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Lord Forsyth of Drumlean
That an humble Address be presented to Her Majesty as follows:
“Most Gracious Sovereign—We, Your Majesty’s most dutiful and loyal subjects, the Lords Spiritual and Temporal in Parliament assembled, beg leave to thank Your Majesty for the most gracious Speech which Your Majesty has addressed to both Houses of Parliament”.
The Parliamentary Under-Secretary of State, Department for Transport (Lord Callanan) (Con)
My Lords, it is a privilege and pleasure to open the second day of debate on Her Majesty’s most gracious Speech. I am honoured to be standing before noble Lords just three weeks after taking up my role in the new Government as a Transport Minister. This is always one of the most interesting and wide-ranging debates in the Lords calendar, so I very much look forward to the valuable and informed contributions that I know that many noble Lords will make. On behalf of the whole Chamber, I particularly extend a warm welcome to the noble Lords, Lord Colgrain and Lord Mountevans, who will be giving their maiden speeches today. I also thank my noble friend Lord Prior, who will be winding up the session this evening.
This Queen’s Speech was all about building a stronger, more successful and more resilient Britain: a country with its sights firmly set on the future and on what we can achieve as we build closer links with friends and trading partners around the world; as we deliver a Brexit deal that works for all parts of the United Kingdom; and as we grow and rebalance our economy, working to meet the aspirations of the whole nation. These themes will crop up regularly in our Queen’s Speech debate today, as we debate the Government’s agenda on economic affairs, transport, business, energy, the environment and agriculture.
Let me start with the economy. The fundamentals of the economy are strong. We have a record number of people—almost 32 million—in employment. We have reduced the deficit by almost three-quarters since 2010. After our economy grew 1.8% last year—the second highest in the G7—the Office for Budget Responsibility expects it to grow a further 2% this year.
Our economic success over the past few years has been widely documented, but what perhaps is less well appreciated is how it is benefiting the whole of our country. As the Chancellor made clear in his Mansion House speech last week, inequality is at its lowest in 30 years. The poorest households here have seen their incomes rise by more since 2010 than any other G7 country. That is partly thanks to the introduction of the national living wage, adding £1,400 to the annual income of those in full-time work on minimum salary. It will continue as we increase the national living wage, so that people on the lowest pay see their wages rise as the economy strengthens.
We have been clear that we want to keep taxes as low as possible for ordinary working people. Although we live in changing times, one thing will never change: this Government will always put economic stability first. That is why we are investing £23 billion through the national productivity investment fund in key growth areas, such as research and development and housing. It is why we are helping young people to get the training and development they need to do the high-skilled, high-paid jobs of the future. It is why we are determined to get the best possible Brexit deal for households and for UK companies.
As we leave the EU and adjust to our new position in the world, the resilience, flexibility and dynamism of our economy will be key. New Bills in the Queen’s Speech on trade and customs will help to give us an independent trade policy and a world-leading customs service. As Her Majesty’s most gracious Speech made clear, we will help British businesses sell their products and services abroad and boost exports.
Achieving our economic objectives depends on co-ordinated action across government, and I am proud that transport is playing a much bigger role today in stimulating growth. Transport used to be among the first departments to suffer whenever Governments of the day had to tighten their fiscal belts. While our competitors invested in major infrastructure projects, here in the UK, transport upgrades often fell victim to short-term political concerns. Because we have failed to invest in the long-term fabric of our nation, we have watched as our roads have grown more congested and our railways more overcrowded. But that is changing. No more is Britain seen as short-termist or infrastructure-averse. Since 2010, we have overhauled transport policy, and today we are delivering the capacity and links that we need to grow as we leave the European Union—connecting British companies with fast-growing global markets, creating the highly skilled jobs we need to modernise transport in this country and making the necessary investments to improve journeys for all working people.
Her Majesty’s most gracious Speech also showed how we are taking full advantage of the unique opportunities that new technologies provide. For example, the automated and electric vehicles Bill will help make Britain a global leader in developing and owning self-driving and electric cars. Self-driving vehicles might sound like science fiction, but they are already science fact and will revolutionise the way we travel. They will make roads safer by cutting the risk of human error and reducing insurance premiums. They will change the lives of disabled people with reduced mobility and reduce congestion by making better use of scarce road space. That is why, through this Bill, we are positioning ourselves as one of the first countries to benefit from the development and growth of self-driving vehicles.
It will also help us retain our leadership in electric vehicles. We are already one of the biggest markets for plug-in cars in Europe. So far this year, sales of pure electric cars are up by 36%, with a total of more than 100,000 ultra-low-emission vehicles now on our roads in this country. That is a ringing endorsement of the Government’s funding commitments of more than £2 billion since 2011 to increase ultra-low-emission vehicle uptake and support greener transport.
Our charging infrastructure is one of the most comprehensive in Europe, with more than 11,000 publicly accessible charging points, now including 900 rapid chargers. As the market evolves, however, this number will need to increase. The new Bill will give drivers confidence that there will be somewhere to charge their cars at motorway service areas and large fuel stations right across the country. Common standards will make them easy to use, and ensure that drivers have a wide choice of charging points. One of the main reasons the sales of electric cars are increasing is that buyers can see the charging infrastructure taking shape around them. This Bill will speed up the development of that network.
There is also a revolution happening on the railway. We are making excellent progress with HS2, Britain’s new high-speed rail network. HS2 will be the backbone of the national rail system, connecting our major cities, transforming capacity across the railway, and freeing up space for new commuter services on existing lines. HS2 is not just a new railway; it is an investment in our economic prosperity for the next half century and more. It will be a powerful catalyst for rebalancing our economy, spreading growth that for far too long has been concentrated in London and the south-east.
The new Bill announced last week will give us the powers to build and operate the next stage of the line from the West Midlands to Crewe. It is a crucial section of the project. Not only will it reduce journey times from London to Manchester and Crewe, it will speed up journeys to places such as Liverpool, Preston and Glasgow. With cross-party support and a programme that remains on time and on budget, construction of phase 1 will begin soon. We expect to deposit the new Bill covering the West Midlands to Crewe route in Parliament by the end of this year.
High-speed rail may be the biggest transport scheme of this generation. However, an even bigger revolution is taking place above us—in space. In the new economic space race, Britain is a strong competitor. The space industry Bill announced by Her Majesty last week has a clear purpose: to make Britain the most attractive place in Europe for commercial spaceflight; to put British business, engineering and science at the forefront of space technology; and to offer our world-leading, small satellite companies low-cost, reliable access to space. It will also generate opportunities for tourism.
While I am sure that most noble Lords would probably prefer two weeks on a cruise ship to floating in sub-orbital weightlessness for half an hour, there is in fact lots of demand for space tourism. The UK space industry is already worth £13.7 billion to our economy, and employs more than 38,000 people. This Bill will help us to achieve our goal to grow our share of the global space market to 10% by 2030. We want to be the first country to establish commercial spaceport operations in Europe. However, we need to move quickly to achieve our objectives. That is why this Bill is so important and we expect its First Reading to take place shortly. It will help provide the legislation required for launches and flights from UK spaceports, giving us new powers to license a wide range of commercial craft, including vertically launched rockets, space planes and satellites. Any site that meets the regulatory requirements will be able to apply to become a spaceport. We have already had strong interest from regions across Britain wanting to benefit from this exciting new market.
Finally, my department will also deliver a Bill to improve protection for holidaymakers. This will update the ATOL scheme so that it can keep pace with changes in the online travel market and UK-established companies can sell more easily across EU borders.
Her Majesty’s most gracious Speech also featured a number of important Bills and measures that the Department for Business, Energy and Industrial Strategy will be taking forward. The nuclear safeguards Bill will enable us to implement a domestic safeguards regime when we leave the EU Euratom treaty. This will allow us to meet our international obligations. We are bringing forward proposals to ensure that critical national infrastructure remains protected, so that foreign infrastructure ownership does not undermine our security or essential services.
We will strike the right balance between protecting national security and remaining a global champion of free trade. The Government also want to ensure fairer markets for consumers, so we will publish a Green Paper that will closely examine markets that are not working in the interests of consumers.
Let me be clear: we are firm believers in the market economy. It is the private sector, operating through a competitive market economy, that has delivered much of the growth that we have seen since 2010, but it is our job to make sure the system is working for the benefit of consumers. In particular, while progress has been made in recent years to improve competition in the energy retail market, it is clear that industry needs to do more. We expect energy suppliers to treat their customers in the same way as other competitive service sectors, so we will act where necessary. This will include bringing forward measures to help tackle unfair practices in the energy market so that energy bills can come down. A smart meters Bill will also help us complete the rollout of smart meters, protecting consumers and leading to £5.7 billion of net benefits to Britain. Smart meters will not just put consumers in control of their energy use, helping them to avoid wasting energy and money, they will end estimated billing and help customers to use smart pre-payment.
As I mentioned, the Queen’s Speech also confirmed the Government’s commitment to increasing the national living wage—specifically, increasing it to 60% of median earnings by 2020, then maintaining it in line with median earnings until the end of this Parliament. The Queen’s Speech also set out the Government’s intention to enhance rights and protections in the modern workplace, informed by Matthew Taylor’s review of modern employment practices.
I turn to the environment and agriculture. Agriculture contributes £8.6 billion to our economy and employs 1.5% of the workforce, so it is important that we support the industry and provide a strong foundation for future growth. The EU’s common agricultural policy, under which we have been operating for the past 44 years, has been an expensive failure. It is a system that provides financial support to millions of farmers across Europe to boost productivity, which accounts for around 40% of the total EU budget at €58 billion a year, and has been widely criticised for creating artificially high food prices throughout the European Union. Leaving the EU presents us with a great opportunity to renew our agriculture policy so that it supports farmers in a targeted and more effective way, while also achieving better value for money for hard-working taxpayers. Our vision is for a productive and competitive UK agriculture sector, supplying products of the highest standard to the domestic market and increasing exports abroad. At the same time, we will improve our environment, so that we can leave a better environment to the next generation than the one we inherited. The agriculture Bill will provide stability and certainty for the farming industry. It will enable the Government to support farmers to produce and sell more great British food, and in a more sustainable way. It will also help us deliver the same cash total fund for farm support until the end of the Parliament.
A fisheries Bill will be introduced to allow us to regain control of the UK’s exclusive economic zone and set UK fishing quotas once we have left the EU. This will provide a basis for us to secure a fairer share of the market, and greater economic benefit from our fish stocks. It will help a new generation of fishermen, as well as preserving and increasing our stocks, and it will support our coastal communities while securing the best possible deal for the UK fishing industry. We will no longer be bound by the common fisheries policy and will become an independent coastal state. But we will, of course, still meet our international obligations and co-operate with other coastal states in the management of our waters.
The gracious Speech sets out a clear direction for the future of Britain: a fairer, more prosperous and self-determining future as we leave the European Union, but also a more global future—one in which we build new relationships and trade agreements around the world, and where the talents and innovation of our own people and businesses can shine. I have set out how our legislative programme will help us meet those ambitions, and now I look forward to hearing contributions from all around your Lordships’ House.
Baroness Jones of Whitchurch (Lab)
My Lords, it is a great pleasure to follow the Minister’s contribution to the debate on the gracious Speech this afternoon and to welcome him to his new role. He has done the best he can, but it is a shame that the Government’s legislative programme appears to have the same vision and authority as the PM herself—very little. This is not surprising, because it is drawn from a disastrous Conservative manifesto that offered no hope and no change to a British public tired of falling living standards and failing public services. This is why it is widely acknowledged that Labour won the battle of ideas in the election, with policies that can deliver stronger growth, better living standards and greater equality and justice.
Although it is a debate for another day, the huge challenge posed by Brexit stalks through all strands of our lives, and we have heard nothing today that will reassure the public, markets, small businesses and the global community that our economy will be stronger once we exit the EU. The Chancellor’s position may be safe for now, but he still seems incapable of setting out a confident and bold strategic vision following the public’s rejection of his less than impressive economic record and his leader’s plans for a hard and uncompromising Brexit. The wrong mix of monetary and fiscal policy has left the economy weak and unstable—weak because investment and productivity have been so poor, and unstable because growth has been so heavily reliant on debt-driven consumer spending. Meanwhile, under this Government, the national debt is set to hit almost £2 trillion. They have missed every debt and deficit target that they have set themselves and their answer is simply to move the target date even more remotely into the future.
This Queen’s Speech represents a missed opportunity to really get to grips with the root causes of our economic woes and to reassure us over the economic impact of Brexit. Even Mark Carney, in his Mansion House speech last week, recognised the urgent need to escape the low-inflation, low-wage, low-growth trap that has driven down household incomes in the last decade. Confronted by strong evidence that economic policy since 2010 has been a failure, this Government’s response has been to offer more of the same. Yet, as we know, the first May-Hammond Budget quickly fell apart and the subsequent Finance Act failed to address the economic crisis or provide a clear direction to those in the finance and pensions sector who were crying out for clarity on this. Meanwhile, Labour has set out a clear alternative. We will set up a national investment bank that will deliver the finance needed by our small businesses, co-operatives and start-ups, getting the economy moving again by filling the gaps in lending by private banks and by providing dedicated long-term finance to R&D-intensive investments.
The UK also has the worst performance in terms of real wages, which have fallen by an average of 1% per year. To our shame, we have punished the young most of all, with 18 to 21 year-olds facing a fall in real wages of over 15%. Is it any wonder that many young people who I have met have lost faith in the idea that they will succeed in life? It is only by building on the creativity and talent of the next generation that Britain will succeed in the 21st century, yet I see little hope for young people in this Queen’s Speech. I am proud of the fact that it is the Labour Party that is the strongest advocate for young people. We showed that we cared about their finances and their future. Our plan to create a fertile ground for businesses to thrive places young people at its very heart by focusing on skills, including quality apprenticeships, research and development, and infrastructure.
Tackling low pay has to be part of the solution. Despite what the Minister has outlined, nearly 6 million people earn below a living wage. Nearly a million workers are on zero-hours contracts, and there are far too many people without the certainty of employment that they need to live a debt-free life. Meanwhile, boardroom bonuses continue to rise, and the widening gap between the highest and lowest earners creates further injustice. This is why we are committed to introducing a real living wage of £10 an hour, giving all workers full and equal rights from day one, introducing an excessive pay levy and rolling out maximum pay ratios of 20 to 1 in the public sector and public contracts. Perhaps when the Minister responds he can explain what this Government plan to do about tackling excessive boardroom pay, ending low pay and intervening in the gig economy to give workers back some control over their lives.
The upgrade needed to the way our economy works includes an industrial strategy that meets the challenges of our times. Sadly, the Government’s much-heralded Green Paper on their industrial strategy has come in for considerable criticism. As the Lords’ Science and Technology Select Committee said recently:
“The Green Paper … resembles a portfolio of tactics rather than a coherent strategy”.
It went on to emphasise the need for a more coherent approach to tax and regulation for science and industry, combined with greater investment in skills and the availability of patient finance to strengthen,
“the relationship between government, businesses and universities”.
We very much hope that work is going on behind the scenes to provide a more coherent strategy, but this Queen’s Speech gives little clue as to what that thinking might be. The issues that are flagged up—electric cars, space rockets, high-speed rail and smart meters—are all laudable in themselves but do not add up to an industrial strategy. Nor do they address the importance of good industrial relations and how to build on the proven link between employee engagement and productivity growth.
Investing in our future also means investing in our environment. Sadly, on this issue as on so many others, the Queen’s Speech represents a missed opportunity. Of course we welcome the reiteration of support for the Paris agreement, although it would have been good to hear something about a serious plan to bring Donald Trump back into line on this. But apart from the brief note on affordable energy and electric cars, why was this the only mention of anything relating to climate change? Despite dangerous air pollution levels across the UK and crucial environmental laws that need to be translated into British legislation as we leave the EU, the environment was notably missing as a policy priority.
The UK is poorly prepared for the inevitable impacts of global warming in coming decades, including deadly annual heatwaves, water shortages and difficulties producing food, yet it seems that the Government will not address any of these problems over the next two years. By ignoring the biggest problem facing us globally and the urgency of this problem, and by putting their head in the sand, the Government are leaving future generations a legacy of problems, including coastal erosion, flood damage, water shortages and food price shocks. We need to begin the process of future-proofing today—a point emphasised by the Committee on Climate Change’s latest report on its risk assessment of the environment. If the Government are happy to ignore the human costs of climate change, it is staggering that they are also ignoring the Bank of England, which only last month published an investigation into the risks of climate change to financial services. It is often said that money talks. Alas, this Queen’s Speech reveals that no one is listening.
The lack of a coherent plan to tackle climate change is symptomatic of a wider failure to embrace renewable energy. The UK energy system is outdated, expensive and polluting. The Government have failed to harness the huge potential of emerging technologies and renewable energy projects. They have placed a disproportionate emphasis on nuclear energy, yet the latest NAO report on Hinkley Point, published last week, is damning. It reports that costs have already risen from £6 billion to £30 billion and says that the deal has,
“locked consumers into a risky and expensive project with uncertain strategic and economic benefits”.
It raises the spectre that the project will be delayed or cancelled. Could the Minister clarify whether this Government are heeding the NAO’s advice and developing a plan B to fill our energy gap if this project fails?
Nothing has worried environmentalists more, recently, than the news that Michael Gove has been appointed Defra Secretary of State. His track record speaks for itself and has a depressing constancy. Time and again, he has voted against measures to reduce carbon emissions and to increase energy from renewable resources. In the leave campaign he spoke with some enthusiasm about the prospects of scrapping environmental regulations, and he has subsequently suggested to the CBI that it should start drawing up a list of social and environmental regulations that it would like to see abolished or reformed. It is true that since his unexpected appointment he has made more conciliatory noises, but we should remain quite rightly suspicious of his ultimate motives. Environmentalists most want the certainty that the existing EU environmental protections will be safeguarded in full and for a long time.
When Mr Gove looks at his in-tray, he could also finalise the publication of both the environment and the food and farming 25-year plans, which were meant to set out a long-term strategy for these sectors but which have been embarrassingly delayed for some time. Can the Minister shed some light on their latest publication date, or confirm rumours that they have both been shredded?
We look forward to debating the agriculture and fisheries Bills, which were included in the Queen’s Speech. Both these sectors need urgent reassurance that jobs, livelihoods and markets will be protected. Their continuing success is fundamental to our country’s economic resilience in the future. We will continue to work closely with all those who work and live in these communities to safeguard jobs and deliver a sustainable long-term future for our farming, fishing and food industries.
Finally, we welcome many of the Government’s transport proposals, looking forward to the future with new rail infrastructure and embracing automated and electric vehicles. We will continue to push for a greater role for the Office for Low Emission Vehicles in driving the uptake of ultra-low emission vehicles. We also applaud the attempt to secure growth in the UK space sector, although since the Government cannot currently manage our rail franchises I have huge concerns about the implementation of any spaceflight Bill, and fear that it might be more of a flight of fancy than reality. My own rail network is run by Southern, so I understand at first hand the chaos, disruption and impact on family life that this has been inflicting on commuters and travellers over the last two years and that seems set to continue. So while spaceflight and high-speed rail are exciting prospects, I hope the Minister will hear our pleas that the Government will tackle the deep flaws in our current rail network as a priority.
I look forward to hearing the remaining debate today, in particular the maiden speeches of several noble Lords who I am sure will add greatly to the quality of the discussion.
This is a wounded Government and a threadbare set of proposals. For as long as the Government remain in office, we will play our full role in scrutinising the Bills in detail. But should this Government fall, as many predict they will, rest assured that Labour will bring forward a Queen’s Speech that truly addresses the challenges facing Britain, offers hope and represents the real centre ground of British politics.
Lord Fox (LD)
My Lords, last week I had the pleasure of attending a reception given by the High Value Manufacturing Catapult. At that event the Minister, the noble Lord, Lord Prior of Brampton, spoke eloquently of the challenges facing this country, in particular the changes that will follow the onset of Industry 4.0, the effects of machine learning, and the scale of the change that will result from those developments. I completely agreed with his speech—which, given the audience, fell on receptive ears. It was clear to all of us there, including businesses seeking to create a new future and some of the brightest manufacturing people around, that the future is changing fast, that Britain needs to change at least as fast and that government must act to maximise our strengths and shore up our weaknesses. Failure to do so will have an impact on all the aspects of this portfolio debate. Yet the gracious Speech did its best to divert attention and fiddle around the margins. Of course, the reasons for that are clear for all to see and will be set out by many speakers in today’s debate, not least by my colleagues on these Benches.
At a time when external pressures on our wealth-generating industries have never been more intense, our Government and the machinery they command are completely distracted. So we face the prospect not only of this Government choosing the wrong paths during the Brexit negotiations but of there being insufficient energy within government to meet the other real existential challenges facing us. The effects of Brexit will be rehearsed by many others in your Lordships’ House today and probably on every other day of the debating week. Noble Lords will be pleased to hear that I will focus on the other part of this challenge.
I shall speak briefly about some of the specific measures in the Queen’s Speech and then pick up some key features around the industrial strategy. We will see that not only are the Government distracted but they are impotent. They have not the slightest chance of passing anything but the most anodyne of measures, which explains the non-Brexit legislation that will be set before us. For example, we have heard that the Government will introduce legislation to ensure that the UK remains a world leader in new industries, including electric and automated vehicles and commercial satellites, about which the Minister spoke very eloquently. Very good, I say. Here, I must draw attention to my declared interests in GKN and Smiths Group. In highlighting those aspects, the Minister has indicated why those Bills are there: they are a diversion from the main issues that we face as a country. They are important but not as important as the things that are not in the Queen’s Speech.
Regarding automated and electric cars, clearing up some of the insurance issues and making things easier to plug in are of course important but there are real technological and infrastructure considerations that are not addressed—not least the woeful wireless and broadband network in the United Kingdom. In that regard, following last Session’s Digital Economy Act, can the Minister tell us when a universal service obligation will be delivered to the whole country and what that USO will be? For its part, the UK space industry, while benefiting from a landing bay, will be massively affected to the negative by how it is being disconnected from the rest of Europe’s industry. Perhaps the Minister can tell us how severing some of our most effective industrial links will strengthen the space industry and, indeed, the wider aerospace industries.
I turn to another part of the Queen’s Speech, where Her Majesty announced that the Government,
“will spread prosperity and opportunity across the country through a new, modern industrial strategy”.
Who would vote against something as good as that? To be fair, once again the noble Lord, Lord Prior, has acknowledged that the current industrial strategy Green Paper, which now awaits the Government’s next move, had its genesis in the days of BIS and the noble Lord, Lord Mandelson. It was taken on and up by Vince Cable and the coalition, so there is a continuum through that process. I am sure that the Minister has read my party’s response to the consultation on the Green Paper but, for the benefit of the rest of the House, I will pull out a couple of points.
From memory, some 40 questions were posed in the consultation, yet none of these asked for any input on how to shape the UK economy to become more green and sustainable. So I ask the Minister: is that because the Government felt they already had the answers to these questions or because they did not care? In answering this question, the Minister could undertake to publish a green business road map setting out measures to incentivise all business to reduce waste and improve effective resource use. He could also explain how the UK can capitalise on our leading positions in green technology and comment on the future role of the Green Investment Bank.
A second facet not highlighted in the industrial strategy response questions was inclusive growth. The Queen’s Speech, rightly, talks about spreading prosperity across the country, so in that regard will the Minister confirm that the Government will recognise the findings of the Inclusive Growth Commission’s report? Furthermore, how place-based development is delivered is key. I would like some clarity from the Government. They have put stock in the creation of metro mayors, yet vast swathes of the country do not have one; it is local enterprise partnerships and other agencies that are charged with driving local development. Will the Minister explain how the Government will deliver their place-based development and how prosperity will be brought across the country? Will it be through the LEPs as they exist now? Will it be through some future, super-charged version of the LEPs, or are we to expect something else?
There is also the issue of skills. Without any real change in the delivery of skilled people, nothing is achievable. We all agree that we need more and different skills. The noble Lord, Lord Baker, and others have eloquently explained how the industrial future will depend on getting this right. As a start, the Government have spoken of T-levels to rival A-levels in esteem. There are no further details as yet, so the Minister could perhaps sketch in how those will work. The Queen’s Speech introduces an idea of major reform of technical education. What does that mean? What does it mean for T-levels? What does it mean for UTCs, their future and their current performance? Whatever is proposed can work only if backed by real and substantial funding for education, training and skills development. All talk of a new sort of technical education pales into insignificance if there is no money. How much new money will be placed on the table to deliver the skills we need?
Finally, there was an eye-catching provision in the Conservative Party manifesto—it is not the one that noble Lords are thinking of—that pointed to the formation of a future Britain sovereign wealth fund, largely funded from shale gas extraction revenues. Will the Minister tell your Lordships’ House whether this fund is still planned and just how much money he expects to be in it by the end of this Parliament? If there is any money in this fund, what will it be used for?
This speech is stuffed full of questions because the election and now the Queen’s Speech have failed to spell out anything meaningful about the Government’s intentions. My worry is that the Government themselves are not sure what they want either. It is very hard to see how the events of the last two years could in any way be seen to be putting the economy first. The economy is suffering from the actions of this Government and will continue to until a coherent vision and route to reach it are properly set out. I hope this debate is used by the Government to start to unveil this vision, but I am not hopeful that we will hear anything that actually and truly spreads prosperity across the country.
Lord Low of Dalston (CB)
My Lords, in a debate that took place last year on the outcome of the referendum, I said:
“Of one thing we can be reasonably certain: that no Prime Minister is going to call another referendum any time soon”.—[Official Report, 6/7/16; col. 2075.]
We can now add to that that no Prime Minister is going to call another snap election any time soon.
I am afraid that I did not find myself altogether in sympathy with the mood of the House at the beginning of the debate on the humble Address last Wednesday. Given the manifest deficiencies in leadership and personal style displayed by the Prime Minister in recent months, I could scarcely credit the panegyric delivered by the noble Lord, Lord Forsyth—for whom I normally have the greatest admiration—in moving the Motion for an humble Address, to the obvious approbation of the House. He described the widespread criticism of the Prime Minister as “vile attacks”. Really? By Matthew Parris, Michael Portillo and the noble Lord, Lord Patten? If I was Theresa May, I would think that the moment I received ringing endorsements such as that from the Tory grandees was the time I really needed to start worrying.
If one considers the colossal misjudgments of the last two Prime Ministers and the way that they threw everything up in the air, it is surely no longer possible to sustain the pretence that the Conservative Party is self-evidently more effective than the Labour Party as a vehicle for governing the country. But I reckon that Theresa May is probably safe until the Conservative Party can make up its mind on what to do. Mind you, the DUP is a potentially dangerous wild card, and the tussle over Brexit is likely to get quite bloody.
It is remarkable how, out of millions of individual voting decisions, it is possible to distil a national mood—but a hung Parliament is probably a pretty fair reflection of it. For a change, there was a real choice, not just one between minute variants of a fundamentally consensual centre. People were obviously no longer willing to buy neoliberal austerity. They were attracted by the alternative that Labour offered, which was described as “hard left” but was in truth fairly standard social democracy, and somewhat less far-reaching than the manifesto on which the Attlee Government were elected. But people were hesitant about making a full-blooded commitment—hardly surprising in view of all the obloquy to which Labour was subjected.
I was not much in sympathy with the reaction of the House to Jeremy Corbyn, either—as much from his own side as from the Government’s. He is obviously still regarded as beyond the pale of the narrow consensus of acceptable views around which the two main parties collude. But people should realise that the centre of gravity has shifted—in defiance of the political establishment, the media and the commentariat. It has taken some time for the worm to turn, but it is clear that people are no longer seduced by the supposed common sense of living within our means, which has underpinned the draconian regime to which they have been subjected since the crash. Labour has offered an alternative, but I wish it had done more to establish in people’s consciousness the alternative common sense on which it will need to be sustained: borrow while interest rates are low and invest in infrastructure, thus giving people work, getting them off the dole and being productive, fuelling growth by spending and creating demand for consumer goods, and paying taxes and boosting receipts for the Exchequer.
What is the result of all this austerity? A great deal of personal misery to begin with. One in four children lives in poverty in the United Kingdom today, taking the total to 4 million. Food bank use continues to rise. The Trussell Trust gave out more than 1 million emergency supplies of food to people in crisis in 2016-17—and the Trussell Trust accounts for only half of all food banks. The social security system is increasingly inhuman and self-defeating. Tougher PIP criteria mean that people lose their Motability car and end up on the dole. People are sanctioned for unavoidably missing appointments. The film “I, Daniel Blake” is all too true to life. The iniquitous work capability assessment finds people fit to work who are patently unfit and who, coroners find, are taking their lives as a result. I could give many more examples, but there is no time.
All this misery, and we have not even balanced the books. These are not the results of idiosyncratic, ad hoc decisions; they are the result of conscious, strategic decision-making such as the decision to cut a further £12 billion from welfare, having already cut nearly £20 billion in the last Parliament. Even more fundamentally, they are the result of a 40-year project to hollow out the public realm and systematically shrink the state back to 36% of GDP or less. Current spending is now just under 38%, with the 36% target reaffirmed in the March Budget to be reached in 2020. This means a level of public services far below comparable European countries—44% of GDP in Germany and 50% in Denmark.
The process is meticulously documented by Polly Toynbee and David Walker in their recent book Dismembered: How the Attack on the State Harms Us All. The NHS is in crisis, public services are in crisis and local services cannot cope. We know this from the Grenfell Tower fire, which is emblematic of all that is wrong. Local government, which provides many of these services, will have lost 60% of its funding by 2020. The election and the Grenfell Tower fire should serve as a wake-up call that we need to change course.
The Lord Bishop of Durham
My Lords, perhaps I may add my welcome from these Benches to the noble Lord in his role as Minister. I also look forward to hearing the maiden speeches of the noble Lords, Lord Colgrain and Lord Mountevans, which will be made during this debate.
Since arriving in Durham, I have been struck that life feels more precarious for many in the north-east than it does elsewhere. There are lots of reasons for hope, not least the social regeneration in my home town of Bishop Auckland, but the sense of precariousness persists due to deep structural disadvantages that the region has faced for decades, even centuries. It is against this backdrop that some of the changes to welfare in the last Parliament felt particularly acute and remain of very deep concern. It is also against this backdrop that the uncertainty of the Brexit negotiation is felt. It was in part this day-to-day experience of powerlessness that led many to vote to exit the EU. It would be a betrayal of the people, especially the most needy, if living and working in the north-east becomes more rather than less precarious as a result of leaving the EU. I therefore welcome the fact that much of the gracious Speech indicates some awareness of this danger.
I want to reflect on three aspects. First, the gracious Speech includes a commitment that:
“Legislation will be introduced to ensure the United Kingdom remains a world leader in new industries, including electric cars”.
It will be no surprise to those who know the north-east that my ears perked up at “electric cars”. We have a proud history of manufacturing and the importance of the industry to the region needs to be prioritised in the Brexit negotiations. We must develop further decent technological education and training that leads to good jobs. This must include engaging with the challenges that the next generation of automation will pose to the livelihoods of people and communities in the north-east and across the country. The Church of England has already carried out some invaluable work on the economic and ethical implications of automation and artificial intelligence, and we look forward to working with the Government to ensure that this work is used to make sure that we develop an industrial strategy ready for the challenges and opportunities that these will pose.
Secondly, the gracious Speech included a commitment that:
“A new Bill will also be brought forward to deliver the next phase of high-speed rail”.
This will be between Birmingham and Crewe. A more interconnected country is to be welcomed. I would, however, like to repeat a proposal I made in the debate on the gracious Speech last year—that we start building HS2 from Newcastle as well. I worry that as long as we continue the approach of gradually moving north, we give the impression that the point of the project is to let the rest of the country share some of the benefits of London. If we think HS2 is truly for the benefit of the whole country, however, I encourage the Government to adopt a radically different approach. This must include serious investment in the whole of the rail network and the related infrastructure in and between every region. In Newton Aycliffe, the new Azuma trains are being built. It would be a tragedy if the region that builds the new trains does not benefit from them.
The rest of the country needs the north-east. We are a region that, despite uncertainties and higher levels of unemployment, is in many ways thriving and has plenty of untapped potential. Take our science and technology sector. The ONS finds that our life sciences and healthcare sector is the largest in England in population terms. Overall, this sector has 221,300 people working for more than 14,000 others. That puts us behind only the south-east and the east of England in this sector.
We also have enormous capacity for renewable energy, through water, wind and our dark skies. It is these kinds of opportunities that the industrial strategy must seize. Water, in rivers, lakes, reservoirs and seas, wind—onshore and offshore—and skies highlight the importance of integrating our environmental priorities within the industrial strategy. A humane and wholesome industrial strategy must be environmentally friendly and connect with a farming and food strategy.
I was glad to hear commitments in the gracious Speech on the national living wage, although I hope we go even further than promised to ensure that this is a truly living wage. I welcome the commitment to workplace rights and ending discrimination. I hope the latter will include ending discrimination that currently affects refugees. The ultimate point of the northern powerhouse must not be simple economic growth, but thriving communities.
As we discuss the details of these measures and the wider industrial strategy, we must strive to incentivise investment that serves the poorest and strengthens communities. This underlines the importance of faith groups and other parts of civil society being strongly included in discussions of industrial strategy. Many communities across the north-east and the wider country have had decades of experiencing politics as “being done to” rather than “working with”. As this Parliament considers Brexit, the industrial strategy and the northern powerhouse, we must engage people of all ages, including our children, in the debate. Each of these discussions is an opportunity to invite all people into the process of building a Britain that truly works for everyone in every part of the country for the generations to come.
Baroness Neville-Rolfe (Con)
My Lords, I start by congratulating my noble friend Lord Callanan on his very well deserved appointment as a Transport Minister. I am especially delighted to have taken over his office up in the eaves of the Palace, with vistas of Lambeth Palace and Westminster Abbey.
I start by welcoming the Queen’s Speech and the determination it shows to turn Brexit into an opportunity. I am a strong believer in free trade—frankly, there are not enough of us—and I want Brexit to be used to transform us into a country that creates more businesses selling services and goods around the world. I put services first, including financial services, because services now represent more than 80% of our economy and must be given the right degree of priority. We need to keep the economy firing and, while I agree with the Minister that we need balanced growth across the UK, we need to keep London firing too: it contributes £34 billion in fiscal surplus for the rest of the UK.
When I was last on the Back Benches, I tried to focus on some key areas where I felt that business and the economy were missing out. The first was broadband and digital, mentioned by the noble Lord, Lord Fox. I found graphic examples everywhere of not-spots and the lack of internet holding business back—indeed, in my case, preventing my children coming to stay with me. The second was technical education. I know from my experience in Germany and in retail that our success in elite education in the UK is not matched in vocational training. I am grateful for the progress that has been made in both areas, but there is a lot more to do in terms of delivery.
Today, time is limited so I shall encourage action in three relatively small areas. As I learned at Tesco, “Every little helps”.
The first area is congestion. I want to make the case for early investment on transport pinch points. In the Autumn Statement, the Chancellor made £2.6 billion available for transport infrastructure. It is really good to see the automated and electric vehicles Bill in the Queen’s Speech and to hear the right reverend Prelate the Bishop of Durham talking about it and about north-east innovation. In the spring Budget, it was announced that £690 million was being competitively allocated to get transport moving. Congestion is reducing this country’s productivity—we fume in jams—not to mention seriously reducing our quality of life. As on broadband, I am collecting a list of the worst offenders: the A36 and A338 in Salisbury; Stonehenge, where I sat with the Glastonbury traffic this morning; Westminster Bridge; Stoke hospital; the A52 in Nottingham; and the A66/M6 at Penrith. I want lots of graphic examples, which I hope people will send me. We need to use the “roundabout fund” to improve our lives and reduce the appalling air pollution to which congestion gives rise. Perhaps the new Minister could consider putting an interactive map on GOV.UK and inviting everyone to contribute so that priorities can be decided quickly and the work actually done.
My second and related point—because these improvements could make more plots available—concerns housing. Frankly, housing is in crisis. We have to build many more homes and we need to build them in the south-east as well as elsewhere. As the Minister hinted, this must be a key priority for the industrial strategy. We need innovative solutions, such as changes to planning rules and better training and skills—learning from the best. We need to look at loosening the financial rules and allowing local authorities to be more entrepreneurial, in addition to encouraging the private sector. We are building less than in the 1980s at a time when we have more demand for homes. Indeed, unless we act quickly, a whole generation will not be able to afford a house, let alone a garden.
Thirdly, turning to small business, I congratulate my noble friend Lord Prior on his reappointment. The Federation of Small Businesses has made a compelling case for driving down the cost of doing business and for tackling the poor payment culture. I urge Ministers to listen to it. I visited a small business in Darlington recently—not an entirely successful visit. It was run by a great couple but the range of cost increases they faced was making life torture. There was not only the national living wage but recycling costs and myriad pressures. Most troubling, they were already benefiting from the Government’s rates exemption for small businesses. Their concerns remind one how important it is to have competitive tax rates for small businesses.
In closing, I ask my noble friend some questions that are important for small business. First, where are we on the implementation of the various legislative provisions on late payment? Secondly, when will the Small Business Commissioner start work? Thirdly, how and when will the Government deliver on the welcome promise on page 14 of the Conservative manifesto to,
“conduct a full review of the business rates system to make sure it is up to date for a world in which people increasingly shop online”?
The shift to online is changing the economy, changing how GDP should be measured and, most important of all, making life very difficult in our high streets, which are so important for cohesive and prosperous communities.
Progress does not depend just on the big battalions and solving the biggest problems. Our economy is complicated and sophisticated. We need action in many areas and we need it now.
Lord Hain (Lab)
My Lords, is it not a delight for the House that the noble Baroness has found her compellingly persuasive voice on the Back Benches? I welcome her to them. I also praise the brilliant speech of the noble Lord, Lord Low, which I hope speaks for everybody in this House.
The economy is not strong and stable but in deep trouble. It has been losing momentum for three consecutive years, and we now share bottom place with Italy in the G7 growth league. Even Greece is forecast to grow faster than Britain next year. Slower economic growth means lower tax revenues and higher government borrowing. The OBR expects borrowing this year to be higher, not lower, than last year and the budget still to be in deficit by the time of the general election in 2022. Over the next five years, the number of people aged 65 or over will increase three times as quickly as the population as a whole. Slow growth makes meeting the challenges of an ageing population even tougher—be it their health, social care or pension needs.
If the Government pursue their stated aim of cutting net immigration to the tens of thousands, it will hold back growth even further by reducing the supply of labour and aggravating skills shortages. The respected economist Jonathan Portes estimates that that alone would mean £6 billion more in taxes, public spending cuts or government borrowing.
Seven years of austerity, the Institute for Fiscal Studies reckons, have meant that UK average incomes in real terms are now 15% below where the 1961 to 2008 growth trend would have taken them. Living standards will certainly fall this year, with prices rising faster than pay and inequality rising. In real terms, pay is set to plummet, with earnings in 2022 no higher than they were in 2007, making this the worst decade for pay growth since before the Battle of Waterloo.
Oxford economist Simon Wren-Lewis estimates that austerity may cost the average household a colossal £23,000 per year in lost income by 2019-20—and there is still no end in sight to austerity, which began so catastrophically and so needlessly under George Osborne in 2010. This Government are now planning another tight fiscal squeeze up to 2019-20, hitting the poorest the hardest of all. According to the Institute for Fiscal Studies, the Tory manifesto means that the severest squeeze on the NHS since it was founded will be extended to 12 years. The Tories also now have the shrinking of school budgets in their sights.
In the private sector, big business is spending its cash mountain on company share buybacks instead of investing in the future, while the commercial property market seems to be at a standstill. Consumer confidence is down and consumer debt up, with more than 3 million people in persistent credit card debt. Last year alone, UK households borrowed a record £32 billion to buy cars, with 90% of private buyers using personal contract plans. That borrowing figure is forecast to exceed £40 billion this year. The Financial Conduct Authority now fears that banks might be hit by a sudden rise in car loan arrears, hitting car sales and hence wider economic growth.
Ten years ago, under Labour, £1 bought $2. Last June it bought $1.50. Now it is worth only $1.30—its lowest level for 30 years. Yet Britain’s foreign trade balance has worsened over the past year, not improved. We have a record trade deficit and we are about to leave the biggest, richest single trading bloc in the world on terms that nobody can foresee. UK productivity today is terrible, lagging far behind our key trading partners in Europe and America. This is not helped by the fact that 5 million adults—a sixth of our employed labour force—lack basic literacy and numeracy skills.
The Institute for Fiscal Studies reckons that there are more than 3 million frustrated workers: those who work part time but want a full-time job, plus those who are economically inactive but want to work. This is especially true in the regions outside London. The economics editor of Sky News, Ed Conway, recently argued that Britain’s tax burden will have to go up. Certainly we need to tax both property and income wealth more fairly.
Grenfell Tower is surely a clarion cry for a clean break with austerity. As the Observer eloquently explained in an editorial on 18 June:
“But this is more than a story of a benign state being hacked at by funding cuts and deregulation. Grenfell has peeled away the layers, to reveal an unaccountable, distant state, sheltering behind arm’s-length bodies to which it has subcontracted its most fundamental responsibilities for keeping people safe … It is hard to escape the conclusion that they fell victim to a culture shaped by indifference to the less well-off; that extols the virtues of the market over the positive role of the state; that scorns expertise and regulation and cuts corners in the name of trimming budgets. It should shame us all”.
Savage cuts and the shrinking of the state must stop. Some of our public services are dangerously close to collapse. It is time to invest in growth and end austerity, and to bring the public finances back into balance—and growth, not austerity, is the best way to do that.