King’s Speech

Lord Horam Excerpts

Monday 13th November 2023 Lords Chamber

[Lord Horam (Con)]

My Lords, I congratulate my noble friend Lord Gascoigne on his maiden speech. He and I come from the Ribble Valley; he will know, as I do, that they speak a lot of common sense in that part of Lancashire. We will hear a lot of common sense from him in future years. I am also delighted, as usual, to follow the noble Lord, Lord Desai, who is a very distinguished economist. I am a much less distinguished economist, but I have followed economics closely ever since I read it at Cambridge many years ago.

My view at the moment, sadly, is that the economic model that all Governments have followed since the Blair/Brown days is leading us badly astray. Gordon Brown rather let the cat out of the bag when he said that what drove economic growth in the UK was immigration and construction. That approach continued under the following Conservative Governments. Even now, Jeremy Hunt will say that 50,000 more immigrants will give him an extra 0.1% growth in GDP—at the moment, he needs all the fractions he can get. Even the Labour Party now subscribes to this orthodoxy. Sir Keir Starmer has said that Labour will build 1.5 million houses within the Parliament if it is elected and has clearly indicated that it will be more relaxed about immigration.

The problem with this approach is that it has serious downsides. Immigration is not a free good, as the Treasury appears to presume. On the scale we have recently allowed it—net more than 600,000 last year—it reduces the incentive to invest in skills and machinery, which is vital to productivity. The noble Lord, Lord Liddle, made the point about productivity; many economists have said that the reduced productivity over the last two years is in inverse relation to the amount of immigration. It also increases poverty and low wages among people affected by it. Immigration also adds to the demand for housing. Labour is promising 1.5 million new homes in the new Parliament, but it has been calculated that even 1 million would mean covering an area the size of Bedfordshire. How much of our green and pleasant land will be left to our children and grandchildren if we go on like this?

We should not go on like this. Fortunately, there is an alternative in the Far East. Countries such as Taiwan, South Korea, Singapore and Japan do not rely on mass immigration and associated housebuilding. They have little or no immigration. They invest in the skills and machinery needed to make their existing populations more productive. Instead of focusing on the size of their economy—crude GDP—they look at GDP per capita, which measures the wealth of the country. They have gone in for the more productive kinds of manufacturing. Taiwan makes two-thirds of the semiconductors in the world; South Korea has nine times as many robots as we do in the UK; even Japan, which has long had a very unfavourable press in the West, now benefits from massive investment by Warren Buffett, the American investor. As a consequence, they are now richer than we are. Per head of population, Singapore is much richer than the UK and South Korea is nearly as rich. Taiwan is richer than the UK per head of population and even Japan is closing fast. Their approach works. They have even got to grips with the problems of an ageing population by extending the working life of ordinary people and using additional technology.

We need to look at this. We need to change. I sense that the Prime Minister may have a glimmering of this, since he said in his conference speech that we need to change from what we have been doing for the last 20 or 30 years. He was derided for saying so, but he has a point. One way he could tackle this is to form a small committee of economists and businessmen—rather like the US President’s committee of economic advisers—and give them six months to come up with an industrial and labour force strategy that does not rely so much on construction and immigration. The Prime Minister has shown that he is prepared to take a refreshing view of his Cabinet and the people who work in government; he should now have a refreshing view of our policies.