Economy: Spring Statement

Lord Higgins Excerpts

Thursday 15th March 2018 Lords Chamber

[Lord Higgins (Con)]

My Lords, I have long since forgotten how many Budget debates I have spoken in, but I have certainly spoken in every one since 1964, which is quite a long while. I have therefore got used to the annual Budget ritual, with the box outside No. 10, and so on. While I fully understand and accept the reasons which the Chancellor has put forward for changing our annual Budget arrangements, none the less I feel a little sentimental about the proposed changes.

We cannot go on calling it a “single fiscal event”; we should go on calling it a Budget in the autumn. I gather, from reading rather more closely what the Chancellor said, that it will continue to be known as a Budget. I also regret the fact that he will no longer publish the Red Book, which I always found a singularly convenient form of presentation, and I hope that he will reconsider that by the time we come to the autumn.

The Chancellor’s speech the other day sets out the record since 2010, which is good: the manufacturing sector is,

“enjoying its longest unbroken run of growth for 50 years”,

with 3 million extra jobs; every single region has,

“higher employment and lower unemployment than in 2010”;

and the wages of the lowest-paid workers are,

“up by almost 7% above inflation”.—[Official Report, Commons, 13/3/18; col. 717.]

All that is good, and the Chancellor is right to have stressed it. Similarly, the OBR forecasts predict more jobs, rising real wages, declining inflation and a falling deficit—and, the Chancellor says, a shrinking debt. It is not actually true that there will be a shrinking debt. My understanding is that clearly the national debt will continue to go up; that must be a slip by the draftsman who produced the Chancellor’s speech. It is essential to stress that we must continue to cut the deficit, for all the reasons that are well known—the effect on future generations, the strength of the economy, the fact that we have to pay large amounts of interest on the debt, and so on. I hope that we can take that point into account.

The OBR forecast in general is optimistic, although we shall have a number of particular problems. We hear talk of austerity all the time, but what that really means is that we are living within our means, and having to take the necessary measures to stay within our means—unlike Mr Gordon Brown, who managed to make everyone happy for a number of years simply by running up debts at a higher and higher level. We certainly do not want to see Mr Corbyn doing the same thing again.

[Lord Skidelsky (CB)]

I am sorry to interrupt the noble Lord, but does he not remember that the debt-to-GDP ratio came down for all the years of Brown’s chancellorship until 2008?

[Lord Higgins]

Conveniently or not, I happen to have forgotten that. At all events, let me consider what the noble Lord has just said.

I am glad to see that the noble Lord, Lord Livermore, who had disappeared for a moment, is now back in his place, because what I really wanted to say is that although I did not agree with every single word he said, I very much agree with what he said in general. The Chancellor missed an opportunity to spell out how much more difficult his task had been made by implementing the results of the referendum.

In my view the referendum has produced a disastrous situation. Someone said at the time that people did not vote for a lower standard of living—but that is precisely what they voted for, and it is precisely what they are going to get. That is very deplorable indeed. I agree with the noble Lord who said that it would be helpful if the Chancellor had spelled out the fact that, because of the effect of that vote, we are facing even bigger problems than we otherwise would have done.

It is important that we should not go for a very hard Brexit. We had a debate yesterday about what was going to happen, and we had to reappraise the position. We were saying that we needed a meaningful vote on the result of the negotiations, and there was a long debate about that. Unfortunately, we did not have an opportunity to vote on the place we should start from. The trouble is that the Government started by saying that we are going to withdraw from the customs union and the single market. That will be dangerous and damaging. Parliament really must take a strong position and say that we cannot go along with the implications of Brexit if it means that the living standards of our people will be lower. I think that we have a duty to say that we will not go along with this.

Therefore, as it stands, it is a good Budget but it is a far less good Budget than it would have been if we had not been dealing with the initial implications of Brexit. The situation will certainly be better if we do not continue along that route but instead take a revised view on where the Government should stand on the single market and the customs union.

I add only one point, which was made yesterday, about the Irish border. If we do not leave the customs union, we do not have a problem, and if we do leave the customs union, we do not have a solution. That is the reality. However, overall I welcome the proposed changes to our financial proceedings and debates, and I believe that this is as good a Budget as one can produce in circumstances which are much worse than they would have been if we had not had the result that we did in the referendum.