Spring Statement

Lord Bilimoria Excerpts

Wednesday 20th March 2019 Lords Chamber

[Lord Bilimoria (CB)]

My Lords, three years ago, exactly at the time of the referendum, the UK was the fastest-growing economy in the western world, respected around the world, at the top table of the world, including at the European Union and then Brexit happened. In spite of this, as the noble Lords, Lord Leigh and Lord Gadhia, have said, the FT said up front:

“Britain’s economy is showing surprising resilience. Public finances are in better fettle than expected. But this progress—and the chance to end the austerity that has sapped public services for a decade—are in jeopardy. The uncertainty over the UK’s exit from the EU must be lifted, and a no-deal departure avoided”.


Those are the two key aspects: uncertainty and the risk of no deal.

The Chancellor described an economy in reasonable and in some cases excellent shape—employment is at a record high and unemployment at a record low of 3.9% —and it is still growing, albeit down from 1.6% to 1.2%. Borrowing has fallen to just 1.1% of GDP. This is down, as the noble Lord, Lord Macpherson said, from 10% a decade ago, which is brilliant. Net public debt is on a sustained downward path: it is now projected to fall from 82.2% of GDP in 2019-20 to 73% in four years. This is all very good. Then we hear about funding for high-tech research and exempting PhD-level roles from the cap on immigrant visas: that is a positive signal. The FT says very clearly:

“Against the fantasies offered by Britain’s Brexiters, the chancellor’s statement offered a dose of realism”.


The Chancellor said very clearly that now was a chance for,

“building a consensus across this House for a deal we can, collectively, support”.—[Official Report, Commons, 13/3/19; col. 352.]

That is exactly the opposite of what his boss, the Prime Minister, has been saying. The Spring Statement was sandwiched between the humiliating second defeat for the Prime Minister and the no-deal vote the following day. The Chancellor also made very clear his opposition to a no-deal Brexit, saying that it would shrink the economy, push down wages and put up prices—a national calamity. Yet what has the Prime Minister said many times? “No deal is better than a bad deal”. We have heard that so many times.

What did the CBI have to say about this? Rain Newton-Smith, the CBI chief economist, said:

“Against a hugely uncertain political backdrop the Chancellor has made an admirable attempt to set out a long-term vision for the UK economy, yet remain shackled by Brexit. This year’s forecast downgrade brings the danger of no deal to the UK economy sharply into view. It must be avoided”.


Doctor Adam Marshall, director-general of the British Chambers of Commerce, said:

“The Chancellor is right to warn of the risks that a messy and disorderly exit on March 29th would pose for the economy. Westminster must heed the fact that businesses and government agencies are simply not ready for such an abrupt change, and Parliament must take concrete action tonight and in the coming days to avoid no-deal in just a fortnight”.


This is business speaking. Business is terrified of a no-deal Brexit.

Let me go into some of the detail. I was on the Finance Bill Committee and of course we challenged HMRC about Making Tax Digital, saying that businesses and HMRC have to be ready for it. It is a burden on business and there is still not sufficient understanding of it. How will HMRC, with stretched resources at the moment, having to deal with Brexit, cope with Making Tax Digital? Will the Minister address this?

There is good news overall on many fronts, with many challenges on employment and immigration. While non-EU immigration is actually going up, EU immigration is plummeting. If we have 3.9% unemployment, which many noble Lords have referred to as full employment in economic terms, what will we do without EU immigration? We have 3.5 million people: what will we do without them? We will have an acute labour shortage. Average earnings have grown by 3.4% over the past year—their fastest in a decade. The noble Lord, Lord Macpherson, spoke about higher tax revenues. Here we have low inflation, low borrowing costs, higher wages and happy households: this is great. Business investment, on the other hand, is suffering. We have had four consecutive quarters of falling business investment. Why? Because of uncertainty over Brexit. Then there is the backdrop of global uncertainties, with the financial markets, possible recession, trade wars, trouble in China and all these challenges as well.

Getting down more to the nitty-gritty, I turn to business rates. Retailers are struggling but the Chancellor did not really address this. It has been dubbed the “high street Armageddon” by the head of the British Retail Consortium. The British high street looks as though it is reaching a really desperate point. January saw the biggest drop in footfall in five years. For many small businesses, renting a unit on the British high street is just not a possibility. The death of the high street has many implications beyond shops closing down. There are social and economic impacts, which are far more wide-ranging. Maybe the Minister will address that point as well.

We then have the so-called Brexit dividend of £26.6 billion, but again this is linked to our productivity. My noble friend Lord Gadhia talked about the challenge we face. Yes, there is good news about graduates at PhD level being allowed to come in, but was mention made in the Statement about increasing funding for universities? What about increasing funding for R&D and innovation? When it comes to productivity, let us not forget this. I chair the Manufacturing Commission and I am the proud manufacturer of Cobra Beer, which we produce here and in Europe. We are proud of manufacturing in this country because it is the best of the best. The top 10% of companies in this country are the best in the world for productivity, but it is the long tail of the 90% that is the problem that needs to be dealt with.

On higher education, we are 1% of the world’s population but we produce 16% of the leading research papers in the world. Just imagine what that could be if, instead of 1.7% being spent on R&D, our investment was the same as that of Germany and America at 2.8%, let alone Israel at 4%? The Chancellor said, “We will use the Brexit dividend to improve public services, increase spending on infrastructure, cut taxes and reduce debt”. Paul Johnson of the Institute for Fiscal Studies, however, has said that it would be,

“irresponsible to open the Treasury’s wallet before the Brexit debate had reached a conclusion”.

We return to uncertainty. We have the lowest forecast level of growth rates, at less than 2% for five years running. We are growing, but we are growing under a cloud of uncertainty. Do the Government have the money to deal with a no-deal Brexit? Is the Minister confident that they do? The Chancellor also said in a message to Brexiteers:

“The idea that there is some readily available fix to avoid the consequences of a no-deal Brexit is, I am afraid, just wrong”.


Does the Minister agree with that?

One item I should like to focus on is policing. The Chancellor says that he will immediately make available £100 million over the next year to pay for extra policing. A neighbour where I live in west London told me that the house opposite her had been burgled, the house next door had been burgled and she thought it would be her turn to be burgled next. She said, “I am so scared when I get out of a taxi or an Uber at night that I ask the driver to wait until I have gone through my door”. Last summer my daughter said that she was scared to walk home from the Tube station because of the stories of things that had happened to her friends. Just today I read that last night there was a mugging at knifepoint at our local Tube station. Numbers in the Met Police in London have fallen below 30,000 for the first time in 15 years. Our very capable commissioner, Cressida Dick, has said that a lack of resources is a factor in homicide rates reaching a 10-year high. There are more and more accusations that the Government are losing their fight against crime. What is an investment of £100 million when billions are required? Figures show that offences have risen by 14% while the number of police officers has plummeted to record lows. The surge in knife crime is front page news all the time. There have also been increases in all other crimes, including burglary, sexual offences, car theft and robberies, yet the number of police officers has fallen to 121,929, the lowest figure since comparable records began 22 years ago.

There has also been a fall in neighbourhood policing. I do not see any neighbourhood police officers in the area where I live, although I used to see them all the time. Overall, taking inflation into account, funding has fallen by 18% compared to an increase in funding of 31% between 2001 and 2010. Who was Home Secretary after 2010 for six years when all these cuts took place? Direct government funding has fallen by 25% over the same period. The number of homicides has increased hugely, with 40,000 offences involving a knife—an increase of 16%. These figures are corroborated by National Health Service hospital admission rates resulting from these crimes. With 1.1 million violent crimes recorded, an increase of 21%, the numbers continue to rise. Recorded crime has gone up by 9% in England and Wales; these are record figures throughout. Some 50% of the public have not seen a police officer in a year. This is really scary. As I say, we should be investing billions in policing, not £100 million.

In the withdrawal agreement, which runs to 585 pages, three things are agreed: the bill of £39 billion, which is a pittance compared with a £2 trillion economy; the rights of EU citizens here and UK citizens in Europe, which should simply happen—we should never use people as bargaining chips; and the backstop. Nothing has actually been agreed.

What about the political declaration? In this implementation period of less than two years we have to agree on: data protection, Union progress, tariffs, regulation, customs, services, investment, financial services, digital, capital, intellectual property, public procurement, mobility, transport, energy, fishing, global co-operation, security, law enforcement, judicial co-operation, data exchange—we use one European database 500 million times a year—operational co-operation, foreign policy, defence, cybersecurity, intelligence, space, development co-operation, health security and dispute settlement. It has taken two years to do three things.

I see that I am being asked to finish, but I am well within my time. Noble Lords may not like what I am saying, but it is the reality.

The PM’s deal now has an implementation period of less than two years. No deal is still a possibility, and that could be extended to infinity and beyond. Internal and external investment will continue to be held back. David Lidington said just six days ago:

“In the absence of a deal, seeking such a short … extension would be downright reckless … making a no-deal scenario far more, rather than less, likely”.—[Official Report, Commons, 14/3/19; col. 566.]


Now the Prime Minister is seeking a three-month extension, crossing the European Union elections, until the end of June. What is going on?

According to the latest survey from YouGov, 52% of people are in favour of an extension. The public want it. The Government are not on the public’s side. It is now said that, in a choice between May’s deal and remaining in the European Union, 62% would favour the latter. The Minister told me earlier that 7.5% of the economy would be better off under the Prime Minister’s deal compared to no deal. Compared to the PM’s deal, how much better would the economy be with an EEA-Norway option? How much better would the economy be if we remained in the European Union? It is the best option by far.

Three-quarters of newly eligible voters would back remain in a second referendum: with 2 million more youngsters and 1.5 million who have sadly passed away, 3.5 million more than last time would vote to remain. There would be an outright vote to remain if we were given a chance. That is at the crux of what we are talking about.