Economy: Growth

Lord Monks Excerpts

Thursday 6th December 2012 Lords Chamber

[Lord Monks]

My Lords, as the noble Lord, Lord Heseltine, rightly says in chapter 7 of his report:

“If there is an upside to the worst … crisis of modern times, it is the emergence of an audience for deep seated and radical proposals”.

Indeed, we cannot just go back to business as usual, pre-2007. We know that we must rebalance our economy towards innovation, manufacturing, infrastructure and the weaker regions. We must save more and invest more. We should not continue to treat the City of London with exaggerated reverence, adopting an almost protectionist zeal that we do not apply to any other sector. The City can be an asset but the banks can be near-lethal to the country, as they were in 2007-08.

The noble Lord, Lord Heseltine, details measures that aim to get the UK economy match fit. For starters, this has to be done up to the level of our neighbours on the other side of the North Sea—Germany, the Netherlands, Flanders and the Nordic states. They have high productivity, positive balances of payments, strong social states, excellent training systems, scope for local and regional initiative, and influential trade unions. Those neighbours are savers and investors.

We have covered our lack of match-fitness in the past, sometimes with North Sea oil revenues and then with the boom in the financial services sector. There are no further windfalls in view and no more short-term fixes except, perhaps, devaluation, of which we have had seven against the deutschmark or the euro since the end of the war. We must surely not rely on devaluation for our future strategy. By the way, the last thing we need is a self-imposed exile from the EU unless it bends to our model. That would be, in effect, a sort of voluntary Dunkirk—and that was a defeat.

Many of the recommendations of the noble Lord, Lord Heseltine, nod in the direction of Germany and the lessons that that country provides for the UK. I add one more: the advantage of codetermination over adversarial relations at work. These codetermination principles seem outlandish to many in the UK, but they keep managements more long-termist and less inclined to help themselves to a disproportionate share of company profits. They guide unions in the right direction, too.

The nation owes much to the long period of public service of the noble Lord, Lord Heseltine. I think of Docklands in the 1980s, Manchester in the 1990s after the bomb, and especially Liverpool over a long period, as well as many other matters, some of which have been mentioned. With this report, we are in his debt once again, and I urge the Government to act on its central recommendations.