Spring Budget 2024

Baroness Goldie Excerpts

Monday 18th March 2024 Lords Chamber

[Baroness Goldie (Con)]

My Lords, it is always a pleasure to follow my noble friend Lord Young of Cookham.

I looked back at what I said in November when we debated the Chancellor’s Autumn Statement. At my stage in life, that is a wise precaution—an aide-memoire is helpful. For this non-dogmatic, non-ideological, pragmatic, prudence-supporting and, I hope, compassionate Conservative, the Autumn Statement was an affirmation of my beliefs. I remember criticism from opponents and even some Conservatives. Predictably, the Labour Party found it tame; not spending enough—no surprise there. Some Conservative colleagues found it dull; not exciting enough.

I do not want the steward of our economy to be some flash Harry putting headlines, gimmicks and show above substance and prudence. Nor do I want a wand-waving wizard treating the economy as some giant experimental laboratory. My noble friend Lord Lamont of Lerwick could never have been described as either in his role as Chancellor and, mercifully, neither can Jeremy Hunt, as he quietly demonstrated in November and confirmed with his Spring Statement. The real test is market reaction, which remained stable.

I remember, in the November carping and criticism, that context was a glaring omission. There was no reference to the extraordinary challenges we have faced—the pandemic, energy price hikes and inflation on the back of the illegal war in Ukraine. Because of the steady approach to the economy by the Prime Minister and the Chancellor, I am clear that context is now being acknowledged and that people understand that. They needed, and got, help with soaring energy bills. They know that there is not a magic money tree, but they are benefiting from falling inflation. They have felt the support offered by the measures in the Autumn Statement and can see how that has been built on by the Spring Statement.

Reaffirming the importance of context, the sobering economic reality is, quite simply, in paragraph 1.1 of the OBR’s Economic and Fiscal Outlook, published earlier this month. It gives an objective assessment of the challenges facing the Chancellor, confirming how tight his envelope is—another helpful confirmation of why the last thing we need is either a flash Harry or a wand-waving wizard. That is why I am reassured by the Chancellor’s approach. In case anyone thinks I am wallowing in a warm bath of self-delusion, let us look at the facts.

At the beginning of 2023, we identified three economic priorities: halve inflation, grow the economy and reduce debt. As my noble friend the Minister indicated, inflation has fallen from 11.1% to 4%, the economy has performed better than forecast and outperformed European neighbours, and debt is on track to fall as a share of GDP to 92.9% in 2028-29, so the steady progress predicted last autumn is happening and there is now scope to help further.

As other contributors have indicated they were, I was very pleasantly surprised by and supportive of the NIC changes to both the employee main rate and the self-employed main rate. The combination of what we did in the autumn and what we do now will make a real difference to the working population, with wider benefits, as the noble Lord, Lord Macpherson of Earl’s Court, pointed out. That is why I will certainly support the NIC Bill at Second Reading later. To grow the economy, we have to make it worth while for people to work. We have to let them keep more of their own money. This delivers that encouragement.

We also have to support people in work, get them back to work and encourage new entrants into work, which these measures, plus changes to the child benefit scheme, will encourage. No one likes paying tax, but measures to help working families and be a catalyst to growing the economy justify putting a bit of the load on some of the broader shoulders. The changes in tax treatment of non-doms are sensible and, recognising the extraordinary increases in receipts for the oil and gas sector, extending the energy profits levy to 2029 with the safety valve of the built-in regulator, because it is there, does not seem oppressive.

The other measures that my noble friend the Minister covered are helpful and sensible for business and offer support in still challenging times for millions of households. The continued work on investment zones is spreading benefit across the whole UK.

Looking ahead, and anticipating that a steady hand continues at the Treasury helm, the IMF forecasts that the UK will grow faster than Japan, Germany, France and Italy cumulatively over the next five years. The OBR confirms that the economy grew last year and will be bigger at the end of the forecast period than it predicted last autumn.

We now need to think strategically about opportunities and innovation as to how we find money. I will look at defence spend, and I want to repeat what I aired in the recent foreign affairs debate in this House. This is the most threat-ridden world we have known since the Second World War. We have to work with partnerships and provide leadership. For NATO, that has to mean looking way beyond 2% of GDP.

During these highly charged times, extraordinary measures are called for if we are serious about the defence and security of this country. That investment would be not just to fund potential kinetic military activity; we need to resource intelligence and cybersecurity measures. There is not much point pouring billions into a more productive health service if activity is wiped out by a hostile cyberattack.

For the next term there is an argument, for a finite period, to top-slice the defence budget to give greater certainty about operational capability. I also believe that the Treasury can be more imaginative in how it procures money to fund defence. My suggestion was to consider the issue of patriot bonds. If we can issue green savings bonds and the still popular premium bonds, why can we not replicate that model for defence? I think there is an appetite for it. I realise that the history of war loan stock might make the Treasury shudder, but surely Treasury expertise can find a model that boosts defence funding, balanced with security and an attractive return to the investor. I do not expect my noble friend the Minister to respond to all that, of course, but I ask her to use a sharp elbow when she returns to the Treasury and to point out that this is not a gentle nudge from a friend; it is a cri de coeur as a matter of necessity.

In conclusion, there is one person for whom the Autumn and Spring Statements create a headache— the shadow Chancellor. In November I questioned the problematic £28 billion borrowing pledge. It has now gone. What next? No one knows. Despite the heroic efforts of the noble Lord, Lord Eatwell, Labour’s economic policy and fiscal proposals remain opaque and incoherent. By contrast, the Prime Minister and his Chancellor, Jeremy Hunt, have set the satnav, we are travelling the journey, the scenery is inviting and the destination is exciting.