aspect of this debate. I want to move away from the focus on the redistribution of a shrinking national cake. The answer is to bake a bigger cake. I am glad that so many noble Lords now profess that they are pro-growth because, until recently, those of us who were arguing for economic development faced lectures that growth was unsustainable, irresponsible, damaging for the environment, a recipe for greedy consumerism and so on.

My problem is that the measures announced in the growth plan are flimsy and insubstantial. The problems we face—here I disagree with the noble Baroness, Lady Smith of Newnham—were foreseeable, but they were denied by all sides politically. Those problems are far greater than the Government or the Opposition seem to acknowledge, even now. If only they could be fixed through the prism of cutting or increasing tax.

I have no doubt that the mini-Budget was a trigger for the present crisis, but we need to be honest that it is not the cause of Britain’s woes. Our stagnated, unproductive economy has deep roots of many years’ standing. For more than a decade, central banks have turned to easy monetary policies and vast amounts of quantitative easing both to keep interest rates near zero and to prop up and sustain a zombie economy. This was not called out by politicians. It could not have gone on indefinitely.

Closing down the UK economy for two years during lockdown, which received all-party support, and now the war in Ukraine have brought the UK economy’s underlying fragilities to the fore. However, the idea that tax cuts are an easy answer is pitifully inadequate—let alone those who blame Brexit; that is just pathetic.

Without things being produced, no wealth is created to generate incomes, profits and tax revenues to pay for public spending, so production is the key. But is the idea of the tax cuts that businesspeople, corporates and wealthy capitalists will spend their untaxed windfalls productively? Why would we think that? Since the 1980s, business has not been short of funds to invest but it has not been entrepreneurial and it has not invested in innovation, better technologies or the skills revolution. Instead, corporate culture itself has become risk-averse, playing it safe and playing with financial engineering.

A furious public are not just in terror about the short-term—their bills and mortgages—but dismayed at the lack of meat on the bone of the plans. Take the energy policy—the energy that we will need to fuel growth. There is no point in the Government loudly shouting, “Let’s frack”, and then whispering, “With local consent”, and continually reaffirming their net-zero targets. Green growth in reality means unreliable energy and eco-austerity. Let us get on with nuclear power. Let us get on with building those houses. At the moment, it is all soundbites. Never mind subsidising old industries, where is the concrete plan to invest in new sectors, with new jobs and new energy solutions? Where is the spirit of risk, courage and experimentation? We must create a new industrial revolution. That is the long-term plan that we need but it is sorely lacking, and the public need to hear more of it.

The public are not fools. They instinctively know that there is no pain-free route out of this. We need some frank talking, and a collective approach to solving the problems, beyond party politics. A huge transformation is needed in the economy, and everybody must be involved in shaping it. The words “Growth, growth, growth” are not enough. A lot more must be done. We must be humble and recognise that we have to take a lead on this but that we need the British public onside to make it happen.