Economy: The Growth Plan 2022

Viscount Trenchard Excerpts

Monday 10th October 2022 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, it is a pleasure to follow the noble Baroness, Lady Sheehan, although I regret to say that I find it difficult to agree with anything she said.

I congratulate my noble friend Lady Neville-Rolfe on her well-deserved reappointment to government. At difficult times such as those we face today, it is encouraging that your Lordships’ House has her experience and wisdom at the centre of the spider’s web in the Cabinet Office, so to speak. She made a good fist of a difficult hand. I am a strong supporter of the political philosophy of the Prime Minister and her Government, and agree with her instinct that it was necessary to move fast and far in order to achieve the growth in the economy that we all desperately need.

I also congratulate the right reverend Prelate the Bishop of Birmingham on his thought-provoking valedictory speech and the noble Baroness, Lady Gohir, on her passionate maiden speech.

I welcome in particular the Government’s decision to reverse the planned rise in corporation tax. The proposed increase from 19% to 25% amounted to an increase of more than 31%—nearly one-third—which would have acted as a deterrent to those thinking of setting up new companies here. The evidence of how effective low corporation tax is for economic activity is particularly strong if one looks at the example of Ireland, whose economy has thrived beyond best expectations.

The accelerated reduction in the rate of basic income tax is welcome. However, does my noble friend the Minister not agree that, to compensate for the unexpectedly rapid and large increase in mortgage rates, there is a strong case for the reintroduction of interest tax relief on principal private residences?

Does my noble friend agree that, to deal with energy costs and energy security, there is a need to adopt without further delay a new and much more ambitious strategy with regard to nuclear power? I mean not only the nuclear generation of electricity but—this is often overlooked—the use of nuclear power to generate industrial heat for our manufacturing and transport industries. Dr Tim Stone, the chairman of the Nuclear Industry Association, recently lamented the fact that we have thrown away our leading position in nuclear power.

In the 11 years from 1956 to 1967 we built 27 new nuclear reactors. In 1978, both France and the UK had 6.4 gigawatts of nuclear power. Today, France has 61 gigawatts and we have less than one-tenth of that, 6 gigawatts, and much of that is to be decommissioned over the next few years. The Government’s plan, set out in their vision for Great British Nuclear, must be fulfilled, expanded and delivered at speed and at scale.

The most important supply-side reforms to which the Government have committed involve the removal of unnecessary costs for businesses. It will come as a relief to companies up and down the country that departments will be required to review, replace or repeal retained EU law, which will otherwise disappear through sunset regulations by the end of next year. That is an enormous task which can be achieved only with full support and co-operation by all departments and regulators. Wholesale regulatory reform is essential to overcome our perennial problem of low productivity, which is essential for the Prime Minister’s growth plan to be achieved and sustainable. Financial services rules such as MiFID II have severely restricted the development of innovative challenger asset-management companies. The Government have already made some moves with regard to solvency too, but the proposed reduction in risk margins still falls short of what the industry believes to be appropriate. The financial regulators should be re-merged into a single body. If this is a step too far at present, at least they should both be given competitiveness objectives ranking equally with their primary objectives.

I look forward to other noble Lords’ contributions.