Budget Statement

Lord Horam Excerpts

Monday 4th December 2017 Lords Chamber

[Lord Horam (Con)]

My Lords, it is always a pleasure to follow the noble Lord, Lord Bilimoria. He may be interested to know that, when I first became a Member of Parliament along the Corridor, the Prime Minister was Ted Heath—that rather gives away my age. He had a Secretary of State for Trade and Industry called John Davies, who had been chief at the CBI. John Davies had a very tough policy on lame ducks. As it happened, Norman St John-Stevas, had had an accident rather similar to that of the noble Lord’s. He rose at Question Time pleading with him not to be tough on lame ducks. It is a rather long-winded way of saying that I hope that the noble Lord recovers from his accident. He has certainly shown no lack of energy.

We are used to Budgets unravelling with great rapidity in recent years, usually over some relatively trivial, second-order issue. This one has not unravelled so far, as the Chancellor said the other day: 12 days with no unravelling must be some kind of record. It was not only sensible but sure-footed in that respect. There were some extremely sensible provisions in it.

I particularly welcome the help for the homeless. The noble Lord, Lord Best, and I, with a great deal of help from Shelter, lobbied the Chancellor about this before the Budget. Never has my lobbying succeeded before, but on this occasion it did. The Government responded by increasing the so-called targeted affordability fund. This is the fund that puts money into those areas where the gap between the rate of benefit, which has been frozen so far, and local rents is highest. The calculation is that this will save 140,000 people over the next two years from becoming homeless. The upside of this, I tell my noble friend Lord Bates, is that we have cancelled our application to have a further lobby with the Minister for Housing, but we are keeping an eye on things because the fact is that housing is, as the Prime Minster herself said, a core issue for this Government, and much more needs to be done than was evident in the Budget.

The objective, as we know, is to achieve 300,000 houses a year. My noble friend Lord Tugendhat was a little disappointed by the figure of 300,000, pointing out that it was what Harold Macmillan aimed for and achieved in the 1950s. Does he not remember how much simpler things were in the 1950s, when we were very young? It was easy in those days for us to achieve that objective. I do not think that 300,000 houses a year, given the planning difficulties we have in this country, which have accumulated over the years, is that bad an aim. Indeed, I think it will be quite hard to achieve.

I recommend to the Government that they concentrate on two things in trying to get there. The first is incentivising housing associations. Housing associations have committed themselves to achieving a target of 120,000 houses a year, which I think is a very challenging target. They will need all the help they can get to get there. Remember that housing associations are no longer part of the public debt; therefore, the Chancellor can help them without adding to public borrowing, which is a very admirable situation to be in. Secondly, we need to stop selling publicly owned land at the highest possible price. We need to look at the guidance on best value to local authorities, because the land issue is fundamental to getting house prices down.

On the bigger economic picture, the Chancellor was more relaxed about borrowing than some of his predecessors. Here, I am afraid that I disagree with the noble Lord, Lord Hain, and agree, surprisingly, with the economics correspondent of the BBC, who pointed this out. He has borrowed more than he thought he would and the markets did not move an inch, frankly. That rather confirmed my view that the Treasury has always been too concerned about market reaction to excessive deficits. The best way to power down the deficit of a country is to prioritise economic growth. Certainly, we should keep a firm grip on current spending, but to cut back on capital spending is actually very foolish: we should keep that as level as possible over the years, which is the way to get sensible and sustainable economic growth.

The fact is that the pressure on the Chancellor to produce an ambitious, radical Budget was unrealistic. Janan Ganesh, political correspondent of the Financial Times, said:

“They expect them to write a symphony in the middle of a cage fight”.


The cage fight analogy is journalistic hyperbole, but I appreciate that there was a certain amount of unhelpful offstage noises accompanying the Chancellor’s attempt to solve our economic problems. I think he resisted those and produced something very controlled and balanced.

None the less, the fact is, as a number of noble Lords have pointed out, that there are severe structural problems remaining in the British economy. We are, and have been for decades, short of skills, low on investment, both private and public, and not very good at exports. Exports make up 27.6% of our GDP; they make up 46% of Germany’s GDP. That is the real problem that we have to face. It can be solved. Before I became an MP, I started a company which has become a medium-sized company with 250 employees: we export 92% of all our sales. I have never seen a trade agreement. So it can be done, if you have the right product and a willingness to get behind it and tackle world markets.

The issues remain to be tackled, but the Government produced a responsible and competent Budget which keeps us heading in the right direction.