Economy: Growth

Lord Wood of Anfield Excerpts

Thursday 31st March 2011 Lords Chamber

[Lord Wood of Anfield]

My Lords, it is a privilege to be standing before you today. In particular, I am proud to be representing the cause and interests of redheads from across the political spectrum. I pledge to stand up for this minority in the years ahead. As an academic, my experience of public speaking has largely been limited to university lecture halls. I was given three tips by an academic colleague before my first lecture that I have obeyed religiously ever since. First, always insert a joke just after halfway through to wake your audience up if they are in danger of falling asleep. Secondly, never distribute your hand-out before you begin speaking or else your audience will pick it up, walk out and get a cup of coffee instead of listening to you. Thirdly, like Cicero, always make your points in groups of three. This advice has stood me in good stead and I pledge to repeat this formula during my contributions to the House in the years ahead.

I have felt not just a slight sense of awe but a great sense of humility since beginning my time on these famous red Benches. That is in part because, as a student and teacher of politics, I am acutely aware of the wisdom, distinction and contribution to Britain of generations of noble Lords who have come before me and served in this House, and in part because, at its best, I know that this House can provide an opportunity for scrutiny, reflection and collaboration in a political system otherwise short of such qualities and a place to speak up for those whose voices do not often get heard.

I am also humbled by the fact that I am surrounded by many of the people, on all sides of this House, who inspired me first to study, then teach and then practise politics. I had a sense as a teenager that politics was, as Tony Blair once said,

“the place for the pursuit of noble causes”—[Official Report, Commons, 27/6/07; col. 334.],

and could offer the possibility for ideas and collective action to change our country for the better. I believed it strongly during my time working for the former Prime Minister, Gordon Brown, to whom I will always be indebted and whose dedication to public service is second to none. I still believe it passionately and I hope my time in this House fuels rather than dims that optimism. Lastly, I thank noble Lords from all sides of the House for their kindness, in particular my noble friends Lady Nye and Lord Kinnock for their encouragement, friendship, cups of tea and hand-holding.

Growth is of course the necessary condition for meeting the aspirations of the British people and funding the public services on which we all rely. My point today is that we should take this opportunity as a country, as we emerge from the international recession, to move beyond a simple concern with what Keynes called,

“the growth of the cake”,

as,

“the object of true religion”.

In particular, we need to focus on three crucial aspects of economic growth. First, we need to aim not just for growth but for sustainable growth in which consumption is based on rising living standards, not excessively dependent on borrowing; where business profits rise as a result of investment and innovation, not simply through speculation; and where environmental sustainability is built in rather than bolted on to the business models of small and large firms alike. This is a long-term ambition. It cannot be achieved through a quick fix, and it requires thinking about how we reshape our economy in quite fundamental ways.

Secondly, we need to move on beyond the rather stale polarity of laissez-faire on the one hand and the demonisation of old-style corporatist industrial policy on the other, to work out not whether but how a Government can provide secure foundations for long-term growth and for raising productivity. Increasing the value of what we produce demands an intelligent role for government intervention: to stimulate greater innovation, modernise our infrastructure and ensure that our banks serve the investment and research needs of companies as well as they serve the short-term interests of their shareholders.

Thirdly, alongside our determination to restore growth, we must have equal determination to ensure that the proceeds of growth are enjoyed by the many, not the few. This is not the case at the moment and has not been for a while. In 1979, the top 1 per cent received under 6 per cent of Britain’s personal income; in 2005 they received over 14 per cent. For the last 30 years, 22 per cent of every extra pound earned has gone into the pockets of the top 1 per cent. Since the global recovery from the financial crisis began, real wages in the USA have increased by $168 billion and in Germany by €36 billion, but in Britain real wages have actually fallen while profits have risen by £14 billion.

In the United States a debate is raging about how growth can raise living standards for all, and whether it is globalisation, technological change, the competition for talent or political choice that is behind the increasing polarisation of rewards. In Britain that debate is only starting now but is long overdue. I hope that noble Lords agree with me that it is a subject to which we should devote some time in this House in the coming months and years, because doing our utmost to ensure that economic growth is not only strong and secure but shared widely is surely among the first duties of those who govern Britain.