Economy: The Growth Plan 2022

Lord Liddle Excerpts

Monday 10th October 2022 Lords Chamber

[Lord Forsyth of Drumlean (Con)]

Fine, I will give way.

[Lord Liddle (Lab)]

How does the noble Lord explain away the fact that the Government introduced the largest set of tax cuts and the biggest increase in the budget deficit since the time of Anthony Barber in 1972?

[Lord Forsyth of Drumlean (Con)]

How does the noble Lord explain away the fact that his Front Bench supported all of it, including the reductions in national insurance and the basic rate of income tax? They did not support the corporation tax cut but that is presumably because they do not recognise the importance of having investment in our country. Where does investment come from? It comes from retained profits after tax; that is how I would explain it. It is actually to the credit of the Opposition that they supported the populist things. But they concentrated on the cut to the top rate of tax, which the Government have since decided not to go ahead with.

Inflation is the enemy. Jim Callaghan, a great Labour Prime Minister, warned us that

“inflation is the father and mother of unemployment”.

That is why the Government are determined to try to get growth, and why we need to recognise that continuing with QE on the present scale will result in inflation and a disaster for both unemployment and our country’s prosperity. The era of free money is over. We need to concentrate on wealth creation, not wealth consumption. We need to save every penny; we could start with our own front door in this place, which is costing £2.5 million. Use the candle ends. Look at programmes and decide on priorities. Personally, I think that increasing universal credit should be a priority. However, if that is to be funded, people must recognise that it will mean cuts elsewhere.

So I say this: all support to the Prime Minister. Stop the personal attacks and look at the reality, because if we get this wrong people’s mortgages and costs will go through the roof—and they will not be able to blame the Government.

--- Later in debate ---

[Lord Liddle (Lab)]

I join the noble Lord, Lord Lamont, in welcoming the noble Baroness, Lady Neville-Rolfe, back to the ministerial Bench. There is much in the speech made by the noble Lord, Lord Lamont, with which I agree. We all want growth, and it is a realistic ambition to try to turn Britain back to the 2.5% growth figure that we enjoyed until the financial crisis. The question is how to do it in a way—I think this is an important point—where the whole of society benefits. The fact is that the growth we have seen since the financial crisis has not trickled down. People on median wages and below have not seen any increase in their standard of living. This is an important thing that future government policy has to address.

As for the details of the plan for growth, there are some things in it with which I agree, but it is limited in its vision. If the Government had paid attention to business, business would have put skills at the top of the list and said that what is needed is more apprenticeships and more people with higher technical qualifications. On pages 19 and 20, which talk about getting more people into work with the right skills, there is not a single mention of that agenda and what the Government are prepared to do about it.

On housing, there is the cut in stamp duty but no clarity on how planning law is to be changed. We know that Conservative MPs in the Commons hate this. There is no mention of any need for social housing.

On infrastructure, there is a sort of half-acknowledgement of guilt that it was the Conservative Back-Benchers, again, who stopped onshore wind—one of the most positive things we could have done to cut energy bills. Let us see whether the objections to onshore wind can now be overcome.

Things such as Northern Powerhouse Rail, which we have been talking about for a decade or more, are on the list of things that the Government might do, but what credibility is there that they will actually do them? Investment zones are an interesting idea, but I have read the academic evidence and it is not very positive on whether they produce results.

There is a point that I think is original. A lot of the Johnson levelling-up agenda was about how we reinvigorated our town centres. Lots of government money is being funnelled into that. These investment zones will be on brownfield sites outside town centres; this seems to be a fundamental contradiction. If I were to encourage investment in my home town of Carlisle, I would want to see it in the centre and on the fringes of the centre, not on some site outside.

The fundamental thing about this Government’s policy is that they have lost the reputation for macroeconomic stability that is fundamental to encouraging business to invest. It was the most irresponsible and reckless Budget since Barber’s in 1972. It caused turmoil in the markets, which threatened the future of people’s pensions. It will lead to spiralling mortgage costs. As the noble Lord, Lord Macpherson, pointed out, there are risks here of a contradiction with monetary policy.

On the fiscal plan that the Government are committed to coming up with, I do not believe the numbers can be made to add up by public spending cuts, which would be both counterproductive in their impact on growth and politically undeliverable. I agree with the noble Lord, Lord Macpherson, that some of the announced tax cuts should be cancelled.

This is not a plan for growth. It is an economic disaster.