Autumn Budget 2024

Lord Londesborough Excerpts

Monday 11th November 2024 Lords Chamber

[Lord Londesborough (CB)]

My Lords, as speaker number 22 of 75, can I open with a quick observation? Over eight long hours, we each wait to speak for five minutes, raising scores of questions that the Minister will struggle or fail to answer. Is this a great advert for public sector productivity; then again, is the Budget?

I will avoid the bipartisan ping-pong match over that black hole, and, instead, I will start with macro and move on to micro; specifically, the impact on our SMEs, which is my background. The Chancellor was right on a number of big calls: the tax burden had to go up; spending has to increase, especially in health, defence and education; and there is a strong case to increase borrowing for investment, whatever definition of debt you choose. For the UK has an ageing, increasingly sick and economically inactive population, resulting in a shrinking workforce and a surge in dependency ratios. Spend on health and social care, welfare and net zero will significantly outpace the OBR’s trend forecast of just 1.5% growth.

As we know, the tax burden climbed under the Conservatives from 33% of GDP to more than 36%, and it is now heading for 38%; and unless we tackle our low-growth, low-productivity malaise, it is set to reach 40% very quickly. So, yes, Jeremy Hunt’s 2% cut in National Insurance was a reckless fiscal act; the new Chancellor could and should have reversed those cuts to send out a message that it is economy first, politics second—opportunity missed. Instead, she and the Prime Minister tied themselves in knots by pledging not to increase taxes for the “working people”. As a result, business and wealth creators are being saddled with almost the entire £40 billion tax rise, making a mockery of Labour’s core mission to deliver

“the highest sustained growth in the G7”.

To hit employers, especially SMEs, with a £25 billion national insurance tax hike, while raising the minimum wage by more than three times the rate of inflation, is an act of self-harm. Ultimately, of course, it will hit the workers where it matters most, which is in their gross pay.

My Lords, I was an entrepreneur for 30 years and, for the last 10 years, I have backed, chaired and advised over 20 start-ups. I declare my interests as set out in the register. I will briefly share the feedback on the Budget that I have received over the last two weeks from founders and CEOs at the coalface. In short, they will cut pay increases and staff bonuses. They will cut back on new job creation and trim headcount. They will scale back on plans for expansion in both 2025 and 2026. Those who can will pass on the increased costs of employment and their supplies to the consumer.

We are not only taxing jobs and growth, but doing it in a grossly disproportionate way, hitting the small to medium-sized businesses that employ between five and 200 staff. They make up a crucial component of GDP growth.

One of the businesses I support is a rural community pub—the only employer and social hub within a five-mile radius. It tells me that this Budget, combined with the minimum wage hikes which account for a 16% increase over two years, will entirely wipe out their modest profit margins.

I will finish with three quick questions for the Minister. First, why target entrepreneurs, who create jobs and take great risks, while income tax and national insurance for the highly paid is untouched? Secondly, one of the biggest growth blockers in our tax system is stamp duty; why raise it? Thirdly, if you are claiming to be fiscally responsible and committed to net zero, why continue to freeze fuel duty? This Budget may be bold, but it is unbalanced. It is tough on growth and tough on the causes of growth.

Working From Home: Public Sector Productivity

Lord Londesborough Excerpts

Wednesday 23rd October 2024 Lords Chamber

Asked by

[Lord Londesborough]

To ask His Majesty’s Government what assessment they have made of the impact of working from home on productivity in the public sector.

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

My Lords, the Government inherited a situation where public sector productivity remained 6.4% below pre-pandemic levels. This is clearly unacceptable. Our focus is on fundamental reform of our public services, to drive greater efficiency and productivity. Further details on this agenda will be set out in the Budget and spending review.

Assessments of the impact of working from home on productivity seem—so far—to be inconclusive. The Government are very clear on the benefits of collaborative face-to-face working, in the Civil Service in particular. Studies by the IMF, the University of Manchester, the CBI, Google and Amazon have set out clear advantages to a hybrid working model.

[Lord Londesborough (CB)]

My Lords, my Question was prompted by an interesting claim made by the Minister’s colleague the Business Secretary. He said that

“allowing working from home creates a more productive, loyal workforce”.

I suggest that that is a sweeping statement, lacking in hard evidence. This is clearly an area where one size does not fit all. When will we see some credible, data-driven research, across all areas of the public sector, to measure the real impact of working from home on productivity?

[Lord Livermore (Lab)]

I agree 100% with the noble Lord that one size does not fit all. So far, studies have been reasonably inconclusive. Some have shown significant drawbacks to working from home, including a lack of social interaction and the associated mental health impacts that that brings, less progression—especially in the early stages of a career—and less creativity and innovation. But there are also some clear advantages to a degree of hybrid working, including more focused working, the ability to work on confidential issues and some interesting labour-supply impacts, particularly for those with disabilities or childcare responsibilities. So I think the jury is out, but more studies are being undertaken all the time.