Autumn Statement 2022

Lord Razzall Excerpts

Tuesday 29th November 2022 Lords Chamber

[Lord Razzall (LD)]

My Lords, nobody could doubt that the British economy is a basket case, and I see nothing in the Autumn Statement that can help what most people regard as the sick man of Europe.

The economic indicators for the next few years are all negative. First, our growth forecast for 2024, 2025 and 2026, as indicated by the OBR, is the worst of all the G20 countries other than Russia. Secondly, government borrowing is at its highest ever level, as noble Lords have indicated, and as a proportion of GDP, it is the highest since the Second World War. Interest costs are helping to cripple the public sector, and as the OBR tells us, the actions of the Bank of England through quantitative easing to get us through the pandemic have involved swapping long-dated gilts for floating rate reserves, thereby giving an early rise in interest rates for government debt as inflation increases. This has made the situation worse. Thirdly, as always, our productivity is the worst of all the G7 countries. The only way to improve productivity is growth and investment, but any policies to help growth have been damaged by the recent antics of the former Prime Minister and Kwasi Kwarteng. Investment possibilities have been reduced; we are no longer the desirable market we once were. Although I disagreed with a lot of Tory policies, I used to believe that at least the economy was safe in their hands—would that were still the case.

Turning to the Autumn Statement itself, first, the freezing of tax allowances to increase tax revenues is a con, if your Lordships will pardon the pun. This is simply designed to enable the Chancellor to stick to the manifesto commitment not to put up income tax rates, but so-called fiscal drag will put up tax for most people. This is clearly an unfair way to proceed.

Secondly, the Government have refused to admit that they have introduced a windfall tax on energy companies despite the fact that they have. Presumably they are saying they have not because the Lib Dems and Labour were calling for it—but they have done it and called it something else. Nevertheless, they have not taken proper advantage of the opportunities given by the huge energy profits. Putting up the rate is not enough. It is ridiculous that the availability of an investment allowance has allowed, for example, Shell to pay no windfall tax despite worldwide profits of nearly £30 billion this year. This tax needs serious reform.

As usual, as my noble friend Lord Shipley said, we have had the clobbering of local authorities. They will be allowed an increase in council tax to fund essential expenditure so that they can be blamed for tax increases to pay for services which should be funded by central government—the same old con trick.

Of course, your Lordships would not expect me to pass on this speech without indicating the elephant in the room: Brexit. The Government say that the major reasons for our disastrous recent economic performance are the pandemic and the war in Ukraine, but our European neighbours have been affected by those factors, and they are doing better than us. As the previous Governor of the Bank of England indicated recently, before the referendum the UK economy was 90% of the size of Germany’s, but that figure is now 60%. As the noble Lord, Lord Eatwell, indicated, despite the fact that the value of the French stock exchange was half of ours in 2015—before the referendum —ours is now smaller than theirs. The OBR let the cat out of the bag over a year ago when calculating that there would be a 4% per annum reduction in our GDP as a result of Brexit, which is significantly greater than the effect of the pandemic. Without Brexit, we would have the growth we need—and, dare I say, maybe Liz Truss might still be Prime Minister.

There are countless examples of the economic damage done by Brexit. I am sorry that the noble Lord, Lord Frost, is not in his place to respond to this, but I will simply mention three. First, we have difficulties exporting our shellfish to Europe; this should have been dealt with in the negotiations. Secondly, our musicians cannot tour Europe because of individual European countries’ restrictions, despite the loss of export earnings from this. The noble Lord, Lord Frost, indicates that this was an oversight. Thirdly, many SMEs have stopped exporting to Europe because of increased bureaucracy.

Any improvement in our economic relationship with Europe is frozen while the Northern Ireland protocol issue is not resolved. Even Andrew Neil told us in the Mail last week that Brexit has not delivered what people voted for: a reduction in immigration. We can forget the ONS figures from last week of net migration of over 500,000 last year, as there were clearly special factors involved. However, the OBR figures for 2025, 2026 and 2027 are based on over 200,000 net migrants generating economic activity, without whom our growth prospects—already the worst in the G20, other than Russia—will be even worse.

Is this what the Government planned when they won the last election on the slogan, “Get Brexit done”? Is this what their red wall voters voted for? When will the Government recognise that Brexit has not brought the proposed sunlit uplands that we were all promised? Does the reaction to the floating, apparently from Downing Street, of a Swiss-type deal mean that we are frozen for ever in a disastrous economic limbo? When will the Government begin serious talks with the European Union to improve our trading relationships and help our economy?