Economic Growth

Lord Agnew of Oulton Excerpts

Thursday 23rd January 2025 Lords Chamber

[Lord Agnew of Oulton (Con)]

My Lords, I am pleased to speak in this debate, and I thank my noble friend Lord Farmer for securing it. I refer to my interests in the register.

Today, we have a Government who wish to spend other people’s money to advance social justice and deal with a range of issues that they believe are important. Indeed, many of them are, but, unfortunately, with a tax rate at a 70-year high, we have now run out of other people’s money. Looking at borrowing, we are at a 64-year high relative to GDP. We are now paying more on our 10-year gilts than most other developed countries, so there is no more money there either.

That leaves growth: the magical elixir the Government hope will provide all the answers. They are completely right to focus on this, as our wealth per capita has been declining since 2010. It has been masked by surging population growth, largely through immigration, but the brutal truth is that the slices of economic pie available to individual British citizens are shrinking.

In December, the Office for National Statistics confirmed that living standards in the UK are falling, as measured by the all-important metric of GDP per capita. Its verdict was that:

“Real GDP per head is estimated to have fallen by 0.2% in Quarter 3—


that is July to September last year—

“compared with the same quarter a year ago”.

Even if that GDP figure is flatlining, as long as the population is increasing, which it has been at 0.75% per year, that means GDP per capita will continue to fall. The increase in GDP needs to be outstripping the growth of the population for living standards to be rising again. So far, we have seen very little evidence of a growth plan, other than warm words. Even Professor Ben Ansell, a significant economist, last week described the Government’s growth policy as contradictory and “empty-minded”.

It is easy in opposition to throw rocks and complain; I would like to offer one small route that is largely in the Government’s gift and would cost very little money. One of my registered interests is as chairman of the Trade Facilitation Commission. It arises from my time as the Brexit border readiness Minister. I have met some extraordinarily talented people who know the business of trade inside out. Many are now on the commission. By a long chalk, I am the least qualified. It is non-political and seeks to advance prosperity. We published a report in October last year, which is available at www.facilitation.trade, showing the path to economic growth through trade facilitation.

It is important to stress that this is not a dogma driven call for things that a Government cannot deliver; it is about the plumbing that facilitates trade flows. To many this is extremely boring and to many more it is simply incomprehensible. But this document, written for the benefit of this Government, shows a path. It needs only some will and co-ordination to achieve it. The potential is huge. It has been estimated—and not by us—that, if improvements in trade flows were implemented, it would increase GDP per family in the UK by £3,500. If the UK improves its trade facilitation process to the level of the best global performer, we could be adding as much as £40 billion into the UK economy. Here are four things the government can and should do.

First, they should appoint a Minister for Trade instead of the current illogical idea of a Cabinet Office Minister for EU trade and mishmash of Foreign Office, Department for Business and Trade and Home Office Ministers, who are all not co-ordinated.

Secondly, instead of talking about dynamic alignment to a fundamentally anti-competitive EU regulatory system, they should embrace unilateral recognition of EU standards. We have already done this for medicines, where we recognise EU, US and Japan for drug approvals. Dynamic alignment is sophistry; all it means is subjugation to rules that we have no control over. However, it is even worse than that because it will almost certainly put us into conflict with any US trade deal and our newly signed trade deal with the CPTPP. Both of these trade blocs are growing far faster than the EU.

Thirdly, we should encourage and expand trusted trader schemes. These preapprovals provide reduced border delays and cost friction. They enhance security and compliance, and they enhance access to mutual trade recognition agreements.

Finally, they should look at the use of digital trade corridors. These reduce the cost, duplication and harmonise data requirements. They enhance data security and improve visibility and connectivity. But in the last few weeks the Government have abandoned their plan for a single trade window. Why has that happened and what are the plans instead?

I would urge the Minister and his colleagues to review this report and meet some of the authors. That is not a pitch for myself to be included; all are better qualified than me. If you care about economic growth in this country, please listen to them.