Queen’s Speech

Lord Mendelsohn Excerpts

Thursday 4th June 2015 Lords Chamber

[Lord Mendelsohn (Lab)]

My Lords, it is a great honour and pleasure to follow such an impressive maiden speech. The Minister is known to me and I was very pleased to hear of his appointment and delighted that he has now taken up ministerial office. The Minister earned an undergraduate degree at the University of Sheffield and a PhD from the University of Surrey. He enjoyed a meteoric rise through the investment banking industry, ending at Goldman Sachs. He should also be known for his services to education, for philanthropy and for his very important work on cities.

Many have previously sought to woo the Minister into political service. I had always hoped that the colour of the shirt of the football team he adores so much was always likely to be a sure indication of his devotions. A recent FT article on his appointment described his political views as “opaque”. Well, from where I sit, he has turned into a Blue—not the most comfortable of places for a Manchester United devotee.

The Minister is an engaging speaker, as we witnessed. An online commercial listing to book the Minister to speak—an old listing, I hasten to say—provides his CV and, to help with your search, has a tab you can press if you are interested to find “similar speakers”. I pressed it. He will be pleased to know that among the eight speakers listed were Franz Beckenbauer and Myleene Klass. He may be comforted to know that the list also included Steve Forbes.

The Minister is a great addition to this house and to the Government. His fantastic work on cities and growth is truly to be admired. I wish him well and wish him every success in his post.

It is always a pleasure to see the noble Baroness, Lady Neville-Rolfe, in her place. I look forward to hearing what she will say later. I congratulate her on her extended role in the Government and hope that the courteous and generous way in which we were able to debate fully on areas of disagreement and collaboratively on areas of agreement will continue in this Parliament.

As someone who still pursues an active life in business, I refer noble Lords to my entries in the register of interests. I am looking forward to this debate and to the maiden speech of the noble Lord, Lord King of Lothbury.

On behalf of these Benches, I want to provide some context to how we will look at the measures proposed in Queen’s Speech and refer to some matters which we hope the Government will consider in their plans. We are yet to be convinced that the gracious Speech provides a strategy to build the productive and sustainable economy that the country needs. There is, for example, a considerable problem with foreign direct investment and its impact on productivity. Our performance is good and has been for many decades, but in the past five years we have clearly seen foreign direct investment’s contribution to UK performance, measured by GDP per head, become a drag on productivity. The coalition Government ended with a wide deficit still in place in public sector finances and external imbalances. Alone among the major economies, this twin-deficit problem is in double-digit territory. A current account deficit represents a country selling its assets and/or incurring debt to finance spending. This is a reasonable strategy if such investments are likely to create a return and to pay off in the long term, but the UK’s problem is that we have been seen to be on a consumption binge. Household savings are weak; household debt is rising steeply and projected to deteriorate further. We may continue to grow but there will be costs and many potential risks and shocks to the system ahead.

The plain truth is that the UK economy has not recovered because of the successful fiscal austerity programme of the Government—quite the contrary: the UK economy recovered because the last Government abandoned the fiscal consolidation programme three years ago and left it for the next Government to deal with. The way in which they dealt with austerity was not balanced. The Minister is in charge of infrastructure, so we hope that he will succeed in delivering effective and long-term investment and making a significant difference.

The likely occurrence of bumps ahead is indicated not just by frequent reports of uneven confidence in different sectors of the economy but by the proposed national insurance contributions Bill and finance Bill. We will not oppose measures that lock the main rates of tax until 2020, as we oppose additional taxes on working people. We want to see the tax burden shared fairly and soberly, with any scope for tax cuts focused only on middle and lower earners. We will not oppose the measures on the national minimum wage even though it is worth pointing out that they provide no additional benefit, as life, frankly, is just too short.

We support efforts to get people back to work, to achieve full employment and to get the social security bill under control. We will look carefully at the full employment and welfare benefits Bill, especially in light of what may be said in the emergency Budget.

We will not oppose the European Union (Finance) Bill, whose purposes we support, and we will clearly support measures in the Bank of England Bill that help ensure that the Bank is able to fulfil its role of overseeing monetary policy and financial stability. We will await the publication of further details.

It is important that the business and economic dimensions are considered in relation to other Bills in the legislative plan, including especially the Cities and Local Government Devolution Bill. We will probe this Bill to make sure that the important economic opportunities are fulfilled and made available to all.

I am concerned that the trade unions Bill masks a much darker purpose that the 20-year trends do not support. No one can accuse me of being in the pocket of the unions and I believe that they require more than just reform, but there lurks something nasty and unpleasant in the construction of this Bill and in its lack of natural justice. The Government should expect some energetic engagement on it.

The centrepiece Bill, which is the expression of the Government’s growth agenda, is the enterprise Bill. I am bound to say that it is a little limited in its scope, but there may be a case for doing a few things well. However, we will naturally support measures that take us beyond where we currently are. We will naturally support, too, measures to make life easier for small businesses, including tackling late payments, as indeed we will support measures to improve the business rates system and address issues around pay-offs for public sector workers. I especially look forward to a detailed analysis and scrutiny of the suggested £10 billion of savings which we have heard about. I am pleased that further measures are planned for small businesses and am grateful for being given a second bite at the cherry on late payments, which is a terrible scandal, with £40 billion to £50 billion of cash failing to circulate properly in the economy and drive economic performance. Having personally examined the Australian arrangements in relation to our debates on the previous Bill, which became the Small Business, Enterprise and Employment Act, I look forward to understanding the Government’s argument for the new proposals.

The Queen’s Speech is quite bold in its language but modest in its scope. The country needs to strive constantly for a low-cost and more business-friendly environment; a more skilled labour force; better economic infrastructure; an industrial policy that fosters competitiveness, innovation and entrepreneurship; balanced and long-term investments; to make the case for the positive role of business in creating prosperity, employment and fulfilment; and, most crucially, to address the productivity failure of the past five years, which will undoubtedly be the greatest challenge for the next 10.

We will rigorously scrutinise every Bill that is before this House. We will be constructive and collaborative where we can be but our economy and businesses need more than what is on offer and we will not shirk from suggesting what can be done within the bounds of the conventions. We will not hesitate to challenge the Government when the occasion demands.