Autumn Statement 2022

Lord Bilimoria Excerpts

Tuesday 29th November 2022 Lords Chamber

[Lord Bilimoria (CB)]

My Lords, the Chancellor said the Autumn Statement on 17 November 2022 will lead to a shallower recession and higher long-term growth. He promised

“stability, growth and public services”,

£55 billion of increased taxes and spending cuts. Yet during the pandemic we spent £400 billion to save the economy, debt to GDP went up to nearly 100% and the OBR has predicted that in 2027-28 we will still have 97.3% debt to GDP. Here is the caveat: the OBR forecasts are forecasts, and invariably they do not actually transpire.

We have the highest tax burden in 70 years. The OBR has predicted that the tax burden will hit a record 37.5% as a share of GDP in 2024-25. Income tax thresholds are frozen. The fiscal drag will bring millions of people to either start paying tax or be dragged into higher bands. There is also the windfall tax on energy companies and corporation tax going up from 19% to 25%. As the noble Lord, Lord Bridges, said, high taxes will stifle the recovery and growth.

When it comes to spending, the good news is that schools are getting £2.3 billion, but that is a drop in the ocean. We have underinvested in schools for decades. As for the guaranteed 2% on defence, we need to go up to 3% because of the Ukraine war and other global threats. Does the Minister agree?

The OBR predicts that inflation will peak at a 40-year high of 11.1%. On growth, the OBR has forecast that we will be in recession—we probably already are—and we expect growth of 1.3% in 2024. Before the financial crisis we were growing at an average of 2.5%. Unemployment is at record lows rate of 3.6%; the OBR forecasts that it will go up to 4.9%. As the noble Lords, Lord Fox and Lord Bridges, said, the OBR has forecast a dramatic decline in real household disposable incomes—the lowest in memory.

What about the Opposition? The shadow Chancellor has said that the Government’s actions

“have forced our economy into a doom loop, where low growth leads to higher taxes, lower investment and squeezed wages”.

She said the UK was

“the only G7 economy that is still poorer than before the pandemic.”—[Official Report, Commons, 17/11/22; cols. 844-57.]

We recently had our CBI annual conference—I have just stepped down as president and am currently vice-president—in Birmingham, where I am proud to be chancellor of the university. There, Tony Danker, our director-general, said:

“Britain is in the middle of stagflation—hit with rocketing inflation and negative growth—for the first time”


in many years. He went on:

“Now, we know how to fight inflation. We know how to fight recession.”


But do we

“know how to fight them together”?

What about growth? He said that

“growth is good. It’s a precondition to a stable society. Without growth the NHS gets worse not better. Without growth, people’s lives get worse not better. Without growth, we lack the resources we need to transform ourselves to a zero-carbon world.”

Since the financial crisis, we have had low growth and flatlining, if not declining, productivity.

There is good news about business rates relief—the Government are finally going to address this—and about infrastructure and Sizewell C, but what about small modular reactors? Rolls-Royce has the capability. We can get them up and running in five years. A 500-megawatt SMR can power electricity for 1 million people. Why have we not started yet?

What about private sector investment? The 130% super- deduction was absolutely brilliant. Now that corporation tax is going up from 19% to 25%, we need permanent full allowances, because that will incentivise companies to invest. We at the CBI estimate that that would unlock an extra £50 billion in capital investment per year by the end of the decade. Do the Government agree?

What about trade? Our trade as a percentage of GDP is the lowest in the G7. Our biggest trade agreement is with the EU. That TCA needs to be unlocked, but we cannot unlock it unless we resolve the Northern Ireland protocol. We need to get round the table and resolve that now.

In his speech at the CBI conference, Prime Minister Rishi Sunak said that

“we … plan to grip inflation and balance the books … And critical to achieving all this is innovation.”

But we invest 1.7% of GDP in innovation and R&D, compared with 3.1% in America. The Prime Minister also said that

“we will … deliver our Lifetime Skills Guarantee to help people of any age retrain and acquire new skills.”

This is great news. When will this start? There are 1.3 million job vacancies.

In his speech, my successor as president of the CBI, Brian McBride, spoke about the good news of our tech unicorns. We have one of the highest levels of tech unicorns in the world. On the other hand, he said:

“We also have one of the biggest skills mismatches in the G7.”


We estimate that 90% of the UK workforce will need to retain by 2030.

Net migration is at 500,000 up to June 2022, yet there are job shortages in every sector, not just in low-skilled jobs. I was addressing the highest tech companies in the country. I asked, “How many of you are experiencing labour shortages?” Every single hand went up. I have said time after time that the Migration Advisory Committee needs to be revamped so that, like the Low Pay Commission and the Monetary Policy Committee, it can independently tell the Government to give one, two or three-year visas sector by sector: so many thousand jobs in this sector, so many thousand in that sector. Why do the Government not do this?

The good news about reskilling is the Help to Grow scheme launched by Rishi Sunak when he was Chancellor; I am on the council. Great—mini-MBAs for SMEs.

In his speech to the CBI, Keir Starmer said his party

“is proud of being pro-business.”

That is great news to hear. He said:

“We won’t ignore the need for workers to come to this country … Migration is part of our national story”.


Good migration has always been good for this country, yet we have fewer industrial robots than any other comparable country. He also made the point about investing in green growth. I believe we should invest in wind, hydrogen, solar, SMRs and, of course, the green industrial revolution, including HydroFLEX, the world’s first retrofitted, hydrogen-powered train, developed by the University of Birmingham with government and industry support.

We do not have an industrial strategy. Do the Government have a plan for an industrial strategy? The business department, BEIS, includes “Industrial Strategy” in its name. The apprenticeship levy is not flexible enough; we need to make it more flexible.

Finally, all this talk about reducing international students and restricting them to elite universities is absolutely wrong. As a third-generation international student from India, I know that international students bring in £30 billion to our economy. They enrich the culture of our universities, form lifelong and generation-long bridges and are one of the strongest elements of soft power in our country. Do not damage international students. We should increase their number from 600,000 to 1 million.

I conclude: growth; investment; address the immediate need for skills; address the long-term need for skills; bring in workforce from abroad; innovation; invest in the green industrial revolution; and let us be grateful and celebrate our universities and our international students.