Budget Statement

Lord Davies of Oldham Excerpts

Tuesday 14th March 2017 Lords Chamber

[Lord Davies of Oldham (Lab)]

My Lords, I agree with the noble Baroness that this has been an exceptionally insightful debate. With 39 speakers, it is very difficult to give a comprehensive response to it. I will limit my remarks in one obvious respect: I have no intention of pursuing the issue of the taxation of national insurance contributions at this time. The Government are in enough difficulty over it. If the noble Lord, Lord Higgins, gives a warning on it and decries the fact that the Prime Minister intervened, it is just as well that the Government have got sufficient time before legislation is necessary and will be able to sort the matter out. We all have sympathy for the Chancellor: he was putting forward a pretty limited Budget anyway and it has been utterly and totally swamped by one issue as far as the press are concerned.

I will concentrate on the main features of the economy and particularly the failures of the Government over the last decade. Growth is being downgraded again, with no prospect of the Government hitting the 2.3% normal growth rate which we had before the financial crisis. The OBR forecasts that growth might reach 2% in 2021. The Government are squeezing as much positive publicity as they can from that. However, after all the sacrifices that the British people have made, with the colossal squeeze on incomes and resources of ordinary people, it is worrying that we are going to see another five years of austerity. This is going to be the third consecutive Parliament of austerity activity. Is it surprising, therefore, that we have some difficulty in analysing why people are responding in the way that they are? There have been no pay rises for large numbers of people in the public sector for nearly a decade and they can see no prospect of that situation being remedied in the near future. Look at the onslaught on the least privileged in society by cuts in benefits and support, reducing a greater number of our children to poverty. The cuts have still not presented their full force. The previous Chancellor’s agenda still has to be delivered from April this year. No wonder that large sections of our population feel that the system is against them. Although it was suggested that my noble friend Lord Howarth was being somewhat apocalyptic—there was certainly naught for our comfort in his contribution —he is reflecting the fact that, for an awful lot of people, that bleakness is fully justified by the economic actions of this Government over the last seven years and the prospects for the future.

In 2010, the previous Chancellor promised to remove the deficit and balance the books by 2015. We now find that the present Chancellor is prepared to run a deficit of £21.4 billion five years from now. This massive priority, which alone could save the economy, has cost the British people so much yet it is regarded by a Conservative Chancellor as a lower priority than it has been in the past. This brings us to what the priority should have been. There is no doubt about that in this debate. It has been made clear that the key to growth is productivity. It is that which should have been concentrated upon.

I congratulate the Government on the aspect of the Budget and those proposals that show an interest in improving technical education and providing direct resources to equip our people with skills suitable for a changing environment—the world of work is changing —to enable them to achieve the level of skills required if we are to be a competitive economy. I was very grateful to the noble Baroness, Lady Wheatcroft, for referring to that aspect in her contribution, as did several of my noble friends. The only thing is, this Government have annihilated large numbers of technical colleges and technical teaching under the previous Chancellor. The proposals in this Budget come nowhere near making up for the devastation that the Government have caused in the recent past. Therefore, we welcome their conversion, albeit we think that it is on a very limited level compared with the cuts that have taken place in the recent past. Nevertheless, we welcome it.

My noble friend Lord Bhattacharyya, as ever, made the most thoughtful of contributions on industry’s need for skilled technicians, skilled technologists and people who are able, like the Germans, to make “Vorsprung durch Technik” a reality so that we enhance our capacities too. I have participated in many economics debates where people have lauded the contribution of higher education in this area. That has never been an issue for higher education as it has the necessary resources and has produced high-level, technologically skilled people. The problem in education has always been at the next level down. At last, the Government seem to have realised that fact to a degree. That is certainly an important step forward.

As the right reverend Prelate indicated in his contribution, we are concerned about certain areas of public services which have now reached absolute crisis point. It is clear that the NHS is in dire circumstances. It is even clearer that social care requires immediate additional funding. The suggestion was that the Government should provide £2 billion for this coming year. The Chancellor has adopted the figure of £2 billion but it is to be spread over three years—in other words, the figure for this year is a third of the amount regarded as necessary. Therefore, it is understandable that our society feels greatly ill favoured towards politicians, the body politic and the actions we set out to carry through.

This has been a distinguished debate. We are proud of the fact that the House of Lords is able to bring together a range of contributors who provide real insights into our discontent. However, it is action that the people need. This economy is far from being on the road to recovery. We have five more years of austerity and of continuous burdens on many who can least bear them. It is clear that the Government still have an underpinning ideology of shrinking the state. They want to reduce public expenditure and the price has to be paid by the ordinary people of this country. This Budget merely reinforces that position. Despite the ameliorative factors that I applaud, the underlying position of this Government is to leave the British people profoundly dissatisfied.