Budget Statement

Viscount Eccles Excerpts

Thursday 27th March 2014 Lords Chamber

[Viscount Eccles (Con)]

My Lords, there has been much concentration on productivity during this debate, and it is clearly the case that, if recovery is to be sustained and debt and deficit are to be dealt with, productivity is a key component. But I want to think a bit about what we produce as well as how we produce it and, as my noble friend Lord Holmes concentrated on, the social effects as well as dry economic statistics.

In the Budget, the Chancellor gave a general exhortation that we should export more, build more, invest more and manufacture more. It was said, correctly, by many people that the recovery is fragile. There are worries about balance, the supply side, skills, the output gap and unemployment. There is clearly a long road ahead, during which public expenditure will continue to be under pressure. Yet if we think back to the advance of technology and the spread of knowledge as well as the opportunities that they have given us over the years, and if we think about the United Kingdom—a free society with a long and reasonably untroubled history, with a language that has become the leading language of the world and a long tradition of successful higher education—it is quite puzzling how we went into quite such a deep hole in 2008 and why it is taking us so long to climb out of that hole into a sustainable recovery.

What has happened? My first theme is that I think that we have tended to have the wrong idea about economic change. Too often, we have seen it in terms of obsolescence—that things will disappear—but, if you look around, you can see that nothing we make, have made or that we do completely disappears. The employment patterns within that marketplace change, but they do not disappear. New things come, but old things do not go. To go to the romantic end of such a theme, somebody somewhere is knapping flints and thatching a cottage; somebody is still writing a book standing up, like Voltaire or Surtees, and that book will be bound by hand. Of course, in larger industries the changes are much more dramatic—in steel or coal or the subsidiaries of the steel industries, the foundries. Those energy-intensive old industries can become very unfashionable, but there was a time when structural steel looked as if it would go out altogether in favour of prestressed concrete. I shall not trouble the House with a detailed analysis of why, but steel has come back and, largely, prestressed concrete has gone out. Then we remember British Leyland. I come from the north-east, where Middlesbrough is the leading dock for exporting and importing cars; we are now a net exporter of cars, as my noble friend the Minister said. However, what happened to our car designers?

With the opportunities for technological change in the diversity that has been available, what has held us back? Why are we not very considerably more successful in short order than we are today? I think that we can look for myths—big ideas, and worst of all Utopian big ideas, which from time to time have gripped us. The first, which has largely gone, will be all-embracing central planning. Of course, there is a role for government in infrastructural planning because there is no way in which to get the money together unless the Government get involved. But as with HS2 or Hinkley Point, there is a great struggle to get to the decision on a new airport, or whatever—and if the Government get involved in too many areas and go in the wrong direction and the end of the road comes for the National Coal Board, the British Steel Corporation or British shipbuilding, what disasters follow from that? They are distortions and long-term disasters, social as well as economic.

The second myth on which I want to touch is that of the interpretation of the post-industrial society. This was the brainchild of Daniel Bell. He foresaw and calculated the rise of the knowledge economy but he never thought that one thing would push out another. He thought only that the emphasis and proportions would change. However, in tabloid-style simplification, both the political system and, regrettably, the schools came to the wrong conclusions. No longer was it considered sensible to go into a foundry, optimise power steering pumps for motor cars, go into steel or coal—never mind about carbon capture and storage and the huge need for knowledge in that area—and still less to become a plumber or a potter. I think that Daniel Bell would be horrified by the interpretation that was put on the fashion that followed. There is a need to invest in capital, of course, and to have a capital allowance—what a good idea—but, if you do not have the people who know what capital goods to buy or how to operate them, you do not buy those tools and those machines. Again, one comes back to social influences and people. Where are the people who can make the right decisions? They are certainly not economists.

We may now be in danger of building another myth called the global race. The problem with races is that they have only one winner. However, I thought that with economic development everyone has the possibility of winning. Admittedly, some people win more than others, but are there any real losers? If we characterise life in language which implies that this is a zero-sum game, we make a mistake.

Where is the Chancellor of the Exchequer in all this? I go back to his very cautious, rather general language. I think he understands that timescales are long and that, if you go in a wrong direction, it takes a long time to put it right, and that there is much complicated interaction within the process of putting it right within society. It is not just an economic problem but a social problem and a cultural issue. A whole raft of things have to be thought through. He, quite correctly, can enable only to a degree. Success is in the hands of society; he cannot command it. It needs to be decentralised to those who live in the real world, where Utopian myths go hang.