Budget Statement

Lord Razzall Excerpts

Wednesday 3rd November 2021 Grand Committee

[Lord Razzall (LD)]

My Lords, it would be fair to say that there has been a mixed response to the Financial Statement. Noble Lords have made a number of criticisms; I would add three comments.

First, whatever the Chancellor’s justification, cutting air passenger duty for domestic flights in the context of COP 26 seems reminiscent of George Osborne’s ill-fated pasty tax. Secondly, to spend more money on a tax reduction for bankers than on the catch-up for schoolchildren seems ill-advised. Thirdly, following the Statement, independent forecasters now calculate that, by 2026, the average working person will be no better off in real terms than they were 30 years ago.

Of course, the Government blame the pandemic for much of their problems, but I fear the cat is now out of the bag, as revealed by OBR Blue Book. Brexit is much more to blame than the pandemic for our forecast economic position. The Government say that all economies are suffering, but page 7 of the executive summary in the OBR book states clearly that in the UK, unlike in other countries,

“supply bottlenecks have been exacerbated by changes in the migration and trading regimes following Brexit. Energy prices have soared, labour shortages have emerged in some occupations, and there have been blockages in some supply chains”.

Page 59 suggests that two-way trade with the EU has reduced by 15%, a large gap to be filled by trade outside the EU. This is where the OBR also says that the full effect of the referendum outcome has not yet come through.

Anyone who does not believe me should listen to Richard Hughes, the OBR chair, who gave an interview last week to the BBC in which he said that Brexit reduces UK GDP by 4% in total while the pandemic does so by only 2%, so Brexit has double the outcome for our economy of the pandemic, as the noble Lord, Lord Eatwell, said.

The dramatic effect of Brexit is illustrated also by the table of forecast GDP growth on page 50 of the OBR Blue Book. It gives a figure of 2.1% for 2023, then only 1.3% in 2024, 1.6% in 2025 and 1.7% in 2026. Where are the sunlit economic uplands that we were promised by the Prime Minister and others when we left the European Union?

The Brexiteers also promised us freedom to innovate and develop our scientific potential outside the European Union. Clearly, our continued participation in the European Union’s Horizon 2021-27 programme is a key part of our continued research and development programme, yet, although our participation was agreed in principle before Christmas, negotiations on a formal agreement have dragged on for months. Even Ukraine has beaten us to it. The president of the Royal Society, Sir Adrian Smith, has called for negotiators to stop treating the issue of research funding as a bargaining chip in other disputes with the European Union, and even Sir Bill Cash says that the delay is damaging UK businesses, although I suspect he blames the EU.

I can only assume that Brexiteers believe that there are other advantages for us of being outside Europe. As the OBR has clearly demonstrated, they are certainly not economic. I hope that the Minister will acknowledge this, although I doubt that he will.