King’s Speech (4th Day)

Lord Morse Excerpts

Monday 22nd July 2024 Lords Chamber

[Lord Morse (CB)]

My Lords, I thank the noble Lord, Lord Fox, and warmly welcome the noble Lord, Lord Vallance, to this House and congratulate him on his brilliant maiden speech. I apologise for my husky voice, by the way—there is nothing I can do about it.

It is encouraging to see the new Government putting sustained economic growth at the top of the agenda. Not many would disagree, but the key issue will be how the Government go about putting their objectives into effect, and how they respond when things do not work according to plan. I will explore this in two contexts: how do we strengthen the attractiveness of the UK as an investment target, and how do we reinforce the appetite of UK business to invest and grow?

International investor confidence in the UK has traditionally been high, because we were seen as sound and stable, both fiscally and constitutionally. This has taken a bit of a shaking in recent years. Proposals in the King’s Speech for fiscal discipline will help rebuild this in large part, provided that the Government are robust in maintaining that discipline when challenges come—as come they will, and the markets will be watching. We also need to show that the UK has a strong sense of shared responsibility across the political divide, and a stable relationship between the courts and government, which again has lapsed a bit recently.

I turn to UK business and its confidence to invest and grow. A great deal will depend on businesses’ assessment of the risk in doing so over the medium term. A planned five-year stability in the corporation tax rates will help provide confidence, provided this apparent stability is not undermined by hidden taxes on business, such as might occur as part of the planned business rates reform. Equally, a shared industrial strategy can help provide business with a stable planning and decision-making background, provided that the industrial strategy council does not turn out to be a way of cramming government and trade union views down on business. It is also very important that it is not seen as a way of taking somewhat out-of-date solutions, such as nationalisation, and bringing them back into effect. The Government really need to not get hung up on any of these outdated solutions, and to be agile and quick to adapt if they are not working.

Some of the planned reforms may be more difficult to implement than is anticipated. Take the example of the reform of employment law; it would not be surprising if one unwanted result of these changes was a reluctance by employers to recruit because the new employment rights will make it harder for them to let staff go if the business finds itself in trouble. How agile and realistic will the Government be when they face these sorts of difficulties?

Finally, the Government have committed to speak honestly about the issues that this country faces. Are they being honest in the proposed changes to the defined pension rules? Most large UK pension funds have a global portfolio of investments; this spreads the risk and improves investment returns for pensioners. If these funds were pressured into investing a predetermined amount of their portfolio in the UK, this would be unlikely to represent an improvement for pension beneficiaries. In fact, let us be honest, it would probably provide something useful for the Government in their growth policy objectives, and put benefits to pensioners under threat. The Government will need to walk the talk when it comes to honesty and openness—they need to work on that very impressively.

If the new Government succeed in creating an effective partnership with UK business, where UK business feels heard and that its need for stability is understood and provided for, they will have achieved something really valuable and done much to build growth. If we manage to make the UK a more attractive investment target again, we will all benefit from that. I offer my best wishes to this new Government, and wish for their success in the national interest.