Spending Review 2020

Lord Tunnicliffe Excerpts

Thursday 3rd December 2020 Grand Committee

[Lord Tunnicliffe (Lab) [V]]

My Lords, this has been an excellent debate, with a range of thoughtful contributions. While we have had several Treasury Statements in recent months, there has not been an opportunity either to look at the economy in the round or to hear from such a range of voices. The Back-Bench contributions may have been short in length, but the Minister has been left with plenty of questions to answer, as well as constructive ideas to take back to the Treasury.

This is the second spending review in a row to duck the challenge of setting out a medium-term plan for the UK economy. While the past two years have been highly unusual in several respects, that makes it even more important to have sight of a comprehensive action plan. We have known for some time that this exercise would be lacking in this respect, which is a disappointment when so many—ourselves included—have spent so long calling for a proper economic strategy.

Why does this matter? When they come under legitimate scrutiny, this Government often seek to turn the tables by asking why others will not simply follow their lead. The reason is simple: confidence. In cases where opposition parties, NGOs and the public have had confidence in the decision-making process, they have lent their support. However, it feels as though major policy and procurement decisions are being taken increasingly on the fly, without due process. Where this happens, it is simply not possible to have confidence in the Government.

The Chancellor’s failure to use this opportunity to present a proper economic vision further undermines confidence. That such a plan is needed is beyond doubt, particularly when looking at recent growth statistics and the OBR’s new forecasts. The UK has suffered the worst downturn of all the G7 nations. On Wednesday, the OECD forecast that our recovery will take longer than that of the rest of the G7. Even before Covid-19, the economy was posting disappointing GDP growth figures, and the OBR predicts that we will return to annual growth of less than 2% in just a few years’ time.

The Government’s failure to address structural economic problems over their decade in office means that we are stuck in a rut. This exercise both reflects and exacerbates the lack of certainty around our economic future. With just weeks until the deadline for a deal with the EU, we still have no idea whether there will be one and, if there is, what it will look like. The lack of detail and forward thinking is also a result of the Chancellor’s continued refusal to formulate an ambitious green agenda to bolster British manufacturing and create millions of new, well-paid and sustainable jobs. We need a genuine plan that matches the ambition shown by several other major economies, not just catchy headlines and soundbites.

The Minister will no doubt point to various initiatives announced last week, including the so-called levelling-up fund, as evidence of a grand plan. However, given the short-term nature of this spending review, those initiatives are unlikely to deliver the boost that our economy so desperately needs. It is also hard to have confidence in the new schemes that we have been offered, given recent experiences with both the towns fund and the procurement of PPE and medical supplies. We need government funds invested in the communities where they will make the greatest difference, rather than where senior Ministers believe they can produce a political dividend at the next election.

I am afraid to say that this spending review fails on several other important fronts. The decision to freeze the pay of many key workers who have helped to get the nation through the pandemic is, quite frankly, a disgrace. Not only does it contradict the Government’s warm words from earlier this year; it will also leave less in people’s pockets and, by extension, in the tills of businesses up and down the country. This is a time to boost consumer confidence and spending, not suppress it.

I very rarely agree with the former Prime Minister, David Cameron, but I refer noble Lords to his recent comments on the importance of the statutory commitment on overseas aid. The decision to undermine this requirement will be a real knock to those countries that rely on our assistance to address their social, economic and environmental challenges. Following the recent United Kingdom Internal Market Bill debacle, I also worry that this announcement will further undermine our reputation among international partners.

Local authorities can have no confidence in the Government’s response to their ongoing plight. They were promised the money that they needed to get through Covid-19, yet the reality has been very different. Ministers have attempted to play city regions and councils off against each other, which has done little for public morale or to foster the kind of collaborative spirit that we need between different levels of government. Rather than working with the Local Government Association and others to address long-standing concerns properly, we have instead seen the announcement of limited grant funding coupled with greater flexibility to increase council tax. This may plug gaps for now, but again, there is no comprehensive and sustainable vision for the future.

Sectors hit disproportionately hard by the pandemic and the restrictions that it has necessitated, such as hospitality, needed additional help in last week’s Statement. We support the tier system but we have always said that it must operate alongside appropriate support for those most affected. Earlier this week, we heard that some pubs in tiers 2 and 3 will receive a one-off grant. This amounts to yet another last-minute and reactionary announcement, rather than giving businesses the tools that they need to rebuild. Given the number of areas in tiers 2 and 3 and the likelihood that restrictions will continue for months rather than weeks, it is disappointing that the Government’s wider support programmes have not been reformed to address long-standing shortcomings. The self-employed and the self-isolating have also been let down.

Rather than making the £20 universal credit uplift permanent and extending it to recipients of legacy benefits, the Chancellor instead looks set to axe it from April 2021. Confidence in universal credit has been close to non-existent for some time, with its initial record of delays being replaced by a string of other problems. Once again, there has been an opportunity for action to improve the social security net for all. Sadly, Ministers have not made the responsible and proactive decision to take that opportunity.

The test for this spending review was for it to provide evidence of forward movement, instil confidence in the Government’s handling of the economy and signal a future centred around recovering jobs, retraining workers and building business. It failed all these tests. We are lagging behind our peers, yet key questions have been left unanswered for another year. Unless urgent action is taken, we cannot make our country the best to grow up and grow old in.