Autumn Statement 2022

Baroness Fox of Buckley Excerpts

Tuesday 29th November 2022 Lords Chamber

[Baroness Fox of Buckley (Non-Afl)]

My Lords, it gives me great pleasure to follow and warmly welcome the noble Baroness, Lady Lea of Lymm. Too often, professional economists are dull technocrats who have disavowed the political drivers and implications of budgetary or fiscal policy. But, as we have heard from her maiden speech, and her prolific writings over the years if noble Lords have followed them, the noble Baroness’s undoubted expertise is never devoid of an awareness of the democratic context and consequences of economic decisions.

I first met the noble Baroness, Lady Lea of Lymm, when she was head of the policy unit at the Institute of Directors, when she invited me for lunch over 20 years ago. I had never been inside the IoD. It was very grand and a tad intimidating, but the noble Baroness made me feel totally at ease. She was not overly formal: she was down to earth, frank and great fun. Despite coming at politics from completely different sides of the political spectrum—a long time before we were on the same side on Brexit—that lively and intellectually stimulating conversation over lunch showed me that the noble Baroness has a generosity of political spirit that, in 2022, is an underrated virtue, but one that will be valuable in this House.

What we had in common, and which has kept us in touch ever since, was the noble Baroness’s passion for freedom, free speech and enhancing accessible public debate. If you look at her eye-wateringly impressive CV, you will see that she has committed her whole adult life to public service. I am glad to see her continue the tradition by taking her place here. If I might say so, it is long overdue.

I am not usually one to focus on representation or role models, but that the noble Baroness was more than equal to making her presence matter in a man’s world was and is inspiring. I am sure that many noble Baronesses across the House will welcome this fearless, clever woman, and independent thinker, as a great asset to the Chamber.

The noble Baroness was very insightful in her comments on the Office for Budget Responsibility, and I shall follow her remarks about the Autumn Statement by disagreeing with her—she will understand that. In the aftermath of the Truss-Kwarteng mini-Budget, many critics suggested that if only Downing Street had allowed the OBR to publish its forecast, financial turmoil could have been avoided. Surely this credits the OBR with some all-knowing, ever-present, god-like qualities when, in reality, it is an unelected watchdog established only in 2010. Rather than treating it as representing unchallengeable truth, its outlook should be open to scrutiny and debate. For example, the OBR’s model assumes that higher interest rates are a negative for economic growth, whereas I agree with those who argue that artificially low rates and cheap credit over the past few decades have disguised serious underlying problems of productivity while facilitating unproductive sectors at the expense of investment in new innovative enterprises.

Regardless of opinions on this, my broad concern is that over recent months politicians have done too much deferring to third-party bodies. The extraordinary intervention by the IMF, with its demands that an elected UK Government should change their economic policies because it did not approve, was cheered on and cited by far too many politicians as proof of the need to halt the growth plan. It was as though everyone forgot that the IMF has been a brutal enforcer of failed austerity policies internationally. I remind the House of the 2010s euro crisis, when the troika imposed such harsh measures on Greece that its public sector employment was slashed by 30% and youth unemployment peaked at 86%, consolidating me as a Brexiteer.

Beyond the OBR and the IMF, there was the narrative that there was no alternative but to bring in the drastic measures of the Autumn Statement because we need to satiate unhappy financial markets. What the self-described grown-ups in the room need to understand is that financial markets do not have emotions, are not unhappy and do not have a purpose. They are simply places where people and institutions sell and trade. By mystifying them as some omnipotent power, markets are given the authority or are provided with an excuse for blocking democratic choices. There is little doubt that Liz Truss’s shallow, tax-cuts-equal-growth intervention was a debacle, but I fear the Autumn Statement throws the growth baby out with the bathwater. Shadow Chancellor Rachel Reeves is right. We need to escape the doom loop of low growth. We need the economy to grow, produce, make and manufacture more in less time in order to crack the long- standing and deeply entrenched productivity crisis that long predates Brexit, but which politicians of all parties have avoided, often preferring to claim credit for superficial gains of cheap credit and state subsidies. Breaking the productivity deadlock requires supply side reforms, such as cheap childcare and business investment in training and skills, not cynically cheating by treating migrants as cheap labour. Of course, we need to free up planning and infrastructure from smothering hyperregulation, so how dispiriting to see so many MPs supporting anti-growth amendments to the levelling-up Bill that threaten to institutionalise nimbyism, block desperately need housing and cost thousands of job in construction.

Meanwhile, the Autumn Statement trots out the same old net-zero priorities that put restraints on production and the use of energy, putting the majority of eggs in the renewables basket that limits options. We need maximum access to all energy sources. Yes, wind farms, but that crucially means also fossil fuels, shale gas and lots more nuclear. That kind of reliable energy is needed as the lifeblood of modern industrialisation, investment in technology and innovation, and lots of R&D. We need to fuel productivity increases as the main guarantor of improved living standards by creating skilled jobs on decent wages. Eco-austerity hurts millions however much it drapes itself in green self-righteousness. Perhaps the only positive of the chaos of the past few months is that we are now facing up to the reality of Britain’s economic stagnation, a refreshing change from decades of smoke-and-mirror claims that our economy was fundamentally sound, shamefully illustrated by all parties gaslighting the public with reassurances that locking down business, halting production and paying furlough for months on end would be cost free. What an illusion. At least now we are going to have an honest debate, and I am sure that the no-nonsense voice of the noble Baroness, Lady Lea, will be an invaluable asset in it.