Autumn Statement 2022

Lord Desai Excerpts

Tuesday 29th November 2022 Lords Chamber

[Lord Desai (Non-Afl)]

My Lords, I shall speak in the gap. In July last, when Boris Johnson was still in power, I said in this House that things are going to get very bad and we will see a repetition of the 1970s and 1980s. The only thing against the Autumn Statement is that it is too optimistic about the future. It more or less says, “Let’s hold on until the election and then we will face up to the reality.” It is not just the UK that is in trouble; I emphasise that this is not local trouble. We had an energy price shock in 1973, and it took us another 16 years before the economy more or less went back to growth. In a situation like this, we have to be ready for a very hard, harsh reality, which we were. We abandoned Keynesianism in the 1970s. We took up monetarism in the 1980s. Governments change, and our philosophies change. We are going to go through a similar crisis now. I am sorry to be the bearer of bad news, but I thought I had better say that.

In a number of ways, we do not realise that our economy has changed fundamentally. In the 1970s and 1980s, we lost manufacturing as a major activity in this country and became more or less a service economy. Manufacturing went to Asia. Part of the story of productivity growth being slow is because we lost manufacturing and gained services. All western countries have similarly lost productivity, partly because productivity is difficult to measure if you are not manufacturing, but partly because we are less productive, and that is the reality. I do not know what the solution is. Yes, history does repeat itself, but there is one difference that I want to mention. During the 1980s, Mrs Thatcher, to her great credit, squeezed the economy dry until inflation went out of the system. She had North Sea oil as a support. She sold social housing, which made some money, and she sold some of the nationalised industries. We do not have that chance any more.

If anything, we are going to face a much worse situation than currently envisaged. We ought to get our thinking out of this current tax and growth nonsense. Forget about all that. Regardless of whatever damage Liz Truss may or may not have done, long before that I had a premonition that this economy was going to go down the drain. That is all I can say. I am not the Chancellor and have no chance of becoming Prime Minister, so I will sit down.