Lords Chamber
Thursday 14th May 2026
Skip to latest contribution
This debate has concluded
(began 1 day, 3 hours ago)
Watch LiveSkip to latest contribution
This debate has concluded
11:07
Business of the House
-
Business of the House
My My Lords, My Lords, I My Lords, I regret My Lords, I regret to My Lords, I regret to inform My Lords, I regret to inform the house of the death of the noble Lord Lord Harries of Pentregarth on the 29th of April. On behalf of the House, I extend our condolences to the noble Lords, family and friends. My Lords, I should like to notify the House of the retirement with effect from Thursday 30th of April, of the noble Lord Lord Curry of Kirkharle.
The noble Baroness Lady Eccles, of Moulton, and Lady Leigh of Lim, and with effect from Thursday 7th May, of the noble Baroness, Lady Burt of Solihull, and with effect from Monday the 11th of May of the Noble and Leonard Lord. Lord Irvine of Lairg. Pursuant to section one of the House of Lords Reform Act 2014. On behalf of the House, I should like to thank the noble Lords for their much valued service to the House. My Lords, I have to notify the House that the noble Lady Billingham and the noble Lord Lord Christopher, yesterday ceased to be members of the House under section two of the House of Lords Reform Act, 2014, by virtue of not attending any proceedings of the House during the Parliamentary Session, 2024 to 26.
On behalf of the House, I should like to thank the noble Lords for their many years of valued service in the House. My Lords, we now come to the first reading, to a first reading.
**** Possible New Speaker ****
Lord Henry of Richmond. Lords, on behalf of my noble friend Lord Hendy, of Richmond Hill, friend Lord Hendy, of Richmond Hill, I beg to introduce a bill to make provision for the protection of purchasers and users of air, purchasers and users of air, transport and airport services to make provision about airspace change, air traffic and air change, air traffic and air navigation services and airport slots and schedules to confer power slots and schedules to confer power on the Civil Aviation Authority.
To make rules to make provision about aviation offences and for connected
**** Possible New Speaker ****
purposes. I beg to move that this bill be now read a first time. The question is that this bill
**** Possible New Speaker ****
The question is that this bill be now read a first time, as many of their opinion will say, content. of their opinion will say, content. The contrary not content. The contents have it now, Lords, we now
**** Possible New Speaker ****
come to another first reading, a Baroness Taylor of Stevenage. My Lords, I beg to introduce a
**** Possible New Speaker ****
My Lords, I beg to introduce a bill to make provision about social housing. I beg to move that this
**** Possible New Speaker ****
bill be now read a first time. My Lords, the question is that this bill. We now read a first time, this bill. We now read a first time, as many of that opinion will say, content contrary, not content. The contents have it. My Lords, we come contents have it. My Lords, we come to another first reading Baroness Twycross.
**** Possible New Speaker ****
Twycross. My Lords, on behalf of my noble friend, the noble Baroness Baroness Twycross, I beg to introduce a bill Twycross, I beg to introduce a bill to make provision for enabling a common set of legislative provisions to be applied to major sporting events held in the United Kingdom, to confer power to provide financial assistance in relation to sporting events held in England, Scotland or Northern Ireland, and for connected purposes. I beg to
**** Possible New Speaker ****
move that this Bill be now read a first time. The question is that this bill be now read a first time, as many of that opinion will say, content contrary, not content. The contents contrary, not content. The contents contrary, not content. The contents have out. Built environment and 32 other appointment motions. The
**** Possible New Speaker ****
other appointment motions. The Senior Deputy Speaker. My Lords, I beg to move the 33. Motions standing in my name on the Order Paper. En bloc these motions appoint the Select Committees and Joint Select Committees and noble Lords to be members of these committees. In the
**** Possible New Speaker ****
new session. I beg to move. The question is that apparently 33 motions in the name of the 33 motions in the name of the Senior Deputy Speaker be agreed to En bloc, as many of that opinion En bloc, as many of that opinion will say, content the contrary not content. The contents have it. content. The contents have it. Motion for debate. The King's Speech Baroness Anderson of Stoke on Trent.
The noble Baroness Lady Eccles, of Moulton, and Lady Leigh of Lim, and with effect from Thursday 7th May, of the noble Baroness, Lady Burt of Solihull, and with effect from Monday the 11th of May of the Noble and Leonard Lord. Lord Irvine of Lairg. Pursuant to section one of the House of Lords Reform Act 2014. On behalf of the House, I should like to thank the noble Lords for their much valued service to the House. My Lords, I have to notify the House that the noble Lady Billingham and the noble Lord Lord Christopher, yesterday ceased to be members of the House under section two of the House of Lords Reform Act, 2014, by virtue of not attending any proceedings of the House during the Parliamentary Session, 2024 to 26.
On behalf of the House, I should like to thank the noble Lords for their many years of valued service in the House. My Lords, we now come to the first reading, to a first reading.
**** Possible New Speaker ****
Lord Henry of Richmond. Lords, on behalf of my noble friend Lord Hendy, of Richmond Hill, friend Lord Hendy, of Richmond Hill, I beg to introduce a bill to make provision for the protection of purchasers and users of air, purchasers and users of air, transport and airport services to make provision about airspace change, air traffic and air change, air traffic and air navigation services and airport slots and schedules to confer power slots and schedules to confer power on the Civil Aviation Authority.
To make rules to make provision about aviation offences and for connected
**** Possible New Speaker ****
purposes. I beg to move that this bill be now read a first time. The question is that this bill
**** Possible New Speaker ****
The question is that this bill be now read a first time, as many of their opinion will say, content. of their opinion will say, content. The contrary not content. The contents have it now, Lords, we now
**** Possible New Speaker ****
come to another first reading, a Baroness Taylor of Stevenage. My Lords, I beg to introduce a
**** Possible New Speaker ****
My Lords, I beg to introduce a bill to make provision about social housing. I beg to move that this
**** Possible New Speaker ****
bill be now read a first time. My Lords, the question is that this bill. We now read a first time, this bill. We now read a first time, as many of that opinion will say, content contrary, not content. The contents have it. My Lords, we come contents have it. My Lords, we come to another first reading Baroness Twycross.
**** Possible New Speaker ****
Twycross. My Lords, on behalf of my noble friend, the noble Baroness Baroness Twycross, I beg to introduce a bill Twycross, I beg to introduce a bill to make provision for enabling a common set of legislative provisions to be applied to major sporting events held in the United Kingdom, to confer power to provide financial assistance in relation to sporting events held in England, Scotland or Northern Ireland, and for connected purposes. I beg to
**** Possible New Speaker ****
move that this Bill be now read a first time. The question is that this bill be now read a first time, as many of that opinion will say, content contrary, not content. The contents contrary, not content. The contents contrary, not content. The contents have out. Built environment and 32 other appointment motions. The
**** Possible New Speaker ****
other appointment motions. The Senior Deputy Speaker. My Lords, I beg to move the 33. Motions standing in my name on the Order Paper. En bloc these motions appoint the Select Committees and Joint Select Committees and noble Lords to be members of these committees. In the
**** Possible New Speaker ****
new session. I beg to move. The question is that apparently 33 motions in the name of the 33 motions in the name of the Senior Deputy Speaker be agreed to En bloc, as many of that opinion En bloc, as many of that opinion will say, content the contrary not content. The contents have it. content. The contents have it. Motion for debate. The King's Speech Baroness Anderson of Stoke on Trent.
11:11
Baroness Anderson of Stoke-on-Trent, The Parliamentary Secretary, Cabinet Office (Labour)
-
-
Baroness Anderson of Stoke-on-Trent, The Parliamentary Secretary, Cabinet Office (Labour)
My Lords, it is a great honour for me to open our five day debate on the Gracious Speech. These moments allow us to reflect on how much we have achieved. After many much we have achieved. After many constructive hours of debate, lots of votes and the occasional or maybe not so occasional late night. maybe not so occasional late night. I think noble Lords know quite how ambitious we have been in our legislative agenda. Over 60 bills were passed in our first session of Parliament, and yesterday His Majesty set out our ambitious ambitions for the forthcoming session.
Those ambitions have one central mission to build a more resilient country that spreads opportunity for all. The country in which we live is one in which talent is everywhere. But opportunity is not, and the world in which we live has never felt more dangerous and volatile. Even in the last few months, global uncertainty has only increased and the impact on our neighbours is real. They are struggling with the cost of living, worrying about the impact on their futures and their children's futures by events outside of their control.
My Lords, our discussions today and in the rest of this session must be real and tangible for them. They must be felt by people in their daily lives. Delivering on our promises are not just words, but our contract with the nation. That is why the Gracious Speech set out new legislation focusing on outcomes, not outputs. That doesn't just address the problems of today. It seeks to strengthen our national foundations so that we can build a stronger and fairer economy that works for all of us in England, in Wales, in Scotland and in Northern Ireland, bringing prosperity to every corner of the United Kingdom, building on our place in the world and strengthening our relations with key allies.
The government's economic plan is based on three pillars to create a strong foundation for businesses to plan and invest to deliver growth, driving infrastructure and to crowd in private investment, and to systematically remove the barriers to growth across the economy. This year's Spring Statement shows our economic plan is the right one. But as we have set out, the war in Iraq will come at a cost. That is why the measures set out in the Gracious Speech will help build that, build growth that is both secure and resilient.
In order to raise living standards for working people. At the heart of this, as noble Lords will be aware, we are continuing our work to secure a closer and more stable relationship with our largest trading partner, the EU, valued at £860 billion last year. This is vital because since Brexit, too many businesses are burdened by unnecessary bureaucracy that dominate everyday imports and exports, with the EU compounding the costs that are passed on to British families pushing up prices and increasing the cost of living, the common understanding agreed last May will remove those barriers, underpinned by sensible legislation that upholds British standards while cutting red tape.
This is a core part of a wider plan. The UK is taking a strategic and clear eyed approach to major partners, deepening trade where it supports growth while balancing security and economic resilience. That includes securing a landmark deal with India, expected to boost UK GDP by £4.8 billion a year, making the most of our accession to the Comprehensive and Progressive Agreement for Trans-Pacific partnership expected to increase UK GDP by £2 billion a year, and a stronger focus on the UK's global strengths, particularly in services exports, to achieve growth in the current global economic environment, businesses need as much certainty as we can offer.
They need support to take advantage of new trade opportunities and of course, they need assistance and guidance in light of new technological innovations. That is why we have published three landmark strategies setting out our collective vision for growth, seeking to make the UK the best place in the world to do business, the best connected economy, and delivering targeted support for businesses as they seek to grow. My Lords, none of the issues we are discussing today can be considered separately to our national security and our place in the world.
The ongoing war in Ukraine has highlighted the importance of European cooperation on security and defence in an ever more uncertain world. It is right and necessary that we seek to deepen our strategic partnerships, including with our neighbours with whom we have common interests, face common threats and with whom we must build common solutions. Your Lordships' House will be aware we have already taken concrete steps towards these objectives. Last year's historic UK EU summit announced a series of deals that are good for household bills, borders and jobs.
We have also recently announced a significant agreement with France to reduce illegal channel crossings, and deeper cooperation has also opened further opportunities for learners, educators and young people. Through our agreement with the EU on the UK's association to Erasmus+ next year. This is a sensible, measured approach that, crucially, also preserves our ability to strike deals with other countries. In this space, we have had notable successes, including signing a trade agreement with India and concluding a deal with Republic of Korea. We are also currently in the process of negotiating trade agreements with the United States, the Gulf Cooperation Council, Switzerland, Turkey and Greenland.
The UK exported around £275 billion in 2025 to these countries, and securing FTAs will strengthen our trading relationships. As part of our mission to kickstart economic growth, we published three key strategies last year. The Industrial Strategy sets out the vision for the sectors that will help achieve the most growth for the UK, boosting long term investment. The Small Business Strategy outlines how we will support businesses in the UK to scale up, and the trade strategy details how we will make full use of a range of trade tools, from free trade agreements to agile or sector specific mini deals that allow government to respond rapidly to the changing geopolitical context.
Maximising opportunities for UK businesses both at home and abroad, and my Lords, through the Steel Strategy, which we published in March, the government set out long term. Our long term plan to fight to revitalise the UK steel sector, restore domestic production to sustainable levels and secure the industry's role in supporting sovereign critical sectors. We are now introducing primary legislation which will provide a route for government to nationalise steel companies or their operations, provided a public interest test is met, bringing British Steel Limited under national ownership will allow government to explore future opportunities, including a transition to decarbonise steel making and to provide reassurance for its workers, suppliers and customers.
This government recognises that securing the long term future relies on both public and private investment for modernisation. My Lords, we are also helping businesses to navigate Windsor framework trading arrangements between GB and NI. We have announced £16.6 million for an enhanced one stop shop regulatory support service, designed to navigate the knowledge gap between facing small and medium sized enterprises. So too have we supported the work of Intertrade UK with over £2 million in funding, which is ably led by the noble Baroness, Lady Foster, to promote the economic bonds and strengths of all parts of the United Kingdom.
And we will continue to back the East West Council to. In developing the ties to across it. But there is more to do as set out in the Gracious Speech. We will take action to further unlock the benefits of a deeper relationship with our closest neighbours. We are prioritising the conclusion of landmark deals on food and drink emissions training and youth experience. Announced at last year's UK EU summit deals, which we will seek to conclude this year. As the Prime Minister said in his speech earlier this week, we must put Britain back in the heart of Europe.
This year's summit will provide an opportunity to build on our strategic partnership, including implementing joint commitments and making progress on where further cooperation cooperation can drive economic and security benefits for both sides. Our collective goal is, and must be to deliver real, tangible benefits for people and businesses in the UK. The food and drink deal will fulfil the manifesto commitment to deliver a veterinary agreement with the EU. Once in place, it will lower costs for UK business exports to the EU by removing certificate and route inspection requirements and in turn, reducing the pressure on food prices.
The deal will also help support trade within the UK internal market, strengthening our union by further simplifying movements of agrifoods between GB and NI, by aligning by aligning Great Britain with standards already established in Northern Ireland, we are further protecting the internal market for the vast majority of agrifoods moving from Great Britain to Northern Ireland, traders will no longer need regulatory certificates, checks or paperwork reducing costs for business. The Windsor framework will work alongside the SPS agreement, continuing to address Northern Ireland's unique circumstances by upholding the Good Friday Agreement and providing Northern Ireland's unique dual market access to both the UK internal market and the EU Single Market Association to Erasmus+ will open up world class opportunities for learners, educators, young people, youth workers, sports sector professionals and communities of all ages across the UK.
We will further strengthen our people to people ties with Europe by establishing an ambitious youth experience scheme with the EU. This scheme will create opportunities for young people to travel, take up short term work or study and take part in invaluable cultural exchange as agreed at the UK EU Leaders Summit in May last year. The overall number of participants in the scheme must be acceptable to both sides and participation will be subject to a visa requirement and time limited. We are negotiating the details of that scheme now with an aim to agree it at the next UK EU summit this year, either through Erasmus+ or our new Youth Experience Scheme.
The EU is at the heart of our offer to young people. The Emissions Trading Agreement, which will link the UK and EU emissions trading schemes, will establish a larger and more stable carbon market. This will support industry confidence to invest in new technologies, leading to new jobs and enabling businesses to decarbonise more quickly and efficiently, efficiently where possible. It will also create the conditions for mutual exemptions from our respective carbon border adjustment mechanisms, saving £7 billion of UK exports a year from being charged.
Combined, the Food and Drink Deal and Emissions Trading Scheme alone could deliver up to £9 billion to the UK economy a year by 2040. As well as easing pressure on consumer food inflation, and at the same time will reduce friction within the union. We also look forward to starting formal negotiations on an electricity agreement with the EU. This agreement will make electricity trade with our European partners more efficient, driving down energy costs and protecting consumers against volatile fossil fuel markets, delivering efficient electricity trading means we can harness the clean energy potential of the North Sea, supporting clean energy jobs and resilient supply chains, and providing secure, affordable energy on the path to net zero.
This will also remove trading frictions between GB and NI, and support energy security for the whole of the UK. Collectively, these actions will deliver for communities across our nations and regions for decades to come, and the European Partnership Bill is the means by which we. We will facilitate the implementation of those deals agreed with the EU now and in the future. The Bill will enable the government to deliver its treaty obligations with the EU and with regards to any future alignment, we are making a sovereign choice to align with EU law in specific areas, enabling us to cut red tape, drive down costs and boost growth.
The cost of nonalignment is added bureaucracy and onerous paperwork for UK businesses. And as we set out in last year's Common understanding, this will come with an appropriate decision shaping role for the UK. The Bill has been designed to ensure that Parliament will have its say on new EU legislation before it is applied in the UK, and I look forward to discussing the detail with members of your Lordships House in the coming months. I suspect for many hours in the coming months as the bill progresses.
My Lords, the European Partnership Bill demonstrates the strength of what this government is seeking to achieve a new relationship. Looking forward, not backwards. A relationship that reflects the realities of our economic and security interests in an uncertain world. Through this bill, we will unlock tangible benefits for the people of our United Kingdom and provide a strong platform for future growth and cooperation. Putting the industrial, small businesses, trade and steel strategies into action is a priority, and pushing for more ambitious outcomes on global trade remains a crucial part of our agenda.
Finally, my Lords, the Gracious Speech reminds us that our security and prosperity are not guaranteed. They must be earned and delivered through our collective efforts and determination. The European Partnership Bill is pivotal to that effort, a statement that we are moving beyond the politics of division and towards a more productive partnership with our European allies. I beg to move.
Those ambitions have one central mission to build a more resilient country that spreads opportunity for all. The country in which we live is one in which talent is everywhere. But opportunity is not, and the world in which we live has never felt more dangerous and volatile. Even in the last few months, global uncertainty has only increased and the impact on our neighbours is real. They are struggling with the cost of living, worrying about the impact on their futures and their children's futures by events outside of their control.
My Lords, our discussions today and in the rest of this session must be real and tangible for them. They must be felt by people in their daily lives. Delivering on our promises are not just words, but our contract with the nation. That is why the Gracious Speech set out new legislation focusing on outcomes, not outputs. That doesn't just address the problems of today. It seeks to strengthen our national foundations so that we can build a stronger and fairer economy that works for all of us in England, in Wales, in Scotland and in Northern Ireland, bringing prosperity to every corner of the United Kingdom, building on our place in the world and strengthening our relations with key allies.
The government's economic plan is based on three pillars to create a strong foundation for businesses to plan and invest to deliver growth, driving infrastructure and to crowd in private investment, and to systematically remove the barriers to growth across the economy. This year's Spring Statement shows our economic plan is the right one. But as we have set out, the war in Iraq will come at a cost. That is why the measures set out in the Gracious Speech will help build that, build growth that is both secure and resilient.
In order to raise living standards for working people. At the heart of this, as noble Lords will be aware, we are continuing our work to secure a closer and more stable relationship with our largest trading partner, the EU, valued at £860 billion last year. This is vital because since Brexit, too many businesses are burdened by unnecessary bureaucracy that dominate everyday imports and exports, with the EU compounding the costs that are passed on to British families pushing up prices and increasing the cost of living, the common understanding agreed last May will remove those barriers, underpinned by sensible legislation that upholds British standards while cutting red tape.
This is a core part of a wider plan. The UK is taking a strategic and clear eyed approach to major partners, deepening trade where it supports growth while balancing security and economic resilience. That includes securing a landmark deal with India, expected to boost UK GDP by £4.8 billion a year, making the most of our accession to the Comprehensive and Progressive Agreement for Trans-Pacific partnership expected to increase UK GDP by £2 billion a year, and a stronger focus on the UK's global strengths, particularly in services exports, to achieve growth in the current global economic environment, businesses need as much certainty as we can offer.
They need support to take advantage of new trade opportunities and of course, they need assistance and guidance in light of new technological innovations. That is why we have published three landmark strategies setting out our collective vision for growth, seeking to make the UK the best place in the world to do business, the best connected economy, and delivering targeted support for businesses as they seek to grow. My Lords, none of the issues we are discussing today can be considered separately to our national security and our place in the world.
The ongoing war in Ukraine has highlighted the importance of European cooperation on security and defence in an ever more uncertain world. It is right and necessary that we seek to deepen our strategic partnerships, including with our neighbours with whom we have common interests, face common threats and with whom we must build common solutions. Your Lordships' House will be aware we have already taken concrete steps towards these objectives. Last year's historic UK EU summit announced a series of deals that are good for household bills, borders and jobs.
We have also recently announced a significant agreement with France to reduce illegal channel crossings, and deeper cooperation has also opened further opportunities for learners, educators and young people. Through our agreement with the EU on the UK's association to Erasmus+ next year. This is a sensible, measured approach that, crucially, also preserves our ability to strike deals with other countries. In this space, we have had notable successes, including signing a trade agreement with India and concluding a deal with Republic of Korea. We are also currently in the process of negotiating trade agreements with the United States, the Gulf Cooperation Council, Switzerland, Turkey and Greenland.
The UK exported around £275 billion in 2025 to these countries, and securing FTAs will strengthen our trading relationships. As part of our mission to kickstart economic growth, we published three key strategies last year. The Industrial Strategy sets out the vision for the sectors that will help achieve the most growth for the UK, boosting long term investment. The Small Business Strategy outlines how we will support businesses in the UK to scale up, and the trade strategy details how we will make full use of a range of trade tools, from free trade agreements to agile or sector specific mini deals that allow government to respond rapidly to the changing geopolitical context.
Maximising opportunities for UK businesses both at home and abroad, and my Lords, through the Steel Strategy, which we published in March, the government set out long term. Our long term plan to fight to revitalise the UK steel sector, restore domestic production to sustainable levels and secure the industry's role in supporting sovereign critical sectors. We are now introducing primary legislation which will provide a route for government to nationalise steel companies or their operations, provided a public interest test is met, bringing British Steel Limited under national ownership will allow government to explore future opportunities, including a transition to decarbonise steel making and to provide reassurance for its workers, suppliers and customers.
This government recognises that securing the long term future relies on both public and private investment for modernisation. My Lords, we are also helping businesses to navigate Windsor framework trading arrangements between GB and NI. We have announced £16.6 million for an enhanced one stop shop regulatory support service, designed to navigate the knowledge gap between facing small and medium sized enterprises. So too have we supported the work of Intertrade UK with over £2 million in funding, which is ably led by the noble Baroness, Lady Foster, to promote the economic bonds and strengths of all parts of the United Kingdom.
And we will continue to back the East West Council to. In developing the ties to across it. But there is more to do as set out in the Gracious Speech. We will take action to further unlock the benefits of a deeper relationship with our closest neighbours. We are prioritising the conclusion of landmark deals on food and drink emissions training and youth experience. Announced at last year's UK EU summit deals, which we will seek to conclude this year. As the Prime Minister said in his speech earlier this week, we must put Britain back in the heart of Europe.
This year's summit will provide an opportunity to build on our strategic partnership, including implementing joint commitments and making progress on where further cooperation cooperation can drive economic and security benefits for both sides. Our collective goal is, and must be to deliver real, tangible benefits for people and businesses in the UK. The food and drink deal will fulfil the manifesto commitment to deliver a veterinary agreement with the EU. Once in place, it will lower costs for UK business exports to the EU by removing certificate and route inspection requirements and in turn, reducing the pressure on food prices.
The deal will also help support trade within the UK internal market, strengthening our union by further simplifying movements of agrifoods between GB and NI, by aligning by aligning Great Britain with standards already established in Northern Ireland, we are further protecting the internal market for the vast majority of agrifoods moving from Great Britain to Northern Ireland, traders will no longer need regulatory certificates, checks or paperwork reducing costs for business. The Windsor framework will work alongside the SPS agreement, continuing to address Northern Ireland's unique circumstances by upholding the Good Friday Agreement and providing Northern Ireland's unique dual market access to both the UK internal market and the EU Single Market Association to Erasmus+ will open up world class opportunities for learners, educators, young people, youth workers, sports sector professionals and communities of all ages across the UK.
We will further strengthen our people to people ties with Europe by establishing an ambitious youth experience scheme with the EU. This scheme will create opportunities for young people to travel, take up short term work or study and take part in invaluable cultural exchange as agreed at the UK EU Leaders Summit in May last year. The overall number of participants in the scheme must be acceptable to both sides and participation will be subject to a visa requirement and time limited. We are negotiating the details of that scheme now with an aim to agree it at the next UK EU summit this year, either through Erasmus+ or our new Youth Experience Scheme.
The EU is at the heart of our offer to young people. The Emissions Trading Agreement, which will link the UK and EU emissions trading schemes, will establish a larger and more stable carbon market. This will support industry confidence to invest in new technologies, leading to new jobs and enabling businesses to decarbonise more quickly and efficiently, efficiently where possible. It will also create the conditions for mutual exemptions from our respective carbon border adjustment mechanisms, saving £7 billion of UK exports a year from being charged.
Combined, the Food and Drink Deal and Emissions Trading Scheme alone could deliver up to £9 billion to the UK economy a year by 2040. As well as easing pressure on consumer food inflation, and at the same time will reduce friction within the union. We also look forward to starting formal negotiations on an electricity agreement with the EU. This agreement will make electricity trade with our European partners more efficient, driving down energy costs and protecting consumers against volatile fossil fuel markets, delivering efficient electricity trading means we can harness the clean energy potential of the North Sea, supporting clean energy jobs and resilient supply chains, and providing secure, affordable energy on the path to net zero.
This will also remove trading frictions between GB and NI, and support energy security for the whole of the UK. Collectively, these actions will deliver for communities across our nations and regions for decades to come, and the European Partnership Bill is the means by which we. We will facilitate the implementation of those deals agreed with the EU now and in the future. The Bill will enable the government to deliver its treaty obligations with the EU and with regards to any future alignment, we are making a sovereign choice to align with EU law in specific areas, enabling us to cut red tape, drive down costs and boost growth.
The cost of nonalignment is added bureaucracy and onerous paperwork for UK businesses. And as we set out in last year's Common understanding, this will come with an appropriate decision shaping role for the UK. The Bill has been designed to ensure that Parliament will have its say on new EU legislation before it is applied in the UK, and I look forward to discussing the detail with members of your Lordships House in the coming months. I suspect for many hours in the coming months as the bill progresses.
My Lords, the European Partnership Bill demonstrates the strength of what this government is seeking to achieve a new relationship. Looking forward, not backwards. A relationship that reflects the realities of our economic and security interests in an uncertain world. Through this bill, we will unlock tangible benefits for the people of our United Kingdom and provide a strong platform for future growth and cooperation. Putting the industrial, small businesses, trade and steel strategies into action is a priority, and pushing for more ambitious outcomes on global trade remains a crucial part of our agenda.
Finally, my Lords, the Gracious Speech reminds us that our security and prosperity are not guaranteed. They must be earned and delivered through our collective efforts and determination. The European Partnership Bill is pivotal to that effort, a statement that we are moving beyond the politics of division and towards a more productive partnership with our European allies. I beg to move.
11:25
Baroness Finn (Conservative)
-
-
Baroness Finn (Conservative)
My Lords, when the Chancellor of >> My Lords, when the Chancellor of the Exchequer made her first speech in that office on the 8th of July, 2024, she said that by growing the economy, the government could rebuild Britain and make every part rebuild Britain and make every part of the country better off. My Lords, that was not a modest claim. It was the central economic wager of this government. Ministers told the country that the hard arithmetic of our public finances could be overcome by sustained growth across the Parliament, that higher productivity, higher investment, stronger real wages and the highest sustained growth in the G7 would produce abundance and avoid difficult choices.
And that ambition is not wrong. Britain needs growth. We want the country to be more prosperous, more productive and more secure. However, growth is not summoned by slogans. It is not delivered by a press release. A reset, a mission brought a pillar or another ministerial speech. Growth is earned by those who embrace risk and sustained effort to produce value. Government can at best, help enable growth by making this country the best place in the developed world to invest, to hire, to build, to innovate and to make things.
Two years on, the question before this House is not whether the government's ambition was the right one, but whether their policies have matched that ambition. The answer, I am afraid, is clear the government have borrowed too much, grown too little and regulated to excess. The office for Budget Responsibility tells us that successive plans to reduce borrowing and stabilise debt have, in its words, not yet materialised. Public sector net borrowing was £152 billion in 20 1425 and is forecast at £132 billion this year.
Underlying debt has continued to rise. Debt interest spending is forecast to rise from £110 billion in 2526 to £137 billion by 2030 31. And while government debt is rising and borrowing costs are at a 30 year high, the government is spending £333 billion annually on welfare. My Lords, that is more than the government receives in income tax. That is the very definition of unsustainable. And when the government sought to cut the rate of increase in that spending, they U-turned.
On Tuesday, the Prime Minister showed us how determined he can be in the face of unsustainable and soaring pressure. But when it came to the essential battle on welfare, the real test of his ability to get those tough and big calls right, the Prime Minister capitulated and the government plans would merely have slowed the rate of growth growth, not reduce the bill. If we are to deliver the brighter future young people deserve, we need to be much more radical. So can the noble Baroness, the Minister, say what measures in the King's speech will bring our unsustainable welfare Bill under control? And can she say why welfare, which is so great a challenge, is not the subject of one of our debates this week.
My Lords, those are not abstract numbers. Every pound spent servicing debt is a pound that cannot be spent on defence, roads, hospitals, skills or tax reductions. High debt interest is not a symbol of compassion, but the price of policy failure. At the same time, growth has disappointed. The IMF has cut its forecast for UK growth this year from 1.3% to 0.8%. The economy grew by just 0.1% in the final quarter of 2025. Youth unemployment is up. There are now more than 700,000 unemployed young people aged 16 to 24, and youth on the youth unemployment rate has risen over the year.
This is the reality behind the rhetoric. Ministers promised with their words a growth government. But they have produced through their actions a high borrowing, high tax, high regulation government as as the outgoing Minister for Safeguarding and Violence against Women and Girls said on Tuesday, it is deeds, not words, that count. In the first session of this Parliament, the government's preferences were clear when in doubt, tax. When in doubt, regulate. When in doubt, create a new body, a new duty, a new levy or a new compliance burden.
The rise in National Insurance employer National Insurance contributions was a direct tax on jobs. It was accompanied by a lower threshold at which employers became liable. At the same time, the government pressed ahead with higher wage costs and an Employment Rights Act, which, even after the important concession on day one, unfair dismissal rights secured in this House still makes it riskier and more expensive to take on staff. My Lords, employment rights matter, but so too do employment opportunities.
If the government makes it more expensive to hire, more uncertain to manage a probation period and more complex to comply with the law, it should not be surprised when firms hesitate before creating the next job. The people hit first are often the young, the inexperienced, the marginal applicant and the small business that cannot absorb another legal risk. The same anti-growth instinct is visible in energy. The government has set out plans not to issue new, not to issue new licences to explore new oil and gas fields in the North Sea.
At a time of geopolitical instability and high energy prices, it is extraordinary to choose greater dependence on imports over the responsible use of our own resources. It means less domestic investment, fewer high skilled jobs and more exposure to shocks beyond our control. So, my Lords, when we turn to the bills announcing the Gracious Speech, the official opposition will apply a simple growth test to each of them. Does it make it cheaper to hire? Does it make energy cheaper? Does it make it faster to build? Does it increase productivity? Does it make investment more attractive? And does it reduce the burden of regulation rather than merely relabel it where the answer is yes, we will be constructive and we will support the government.
Where the answer is no, where the bill where a bill creates another regulator, another levy, another licensing regime, another statutory duty, another offence, another code, another reporting requirement or another cost on business, we will challenge it firmly. And on the issue of productivity, I would be grateful if Ministers could provide more detail on the proposals to strengthen the productivity of the civil service, the government, the country. My Lords cannot afford another session in which every problem is met with a new rule, and every industry is treated as a revenue stream.
An alternative King's Speech would start with what the economy actually needs lower business taxes, cheaper energy, faster planning, lighter regulation and a serious commitment to competitiveness. It would slash business rates for the high street and for hospitality. It would remove the most damaging part of the Employment Rights Act. It would bring forward a serious deregulatory programme, not another request for regulators to write letters about growth. It would make energy policies serve industry and households, not ideology, and it would use our freedoms outside the European Union to strike a more agile, more pro-innovation path where that is in the national interest.
So I ask the noble Baroness, the Minister, which measures which measure in the King's speech will make it cheaper for a small firm to employ its next worker, which will bring down the energy bill of a manufacturer which will cut the number of forms, approvals and licences faced by a growing business, and which will tell investors that Britain is open not merely in rhetoric but in law, tax and regulation. My Lords, let us turn to Europe. Like many noble Lords, I listened to the Prime Minister's speech on Monday of this week, hoping that the government might have learned from the public's verdict in the local elections and changed course.
I was disappointed what we heard was not a reset. It was a retreat into the familiar instincts of the left more state direction, more nationalisation, more guarantees announced from the centre and closer alignment with the European Union. There is a place for government action, but the government cannot substitute itself for enterprise. It cannot nationalise its way to productivity. It cannot guarantee its way to opportunity. If the private sector is being taxed, regulated and second guessed at every turn, and it cannot align its way to competitiveness by binding Britain more closely to a European model whose own leaders now acknowledge is failing to deliver the growth Europe needs.
My Lords, this is not an argument for hostility to Europe. Britain should trade with Europe, cooperate with Europe, stand with Europe on security and work constructively with our neighbours wherever our interests coincide. But cooperation is not submission. Friendship is not rule taking, and a reset must not become re-entry by stealth. The British people voted in 2016 to leave the European Union. At the last election, the Prime Minister promised not to rejoin the single market, the customs union or free movement.
Yet with every speech, every summit and every reset, the government appears to edge closer to the EU's regulatory orbit, closer to payments, closer to mobility schemes and closer to alignment for its own sake. The irony is that Europe itself is now warning against the very model to which this Prime Minister seems so drawn. At Davos this year, the German Chancellor, Friedrich Merz, said that Germany and Europe had wasted incredible potential for growth. He said Europe had become the world champion of overregulation.
A few weeks later, at the European Industry Summit, Chancellor Mertes went further. He said overregulation hampers our economic growth. He called for a regulatory clean slate and said that Europe must deregulate every sector. My Lords, those are not the words of a British Eurosceptic caricature in Brussels. They are the words of the Chancellor of Germany. Speaking from the heart of the European project, warning that regulation has damaged growth, investment and innovation, the Draghi report made the same diagnosis.
It said that Europe largely missed out on the digital revolution. It observed that only four of the world's top 50 technology companies are European. It warned that innovative companies are held back by inconsistent and restrictive regulations. My Lords, if the leaders of the European Union now know that their penchant for overregulation is a central cause of their economic weakness, why is Britain being drawn closer to that system? Why would we import the very burdens that Europe itself is trying to cut? Why would we trade the freedom to be faster, lighter and more agile for the comfort of alignment with a model that has underperformed? The Prime Minister owes the country a clear answer, not a slogan, not another platitude about being at the heart of Europe.
Will the Minister confirm that there will be no dynamic alignment with EU rules without explicit parliamentary approval? And by explicit approval, we do not mean a broadly drafted Henry the Eighth Power. Will she confirm that Britain will not become an EU rule taker? Will she confirm that there will be no new annual payments to EU programmes without a vote in Parliament? And will she confirm that any youth experience scheme will be capped time limited and will not recreate free movement by another name? Brexit was a vote to govern ourselves.
The government should use that freedom to make Britain more competitive, not bargain it away. In pursuit of applause in Brussels. My Lords, the government's problem is not that its ambition is too high. It is that its instincts are wrong. It wants growth. But taxes jobs. It wants investment but raises uncertainty. It wants enterprise but regulates success. It wants fiscal space but allows debt interest to crowd out the future. It wants to be pro-business but treats business as something to be managed, charged and corrected.
Britain does not need another reset. It needs a change. Of course. It needs lower burdens, cheaper energy, faster building a tax system that rewards work and investment, and a regulatory culture that asks first whether intervention is necessary at all. The official opposition will support measures that genuinely promote growth, but we will not be silent when the government repeats the mistakes of the previous session. The British people were promised growth, they have been given borrowing, tax rises and regulation.
It is time for Ministers to stop talking about growth and start removing the obstacles to it.
And that ambition is not wrong. Britain needs growth. We want the country to be more prosperous, more productive and more secure. However, growth is not summoned by slogans. It is not delivered by a press release. A reset, a mission brought a pillar or another ministerial speech. Growth is earned by those who embrace risk and sustained effort to produce value. Government can at best, help enable growth by making this country the best place in the developed world to invest, to hire, to build, to innovate and to make things.
Two years on, the question before this House is not whether the government's ambition was the right one, but whether their policies have matched that ambition. The answer, I am afraid, is clear the government have borrowed too much, grown too little and regulated to excess. The office for Budget Responsibility tells us that successive plans to reduce borrowing and stabilise debt have, in its words, not yet materialised. Public sector net borrowing was £152 billion in 20 1425 and is forecast at £132 billion this year.
Underlying debt has continued to rise. Debt interest spending is forecast to rise from £110 billion in 2526 to £137 billion by 2030 31. And while government debt is rising and borrowing costs are at a 30 year high, the government is spending £333 billion annually on welfare. My Lords, that is more than the government receives in income tax. That is the very definition of unsustainable. And when the government sought to cut the rate of increase in that spending, they U-turned.
On Tuesday, the Prime Minister showed us how determined he can be in the face of unsustainable and soaring pressure. But when it came to the essential battle on welfare, the real test of his ability to get those tough and big calls right, the Prime Minister capitulated and the government plans would merely have slowed the rate of growth growth, not reduce the bill. If we are to deliver the brighter future young people deserve, we need to be much more radical. So can the noble Baroness, the Minister, say what measures in the King's speech will bring our unsustainable welfare Bill under control? And can she say why welfare, which is so great a challenge, is not the subject of one of our debates this week.
My Lords, those are not abstract numbers. Every pound spent servicing debt is a pound that cannot be spent on defence, roads, hospitals, skills or tax reductions. High debt interest is not a symbol of compassion, but the price of policy failure. At the same time, growth has disappointed. The IMF has cut its forecast for UK growth this year from 1.3% to 0.8%. The economy grew by just 0.1% in the final quarter of 2025. Youth unemployment is up. There are now more than 700,000 unemployed young people aged 16 to 24, and youth on the youth unemployment rate has risen over the year.
This is the reality behind the rhetoric. Ministers promised with their words a growth government. But they have produced through their actions a high borrowing, high tax, high regulation government as as the outgoing Minister for Safeguarding and Violence against Women and Girls said on Tuesday, it is deeds, not words, that count. In the first session of this Parliament, the government's preferences were clear when in doubt, tax. When in doubt, regulate. When in doubt, create a new body, a new duty, a new levy or a new compliance burden.
The rise in National Insurance employer National Insurance contributions was a direct tax on jobs. It was accompanied by a lower threshold at which employers became liable. At the same time, the government pressed ahead with higher wage costs and an Employment Rights Act, which, even after the important concession on day one, unfair dismissal rights secured in this House still makes it riskier and more expensive to take on staff. My Lords, employment rights matter, but so too do employment opportunities.
If the government makes it more expensive to hire, more uncertain to manage a probation period and more complex to comply with the law, it should not be surprised when firms hesitate before creating the next job. The people hit first are often the young, the inexperienced, the marginal applicant and the small business that cannot absorb another legal risk. The same anti-growth instinct is visible in energy. The government has set out plans not to issue new, not to issue new licences to explore new oil and gas fields in the North Sea.
At a time of geopolitical instability and high energy prices, it is extraordinary to choose greater dependence on imports over the responsible use of our own resources. It means less domestic investment, fewer high skilled jobs and more exposure to shocks beyond our control. So, my Lords, when we turn to the bills announcing the Gracious Speech, the official opposition will apply a simple growth test to each of them. Does it make it cheaper to hire? Does it make energy cheaper? Does it make it faster to build? Does it increase productivity? Does it make investment more attractive? And does it reduce the burden of regulation rather than merely relabel it where the answer is yes, we will be constructive and we will support the government.
Where the answer is no, where the bill where a bill creates another regulator, another levy, another licensing regime, another statutory duty, another offence, another code, another reporting requirement or another cost on business, we will challenge it firmly. And on the issue of productivity, I would be grateful if Ministers could provide more detail on the proposals to strengthen the productivity of the civil service, the government, the country. My Lords cannot afford another session in which every problem is met with a new rule, and every industry is treated as a revenue stream.
An alternative King's Speech would start with what the economy actually needs lower business taxes, cheaper energy, faster planning, lighter regulation and a serious commitment to competitiveness. It would slash business rates for the high street and for hospitality. It would remove the most damaging part of the Employment Rights Act. It would bring forward a serious deregulatory programme, not another request for regulators to write letters about growth. It would make energy policies serve industry and households, not ideology, and it would use our freedoms outside the European Union to strike a more agile, more pro-innovation path where that is in the national interest.
So I ask the noble Baroness, the Minister, which measures which measure in the King's speech will make it cheaper for a small firm to employ its next worker, which will bring down the energy bill of a manufacturer which will cut the number of forms, approvals and licences faced by a growing business, and which will tell investors that Britain is open not merely in rhetoric but in law, tax and regulation. My Lords, let us turn to Europe. Like many noble Lords, I listened to the Prime Minister's speech on Monday of this week, hoping that the government might have learned from the public's verdict in the local elections and changed course.
I was disappointed what we heard was not a reset. It was a retreat into the familiar instincts of the left more state direction, more nationalisation, more guarantees announced from the centre and closer alignment with the European Union. There is a place for government action, but the government cannot substitute itself for enterprise. It cannot nationalise its way to productivity. It cannot guarantee its way to opportunity. If the private sector is being taxed, regulated and second guessed at every turn, and it cannot align its way to competitiveness by binding Britain more closely to a European model whose own leaders now acknowledge is failing to deliver the growth Europe needs.
My Lords, this is not an argument for hostility to Europe. Britain should trade with Europe, cooperate with Europe, stand with Europe on security and work constructively with our neighbours wherever our interests coincide. But cooperation is not submission. Friendship is not rule taking, and a reset must not become re-entry by stealth. The British people voted in 2016 to leave the European Union. At the last election, the Prime Minister promised not to rejoin the single market, the customs union or free movement.
Yet with every speech, every summit and every reset, the government appears to edge closer to the EU's regulatory orbit, closer to payments, closer to mobility schemes and closer to alignment for its own sake. The irony is that Europe itself is now warning against the very model to which this Prime Minister seems so drawn. At Davos this year, the German Chancellor, Friedrich Merz, said that Germany and Europe had wasted incredible potential for growth. He said Europe had become the world champion of overregulation.
A few weeks later, at the European Industry Summit, Chancellor Mertes went further. He said overregulation hampers our economic growth. He called for a regulatory clean slate and said that Europe must deregulate every sector. My Lords, those are not the words of a British Eurosceptic caricature in Brussels. They are the words of the Chancellor of Germany. Speaking from the heart of the European project, warning that regulation has damaged growth, investment and innovation, the Draghi report made the same diagnosis.
It said that Europe largely missed out on the digital revolution. It observed that only four of the world's top 50 technology companies are European. It warned that innovative companies are held back by inconsistent and restrictive regulations. My Lords, if the leaders of the European Union now know that their penchant for overregulation is a central cause of their economic weakness, why is Britain being drawn closer to that system? Why would we import the very burdens that Europe itself is trying to cut? Why would we trade the freedom to be faster, lighter and more agile for the comfort of alignment with a model that has underperformed? The Prime Minister owes the country a clear answer, not a slogan, not another platitude about being at the heart of Europe.
Will the Minister confirm that there will be no dynamic alignment with EU rules without explicit parliamentary approval? And by explicit approval, we do not mean a broadly drafted Henry the Eighth Power. Will she confirm that Britain will not become an EU rule taker? Will she confirm that there will be no new annual payments to EU programmes without a vote in Parliament? And will she confirm that any youth experience scheme will be capped time limited and will not recreate free movement by another name? Brexit was a vote to govern ourselves.
The government should use that freedom to make Britain more competitive, not bargain it away. In pursuit of applause in Brussels. My Lords, the government's problem is not that its ambition is too high. It is that its instincts are wrong. It wants growth. But taxes jobs. It wants investment but raises uncertainty. It wants enterprise but regulates success. It wants fiscal space but allows debt interest to crowd out the future. It wants to be pro-business but treats business as something to be managed, charged and corrected.
Britain does not need another reset. It needs a change. Of course. It needs lower burdens, cheaper energy, faster building a tax system that rewards work and investment, and a regulatory culture that asks first whether intervention is necessary at all. The official opposition will support measures that genuinely promote growth, but we will not be silent when the government repeats the mistakes of the previous session. The British people were promised growth, they have been given borrowing, tax rises and regulation.
It is time for Ministers to stop talking about growth and start removing the obstacles to it.
11:39
Lord Fox (Liberal Democrat)
-
-
Lord Fox (Liberal Democrat)
My Lords, nearly two years ago, the general election resulted in a brief outbreak of euphoria in the brief outbreak of euphoria in the benches opposite. Then, during the long parliamentary session that long parliamentary session that followed reality bit. But during that campaign, as we heard, growth was declared as the number one priority of that government. And yet, during that first session of Parliament, many of the government's actions pushed in the opposite direction. The truly disastrous increase in employers NIC was a striking example, but it was by no means unique.
This meant that the country exited the last legislative session with greatly increased operational costs for businesses. This sent a messages that discouraged investment and pushed thousands of high street businesses and hospitality businesses into oblivion. It was indeed the opposite of a growth centred strategy, and the hangover from that session will see yet more non growth legislation has yet to arrive. So now we have a new set of bills, my Lords and the prism, as we've just heard, we should look through.
That is how does it affect the government's mission on growth. So let's look at some of them. The Small Business Protections (Late Payments) Bill. Yes. It's important that we deal with the scourge of late payments, but we will be looking to see how the legislative backup will will be delivered to support the small business strategy that the noble Baroness Anderson just spoke about. Then we have the Enhancing Financial Services Bill. Well, we welcome reforms that may support growth, but we don't want to put pressure on people's savings and undermine consumer protection.
So we'll be looking very hard at the details there. The Competition and Reform bill seems like an attempt to water down the work of the CMA, the Competition and Markets Authority, in the way that its digital unit has been curtailed. So we'll be looking very, very closely at the plans on that bill. And the Regulating for Growth Bill looks like just the sort of technical bill that your Lordships would like to get your teeth into. I look forward to the many hours of that, but all four of these, they make important points, and I'm sure there'll be lots and lots of debate in your Lordships House, but it's hard to discern a pattern, and it's hard to see the strategic drive for growth within those those those moves.
There's no bold moves. And my Lords, when AI is set to affect every aspect of our economy, there is no AI bill in this in this session. How can that be sensible, my Lords? So I'm going to use my final minutes to talk about two other bills. And these were the ones that the current Prime Minister chose to pre-announce in one of his fight back speeches earlier this week, and that is Steel and Europe. Yes. Now, perhaps summoning the ghosts of Clement Attlee and Harold Wilson.
Labour proposes nationalising, or should I say, renationalising the steel industry for the third time with the Steel Industry nationalisation Bill. My Lords, I do not underestimate the importance of these of these to the people of this measure, to those working in the industry and in and its importance to the country's manufacturing and defence sectors and its industrial strategy. But of course, the government has effectively been funding this plant since the summer. And this move was one, I think most of us expected to be brought to your Lordships House sooner or later.
So we want to see the details. We want to see the plans to help find private co-investors who can help modernise the sites and put money in to help create more jobs. We need to see proper long term plan for the future, with an emphasis on national security, and we need to know the costs now by choosing to preannounce this measure, the Prime Minister was clearly aiming to stir the blood of those to the left of his party, and it also followed the surprise appointment of Gordon Brown as some sort of global global emissary.
I assume the PM was searching for reflected glory from the halcyon days of the Brown Premiership. Perhaps the Minister can throw some light on what Gordon Brown will actually be up to. If he's the Prime Minister's man, how will he relate to the Chancellor and the Treasury, and how will his activities be accountable to Parliament? Will he be summonable by select committees, for example? Now, of course, steel nationalisation in in some will not meaningfully increase GDP, GDP and it will not move the needle on national productivity, nor will it address the cost of living.
However, the second topic that Starmer pre-announced could indeed materially affect the fortunes of British people. We welcome all talk of moving closer to Europe. Of course we do. But the European Partnership Bill seems to be just the latest example of a total lack of ambition when it comes to rebuilding trade links with the EU. It offers very little, actually. That's new. What the PM announced in that speech seemed only to be a restatement of where we already are with the UK.
At least six months into negotiating a reset with its relations in the EU. And here I would note at the same time as these negotiations are going on, the EU Made in Europe regime proposals pose an existential risk to the EU, UK automotive trading relationship, and that's worth around 80 billion a year. The UK is the EU's number one trading partner for automotive trade. So can the Minister tell your Lordships' House what negotiations are underway? This is a really important issue, and we have to know that His Majesty's Government is going all out to reach an agreement.
It is absolutely vital for our automotive industry in this country. But returning to the proposed relation, clearly, as we've heard from the noble Baroness Anderson, some alignment is planned. And of course, we look forward to the long discussions that will no doubt ensue when we interrogate the depth of that alignment. However, as Prime Minister Starmer has equivocally ruled out crossing the red lines he cautiously drew during the general election. So, assuming the EU reset is successful, agreement on border arrangements for food and animals would be positive, not least for our beleaguered farmers.
Easier EU travel for bands and orchestras and theatrical productions if we get it, would be really welcome. And so would anything else. Of the light that Baroness Anderson set out would be welcome. But so much more is possible if the government is bolder. There are huge wins. Business could trade with our largest market so much more easily, making jobs secure and increasing pay and delivering growth. Holidaymakers could use EU e-gates instead of queuing for hours in the rest of the world line, and our border police could once again properly use EU data to help them more easily identify and stop the evil people traffickers.
These are just three examples of what could be delivered. These and many more are possible. But they won't happen if the Prime Minister sticks to his red lines. The government needs to go further and faster to strengthen our relationship with the EU. If it wants to turn around our very low performing economy and begin repairing the £90 billion Brexit black hole that the Conservatives botched deal delivered. Now, I understand that these red lines were in Labour's manifesto, but since then the world has changed.
Rather, our close relationship with the USA has been under pressure and Trump has indicated to all Britons where our real economic future lies. This hostility from the United. The US president added to the war in Gaza and the Arabian Gulf, an energy crisis and Putin's continued pummelling of Ukraine should set the scene for a revised worldview. And in general, people out there, they recognise that the whole balance of the world has changed. An awful lot has changed in the two years since that election and that manifesto, and it seems to me that to robotically stick to an out of date manifesto like it's a holy writ is a dereliction of leadership, a dereliction of leadership.
Whoever turns out to be the Prime Minister should be bold and ambitious for our country, and they should work hard to take the country with them hitting the road. To explain why there is a need for a different approach, how people should benefit and what needs to change. That is leadership, my Lords, and this is not one sided. Our European neighbours are feeling the need to move closer to. For example, my Lords, last month I was in Berlin for a joint UK German business meeting as part of the Kensington Treaty.
The Secretary of State, Peter Carl MP, was there, as was his German counterpart, plus the key business organisations for both countries and about 300 businesses. The energy of that meeting demonstrated we have enormous mutual opportunities, but with each day that passes, it feels like the world. The work gets harder and business morale gets lower. This government has already wasted two years. The country, our economy and our people cannot afford more years of timidity. We need a government that is bold and moves decisively for.
For a start, the Liberal Democrats are clear. Ministers must straight away prioritise negotiations for a new customs union with the EU. This would turbocharge our economy and unleash British business. That would be the start of a real growth policy.
This meant that the country exited the last legislative session with greatly increased operational costs for businesses. This sent a messages that discouraged investment and pushed thousands of high street businesses and hospitality businesses into oblivion. It was indeed the opposite of a growth centred strategy, and the hangover from that session will see yet more non growth legislation has yet to arrive. So now we have a new set of bills, my Lords and the prism, as we've just heard, we should look through.
That is how does it affect the government's mission on growth. So let's look at some of them. The Small Business Protections (Late Payments) Bill. Yes. It's important that we deal with the scourge of late payments, but we will be looking to see how the legislative backup will will be delivered to support the small business strategy that the noble Baroness Anderson just spoke about. Then we have the Enhancing Financial Services Bill. Well, we welcome reforms that may support growth, but we don't want to put pressure on people's savings and undermine consumer protection.
So we'll be looking very hard at the details there. The Competition and Reform bill seems like an attempt to water down the work of the CMA, the Competition and Markets Authority, in the way that its digital unit has been curtailed. So we'll be looking very, very closely at the plans on that bill. And the Regulating for Growth Bill looks like just the sort of technical bill that your Lordships would like to get your teeth into. I look forward to the many hours of that, but all four of these, they make important points, and I'm sure there'll be lots and lots of debate in your Lordships House, but it's hard to discern a pattern, and it's hard to see the strategic drive for growth within those those those moves.
There's no bold moves. And my Lords, when AI is set to affect every aspect of our economy, there is no AI bill in this in this session. How can that be sensible, my Lords? So I'm going to use my final minutes to talk about two other bills. And these were the ones that the current Prime Minister chose to pre-announce in one of his fight back speeches earlier this week, and that is Steel and Europe. Yes. Now, perhaps summoning the ghosts of Clement Attlee and Harold Wilson.
Labour proposes nationalising, or should I say, renationalising the steel industry for the third time with the Steel Industry nationalisation Bill. My Lords, I do not underestimate the importance of these of these to the people of this measure, to those working in the industry and in and its importance to the country's manufacturing and defence sectors and its industrial strategy. But of course, the government has effectively been funding this plant since the summer. And this move was one, I think most of us expected to be brought to your Lordships House sooner or later.
So we want to see the details. We want to see the plans to help find private co-investors who can help modernise the sites and put money in to help create more jobs. We need to see proper long term plan for the future, with an emphasis on national security, and we need to know the costs now by choosing to preannounce this measure, the Prime Minister was clearly aiming to stir the blood of those to the left of his party, and it also followed the surprise appointment of Gordon Brown as some sort of global global emissary.
I assume the PM was searching for reflected glory from the halcyon days of the Brown Premiership. Perhaps the Minister can throw some light on what Gordon Brown will actually be up to. If he's the Prime Minister's man, how will he relate to the Chancellor and the Treasury, and how will his activities be accountable to Parliament? Will he be summonable by select committees, for example? Now, of course, steel nationalisation in in some will not meaningfully increase GDP, GDP and it will not move the needle on national productivity, nor will it address the cost of living.
However, the second topic that Starmer pre-announced could indeed materially affect the fortunes of British people. We welcome all talk of moving closer to Europe. Of course we do. But the European Partnership Bill seems to be just the latest example of a total lack of ambition when it comes to rebuilding trade links with the EU. It offers very little, actually. That's new. What the PM announced in that speech seemed only to be a restatement of where we already are with the UK.
At least six months into negotiating a reset with its relations in the EU. And here I would note at the same time as these negotiations are going on, the EU Made in Europe regime proposals pose an existential risk to the EU, UK automotive trading relationship, and that's worth around 80 billion a year. The UK is the EU's number one trading partner for automotive trade. So can the Minister tell your Lordships' House what negotiations are underway? This is a really important issue, and we have to know that His Majesty's Government is going all out to reach an agreement.
It is absolutely vital for our automotive industry in this country. But returning to the proposed relation, clearly, as we've heard from the noble Baroness Anderson, some alignment is planned. And of course, we look forward to the long discussions that will no doubt ensue when we interrogate the depth of that alignment. However, as Prime Minister Starmer has equivocally ruled out crossing the red lines he cautiously drew during the general election. So, assuming the EU reset is successful, agreement on border arrangements for food and animals would be positive, not least for our beleaguered farmers.
Easier EU travel for bands and orchestras and theatrical productions if we get it, would be really welcome. And so would anything else. Of the light that Baroness Anderson set out would be welcome. But so much more is possible if the government is bolder. There are huge wins. Business could trade with our largest market so much more easily, making jobs secure and increasing pay and delivering growth. Holidaymakers could use EU e-gates instead of queuing for hours in the rest of the world line, and our border police could once again properly use EU data to help them more easily identify and stop the evil people traffickers.
These are just three examples of what could be delivered. These and many more are possible. But they won't happen if the Prime Minister sticks to his red lines. The government needs to go further and faster to strengthen our relationship with the EU. If it wants to turn around our very low performing economy and begin repairing the £90 billion Brexit black hole that the Conservatives botched deal delivered. Now, I understand that these red lines were in Labour's manifesto, but since then the world has changed.
Rather, our close relationship with the USA has been under pressure and Trump has indicated to all Britons where our real economic future lies. This hostility from the United. The US president added to the war in Gaza and the Arabian Gulf, an energy crisis and Putin's continued pummelling of Ukraine should set the scene for a revised worldview. And in general, people out there, they recognise that the whole balance of the world has changed. An awful lot has changed in the two years since that election and that manifesto, and it seems to me that to robotically stick to an out of date manifesto like it's a holy writ is a dereliction of leadership, a dereliction of leadership.
Whoever turns out to be the Prime Minister should be bold and ambitious for our country, and they should work hard to take the country with them hitting the road. To explain why there is a need for a different approach, how people should benefit and what needs to change. That is leadership, my Lords, and this is not one sided. Our European neighbours are feeling the need to move closer to. For example, my Lords, last month I was in Berlin for a joint UK German business meeting as part of the Kensington Treaty.
The Secretary of State, Peter Carl MP, was there, as was his German counterpart, plus the key business organisations for both countries and about 300 businesses. The energy of that meeting demonstrated we have enormous mutual opportunities, but with each day that passes, it feels like the world. The work gets harder and business morale gets lower. This government has already wasted two years. The country, our economy and our people cannot afford more years of timidity. We need a government that is bold and moves decisively for.
For a start, the Liberal Democrats are clear. Ministers must straight away prioritise negotiations for a new customs union with the EU. This would turbocharge our economy and unleash British business. That would be the start of a real growth policy.
11:50
Lord Burns (Crossbench)
-
-
Lord Burns (Crossbench)
My Lords, most of us agree that economic growth is is critical and I'm very pleased to see that it is on the board as being one of the first topics that we're discussing in this response to the Gracious Speech growth widens the choices that are available for governments. It increases the scope for making those choices and the trade offs that governments are forced to make. As we know, higher output, greater productivity, lead to high disposable incomes. It also generates the taxes that we need to fund public services.
And it provides when you have decent rate of growth, much more room for spending adjustments and allocations between different areas. The tough challenge, though, for any government, is that underlying growth rates only change slowly, and they're very difficult to predict. Since 2007, the growth rates of the major countries have been significantly slower than they were in the years before. And in this respect, the UK s performance is very similar to that of other major European countries, and the reality is that it is difficult to increase the underlying growth rate in the UK.
If we have slow growth around the world, and that has been the pattern. And for the moment that looks as if that pattern will continue. We've also got to be much more careful, I think, by putting too much emphasis on month to month changes, which tend to be erratic. There's been a pattern in recent years with stronger figures in the early months of the year and weaker figures later, possibly a seasonal adjustment problem. This morning's GDP might show a quarterly increase of 0.6%, but the reality is it's still only 1.1% higher than the first quarter of last year.
And this, of course, compares with the years and years when we became accustomed to growth rates of 2.5%. One criticism I have had about the government's approach has been the failure to acknowledge, at an earlier point, that much of the previous government's woes were due to this global slowdown, and that simply changing government has not changed this. Ahead of the election, the Economic Affairs Committee highlighted major spending challenges ahead the cost of net zero, increased defence spending and an ageing population, all of which will be going to be putting pressures upon financial stabilisation.
Given these challenges, my own view has been that either taxes would have to increase across the board, or significant public spending savings would be necessary, and probably both. Instead, what we've seen is increased public spending and attempts to raise taxes, either on employers or on a very narrow part of the tax system. And this has sparked anger. It's not succeeded in raising sufficient revenue. And furthermore, the other measures to protect jobs, as we have seen, have done very little to improve the economy's supply side.
However, my biggest concern now is that some groups involved in the current leadership debate are convinced that faster growth can be achieved through increased public expenditure and larger fiscal deficits. My experience is that this is a confusion of cause and effect and a very serious one. Over time, the scope for higher public spending is the result of faster growth. It is not the cause of faster growth. The reality is that we start with a debt ratio close to 100% of GDP.
Debt interest costs consume 10% of our tax revenue. We have not been able to pay for the huge borrowing at the time of Covid, or the cost of supporting energy bills and proposals to increase this further, either openly or through disguised off balance sheet borrowing that we have heard some chatter about our high risk policies. We all desire a world where spending eventually pays for itself, and with some aspects of spending, this is the case, although the benefits do take time to emerge.
But more often they don't pay for themselves. And the Chancellor, to my mind, deserves credit for recognising this and emphasising this. The faster growth we need an environment with effective incentives for both work and investment. We urgently need an overhaul of the tax system to iron out inconsistent and bizarre marginal rates of tax across. For some people, we need to eliminate the wide range of unnecessary exemptions and allowances, and we need to ensure the right incentives for business taxation. However, these are all issues for future budgets rather than for the gracious address.
There are reforms in the Gracious Speech that that I welcome and could make a difference. And we've heard about some of them this morning. I welcome the emphasis given to growth when judging the approach to financial services regulation. It's been a view of mine since the crisis that there has been a significant regulatory overreaction to the 2008 crisis. There was a natural desire to prevent it happening again, and it's very important that prudential risks should be managed. But in the process, increased regulation, damaged bank lending to the private sector and the productivity of the banking industry.
The focus was on changes that were the easiest to make, rather than addressing the weaknesses that posed the greatest risks. And this was also the action that has to be taken by the other major countries. And my view is that the growth, which reduction, which we have seen across all of those countries, has suffered in part as a result of that response to the to the crisis. I also support efforts to minimise friction to trade and flows of investment within Europe.
Although reaching agreement will be difficult and contentious, and as many have pointed out in the course of the debate already, the growth performance of the major European countries have been one of the slowest growth areas in the in the world over this period. It's not exactly a vibrant market at this point. Also welcome to me are the proposals for the Northern Powerhouse Rail. As a predominantly service based economy, cities have become increasingly important centres of wealth creation. However, they can only realise their potential if they have a functioning public transport system that allows as many people as possible to access them.
With the growth of the economic potential of cities, commuting by car into those cities becomes increasingly difficult. And this is not just London issue. We can see the pressure around many cities. I was involved in transport cities in Wales where road systems are struggling to cope with these pressures, and I remain very hopeful that the proposals for a commuter service in South Wales, which I was involved in putting
**** Possible New Speaker ****
forward, will be in I sing despite some of the of
**** Possible New Speaker ****
the issues. Lord Singh. I'm pleased to speak in this debate on the Gracious in this debate on the Gracious Speech and wish all noble Lords well in this new session. I declare well in this new session. I declare an interest as president of the Rural Coalition. It is an honour to follow the noble Lord Lord Burns,
And it provides when you have decent rate of growth, much more room for spending adjustments and allocations between different areas. The tough challenge, though, for any government, is that underlying growth rates only change slowly, and they're very difficult to predict. Since 2007, the growth rates of the major countries have been significantly slower than they were in the years before. And in this respect, the UK s performance is very similar to that of other major European countries, and the reality is that it is difficult to increase the underlying growth rate in the UK.
If we have slow growth around the world, and that has been the pattern. And for the moment that looks as if that pattern will continue. We've also got to be much more careful, I think, by putting too much emphasis on month to month changes, which tend to be erratic. There's been a pattern in recent years with stronger figures in the early months of the year and weaker figures later, possibly a seasonal adjustment problem. This morning's GDP might show a quarterly increase of 0.6%, but the reality is it's still only 1.1% higher than the first quarter of last year.
And this, of course, compares with the years and years when we became accustomed to growth rates of 2.5%. One criticism I have had about the government's approach has been the failure to acknowledge, at an earlier point, that much of the previous government's woes were due to this global slowdown, and that simply changing government has not changed this. Ahead of the election, the Economic Affairs Committee highlighted major spending challenges ahead the cost of net zero, increased defence spending and an ageing population, all of which will be going to be putting pressures upon financial stabilisation.
Given these challenges, my own view has been that either taxes would have to increase across the board, or significant public spending savings would be necessary, and probably both. Instead, what we've seen is increased public spending and attempts to raise taxes, either on employers or on a very narrow part of the tax system. And this has sparked anger. It's not succeeded in raising sufficient revenue. And furthermore, the other measures to protect jobs, as we have seen, have done very little to improve the economy's supply side.
However, my biggest concern now is that some groups involved in the current leadership debate are convinced that faster growth can be achieved through increased public expenditure and larger fiscal deficits. My experience is that this is a confusion of cause and effect and a very serious one. Over time, the scope for higher public spending is the result of faster growth. It is not the cause of faster growth. The reality is that we start with a debt ratio close to 100% of GDP.
Debt interest costs consume 10% of our tax revenue. We have not been able to pay for the huge borrowing at the time of Covid, or the cost of supporting energy bills and proposals to increase this further, either openly or through disguised off balance sheet borrowing that we have heard some chatter about our high risk policies. We all desire a world where spending eventually pays for itself, and with some aspects of spending, this is the case, although the benefits do take time to emerge.
But more often they don't pay for themselves. And the Chancellor, to my mind, deserves credit for recognising this and emphasising this. The faster growth we need an environment with effective incentives for both work and investment. We urgently need an overhaul of the tax system to iron out inconsistent and bizarre marginal rates of tax across. For some people, we need to eliminate the wide range of unnecessary exemptions and allowances, and we need to ensure the right incentives for business taxation. However, these are all issues for future budgets rather than for the gracious address.
There are reforms in the Gracious Speech that that I welcome and could make a difference. And we've heard about some of them this morning. I welcome the emphasis given to growth when judging the approach to financial services regulation. It's been a view of mine since the crisis that there has been a significant regulatory overreaction to the 2008 crisis. There was a natural desire to prevent it happening again, and it's very important that prudential risks should be managed. But in the process, increased regulation, damaged bank lending to the private sector and the productivity of the banking industry.
The focus was on changes that were the easiest to make, rather than addressing the weaknesses that posed the greatest risks. And this was also the action that has to be taken by the other major countries. And my view is that the growth, which reduction, which we have seen across all of those countries, has suffered in part as a result of that response to the to the crisis. I also support efforts to minimise friction to trade and flows of investment within Europe.
Although reaching agreement will be difficult and contentious, and as many have pointed out in the course of the debate already, the growth performance of the major European countries have been one of the slowest growth areas in the in the world over this period. It's not exactly a vibrant market at this point. Also welcome to me are the proposals for the Northern Powerhouse Rail. As a predominantly service based economy, cities have become increasingly important centres of wealth creation. However, they can only realise their potential if they have a functioning public transport system that allows as many people as possible to access them.
With the growth of the economic potential of cities, commuting by car into those cities becomes increasingly difficult. And this is not just London issue. We can see the pressure around many cities. I was involved in transport cities in Wales where road systems are struggling to cope with these pressures, and I remain very hopeful that the proposals for a commuter service in South Wales, which I was involved in putting
**** Possible New Speaker ****
forward, will be in I sing despite some of the of
**** Possible New Speaker ****
the issues. Lord Singh. I'm pleased to speak in this debate on the Gracious in this debate on the Gracious Speech and wish all noble Lords well in this new session. I declare well in this new session. I declare an interest as president of the Rural Coalition. It is an honour to follow the noble Lord Lord Burns,
11:57
The Lord Bishop of Newcastle (Bishops)
-
-
The Lord Bishop of Newcastle (Bishops)
follow the noble Lord Lord Burns, particularly with his North East roots. I speak from the perspective of the region in which my diocese is located. The North East communities with deep resilience and enormous potential, but which also continue to live with the consequences of economic inequality, industrial transition and social fragmentation. There is much that gives cause for confidence. We see innovation emerging from our universities and wider research communities, growing expertise in clean energy, digital technology and advanced manufacturing, and renewed confidence in sectors helping to shape the industries of the future.
The North East Space Skills and Technology Centre, based at Northumbria University, is a notable example of combining public funding, university match funding and private sector aerospace investment, a model that is about long term economic development. Yet optimism is accompanied by realism. The latest North East Chamber of Commerce Quarterly Economic Survey points to a business community that remains resilient, but cautious firms continue to report pressures linked to labour costs, energy prices, inflation and uncertainty around future demand.
Businesses are still recruiting, but many are delaying investment decisions and remain concerned about long term productivity and skills shortages. The rural economy is especially important within Northumberland, yet often insufficiently recognised in national economic debate. Farming, land management, tourism, food production and rural small businesses contribute enormously not only to economic activity but to environmental stewardship, cultural identity and the sustainability of rural communities. Yet many rural businesses continue to face challenges linked to transport, connectivity, digital infrastructure, workforce shortages and access to services.
If growth is genuinely to reach every part of the country, rural economies must not be treated as peripheral to national prosperity, but as integral to it as my noble friend Baroness Batters has often pointed out. Food security is vital for economic prosperity and stable food systems. Reduce poverty in Newcastle, areas such as Ouseburn and the Grainger Market reflect the imagination and determination of local enterprise businesses such as Greggs. Founded in Newcastle and still strongly associated with the region, show how commercial success can remain connected to local identity and social responsibility with a much wider reach.
My Lords, it can now be argued that the humble cheese and onion bake is now an instrument of EU partnership, as there is now a Greggs in Tenerife airport. On a serious note, this connectivity is why economic policy cannot be judged solely by whether growth occurs, but by the nature of that growth and who shares in its benefits. Do people experience greater dignity, security and opportunity through that growth? Do communities feel strengthened or left behind? Do younger generations believe they have a meaningful future in the places where they grew up? Does work enhance human flourishing, or does it leave people exhausted, insecure and excluded? It is right that the government's proposed legislative programme seeks to support investment, industrial renewal and closer co-operation with our European neighbours.
The proposed European Partnership Bill is important for regions such as the North East. Our relationship with our neighbours is not an ideological abstraction but a matter of practical economic significance. I hope the Minister might say more about how the government intends the proposed bill to strengthen opportunities for regional exporters, universities and smaller firms outside London and the South East. How will the government ensure that improved relationships with the EU lead to tangible economic benefits for places such as Newcastle and Northumberland? Rather than reinforcing existing geographical inequalities? I also welcome the emphasis placed upon energy security and industrial renewal within the Gracious Speech.
Northumberland is well placed to contribute to the nation's transition towards cleaner and more secure sources of energy through offshore renewables and associated industries. Yet the transition to a low carbon economy must also be rooted in justice and fairness. Communities that contributed so much to earlier generations of industrial and energy production should not feel excluded from the opportunities now emerging. Economic transition cannot simply happen to communities. It must happen with and for them. Can the Minister say more about how the government intends to ensure that smaller local businesses, local workers and younger people are able to participate fully in the opportunities created through energy transition and industrial investment? What role does the government see for devolved leadership and community wealth building in ensuring that prosperity is genuinely shared? I also welcome the government's proposed Regulating for Growth Bill and its stated intention to create greater clarity and consistency for business.
Can I too, along with the noble Lady Baroness Finn, ask the Minister how the government intends to ensure that smaller businesses are properly supported within this agenda? How will the government balance economic flexibility with the need to maintain fair employment standards? Workforce wellbeing and responsible business practice. My Lords, economic life is ultimately about human beings, relationships and moral responsibility as we pursue growth and competitiveness. We must resist any tendency to treat human beings merely as economic instruments or units of productivity.
Every person possesses inherent dignity and worth, which no labour market can define, and no economic circumstance can erase. Modern slavery remains a painful reality in our country. It represents not only criminal exploitation, but a profound moral failure. The denial of human dignity for economic gain. In that respect, may I ask the Minister what further steps the government intends to take to strengthen transparency and accountability within supply chains, particularly in sectors vulnerable to labour exploitation? Good growth, my Lords, is not growth at any cost.
Good growth strengthens communities, widens opportunity and enables people to live with dignity and hope. My Lords, the success of this session of Parliament will not be measured solely through national growth figures or investment totals. It will be measured by whether people truly experience greater dignity, stronger communities, wider opportunity and renewed hope wider opportunity and renewed hope in the places they call home.
The North East Space Skills and Technology Centre, based at Northumbria University, is a notable example of combining public funding, university match funding and private sector aerospace investment, a model that is about long term economic development. Yet optimism is accompanied by realism. The latest North East Chamber of Commerce Quarterly Economic Survey points to a business community that remains resilient, but cautious firms continue to report pressures linked to labour costs, energy prices, inflation and uncertainty around future demand.
Businesses are still recruiting, but many are delaying investment decisions and remain concerned about long term productivity and skills shortages. The rural economy is especially important within Northumberland, yet often insufficiently recognised in national economic debate. Farming, land management, tourism, food production and rural small businesses contribute enormously not only to economic activity but to environmental stewardship, cultural identity and the sustainability of rural communities. Yet many rural businesses continue to face challenges linked to transport, connectivity, digital infrastructure, workforce shortages and access to services.
If growth is genuinely to reach every part of the country, rural economies must not be treated as peripheral to national prosperity, but as integral to it as my noble friend Baroness Batters has often pointed out. Food security is vital for economic prosperity and stable food systems. Reduce poverty in Newcastle, areas such as Ouseburn and the Grainger Market reflect the imagination and determination of local enterprise businesses such as Greggs. Founded in Newcastle and still strongly associated with the region, show how commercial success can remain connected to local identity and social responsibility with a much wider reach.
My Lords, it can now be argued that the humble cheese and onion bake is now an instrument of EU partnership, as there is now a Greggs in Tenerife airport. On a serious note, this connectivity is why economic policy cannot be judged solely by whether growth occurs, but by the nature of that growth and who shares in its benefits. Do people experience greater dignity, security and opportunity through that growth? Do communities feel strengthened or left behind? Do younger generations believe they have a meaningful future in the places where they grew up? Does work enhance human flourishing, or does it leave people exhausted, insecure and excluded? It is right that the government's proposed legislative programme seeks to support investment, industrial renewal and closer co-operation with our European neighbours.
The proposed European Partnership Bill is important for regions such as the North East. Our relationship with our neighbours is not an ideological abstraction but a matter of practical economic significance. I hope the Minister might say more about how the government intends the proposed bill to strengthen opportunities for regional exporters, universities and smaller firms outside London and the South East. How will the government ensure that improved relationships with the EU lead to tangible economic benefits for places such as Newcastle and Northumberland? Rather than reinforcing existing geographical inequalities? I also welcome the emphasis placed upon energy security and industrial renewal within the Gracious Speech.
Northumberland is well placed to contribute to the nation's transition towards cleaner and more secure sources of energy through offshore renewables and associated industries. Yet the transition to a low carbon economy must also be rooted in justice and fairness. Communities that contributed so much to earlier generations of industrial and energy production should not feel excluded from the opportunities now emerging. Economic transition cannot simply happen to communities. It must happen with and for them. Can the Minister say more about how the government intends to ensure that smaller local businesses, local workers and younger people are able to participate fully in the opportunities created through energy transition and industrial investment? What role does the government see for devolved leadership and community wealth building in ensuring that prosperity is genuinely shared? I also welcome the government's proposed Regulating for Growth Bill and its stated intention to create greater clarity and consistency for business.
Can I too, along with the noble Lady Baroness Finn, ask the Minister how the government intends to ensure that smaller businesses are properly supported within this agenda? How will the government balance economic flexibility with the need to maintain fair employment standards? Workforce wellbeing and responsible business practice. My Lords, economic life is ultimately about human beings, relationships and moral responsibility as we pursue growth and competitiveness. We must resist any tendency to treat human beings merely as economic instruments or units of productivity.
Every person possesses inherent dignity and worth, which no labour market can define, and no economic circumstance can erase. Modern slavery remains a painful reality in our country. It represents not only criminal exploitation, but a profound moral failure. The denial of human dignity for economic gain. In that respect, may I ask the Minister what further steps the government intends to take to strengthen transparency and accountability within supply chains, particularly in sectors vulnerable to labour exploitation? Good growth, my Lords, is not growth at any cost.
Good growth strengthens communities, widens opportunity and enables people to live with dignity and hope. My Lords, the success of this session of Parliament will not be measured solely through national growth figures or investment totals. It will be measured by whether people truly experience greater dignity, stronger communities, wider opportunity and renewed hope wider opportunity and renewed hope in the places they call home.
12:05
Lord Barber of Chittlehampton (Labour)
-
-
Lord Barber of Chittlehampton (Labour)
My Lords. My Lords, it's an honour to follow the excellent honour to follow the excellent contribution from the Bishop of Newcastle, the Right reverend right reverend Prelate. Her messages, by the way, are directly relevant also to the area where I live, the south west of England, and I congratulate her on her thoughts. It's also daunting always to follow the legendary Lord Burns, but that's the order. The speakers turned out. Yesterday's gracious speech emphasised economic security in achieving that, public expenditure is vital.
I strongly support the Chancellor's spending, reviews and budgets. Her goals could not be more important to create the conditions for growth, to maintain and improve public services, and to manage and reduce debt. I realise that the conflict in the Middle East poses significant challenges, but thanks to the progress already made, we face them with enhanced resilience. The public debate and hours in this chamber tend to focus on the amount government spends and the level of taxation, and these are indeed fundamental questions.
But I want to focus on two related questions which perhaps get less attention. First, what matters most for the citizen and to economic growth is not just the amount we spend, but how well we spend it. Every day the government spends £3.5 billion. How do we maximise the public value of every one of those tax pounds? Second, how might we innovate in the way we raise and allocate funding for social outcomes that we need? To start with the first question.
Maximising public value surely demands that at every level, from a teacher in a classroom or a nurse in a hospital ward to a civil servant or a Minister in Whitehall, there is a constant daily focus on delivering real value. The noble Baroness Baroness Finn made a similar point about civil service productivity. This is not a new insight. A previous parliament concluded I'm quoting here officials at every level will be ordered to make due swift and good execution without tarrying or delaying.
The sentiment sounds contemporary, even if the language doesn't. It's from 1376. Parliaments have been urging more effective and more rapid delivery for 750 years at least, and rightly so, because government spend other people's money and should be firmly held to account for what they deliver in return. To take an example, we're now seeing a welcome increase in defence expenditure, and already we know there needs to be more still in this dangerous world. The public will want to know both what capabilities that extra investment will provide and that those urgent, evident progress towards their realisation.
Similarly, there will surely be further growth in health expenditure and again, in return, the public will expect to see measurably reduced waiting times and significantly improved care. We've made a start, but there's much more to do. Willingness to continue paying taxes has always depended on the impact that results from those taxes the world over. This pressure to deliver public value is sharper now than ever. But what exactly is public value? How do you know it when you see it, and how do you monitor it? At times, the Treasury in this country has led the world in thinking through these questions.
Going back to Lord Burns, to Gordon Brown's time as Chancellor and to the. And to the work of the noble Lord, Lord Macpherson, who back then was in charge of public expenditure. Later in 2017, and building on that work, that earlier work, David Gauke, as Chief Secretary, commissioned from me a report on public value. It was strongly welcomed at the time, but sadly got lost in an ever changing world of chief secretaries and the pandemic. Now perhaps might be the time to revive and build on that agenda.
The report described four elements of managing public value. First inputs is the allocated funding being efficiently managed? Second, and my noble friend Baroness Anderson emphasised outcomes. Second, outcomes are. They are. Are. Are we making progress towards the the intended outcomes that the money was allocated for? And how do we know? Third engagement. Are the intended beneficiaries willing to take their share of responsibility for delivering the outcomes. For example, health outcomes are improved by people who manage diet and exercise.
Are those getting into employment is enhanced by active by people who actively seek work, rather than waiting for it to come to them, or in schools and universities, people who study hard, rather than just show up briefly. In each of these cases, the same amount of public expenditure will deliver greatly enhanced outcomes. If the beneficiary engages. This is important to public value. And finally, stewardship as the funding is spent. Is it also enhancing the underlying quality of a service? It's technology, buildings, resilience, workforce skills, leadership and commitment, thus leaving the service better than it was found all the time.
By tracking indicators relevant to these four elements in close to real time, we can measure the impact of our public expenditure is having and adjust implementation as necessary. Some social outcomes partnerships are already well advanced in this respect. Which leads to my second point innovation. The Treasury recently established and allocated 500,000,000/10 years to the Better Futures Fund. It's boldly aimed at solving some of the most complex social problems affecting children and young people. The fund will add to Britain's already world leading experience in social partnerships which will become and which will, and this fund globally.
It builds on the Life Chances Fund established by the previous government in 2016, and the work over many years of the great Sir Ronald Cohen. The characteristics of such social outcomes. Partnerships make them a major innovation. They attract philanthropic and private investors, which, in the case of the Better Futures Fund, could double the funding government has made, making the total a billion. They engage local government, charities and social enterprises as partners in prevention, not just cure. They work exceptionally well for those tough, cross-cutting challenges which bedevil public policy.
Crucially, for each funded outcome, there are each funded scheme, there are defined outcomes and government outcomes. Only government outcomes payments are only paid once the defined outcomes have been delivered and independently verified. Increased prevention, collaborative partnerships. Devolved delivery. High quality data and analysis. Measurement of public value and evidence from CQC consultants that such social outcomes partnerships deliver up to £9 of public value for every pound they spend. To conclude with such innovative approaches to delivery and a consistent focus on delivering public value throughout the public services, we can enhance public sector productivity and contribute to private sector productivity and create the conditions for growth.
The downward spiral that followed the financial crisis of 2008, with its declining return on investment, is not inevitable. We can turn it into an upward spiral with a rising return on investment. A year of delivery lies ahead. In time, we might even delight people, perhaps including our ancestors. From 1376.
I strongly support the Chancellor's spending, reviews and budgets. Her goals could not be more important to create the conditions for growth, to maintain and improve public services, and to manage and reduce debt. I realise that the conflict in the Middle East poses significant challenges, but thanks to the progress already made, we face them with enhanced resilience. The public debate and hours in this chamber tend to focus on the amount government spends and the level of taxation, and these are indeed fundamental questions.
But I want to focus on two related questions which perhaps get less attention. First, what matters most for the citizen and to economic growth is not just the amount we spend, but how well we spend it. Every day the government spends £3.5 billion. How do we maximise the public value of every one of those tax pounds? Second, how might we innovate in the way we raise and allocate funding for social outcomes that we need? To start with the first question.
Maximising public value surely demands that at every level, from a teacher in a classroom or a nurse in a hospital ward to a civil servant or a Minister in Whitehall, there is a constant daily focus on delivering real value. The noble Baroness Baroness Finn made a similar point about civil service productivity. This is not a new insight. A previous parliament concluded I'm quoting here officials at every level will be ordered to make due swift and good execution without tarrying or delaying.
The sentiment sounds contemporary, even if the language doesn't. It's from 1376. Parliaments have been urging more effective and more rapid delivery for 750 years at least, and rightly so, because government spend other people's money and should be firmly held to account for what they deliver in return. To take an example, we're now seeing a welcome increase in defence expenditure, and already we know there needs to be more still in this dangerous world. The public will want to know both what capabilities that extra investment will provide and that those urgent, evident progress towards their realisation.
Similarly, there will surely be further growth in health expenditure and again, in return, the public will expect to see measurably reduced waiting times and significantly improved care. We've made a start, but there's much more to do. Willingness to continue paying taxes has always depended on the impact that results from those taxes the world over. This pressure to deliver public value is sharper now than ever. But what exactly is public value? How do you know it when you see it, and how do you monitor it? At times, the Treasury in this country has led the world in thinking through these questions.
Going back to Lord Burns, to Gordon Brown's time as Chancellor and to the. And to the work of the noble Lord, Lord Macpherson, who back then was in charge of public expenditure. Later in 2017, and building on that work, that earlier work, David Gauke, as Chief Secretary, commissioned from me a report on public value. It was strongly welcomed at the time, but sadly got lost in an ever changing world of chief secretaries and the pandemic. Now perhaps might be the time to revive and build on that agenda.
The report described four elements of managing public value. First inputs is the allocated funding being efficiently managed? Second, and my noble friend Baroness Anderson emphasised outcomes. Second, outcomes are. They are. Are. Are we making progress towards the the intended outcomes that the money was allocated for? And how do we know? Third engagement. Are the intended beneficiaries willing to take their share of responsibility for delivering the outcomes. For example, health outcomes are improved by people who manage diet and exercise.
Are those getting into employment is enhanced by active by people who actively seek work, rather than waiting for it to come to them, or in schools and universities, people who study hard, rather than just show up briefly. In each of these cases, the same amount of public expenditure will deliver greatly enhanced outcomes. If the beneficiary engages. This is important to public value. And finally, stewardship as the funding is spent. Is it also enhancing the underlying quality of a service? It's technology, buildings, resilience, workforce skills, leadership and commitment, thus leaving the service better than it was found all the time.
By tracking indicators relevant to these four elements in close to real time, we can measure the impact of our public expenditure is having and adjust implementation as necessary. Some social outcomes partnerships are already well advanced in this respect. Which leads to my second point innovation. The Treasury recently established and allocated 500,000,000/10 years to the Better Futures Fund. It's boldly aimed at solving some of the most complex social problems affecting children and young people. The fund will add to Britain's already world leading experience in social partnerships which will become and which will, and this fund globally.
It builds on the Life Chances Fund established by the previous government in 2016, and the work over many years of the great Sir Ronald Cohen. The characteristics of such social outcomes. Partnerships make them a major innovation. They attract philanthropic and private investors, which, in the case of the Better Futures Fund, could double the funding government has made, making the total a billion. They engage local government, charities and social enterprises as partners in prevention, not just cure. They work exceptionally well for those tough, cross-cutting challenges which bedevil public policy.
Crucially, for each funded outcome, there are each funded scheme, there are defined outcomes and government outcomes. Only government outcomes payments are only paid once the defined outcomes have been delivered and independently verified. Increased prevention, collaborative partnerships. Devolved delivery. High quality data and analysis. Measurement of public value and evidence from CQC consultants that such social outcomes partnerships deliver up to £9 of public value for every pound they spend. To conclude with such innovative approaches to delivery and a consistent focus on delivering public value throughout the public services, we can enhance public sector productivity and contribute to private sector productivity and create the conditions for growth.
The downward spiral that followed the financial crisis of 2008, with its declining return on investment, is not inevitable. We can turn it into an upward spiral with a rising return on investment. A year of delivery lies ahead. In time, we might even delight people, perhaps including our ancestors. From 1376.
12:13
Lord Hunt of Wirral (Conservative)
-
-
Lord Hunt of Wirral (Conservative)
To to follow the noble Lord, Lord Barber of Chittlehampton. Lord Barber of Chittlehampton. Given his background as head of the Prime Minister's Policy Unit under Prime Minister's Policy Unit under Tony Blair, and also, if I might commend to colleagues his. His book. Entitled Instruction to Deliver, which sets out very much the message that he was giving about outcomes. And I want to refer back to the noble Lord Lord Fox comment about the steel industry, because the National Audit Office and the noble Lord will know the importance of that institution has produced a very detailed report.
And rather like the noble Lord Lord Fox, the announcement that the government now seeks power to nationalise British steel, I found to be fascinating, though perhaps not surprising, because it should be seen for what it is not the emergence of a plan, but the admission that a plan has already failed. A year ago, Ministers came to Parliament and we all arrived here on a Saturday, specially to provide emergency powers needed to prevent the imminent closure of the blast furnaces at Scunthorpe.
We were told this was a temporary intervention. The constructive discussions with Ginger were continuing, that the taxpayers support was recoverable and that there was a route to a commercial solution. One is reminded, and I don't know whether this features in the book, but I'm certainly reminded of Milton Friedman's observation that there is nothing so permanent as a temporary government program. Well, after all that, we are back precisely where the government insisted on that day that we were not going nationalisation anyway.
The question for Ministers is simple what has been bought for the money already spent? The National Audit Office releasing its investigation into the government's intervention into the British Steel Scunthorpe site, revealed that by the 31st of January this year, the department had spent £377 million on this and the costs were expected to exceed £642 million by June. Between 1.3 to £1.4 million every single day. The know now further observed that and I quote DBT intervened without a clear exit strategy and warned that the intervention has not stabilised the company's finances, that there is no clear end date and that spending could exceed 1.5 billion by 2028 before transformation costs.
Compensation to ginger or exit costs are even considered. This is not. This is not a rounding error, nor even a bridging loan, nor a prudent investment patiently awaiting a return. No, it's a daily call on the taxpayer to keep alive a business which Ministers have still not shown can be made viable. In paragraph 2.6 of its investigation, the Nao records that, and I quote advice provided by DBT officials to Ministers. On the 28th of March 2025 noted that there was no affordable solution to maintain steelmaking at Scunthorpe.
The advice recommended that the government not intervene to stop the company from making commercial decisions to close. DBT told us, and I continue the quote, that it had no budget nor legal power to intervene at that time and that there were no strong value for money case to do so, advising instead to focus on the impact on the local area and to support steelmaking elsewhere. Now, over the subsequent 14 months, apparent operating losses have doubled, whilst production levels have fallen further.
What is the value for money justification today? Now Ministers will of course, say that British Steel is strategically important and no one disputes that steel matters for defence, construction, rail energy and manufacturing. The question is not whether steel matters. The question is whether this government has a credible plan to make steelmaking in Britain competitive. And at present I don't believe it has. Nor can this debate be separated from the government's new tariff regime. From July, the government proposes to cut tariff free steel quotas by 60% and impose a 50% tariff above quota.
Ministers describe that as protection for British steelmaking, but for automotive, construction, aerospace and engineering businesses, it is a direct Inc. increase in input costs. Think. Think of the automotive manufacturer already under pressure from the government's EV mandate. The construction firm, facing squeezed margins and higher material prices, or the exporter using steel as an input. They are facing higher costs at home and fiercer competition abroad. All of them will inevitably pay the price a high price for a policy framed as saving jobs in one town, whilst quietly making jobs more expensive to sustain in many other places.
There is also a profound contradiction running through the government's position on energy and steel production. More broadly. India cite one example is driving a substantial share of the global rise in coal based steel capacity, expanding output, expanding furnaces and expanding its competitive position in world markets. In contrast, this government has banned domestic coking coal production, pushes domestic steel makers towards more expensive alternatives, and then seemingly wonders why the taxpayer must step in to make the difference.
The result is that we make domestic production more expensive, restrict cheaper imports and load the industry with additional regulatory costs. And then we present the bill to British industry. And I just say to the noble Lord, when he winds up this debate, can we please have a strategy for steel? The government did publish one, but it doesn't have a long term impact that we all want to see. Steel has been the backbone of this nation.
It must be part of its future, too. And it's about time that we had a clear
**** Possible New Speaker ****
strategy that takes us all further forward. Yes.
**** Possible New Speaker ****
Yes. Pleasure to follow Lord hunt, whose brand of conservative whose brand of conservative politics I've always personally admired. And I think that he raises admired. And I think that he raises very important questions about the steel industry. Just two two points, steel industry. Just two two points, however, that that I would make is there is a case for a sovereign capability in steel, and we have to work out a strategy as to how best and most efficiently to do that.
So I agree with that. But secondly, it has to be part of a European policy. We have to be there because the we are have integrated supply chains in the in the steel industry. A lot of I think something like two thirds of our exports go to the European Union. And similarly, there's a similar flow in the other direction. So we cannot have an effective policy with all without also having it a European dimension to it, to.
And that is what I want to focus my remarks on in the Gracious Speech, its commitment to building a much closer partnership with the European Union. Now, I strongly support the government's proposed legislation, but would urge on the government fast progress. As the Prime Minister said, we need to be at the heart of Europe, and it seems to me that's the only way forward to meet the frightening new geopolitical challenges that Britain now faces. But also it's a necessary, but in
And rather like the noble Lord Lord Fox, the announcement that the government now seeks power to nationalise British steel, I found to be fascinating, though perhaps not surprising, because it should be seen for what it is not the emergence of a plan, but the admission that a plan has already failed. A year ago, Ministers came to Parliament and we all arrived here on a Saturday, specially to provide emergency powers needed to prevent the imminent closure of the blast furnaces at Scunthorpe.
We were told this was a temporary intervention. The constructive discussions with Ginger were continuing, that the taxpayers support was recoverable and that there was a route to a commercial solution. One is reminded, and I don't know whether this features in the book, but I'm certainly reminded of Milton Friedman's observation that there is nothing so permanent as a temporary government program. Well, after all that, we are back precisely where the government insisted on that day that we were not going nationalisation anyway.
The question for Ministers is simple what has been bought for the money already spent? The National Audit Office releasing its investigation into the government's intervention into the British Steel Scunthorpe site, revealed that by the 31st of January this year, the department had spent £377 million on this and the costs were expected to exceed £642 million by June. Between 1.3 to £1.4 million every single day. The know now further observed that and I quote DBT intervened without a clear exit strategy and warned that the intervention has not stabilised the company's finances, that there is no clear end date and that spending could exceed 1.5 billion by 2028 before transformation costs.
Compensation to ginger or exit costs are even considered. This is not. This is not a rounding error, nor even a bridging loan, nor a prudent investment patiently awaiting a return. No, it's a daily call on the taxpayer to keep alive a business which Ministers have still not shown can be made viable. In paragraph 2.6 of its investigation, the Nao records that, and I quote advice provided by DBT officials to Ministers. On the 28th of March 2025 noted that there was no affordable solution to maintain steelmaking at Scunthorpe.
The advice recommended that the government not intervene to stop the company from making commercial decisions to close. DBT told us, and I continue the quote, that it had no budget nor legal power to intervene at that time and that there were no strong value for money case to do so, advising instead to focus on the impact on the local area and to support steelmaking elsewhere. Now, over the subsequent 14 months, apparent operating losses have doubled, whilst production levels have fallen further.
What is the value for money justification today? Now Ministers will of course, say that British Steel is strategically important and no one disputes that steel matters for defence, construction, rail energy and manufacturing. The question is not whether steel matters. The question is whether this government has a credible plan to make steelmaking in Britain competitive. And at present I don't believe it has. Nor can this debate be separated from the government's new tariff regime. From July, the government proposes to cut tariff free steel quotas by 60% and impose a 50% tariff above quota.
Ministers describe that as protection for British steelmaking, but for automotive, construction, aerospace and engineering businesses, it is a direct Inc. increase in input costs. Think. Think of the automotive manufacturer already under pressure from the government's EV mandate. The construction firm, facing squeezed margins and higher material prices, or the exporter using steel as an input. They are facing higher costs at home and fiercer competition abroad. All of them will inevitably pay the price a high price for a policy framed as saving jobs in one town, whilst quietly making jobs more expensive to sustain in many other places.
There is also a profound contradiction running through the government's position on energy and steel production. More broadly. India cite one example is driving a substantial share of the global rise in coal based steel capacity, expanding output, expanding furnaces and expanding its competitive position in world markets. In contrast, this government has banned domestic coking coal production, pushes domestic steel makers towards more expensive alternatives, and then seemingly wonders why the taxpayer must step in to make the difference.
The result is that we make domestic production more expensive, restrict cheaper imports and load the industry with additional regulatory costs. And then we present the bill to British industry. And I just say to the noble Lord, when he winds up this debate, can we please have a strategy for steel? The government did publish one, but it doesn't have a long term impact that we all want to see. Steel has been the backbone of this nation.
It must be part of its future, too. And it's about time that we had a clear
**** Possible New Speaker ****
strategy that takes us all further forward. Yes.
**** Possible New Speaker ****
Yes. Pleasure to follow Lord hunt, whose brand of conservative whose brand of conservative politics I've always personally admired. And I think that he raises admired. And I think that he raises very important questions about the steel industry. Just two two points, steel industry. Just two two points, however, that that I would make is there is a case for a sovereign capability in steel, and we have to work out a strategy as to how best and most efficiently to do that.
So I agree with that. But secondly, it has to be part of a European policy. We have to be there because the we are have integrated supply chains in the in the steel industry. A lot of I think something like two thirds of our exports go to the European Union. And similarly, there's a similar flow in the other direction. So we cannot have an effective policy with all without also having it a European dimension to it, to.
And that is what I want to focus my remarks on in the Gracious Speech, its commitment to building a much closer partnership with the European Union. Now, I strongly support the government's proposed legislation, but would urge on the government fast progress. As the Prime Minister said, we need to be at the heart of Europe, and it seems to me that's the only way forward to meet the frightening new geopolitical challenges that Britain now faces. But also it's a necessary, but in
12:24
Lord Liddle (Labour)
-
-
Lord Liddle (Labour)
my view, not sufficient, precondition of restoring broad based economic growth in our based economic growth in our country, which has eluded us since the financial crisis, and more particularly since the 2016 particularly since the 2016 referendum. And as we approach the 10th anniversary of the Brexit 10th anniversary of the Brexit referendum, we need to ask ourselves what benefits positively have been realised? I'm not aware of any respectable economic analysis that demonstrates positive benefits, and how much of the positive have the so-called Brexit freedoms delivered? Some people here refer to the ability to make our own free trade agreements, and Baron.
My noble friend, made an excellent speech this morning, but she did refer to those Brexit freedoms. Let me just point out to the House that the benefits in terms of economic growth that she referred to amount to about half a percent of GDP per year. When the total when the loss as a result of Brexit is something of the order of 4%. And some some economists say far, far higher. Now, for some people on the other side, none of these questions of fact about the impact actually matter, because what matters to them is that with Brexit, Britain has regained its sovereignty.
And in a technical sense, of course, of constitutional law. That is correct. But what what is worthwhile about technical legalistic sovereignty? If all that does is impose additional costs and burdens, as in the chemical industry and as in many other sectors on whole swathes of our business. And this is what I think this alignment bill is the challenge this alignment bill will address, and we should get it through this House as quickly as possible. Now, the point that Baroness Finn, in a very good speech, if I may say so, even if I didn't agree with it, the point that she made was, why align yourself with a stagnant European Union? Now I make two points about that.
First of all, 40% of our trade is with Europe 40%. Most people think that geography is what determines trade and particularly trade in services, which is our great strength. When the reality is that Europe is going to be by far our biggest trading partner for decades ahead, and we have to have a better relationship simply in those terms. Also, I'd say I agree, of course, with what Chancellor Mertes says about the need for regulatory reform in Europe.
I think the Draghi report is an excellent report, and actually I'd like to see some of its lessons applied in the United Kingdom. But. But one of the reasons I think that we may find support in key member states for our alignment Bill, is that I think Chancellor Mertes will see Britain as a potential ally in future on the need for pressing for that regulatory reform. Now, what we're trying to do is difficult. Nothing to do with the European Union is easy, as I've known for a long time, having worked on these issues.
First, I think we do have to face the issue of budget contributions. We have to find a formula that can be applied relating to our share of joint and the economic significance of the particular sector we're talking about. Secondly, we do have to have a flexibility on freedom of movement. I think the Youth Experience scheme is an excellent idea. This House has demanded freedom of movement for artists and performers in Europe. One of the key things that we've lost, and I think the same applies to professional services.
And I would do these, make these movements on freedom of movement in return for closer cooperation in tackling illegal migration. I find it odd, by the way, that people on the other side can talk about criticise freedom of movement. As soon as they got Brexit, what did they do? They implemented the biggest wave of immigration that we have seen in the post-war era, and is one of the reasons for the rise of reform today, because the Conservative Party did exactly the opposite of what it promised in the referendum, as far as immigration was concerned.
Now, the third point is that I think we have to raise our game in Europe. And all that means means in terms of rebuilding our Brussels capabilities, having a strong coordination machinery domestically, having the political will to impose solutions from the centre, from number ten, where departments disagree, and having a Cabinet that takes the Europe relationship seriously and spends time on it. I think we have a lot of common interests in joint EU, UK cooperation, interest in defence procurement in a joint approach to the regulation of artificial intelligence, in trade, in technology, where we have so much to offer.
People have said, you know, John Monnet said Europe was born in crises. Well, we're certainly living through a big crisis now, and I think we have to think boldly, and I would like to see the possibility of a commitment to rejoin the European Union being put in the next Labour manifesto. It's always. A great nostalgic pleasure.
My noble friend, made an excellent speech this morning, but she did refer to those Brexit freedoms. Let me just point out to the House that the benefits in terms of economic growth that she referred to amount to about half a percent of GDP per year. When the total when the loss as a result of Brexit is something of the order of 4%. And some some economists say far, far higher. Now, for some people on the other side, none of these questions of fact about the impact actually matter, because what matters to them is that with Brexit, Britain has regained its sovereignty.
And in a technical sense, of course, of constitutional law. That is correct. But what what is worthwhile about technical legalistic sovereignty? If all that does is impose additional costs and burdens, as in the chemical industry and as in many other sectors on whole swathes of our business. And this is what I think this alignment bill is the challenge this alignment bill will address, and we should get it through this House as quickly as possible. Now, the point that Baroness Finn, in a very good speech, if I may say so, even if I didn't agree with it, the point that she made was, why align yourself with a stagnant European Union? Now I make two points about that.
First of all, 40% of our trade is with Europe 40%. Most people think that geography is what determines trade and particularly trade in services, which is our great strength. When the reality is that Europe is going to be by far our biggest trading partner for decades ahead, and we have to have a better relationship simply in those terms. Also, I'd say I agree, of course, with what Chancellor Mertes says about the need for regulatory reform in Europe.
I think the Draghi report is an excellent report, and actually I'd like to see some of its lessons applied in the United Kingdom. But. But one of the reasons I think that we may find support in key member states for our alignment Bill, is that I think Chancellor Mertes will see Britain as a potential ally in future on the need for pressing for that regulatory reform. Now, what we're trying to do is difficult. Nothing to do with the European Union is easy, as I've known for a long time, having worked on these issues.
First, I think we do have to face the issue of budget contributions. We have to find a formula that can be applied relating to our share of joint and the economic significance of the particular sector we're talking about. Secondly, we do have to have a flexibility on freedom of movement. I think the Youth Experience scheme is an excellent idea. This House has demanded freedom of movement for artists and performers in Europe. One of the key things that we've lost, and I think the same applies to professional services.
And I would do these, make these movements on freedom of movement in return for closer cooperation in tackling illegal migration. I find it odd, by the way, that people on the other side can talk about criticise freedom of movement. As soon as they got Brexit, what did they do? They implemented the biggest wave of immigration that we have seen in the post-war era, and is one of the reasons for the rise of reform today, because the Conservative Party did exactly the opposite of what it promised in the referendum, as far as immigration was concerned.
Now, the third point is that I think we have to raise our game in Europe. And all that means means in terms of rebuilding our Brussels capabilities, having a strong coordination machinery domestically, having the political will to impose solutions from the centre, from number ten, where departments disagree, and having a Cabinet that takes the Europe relationship seriously and spends time on it. I think we have a lot of common interests in joint EU, UK cooperation, interest in defence procurement in a joint approach to the regulation of artificial intelligence, in trade, in technology, where we have so much to offer.
People have said, you know, John Monnet said Europe was born in crises. Well, we're certainly living through a big crisis now, and I think we have to think boldly, and I would like to see the possibility of a commitment to rejoin the European Union being put in the next Labour manifesto. It's always. A great nostalgic pleasure.
12:31
Lord Lilley (Conservative)
-
-
Lord Lilley (Conservative)
Following Lord Livermore. >> Following Lord Livermore. >> Whose enthusiasm. >> For rejoining the European Union
**** Possible New Speaker ****
For rejoining the European Union reminds me of the remarks of Samuel Johnson about a friend of his who Johnson about a friend of his who was contemplating a second marriage, that it was a triumph of hope over experience and no experience. No facts will denote the hope and enthusiasm of the noble Lord Liddle. But we all make mistakes and we predict things which don't happen. We advocate policies which don't work, and there's no great shame in it. Indeed, I'm sure the right reverend Prelate would accept that as long as we acknowledge our mistakes and repent of them, we will be forgiven.
But I've certainly made mistakes. Indeed, I made the same mistake as this government is making and lies behind its policy on the reset. When I was the. The government actually believes that, in the words of the Business Secretary, the single market is where the magic lies. Rejoining it or aligning with it will make our exports grow and our GDP. Likewise. Now, as Trade and Industry Secretary responsible for preparing this country for participation in the single market and overseeing the process, I made similar speeches.
I didn't invoke magic, but I did say that membership of the single market would boost our exports. And with it, our growth, our exports to the EU. And I said it would do so even more powerfully than the Uruguay Round, which we were simultaneously negotiating and which halved tariffs worldwide and created the WTO. And for many years thereafter, I assumed that that had happened. But eventually I was confronted with the facts and they showed I was wrong. My Lords, throughout our more than a quarter of a century of membership of the single market, our exports of goods to our founding fellow partners of the single Market had stagnated.
They grew at less than 1% a year for 28 years. And at the same time, our exports to countries worldwide with whom we had no trade agreement, no trade deals, had grown four times as much by 87%, and our services exports within the single market grew more slowly than all but two other rather minor countries in the single market. The single market magic, whatever it is, failed for Britain. Now why don't the government recognise it? Why do they still believe? And I'm sure they're sincere in their belief.
They're not just lying to us, they're sincere that the single market will magically boost our exports. Well, they're not alone. Most of the commentariat also assumed the single market was good for us. Indeed, how many noble Lords speaking today who are going to speak in favour of a reset? We're aware that the single market was such a failure in terms of our goods exports to the EU. I think there's half a person in this. Half a noble Lord was aware of it.
The others were not. And there's a reason for that. I've been thinking about why it is that this view is so prevalent. And the reason that the facts are so little known is that the single market was the aspect of the European membership which commanded near universal support. Free market conservatives like me hoped it would unleash market forces and make us all richer. Eurosceptics put aside any reservations they had because Mrs. Thatcher was a great advocate of it.
And on the other side of the political spectrum, Jacques Delors persuaded an initially very sceptical trade Union Congress. And with that the Labour Party, who had been, many of whom had been opposed to membership of the European Community, that the single market would enable them to control and regulate markets in the public interest. And what's more, they could do so from a European level without the need to win an election in Britain which had eluded them and did elude them for 18 years.
So none of us ever doubted that it was a good thing. And nobody queried it. I googled to find what studies have been made by academics and politicians of how much the single market had either benefited or benefited British goods exports during our membership. There are almost none of them during that period, but eventually some were made and they. Facts are incontrovertible. Our goods exports grew at a snail's pace. Now service exports did little better in the EU.
We can respond to those effects by adjusting our predictions and policies accordingly, and that's what we should do. Or we can react like Hegel, who claimed he could develop, could derive all the theories of natural science from his first principles and his dialectic method. And his disciples went out and came back and said, but, master, the facts contradict your theories. To which he replied, so much the worse for the facts. And that seems to be the attitude of the government as far as the facts of our past experience in the single market or concerned.
Now there's a lesson of that experience, and that is that what drives trade is not trade deals. Trade deals can bring some benefits if they're not offset by the greater burden of regulation, which one imports with them. But it's only a second order benefit. And the noble Lord Little's right to say that trade deals with the rest of the world are not going to be an elixir. But what drives trade is producing goods and services other people want to buy, going out and selling them, preferably in fast growing markets and not allowing yourself to be encumbered by unnecessary burdens and protection from Europe, which have made Europe the slowest growing continent in the world.
Sadly, that's not what we've been doing. We've been stopping producing things. We've been introducing policies which make it more difficult to produce things. And you cannot export what you do not produce. The government has a policy of stopping all new exploration and development in the North Sea, but our exploration, our exports of oil and gas were to Europe were considerable. As a result, we've closed down a third of our refineries and our export of refined products were important.
It's undermined our chemicals industry. And with that we've lost production of fertiliser and ammonia. That's not just in those oil and gas related industries, but anything that's dependent on energy has been undermined by the fact that we have the highest energy prices in the O, E, C, D, and that's meant that we've lost much of our aluminium industry. We're in processing processes. In brilliant speech from noble Lord hunt, we saw it happening in steel industry and we are losing the production in all labour energy intensive industries ceramics, bricks, cement and so on.
It's a self-inflicted wound, my Lords. We cannot export what we do not produce. I urge noble Lords to read a excellent report by Catherine McBride and others called Premeditated Industrial Destruction. She's one of our leading trade analysts, and it paints a very grim picture of what's happening to our trade and why it's happening, not trade deals. Nothing to do with that. If you don't produce, you cannot export. The obsession with tweaking our trade arrangements with the EU is a displacement activity for those who will not face up to the damage our domestic policies are inflicting on industry after industry.
Excellent.
**** Possible New Speaker ****
I normally speak in the debate on foreign affairs in the when I'm
**** Possible New Speaker ****
on foreign affairs in the when I'm speaking about the Gracious Speech, but in. January of last year I was. Appointed the UK trade envoy for
**** Possible New Speaker ****
Appointed the UK trade envoy for Azerbaijan and Central Asia. So perhaps it's more appropriate that I speak on the day when we're I speak on the day when we're thinking about trade and the economy. Now, when I was appointed, of course, I read the briefs that of course, I read the briefs that were sent by civil servants, but I've always been interested in the history and culture of places that I try to engage with. And so I started to read about the history and culture of Central Asia and reading books like The Great Game by Peter Hopkirk.
I came across some names that I knew the name, for example, of Sir Henry Pottinger.
**** Possible New Speaker ****
For rejoining the European Union reminds me of the remarks of Samuel Johnson about a friend of his who Johnson about a friend of his who was contemplating a second marriage, that it was a triumph of hope over experience and no experience. No facts will denote the hope and enthusiasm of the noble Lord Liddle. But we all make mistakes and we predict things which don't happen. We advocate policies which don't work, and there's no great shame in it. Indeed, I'm sure the right reverend Prelate would accept that as long as we acknowledge our mistakes and repent of them, we will be forgiven.
But I've certainly made mistakes. Indeed, I made the same mistake as this government is making and lies behind its policy on the reset. When I was the. The government actually believes that, in the words of the Business Secretary, the single market is where the magic lies. Rejoining it or aligning with it will make our exports grow and our GDP. Likewise. Now, as Trade and Industry Secretary responsible for preparing this country for participation in the single market and overseeing the process, I made similar speeches.
I didn't invoke magic, but I did say that membership of the single market would boost our exports. And with it, our growth, our exports to the EU. And I said it would do so even more powerfully than the Uruguay Round, which we were simultaneously negotiating and which halved tariffs worldwide and created the WTO. And for many years thereafter, I assumed that that had happened. But eventually I was confronted with the facts and they showed I was wrong. My Lords, throughout our more than a quarter of a century of membership of the single market, our exports of goods to our founding fellow partners of the single Market had stagnated.
They grew at less than 1% a year for 28 years. And at the same time, our exports to countries worldwide with whom we had no trade agreement, no trade deals, had grown four times as much by 87%, and our services exports within the single market grew more slowly than all but two other rather minor countries in the single market. The single market magic, whatever it is, failed for Britain. Now why don't the government recognise it? Why do they still believe? And I'm sure they're sincere in their belief.
They're not just lying to us, they're sincere that the single market will magically boost our exports. Well, they're not alone. Most of the commentariat also assumed the single market was good for us. Indeed, how many noble Lords speaking today who are going to speak in favour of a reset? We're aware that the single market was such a failure in terms of our goods exports to the EU. I think there's half a person in this. Half a noble Lord was aware of it.
The others were not. And there's a reason for that. I've been thinking about why it is that this view is so prevalent. And the reason that the facts are so little known is that the single market was the aspect of the European membership which commanded near universal support. Free market conservatives like me hoped it would unleash market forces and make us all richer. Eurosceptics put aside any reservations they had because Mrs. Thatcher was a great advocate of it.
And on the other side of the political spectrum, Jacques Delors persuaded an initially very sceptical trade Union Congress. And with that the Labour Party, who had been, many of whom had been opposed to membership of the European Community, that the single market would enable them to control and regulate markets in the public interest. And what's more, they could do so from a European level without the need to win an election in Britain which had eluded them and did elude them for 18 years.
So none of us ever doubted that it was a good thing. And nobody queried it. I googled to find what studies have been made by academics and politicians of how much the single market had either benefited or benefited British goods exports during our membership. There are almost none of them during that period, but eventually some were made and they. Facts are incontrovertible. Our goods exports grew at a snail's pace. Now service exports did little better in the EU.
We can respond to those effects by adjusting our predictions and policies accordingly, and that's what we should do. Or we can react like Hegel, who claimed he could develop, could derive all the theories of natural science from his first principles and his dialectic method. And his disciples went out and came back and said, but, master, the facts contradict your theories. To which he replied, so much the worse for the facts. And that seems to be the attitude of the government as far as the facts of our past experience in the single market or concerned.
Now there's a lesson of that experience, and that is that what drives trade is not trade deals. Trade deals can bring some benefits if they're not offset by the greater burden of regulation, which one imports with them. But it's only a second order benefit. And the noble Lord Little's right to say that trade deals with the rest of the world are not going to be an elixir. But what drives trade is producing goods and services other people want to buy, going out and selling them, preferably in fast growing markets and not allowing yourself to be encumbered by unnecessary burdens and protection from Europe, which have made Europe the slowest growing continent in the world.
Sadly, that's not what we've been doing. We've been stopping producing things. We've been introducing policies which make it more difficult to produce things. And you cannot export what you do not produce. The government has a policy of stopping all new exploration and development in the North Sea, but our exploration, our exports of oil and gas were to Europe were considerable. As a result, we've closed down a third of our refineries and our export of refined products were important.
It's undermined our chemicals industry. And with that we've lost production of fertiliser and ammonia. That's not just in those oil and gas related industries, but anything that's dependent on energy has been undermined by the fact that we have the highest energy prices in the O, E, C, D, and that's meant that we've lost much of our aluminium industry. We're in processing processes. In brilliant speech from noble Lord hunt, we saw it happening in steel industry and we are losing the production in all labour energy intensive industries ceramics, bricks, cement and so on.
It's a self-inflicted wound, my Lords. We cannot export what we do not produce. I urge noble Lords to read a excellent report by Catherine McBride and others called Premeditated Industrial Destruction. She's one of our leading trade analysts, and it paints a very grim picture of what's happening to our trade and why it's happening, not trade deals. Nothing to do with that. If you don't produce, you cannot export. The obsession with tweaking our trade arrangements with the EU is a displacement activity for those who will not face up to the damage our domestic policies are inflicting on industry after industry.
Excellent.
**** Possible New Speaker ****
I normally speak in the debate on foreign affairs in the when I'm
**** Possible New Speaker ****
on foreign affairs in the when I'm speaking about the Gracious Speech, but in. January of last year I was. Appointed the UK trade envoy for
**** Possible New Speaker ****
Appointed the UK trade envoy for Azerbaijan and Central Asia. So perhaps it's more appropriate that I speak on the day when we're I speak on the day when we're thinking about trade and the economy. Now, when I was appointed, of course, I read the briefs that of course, I read the briefs that were sent by civil servants, but I've always been interested in the history and culture of places that I try to engage with. And so I started to read about the history and culture of Central Asia and reading books like The Great Game by Peter Hopkirk.
I came across some names that I knew the name, for example, of Sir Henry Pottinger.
12:40
Lord Alderdice (Liberal Democrat)
-
-
Lord Alderdice (Liberal Democrat)
Pottinger came from the >> Pottinger came from the Pottinger area of East Belfast, which I represented in the Northern Ireland Assembly. And if you go to Ireland Assembly. And if you go to the Foreign Office, there's still a more than life size portrait of this more than life size character. But what was striking to me about him, and relevant to what I was doing, was the fact that he was not only an extraordinary colonial administrator, he was the first governor of Hong Kong and so on.
But as a young man, when there was a great conflict and struggle going on between Britain and Russia over the links to India, he went out and like many other young men, acted with the most extraordinary venture and courage in trying to ensure the well-being of his country. The reason I was struck by that was that as I engaged with people from Azerbaijan and Central Asia, I was really struck by how venturesome many of the young people in those countries had become when they were freed of the yoke of Soviet Union.
But I was also struck by how in our own country, we seem to have lost much of this. There's a degree of risk aversion which is not healthy for business, and I also see it in government. And if we don't venture out, we won't succeed there. There have to be risks taken. You can't be sure that everything will always be successful. Now, it's a it's a worrying world at the moment. It's a frightening place. There are lots of dangerous things happening.
We look at questions of, of, of oil and gas. And it's not just that the costs have gone up, but there's all the uncertainties of managing a country and concern about other actors, including some of our allies or former allies who don't obey the rules anymore. So many of our businesses, and as I say, I think our government has often become risk averse. One thing surprised me, though. The place where I saw the most venturesomeness and indeed success, was in an area that I didn't really think of as part of business and trade, and that was the development of English language, higher education, a huge appetite for this amongst young people in that region, and a preparedness on the part of our universities to get out there and develop campuses and engage with universities there.
And I thought to myself, well, this is very interesting. I wonder why that happens? And then I thought, well, maybe maybe it's the fact that if you're going to be a serious academic and scientist now, you need to be prepared to go to conferences and meet with others who are doing scientific work. You need to be prepared to engage in, in, in, in research across countries, across borders. And because that's part of the natural thing, you then meet with people who you start to work with and you develop a relationship with them.
And so actually, some of our academics and universities are doing more and being more outgoing and courageous and are prepared to take risks rather than the risk aversion that I see often, not always, but often in business and indeed in in government. But we do have to face the realities which have changed and are very difficult for us. You know, there were things that we we used to think in the noble Lord, Lord Lillie talked about the way he had changed his perspective on things.
You know, it used to be thought that if countries could be brought to a liberal economic approach, then liberal democracy in politics would ultimately follow. Well, China is the the great, the great end to that notion. Then there was the notion that if you've got military power, you will win wars. Well, I used to be the case. The United States didn't do so well in Korea or Vietnam or Afghanistan or Iraq or Libya or Syria or Iran, because military power can enable you to destroy things and kill people.
But it doesn't create democracy. It can just lay waste and leave a shambles. We thought of Europe as the centre of civilisation in the past and would be for the future. But you know, there are older civilisations and increasingly impressive economic and scientific advancement to the east, where we have tended not to look in the past and why we have still strengths and they are significant and they are recognised. We're not as rich or powerful or significant as we were, and other countries are becoming more wealthy and powerful.
And I think another illusion that's around often is that you can continue to cut the workforce and still have expansion. And as I look at the cutting of the workforce and DBT and FCDO, I can't see how there's going to be anything other than a retrenchment and retraction. And I would ask the government to think again about some of those cuts. If we're really going to achieve what the government wants to achieve. And we talk things up, endless superlatives. The dangers, I think, of overplaying our hand when we talk about everything we do being world beating and world leading when we're not.
Propaganda is particularly dangerous when you inhale. And one of the problems is that we've started to believe some of these things that we tell about. So it's not that we don't have any world beating things, but not in many of the places that we speak. And and there's another problem. Not only do we sometimes believe it, but our people believe it. And if you tell your population that they are world beating and leading in everything, then they expect that you're going to be able to pay for all the kinds of services that they want for welfare services, for the National Health Service, for defence, which we do need.
And that's that's playing a story to them. That's not true. And you've got to be very careful about that kind of thing. I was talking to a nationalist friend from Northern Ireland and she said, you know, I've suddenly realised I've made a big mistake when I go down to Dublin, I tell them about how terrible things are in the North, and I've suddenly realised if I persuade them that it's terrible, why on earth would they want to take it on? I need to go down and tell them that there are problems, but there we're able to do something about those and please work with us on that.
So we have to be very careful about the kind of things we say, because people sometimes believe us, and then we're in real trouble because that's not really what we want them to do. And at the same time, we're neglecting our soft power. Cutting back on the BBC, British Council, our diplomatic services are really said and neglecting not so much hard power as our capacity to defend ourselves. The noble Lord, Lord Robertson, will undoubtedly say something about this because he said a lot publicly and quite rightly so.
We're not able now to defend ourselves. We told ourselves and our and our people for years that the world was going to be more peaceful. We had a world class military machine, and any way we could depend on the United States to defend us. None of these things are true anymore. The world has changed, and that means that we must change our way of approaching it. Leaving the EU did not bring the benefits we were promised, but simply reversing Brexit without recognising that we've changed.
Europe's changed. The world has changed, won't solve the problems either. Prime Minister Mark Carney has made it clear that the world is a different place, and we need to listen to his injunction for middle powers, of which we are now one, to build a future based more on a variable geometry of workable relationships, rather than some of the institutional structures that are vulnerable to the vetoes of the mighty. We need to build relationships more than institutions and structures. My Lords, that would be my appeal that we address the risk aversion in business and government, that we face the realities of the world as it is now, not as it was in the past, or as we wish it was, and that we build relationships in this changing and challenging world, not just conduct transactions.
But as a young man, when there was a great conflict and struggle going on between Britain and Russia over the links to India, he went out and like many other young men, acted with the most extraordinary venture and courage in trying to ensure the well-being of his country. The reason I was struck by that was that as I engaged with people from Azerbaijan and Central Asia, I was really struck by how venturesome many of the young people in those countries had become when they were freed of the yoke of Soviet Union.
But I was also struck by how in our own country, we seem to have lost much of this. There's a degree of risk aversion which is not healthy for business, and I also see it in government. And if we don't venture out, we won't succeed there. There have to be risks taken. You can't be sure that everything will always be successful. Now, it's a it's a worrying world at the moment. It's a frightening place. There are lots of dangerous things happening.
We look at questions of, of, of oil and gas. And it's not just that the costs have gone up, but there's all the uncertainties of managing a country and concern about other actors, including some of our allies or former allies who don't obey the rules anymore. So many of our businesses, and as I say, I think our government has often become risk averse. One thing surprised me, though. The place where I saw the most venturesomeness and indeed success, was in an area that I didn't really think of as part of business and trade, and that was the development of English language, higher education, a huge appetite for this amongst young people in that region, and a preparedness on the part of our universities to get out there and develop campuses and engage with universities there.
And I thought to myself, well, this is very interesting. I wonder why that happens? And then I thought, well, maybe maybe it's the fact that if you're going to be a serious academic and scientist now, you need to be prepared to go to conferences and meet with others who are doing scientific work. You need to be prepared to engage in, in, in, in research across countries, across borders. And because that's part of the natural thing, you then meet with people who you start to work with and you develop a relationship with them.
And so actually, some of our academics and universities are doing more and being more outgoing and courageous and are prepared to take risks rather than the risk aversion that I see often, not always, but often in business and indeed in in government. But we do have to face the realities which have changed and are very difficult for us. You know, there were things that we we used to think in the noble Lord, Lord Lillie talked about the way he had changed his perspective on things.
You know, it used to be thought that if countries could be brought to a liberal economic approach, then liberal democracy in politics would ultimately follow. Well, China is the the great, the great end to that notion. Then there was the notion that if you've got military power, you will win wars. Well, I used to be the case. The United States didn't do so well in Korea or Vietnam or Afghanistan or Iraq or Libya or Syria or Iran, because military power can enable you to destroy things and kill people.
But it doesn't create democracy. It can just lay waste and leave a shambles. We thought of Europe as the centre of civilisation in the past and would be for the future. But you know, there are older civilisations and increasingly impressive economic and scientific advancement to the east, where we have tended not to look in the past and why we have still strengths and they are significant and they are recognised. We're not as rich or powerful or significant as we were, and other countries are becoming more wealthy and powerful.
And I think another illusion that's around often is that you can continue to cut the workforce and still have expansion. And as I look at the cutting of the workforce and DBT and FCDO, I can't see how there's going to be anything other than a retrenchment and retraction. And I would ask the government to think again about some of those cuts. If we're really going to achieve what the government wants to achieve. And we talk things up, endless superlatives. The dangers, I think, of overplaying our hand when we talk about everything we do being world beating and world leading when we're not.
Propaganda is particularly dangerous when you inhale. And one of the problems is that we've started to believe some of these things that we tell about. So it's not that we don't have any world beating things, but not in many of the places that we speak. And and there's another problem. Not only do we sometimes believe it, but our people believe it. And if you tell your population that they are world beating and leading in everything, then they expect that you're going to be able to pay for all the kinds of services that they want for welfare services, for the National Health Service, for defence, which we do need.
And that's that's playing a story to them. That's not true. And you've got to be very careful about that kind of thing. I was talking to a nationalist friend from Northern Ireland and she said, you know, I've suddenly realised I've made a big mistake when I go down to Dublin, I tell them about how terrible things are in the North, and I've suddenly realised if I persuade them that it's terrible, why on earth would they want to take it on? I need to go down and tell them that there are problems, but there we're able to do something about those and please work with us on that.
So we have to be very careful about the kind of things we say, because people sometimes believe us, and then we're in real trouble because that's not really what we want them to do. And at the same time, we're neglecting our soft power. Cutting back on the BBC, British Council, our diplomatic services are really said and neglecting not so much hard power as our capacity to defend ourselves. The noble Lord, Lord Robertson, will undoubtedly say something about this because he said a lot publicly and quite rightly so.
We're not able now to defend ourselves. We told ourselves and our and our people for years that the world was going to be more peaceful. We had a world class military machine, and any way we could depend on the United States to defend us. None of these things are true anymore. The world has changed, and that means that we must change our way of approaching it. Leaving the EU did not bring the benefits we were promised, but simply reversing Brexit without recognising that we've changed.
Europe's changed. The world has changed, won't solve the problems either. Prime Minister Mark Carney has made it clear that the world is a different place, and we need to listen to his injunction for middle powers, of which we are now one, to build a future based more on a variable geometry of workable relationships, rather than some of the institutional structures that are vulnerable to the vetoes of the mighty. We need to build relationships more than institutions and structures. My Lords, that would be my appeal that we address the risk aversion in business and government, that we face the realities of the world as it is now, not as it was in the past, or as we wish it was, and that we build relationships in this changing and challenging world, not just conduct transactions.
12:48
Lord Redwood (Conservative)
-
-
Lord Redwood (Conservative)
My Lord, the noble Lord is right to warn us all that our relative to warn us all that our relative prosperity and power is waning. And I've always been very happy to fully support this government's main aim set out in the general election and repeated in all the economic speeches I've heard them make. They are right that this country can achieve so much more. It can grow much faster. It can unleash enterprise, it can develop more business. But I fear, my noble friend Baroness Finn, in a brilliant speech set out just how in almost two years now, this government has done everything wrong.
If you wish to promote growth, it's clobbered entrepreneurs instead of praising them. It's tax people instead of rewarding them, it's taken incentive out. It's made it more difficult to employ young people. It seems to have a grudge against young people. And now we are presented in this Gracious Speech one. They think a golden thread, which I think will turn out to be leaden and depressing. The idea that an EU reset will somehow promote trade, which in turn will give us that missing growth.
Let me try and help the government a little more. Thinking this through. Quite often, Ministers here and elsewhere tell us that we suffered 4% GDP loss as a result of Brexit. Now, if you look at all the graphs and charts of what happened to GDP 2016 to today for the leading European countries and ourselves, there is absolutely no sign on those graphs of an extra 4% drop as a result of us either voting to leave or actually leaving.
And if you ask the government Ministers, why do they think there's been this 4% drop? They say that this is what the OBR has said. Well, if you read the OBR report, it's a forecast and it says that it thinks that between 2020 and 2035, the British economy might grow its productivity 0.25% per annum less than if we hadn't left the EU. So it's not forecasting any drop in GDP at all. It's not even forecasting a drop in productivity.
It says it might grow a bit slower. And if you compound out 0.25% for 15 years, you get to roughly the 4% they all wrongly cite. But Ministers must be honest with themselves and the public. There was no 4% drop and their own
**** Possible New Speaker ****
research will not recover the 4% which They wrongly allege has disappeared. Then let's explore this idea that increasing trade would uniquely provide growth. I fear again, they are mistaken because our trade with the European because our trade with the European Union results in a very large trade deficit, particularly in goods. deficit, particularly in goods. They sell us a lot more than we sell them. So if there were a set of policies, we could agree with them that might increase the exports of each side by 10%.
So quite a sizeable number. The deficit would rise and our GDP would fall because they would export much more to us than we export to them. And we would have to close down things in Britain to receive the exports we decided were cheaper or better. As a result of the changes we would need to grow our exports by 17% to match a growth of 10% in their exports to have the same volume. And if you wanted to get more GDP, you actually got to grow our exports a lot faster than the European Union because just repeat it.
The government exports add to our GDP, but imports don't. If we import more German cars and close a UK car factory, our GDP goes down. It doesn't miraculously go up because our trade figures with the EU have gone up. And that is exactly what this government strategy is, mainly thanks to its net zero policies. My, my noble friend Lord Lilley set this all out very well. They are literally going to ban us making any diesel or petrol cars from 2035 years earlier than they were stupidly banned them on the continent.
So do they not see that? That means we close our factories first, and we definitely lose all the jobs, while Europe is still thinking about making more of these cars that people want to buy. And the government will say, oh, well, we're going to buy battery cars. Yes, some people will buy battery cars if they can't buy diesel cars or petrol cars, but most of those will probably be imported from China, or they may be made in Eastern Europe and imported via that route.
So you're the government is not going to be getting more jobs or more growth or more economic activity from that source. So here, here is my friendly proposal. I really want this country to do well. I want this government to do well. I know it's not about to fall. The Prime Minister's might come and go, but they're presumably going to carry on governing. And so please govern well. And what I would like them to do is instead of having this wrong idea that promoting more imports from Europe and maybe a few more exports to Europe is going to miraculously transform, the position is to put in place in Britain a series of policies for import substitution.
It is much easier for small companies to sell to people and shops and businesses near them, than to go through all the hassle of exporting however much red tape they think they can reduce by, and give our small businesses more chance by creating more opportunity for British production. And it should be much cheaper and easier to replace imports than to try and develop exports to markets with different languages and different customs, and who may not like what you're doing or what you're offering.
I know this well from my own past experience running industrial businesses, where we found by far and away the most difficult markets to export to were France and Germany. Although they were geographically much nearer. We always hired staff that love the countries and spoke the language, but it was still much more difficult to sell there than it was around the English speaking world, into America or into Asian countries where English was their common business language. And so we need to lift the ban on making our own petrol and diesel cars, because they've always been one of our leading exports to the continent.
We need to lift the ban on getting our own oil and gas out, because those have been leading exports to the continent. We need to get energy prices down, as Lord Lilley rightly said, because we have in the past exported a lot of petrochemicals and a lot of refined oil product. And if we're shutting all our refineries and and all our petrochemical works and our ethylene plants and so forth, we're not going to be exporting anything like that volume in the future.
The government needs a dose of reality, common sense and examination of the data. It's not good enough for Ministers to say, we will get the British economy to grow as soon as we signed away our powers to make our own business laws, and as soon as we've given some more money to Brussels, that because they cannot identify billions of pounds of extra exports, we can make at a time when they, through their policies, are ensuring we export fewer and fewer cars, we export less and less oil and gas.
We export less and less refined product. We export less and less chemicals. We think we're in the process of closing 21 plastics recycling plants. And as my noble friend Lord hunt in another absolutely brilliant speech set out, there is no plan to save steel. Indeed, I heard the Minister say in opening remarks that it's still the government policy to go over to electric arc furnaces. Well, then, they need to be honest to the workers in Scunthorpe. They're not permanently going to save the Scunthorpe jobs.
They still want to sack all those people. But just a little bit later, after they have wasted billions of public money on keeping open a works that is struggling to compete in the way that Lord hunt set out. So government, please level with the workers in Scunthorpe that your plan is anti blast furnace, anti burning coal in any sense and come to a decent settlement with them. And don't think you have a solution to steel because you clearly haven't.
If you wish to promote growth, it's clobbered entrepreneurs instead of praising them. It's tax people instead of rewarding them, it's taken incentive out. It's made it more difficult to employ young people. It seems to have a grudge against young people. And now we are presented in this Gracious Speech one. They think a golden thread, which I think will turn out to be leaden and depressing. The idea that an EU reset will somehow promote trade, which in turn will give us that missing growth.
Let me try and help the government a little more. Thinking this through. Quite often, Ministers here and elsewhere tell us that we suffered 4% GDP loss as a result of Brexit. Now, if you look at all the graphs and charts of what happened to GDP 2016 to today for the leading European countries and ourselves, there is absolutely no sign on those graphs of an extra 4% drop as a result of us either voting to leave or actually leaving.
And if you ask the government Ministers, why do they think there's been this 4% drop? They say that this is what the OBR has said. Well, if you read the OBR report, it's a forecast and it says that it thinks that between 2020 and 2035, the British economy might grow its productivity 0.25% per annum less than if we hadn't left the EU. So it's not forecasting any drop in GDP at all. It's not even forecasting a drop in productivity.
It says it might grow a bit slower. And if you compound out 0.25% for 15 years, you get to roughly the 4% they all wrongly cite. But Ministers must be honest with themselves and the public. There was no 4% drop and their own
**** Possible New Speaker ****
research will not recover the 4% which They wrongly allege has disappeared. Then let's explore this idea that increasing trade would uniquely provide growth. I fear again, they are mistaken because our trade with the European because our trade with the European Union results in a very large trade deficit, particularly in goods. deficit, particularly in goods. They sell us a lot more than we sell them. So if there were a set of policies, we could agree with them that might increase the exports of each side by 10%.
So quite a sizeable number. The deficit would rise and our GDP would fall because they would export much more to us than we export to them. And we would have to close down things in Britain to receive the exports we decided were cheaper or better. As a result of the changes we would need to grow our exports by 17% to match a growth of 10% in their exports to have the same volume. And if you wanted to get more GDP, you actually got to grow our exports a lot faster than the European Union because just repeat it.
The government exports add to our GDP, but imports don't. If we import more German cars and close a UK car factory, our GDP goes down. It doesn't miraculously go up because our trade figures with the EU have gone up. And that is exactly what this government strategy is, mainly thanks to its net zero policies. My, my noble friend Lord Lilley set this all out very well. They are literally going to ban us making any diesel or petrol cars from 2035 years earlier than they were stupidly banned them on the continent.
So do they not see that? That means we close our factories first, and we definitely lose all the jobs, while Europe is still thinking about making more of these cars that people want to buy. And the government will say, oh, well, we're going to buy battery cars. Yes, some people will buy battery cars if they can't buy diesel cars or petrol cars, but most of those will probably be imported from China, or they may be made in Eastern Europe and imported via that route.
So you're the government is not going to be getting more jobs or more growth or more economic activity from that source. So here, here is my friendly proposal. I really want this country to do well. I want this government to do well. I know it's not about to fall. The Prime Minister's might come and go, but they're presumably going to carry on governing. And so please govern well. And what I would like them to do is instead of having this wrong idea that promoting more imports from Europe and maybe a few more exports to Europe is going to miraculously transform, the position is to put in place in Britain a series of policies for import substitution.
It is much easier for small companies to sell to people and shops and businesses near them, than to go through all the hassle of exporting however much red tape they think they can reduce by, and give our small businesses more chance by creating more opportunity for British production. And it should be much cheaper and easier to replace imports than to try and develop exports to markets with different languages and different customs, and who may not like what you're doing or what you're offering.
I know this well from my own past experience running industrial businesses, where we found by far and away the most difficult markets to export to were France and Germany. Although they were geographically much nearer. We always hired staff that love the countries and spoke the language, but it was still much more difficult to sell there than it was around the English speaking world, into America or into Asian countries where English was their common business language. And so we need to lift the ban on making our own petrol and diesel cars, because they've always been one of our leading exports to the continent.
We need to lift the ban on getting our own oil and gas out, because those have been leading exports to the continent. We need to get energy prices down, as Lord Lilley rightly said, because we have in the past exported a lot of petrochemicals and a lot of refined oil product. And if we're shutting all our refineries and and all our petrochemical works and our ethylene plants and so forth, we're not going to be exporting anything like that volume in the future.
The government needs a dose of reality, common sense and examination of the data. It's not good enough for Ministers to say, we will get the British economy to grow as soon as we signed away our powers to make our own business laws, and as soon as we've given some more money to Brussels, that because they cannot identify billions of pounds of extra exports, we can make at a time when they, through their policies, are ensuring we export fewer and fewer cars, we export less and less oil and gas.
We export less and less refined product. We export less and less chemicals. We think we're in the process of closing 21 plastics recycling plants. And as my noble friend Lord hunt in another absolutely brilliant speech set out, there is no plan to save steel. Indeed, I heard the Minister say in opening remarks that it's still the government policy to go over to electric arc furnaces. Well, then, they need to be honest to the workers in Scunthorpe. They're not permanently going to save the Scunthorpe jobs.
They still want to sack all those people. But just a little bit later, after they have wasted billions of public money on keeping open a works that is struggling to compete in the way that Lord hunt set out. So government, please level with the workers in Scunthorpe that your plan is anti blast furnace, anti burning coal in any sense and come to a decent settlement with them. And don't think you have a solution to steel because you clearly haven't.
12:57
Baroness O'Grady of Upper Holloway (Labour)
-
-
Baroness O'Grady of Upper Holloway (Labour)
Yeah. >> Hello it's my Lords. It's a pleasure to follow Lord Redwood. And maybe to offer a slightly And maybe to offer a slightly different perspective. And I also want to declare my interest as a member of the start up board for Great British Energy, and in particular, my responsibilities around the just transition. My Lords, we live in times of global economic shocks from the financial crash to Brexit, Covid and conflict in the Middle East. And there's no guarantee that the global picture will get any easier.
On the contrary, such shocks could speed up and intensify. So that makes it ever more important that we build our economic resilience. At times like this, it's even more important that the UK has an industrial policy that is both agile and long term. To succeed, it must certainly last longer than the life of a couple of parliaments, and that means that we need a broad national consensus to sustain it. This government's industrial strategy has won support across traditional lines, and that's reflected in the make up of the Industrial Strategy Advisory Council.
There's broad agreement that a long running problem for the UK has been low investments in technology, capital, equipment and skills, and that leads to low productivity and that this is a challenge that must be met not just by the Treasury, but by the whole of government and at local as well as national level. There's widespread consensus to that. The government has made the right call in identifying eight strategic sectors with the right balance between industry and the service sector, economic security and stability matters for families and communities as well as the country.
So it should be self-evident that a key objective of industrial strategy must be to cut carbon, reduce energy costs and to deliver prosperity and good skilled jobs in the parts of the country that need them most. I think we have to recognise that there is a growing public expectation on the state to step up and protect people against the volatilities and the failures of the free market, and to tackle structural inequalities. A mission for growth becomes meaningful in everyday life when it also delivers rising living standards and fair shares.
Polls showed that public support for a modern mixed economy is strong, and if I were to put this plainly, I would merely observe that privatisation of Royal Mail, British Rail and the utilities is now seen as an almighty rip off. I commend the government for taking back public control of rail and steel, which is a core foundation industry critical for the security of this country and indeed Europe. I'm sure I don't need to remind my Lords that polling shows strong, popular appetite for more public ownership, not least of the water industry.
We also need the private sector to play its part in delivering fair growth for the British people. According to the latest data from the Office of National Statistics. Share ownership in Britain is dominated by overseas investors. It's now reached a record high of nearly 58% of UK, UK quoted shares and on average, of course, shares changed hands in a matter of months. That's why I believe that an intelligent industrial strategy must also address the case for corporate governance reform, to encourage directors to focus on company long term success and to ensure that workers voice is included.
Now, while there is growing consensus in favour of an active industrial policy here in the UK, others are not standing still. They are moving ahead to. So I want to end by asking my noble friend the Minister, about proposals for EU alignment and the EU's Draft Industry Accelerator Act, which was published in March this year. And I think Lord Fox touched on this briefly. The act sets a clear goal to bring EU manufacturing back up to 20% of GDP by 2035.
It said that this will be delivered by introducing made in EU and low carbon preferences in public procurement. It will also regulate foreign direct investments in emerging strategic sectors. Streamline and digitalise permission for new industrial projects and launch acceleration areas to encourage the creation of clean manufacturing clusters. So I have some questions which, if the Minister understandably can't provide answers to now, I'd be happy to receive in the form of a letter. What is the government's assessment of this EU act? Impact on the UK? Is it on the agenda for the reset and dynamic alignment discussions with the EU? And will the government agree to open a public conversation, including with British based manufacturers, alongside the TUC and unions, on how we can match the ambition here in the UK?
On the contrary, such shocks could speed up and intensify. So that makes it ever more important that we build our economic resilience. At times like this, it's even more important that the UK has an industrial policy that is both agile and long term. To succeed, it must certainly last longer than the life of a couple of parliaments, and that means that we need a broad national consensus to sustain it. This government's industrial strategy has won support across traditional lines, and that's reflected in the make up of the Industrial Strategy Advisory Council.
There's broad agreement that a long running problem for the UK has been low investments in technology, capital, equipment and skills, and that leads to low productivity and that this is a challenge that must be met not just by the Treasury, but by the whole of government and at local as well as national level. There's widespread consensus to that. The government has made the right call in identifying eight strategic sectors with the right balance between industry and the service sector, economic security and stability matters for families and communities as well as the country.
So it should be self-evident that a key objective of industrial strategy must be to cut carbon, reduce energy costs and to deliver prosperity and good skilled jobs in the parts of the country that need them most. I think we have to recognise that there is a growing public expectation on the state to step up and protect people against the volatilities and the failures of the free market, and to tackle structural inequalities. A mission for growth becomes meaningful in everyday life when it also delivers rising living standards and fair shares.
Polls showed that public support for a modern mixed economy is strong, and if I were to put this plainly, I would merely observe that privatisation of Royal Mail, British Rail and the utilities is now seen as an almighty rip off. I commend the government for taking back public control of rail and steel, which is a core foundation industry critical for the security of this country and indeed Europe. I'm sure I don't need to remind my Lords that polling shows strong, popular appetite for more public ownership, not least of the water industry.
We also need the private sector to play its part in delivering fair growth for the British people. According to the latest data from the Office of National Statistics. Share ownership in Britain is dominated by overseas investors. It's now reached a record high of nearly 58% of UK, UK quoted shares and on average, of course, shares changed hands in a matter of months. That's why I believe that an intelligent industrial strategy must also address the case for corporate governance reform, to encourage directors to focus on company long term success and to ensure that workers voice is included.
Now, while there is growing consensus in favour of an active industrial policy here in the UK, others are not standing still. They are moving ahead to. So I want to end by asking my noble friend the Minister, about proposals for EU alignment and the EU's Draft Industry Accelerator Act, which was published in March this year. And I think Lord Fox touched on this briefly. The act sets a clear goal to bring EU manufacturing back up to 20% of GDP by 2035.
It said that this will be delivered by introducing made in EU and low carbon preferences in public procurement. It will also regulate foreign direct investments in emerging strategic sectors. Streamline and digitalise permission for new industrial projects and launch acceleration areas to encourage the creation of clean manufacturing clusters. So I have some questions which, if the Minister understandably can't provide answers to now, I'd be happy to receive in the form of a letter. What is the government's assessment of this EU act? Impact on the UK? Is it on the agenda for the reset and dynamic alignment discussions with the EU? And will the government agree to open a public conversation, including with British based manufacturers, alongside the TUC and unions, on how we can match the ambition here in the UK?
13:04
Baroness Penn (Conservative)
-
-
Baroness Penn (Conservative)
Yeah. >> My Lords, to follow on from the noble Lady Baroness O'Grady, I too want to focus on the theme from yesterday's gracious speech as yesterday's gracious speech as being one of security, defence, being one of security, defence, security, energy security, economic security. Although I will resist the temptation to make a joke about job security, particularly as the Health Secretary, I believe has just resigned.
**** Possible New Speaker ****
Indeed. That theme was the right one. In today's volatile world, we are too today's volatile world, we are too insecure as a nation and people feel too insecure in their day to feel too insecure in their day to day lives. But as is becoming more apparent day by day, the government's rhetoric is not borne government's rhetoric is not borne out in reality. And if you start with the cornerstone of our with the cornerstone of our national security defence here, the government commissioned the serious and widely welcomed Strategic Defence Review.
The review concluded nearly a year ago, but remains largely unimplemented, and I'm sure we will hear the views of the noble Lord, Lord Robertson, on that shortly. But my Lord, we have no defence investment plan, and in the Gracious Speech we had no defence readiness Bill, and it is no good talking of the largest sustained increase in defence spending since the Cold War. If Ministers are not prepared to take the decisions needed on how it is spent, and the claim rings even more hollow, with defence spending due to fall next year.
My Lord, that's the cornerstone of the government's agenda and there is nothing to show for it. But if the national security implications of our changed world have been explored through the Strategic Defence Review, the economic implications for the UK of a changing world economic order remain underexplored and under provided for in government policy. There have been moments when the Chancellor has attempted to do this, securing the two main lectures, but it has come on and off the agenda as priorities change with each new focus group.
And as is too often the case with this government, it remains a set of vague, often contradictory intentions, unwilling to make the serious trade offs needed to meet the new reality, take energy security. Yes, the measures to implement the results of the Fingleton review are welcome. But again, the pace of decision making and implementation has been painfully slow. And more broadly, in a world where we have had two energy shocks in less than five years, in a world where projected energy demand for AI, quantum and other technologies is due to soar, the government has failed to look again at the trade offs between security cost and decarbonisation because there are trade offs there.
Yes, my Lords, I strongly believe renewables will be a big part of our domestic energy security, and I believe that investment in green technology has the ability to drive growth and jobs. But it is also true, my Lords, that when it comes to the government's clean power target, focusing on getting to 95% clean power instead of the around 90%, which we were already on track to deliver over a five year period, has significant additional marginal costs, and pursuing the last mile of the Carbonisation may indeed have the perverse effect of failing to incentivise people to power their homes or their cars by electricity.
As we drive up its cost, and at a time when people and businesses are struggling with their bills, the government is not being straight with them about the decisions that they are taking that drive those bills up even further. And my Lords, the government has been equally unable to make the trade offs needed when it comes to spending. Instead of investing in growing our economy and using the proceeds of higher growth in productivity to boost spending, as was outlined in the manifesto, the government has raised taxes in the most damaging way to growth to increase welfare spending.
Before any of that growth or productivity has materialised. And I think even this government has realised that the public and the economy are unlikely to tolerate further tax rises. But we have a set of commitments, a set of demands that must be met, increasing defence spending to three and 3.5% of GDP. The short term trick of switching over to defence cannot be repeated, meeting the growing demands of our health service or an ageing population. These pressures must, at least in part, be met from savings in spending elsewhere.
But the Gracious Speech contained not a single proposal for where such savings might come from. No sign of welfare reform measures, which the government continues to claim are necessary but fails to take action on. And, my Lords, given the demands placed on us in a more insecure world, and given that we are at record levels of taxation, tax reform must now come onto the agenda. If we want to avoid further damaging tax rises, then we need to find a way to raise the same, if not more, revenue from a more efficient, more growth friendly tax system.
Instead, we had a national insurance tax change designed in the worst possible way to discourage work and the gap between the tax treatment of employment versus self-employment or other income continues to grow. And we continue to have a tax system. As the noble Lord, Lord Burns said, that discourages mobility, discourages investment and creates perverse incentives and cliff edges along the way. And perhaps the government will reflect on the gap between not only their promise at the election, but their continued claim now that they would not raise taxes on working people and the reality of their decisions as something that may have contributed to a lack of trust in the government displayed at the ballot box last week.
And, my Lords, I turn last to growth and we could come to the government's Regulating for Growth Bill, which some might call a contradiction in terms, but I'm inclined to be more generous, and we will have to wait to see the detail. But on first impressions, whilst well intentioned, it looks like it will struggle to have an impact because instead of fundamentally revisiting whether the regulatory architecture that we have built over the last 20 years makes sense in today's economy, it makes a few tweaks here and a few tweaks there, and again, refuses to engage in the trade offs that might be involved in some of this decision making.
My Lords, we need to take a step back and look not just at the individual merits of each piece of regulation, but on their cumulative effect. My Lords, are half measures and the lack of pace and the lack of vision that this is representative of sums up the government's approach. If growth is the number one priority, then you have to go further and faster on planning further and faster on artificial intelligence. As growth is the number one priority. You don't make the labour market more rigid at the exact time.
You need more flexibility, and you need a government that is willing to take decisions and change the process for implementing those decisions so that it does not take years to get anything done. To quote a different part of the former Home Office minister's resignation letter to my noble friend Baroness Finn. This government is the definition of incremental change. There is nothing bold about it. So for the government to deliver on our national security, our energy security, our economic security, it needs a strategy that faces up to the new realities in which we are living, that recognises that the open, globalised, rule based order that was a foundation of our previous growth and productivity has fundamentally changed.
And that means we need to look fundamentally at how we support business at home and how we engage abroad. My Lords, I do not intend to focus on our relationship with the EU. Many others before and after me in this debate have covered that ground, and personally, I'm pragmatic about the opportunities and potential costs of a closer relationship with Europe. But what I would say is that in this new world, we need a new approach. And in agreement with the noble Lord Lord Alderdice, we need an approach that engages with the world as it is, not as we wish it would be, or as we once thought it was.
My Lords, the government speaks the language of a new global economic order whilst governing in the paradigm of an old one, and that's perhaps best summed up by the response to last week's local elections being the appointment of Gordon Brown as the Special Reviewer on global finance. This country cannot afford a government that is unwilling or unable to take the decisions needed to meet the challenge before us, something my Lords has got to give, and I expect that we will find out in the coming days and weeks just what that is.
**** Possible New Speaker ****
My Lords, I'm delighted to speak in today's debate on the Humble Address, and as you probably expect, Address, and as you probably expect, I'm planning to focus on European issues and in particular the the sadly misnamed European Partnership Bill, which would, I think would better be called the European better be called the European Subordination Bill, for in reality, that's what's going to achieve. It's going to deprive this It's going to deprive this Parliament of any say in areas where the government has agreed to accept EU law and dynamic alignment,
**** Possible New Speaker ****
Indeed. That theme was the right one. In today's volatile world, we are too today's volatile world, we are too insecure as a nation and people feel too insecure in their day to feel too insecure in their day to day lives. But as is becoming more apparent day by day, the government's rhetoric is not borne government's rhetoric is not borne out in reality. And if you start with the cornerstone of our with the cornerstone of our national security defence here, the government commissioned the serious and widely welcomed Strategic Defence Review.
The review concluded nearly a year ago, but remains largely unimplemented, and I'm sure we will hear the views of the noble Lord, Lord Robertson, on that shortly. But my Lord, we have no defence investment plan, and in the Gracious Speech we had no defence readiness Bill, and it is no good talking of the largest sustained increase in defence spending since the Cold War. If Ministers are not prepared to take the decisions needed on how it is spent, and the claim rings even more hollow, with defence spending due to fall next year.
My Lord, that's the cornerstone of the government's agenda and there is nothing to show for it. But if the national security implications of our changed world have been explored through the Strategic Defence Review, the economic implications for the UK of a changing world economic order remain underexplored and under provided for in government policy. There have been moments when the Chancellor has attempted to do this, securing the two main lectures, but it has come on and off the agenda as priorities change with each new focus group.
And as is too often the case with this government, it remains a set of vague, often contradictory intentions, unwilling to make the serious trade offs needed to meet the new reality, take energy security. Yes, the measures to implement the results of the Fingleton review are welcome. But again, the pace of decision making and implementation has been painfully slow. And more broadly, in a world where we have had two energy shocks in less than five years, in a world where projected energy demand for AI, quantum and other technologies is due to soar, the government has failed to look again at the trade offs between security cost and decarbonisation because there are trade offs there.
Yes, my Lords, I strongly believe renewables will be a big part of our domestic energy security, and I believe that investment in green technology has the ability to drive growth and jobs. But it is also true, my Lords, that when it comes to the government's clean power target, focusing on getting to 95% clean power instead of the around 90%, which we were already on track to deliver over a five year period, has significant additional marginal costs, and pursuing the last mile of the Carbonisation may indeed have the perverse effect of failing to incentivise people to power their homes or their cars by electricity.
As we drive up its cost, and at a time when people and businesses are struggling with their bills, the government is not being straight with them about the decisions that they are taking that drive those bills up even further. And my Lords, the government has been equally unable to make the trade offs needed when it comes to spending. Instead of investing in growing our economy and using the proceeds of higher growth in productivity to boost spending, as was outlined in the manifesto, the government has raised taxes in the most damaging way to growth to increase welfare spending.
Before any of that growth or productivity has materialised. And I think even this government has realised that the public and the economy are unlikely to tolerate further tax rises. But we have a set of commitments, a set of demands that must be met, increasing defence spending to three and 3.5% of GDP. The short term trick of switching over to defence cannot be repeated, meeting the growing demands of our health service or an ageing population. These pressures must, at least in part, be met from savings in spending elsewhere.
But the Gracious Speech contained not a single proposal for where such savings might come from. No sign of welfare reform measures, which the government continues to claim are necessary but fails to take action on. And, my Lords, given the demands placed on us in a more insecure world, and given that we are at record levels of taxation, tax reform must now come onto the agenda. If we want to avoid further damaging tax rises, then we need to find a way to raise the same, if not more, revenue from a more efficient, more growth friendly tax system.
Instead, we had a national insurance tax change designed in the worst possible way to discourage work and the gap between the tax treatment of employment versus self-employment or other income continues to grow. And we continue to have a tax system. As the noble Lord, Lord Burns said, that discourages mobility, discourages investment and creates perverse incentives and cliff edges along the way. And perhaps the government will reflect on the gap between not only their promise at the election, but their continued claim now that they would not raise taxes on working people and the reality of their decisions as something that may have contributed to a lack of trust in the government displayed at the ballot box last week.
And, my Lords, I turn last to growth and we could come to the government's Regulating for Growth Bill, which some might call a contradiction in terms, but I'm inclined to be more generous, and we will have to wait to see the detail. But on first impressions, whilst well intentioned, it looks like it will struggle to have an impact because instead of fundamentally revisiting whether the regulatory architecture that we have built over the last 20 years makes sense in today's economy, it makes a few tweaks here and a few tweaks there, and again, refuses to engage in the trade offs that might be involved in some of this decision making.
My Lords, we need to take a step back and look not just at the individual merits of each piece of regulation, but on their cumulative effect. My Lords, are half measures and the lack of pace and the lack of vision that this is representative of sums up the government's approach. If growth is the number one priority, then you have to go further and faster on planning further and faster on artificial intelligence. As growth is the number one priority. You don't make the labour market more rigid at the exact time.
You need more flexibility, and you need a government that is willing to take decisions and change the process for implementing those decisions so that it does not take years to get anything done. To quote a different part of the former Home Office minister's resignation letter to my noble friend Baroness Finn. This government is the definition of incremental change. There is nothing bold about it. So for the government to deliver on our national security, our energy security, our economic security, it needs a strategy that faces up to the new realities in which we are living, that recognises that the open, globalised, rule based order that was a foundation of our previous growth and productivity has fundamentally changed.
And that means we need to look fundamentally at how we support business at home and how we engage abroad. My Lords, I do not intend to focus on our relationship with the EU. Many others before and after me in this debate have covered that ground, and personally, I'm pragmatic about the opportunities and potential costs of a closer relationship with Europe. But what I would say is that in this new world, we need a new approach. And in agreement with the noble Lord Lord Alderdice, we need an approach that engages with the world as it is, not as we wish it would be, or as we once thought it was.
My Lords, the government speaks the language of a new global economic order whilst governing in the paradigm of an old one, and that's perhaps best summed up by the response to last week's local elections being the appointment of Gordon Brown as the Special Reviewer on global finance. This country cannot afford a government that is unwilling or unable to take the decisions needed to meet the challenge before us, something my Lords has got to give, and I expect that we will find out in the coming days and weeks just what that is.
**** Possible New Speaker ****
My Lords, I'm delighted to speak in today's debate on the Humble Address, and as you probably expect, Address, and as you probably expect, I'm planning to focus on European issues and in particular the the sadly misnamed European Partnership Bill, which would, I think would better be called the European better be called the European Subordination Bill, for in reality, that's what's going to achieve. It's going to deprive this It's going to deprive this Parliament of any say in areas where the government has agreed to accept EU law and dynamic alignment,
13:13
Lord Frost (Non-affiliated)
-
-
Lord Frost (Non-affiliated)
and I look forward to debating this bill at great length when it bill at great length when it reaches your Lordships House. Now, the bigger question behind it, of course, is, is why is the government going down this road at government going down this road at all? Why is it embarking on this reset? And I think there are three reset? And I think there are three reasons for that. The first, which we heard about this week, is a we heard about this week, is a slightly surprising one, and it is the apparent belief of the current Prime Minister that we can get Britain to be at the heart of Europe, a phrase, a phrase, if ever I heard one takes me back to John Major, of course, in 1990, and a lot has happened since then.
There's been a lot of back and forth. But at no point in that period has this country ever been at the heart of Europe, and I doubt very much that it ever will be, for we do not share the goals of those who run and manage the European Union. And if you look back over that period, we've spent almost our entire period of EU membership under both parties resisting any kind of European defence agreement. And indeed the Polish Foreign Minister last year, I think it was, was celebrating the fact that we left because Europe could now get on with doing such an agreement.
That's not being at the heart of Europe. Neither party wanted to be part of part of the Justice and Home Affairs agreement. Neither party wanted to join Schengen. And of course, the reason we're not in the euro is thanks to the many efforts of the man who is now apparently an an adviser to the current Prime Minister, the former Chancellor, Gordon Brown. And the truth is that any policy that's based on trying to put this country at the heart of Europe will be based on an illusion, and it will lead the policy makers astray.
And I suggest that's exactly what is happening. That's the first reason. The second reason Ministers ask us to believe that there has been significant economic damage to leaving the EU. Unfortunately for them, the truth is that our growth pattern has not changed compared to our European comparators. However, you cut the figures, Brexit doesn't show up and the noble Lord Lord Redwood has already embarked on this point. But if you look at the world Bank figures since the 2008 crash, if you think 2016 was the inflection point before 2016, we grew about the same speed as Germany faster than France.
After 2016, it was the other way round. If you think 2020 was the inflection point well, before 2020, we grew a bit slower than Germany, faster than France. Since 2020, we've grown faster than both. And if you think 2022 to 24 is the most important period, well, then we grew faster than France, faster than Germany, faster than the eurozone. And indeed, there is an alternative world where Ministers might be talking about this morning's growth figures as reinforcing what the British economy could achieve outside the European Union.
For, of course, none of the reset measures are actually in force yet. I don't expect to hear that argument, of course, from the front bench today. Now, what is going on then? Why can you not see Brexit in the figures? Well, my view is that there has been some small effect transitional effect from leaving the single market and the customs union. Maybe it's 1% of GDP. Maybe it's 1.5% of GDP. Hard to tell. I certainly wouldn't put it as anything like as high as the the OBR.
But of course that's not the only thing that's going on. We have done reforms since 2020. We have happily stayed out of the worst of the EU's legislation, and in particular, EU laws and AI have helped make this country the third centre in the world for AI brought in much investment. And indeed, that's probably the major reason for the growth figures that we've been seeing. We have reformed some financial services. We have reduced tariffs to the rest of the world and made food cheaper.
And indeed, the government itself has just done another wave of that, which makes one think they must think there's some value in it. We've done innovation in food, gene editing, less obsessional bands of pesticides and so on. Of course I wish we'd done more. We should have done much more. But what we have done very plausibly makes up additional growth of perhaps 1 to 1.5%. And that's why you can't see Brexit in the figures. The cost of Brexit, such as they are, are paid, the benefits are still to come and there are many more to be had.
But sadly, this government is doing the best it can to squander them. The real economic risks don't come from Brexit at all. They come from bad policy making here and in the European Union. And perhaps that's why the latest Deloitte poll of CFOs says that CFOs are now more worried about, and I quote, economic weakness in the euro area and the possibility of a renewed euro crisis than they are worried about the effects of Brexit. So perhaps in summing up, I hope the Minister might, instead of repeating the zombie figures of 4% or 6% or 8% or or whatever, could he comment perhaps, on what the real world data is actually showing us, and therefore explain why it's so important for us to give away our legislative and economic power to deal with the problem, which doesn't exist.
Finally, my Lords, the third reason the government's messed up the negotiations. It didn't know what it was doing in opposition. It's clear to see what happens in opposition. It believed that the EU would simply warm to it, and it would be easy to negotiate something better than the TCA while remaining in the so-called red lines. It believed that some of the outstanding problems from the TCA were outstanding, because we'd simply chosen not to deal with them for ideological reasons, rather than because the EU was not interested in negotiating collaborative solutions, and they thought a few token offers in the manifesto and lots of warm words would fix things.
Well, they didn't and they haven't. And I imagine our negotiators are a bit more realistic now. But instead of drawing the correct conclusion that it would be better to try and make the TCA work and focus on economic reform in this country, they can't admit the misdiagnosis. They've got sucked into the machine. They realise what they promised can't be delivered, so their only option to avoid looking like they got it all wrong is to take whatever the EU is prepared to offer.
So now they're in the traditional position of British government's collusion with the EU about what's being agreed, the EU saying that if you accept our way of doing things, then we will help you tell your own people there's nothing to see here. This really is the only explanation for why the government's achieved so little while being dragged so far from its manifesto commitments. They're simply misleading the British people about what's going on. Let's have a final look at what their manifesto actually said.
It promised only four things actually help for touring artists. They've got nothing mutual recognition qualifications, they've got nothing. UK, EU security pact, they've got an agreement to attend meetings. Veterinary agreement. That's the fourth. Well, they've got that, but they've got a lot else. Besides, they've been sucked into the EU single market on food. Against that, they've agreed lots of things that were never in the manifesto. Where in the manifesto is the 12 year session of fishing grounds? Where in the manifesto is the commitment to dynamic alignment and obeying EU laws with no say? Where is the Product Standards Act that allowed Ministers to align with the EU by fiat? Where is the commitment to follow EU rules on cars? Where is joining EU carbon pricing? Where is joining the single market for electricity? Where is joining the EU's customs union rules for carbon intensive goods? Where is rejoining Erasmus for £1 billion a year? Where is the youth mobility scheme? That is apparently going to be more ambitious than ever, according to the PM on Monday, the answer is is nowhere.
The dams of the red lines are long since broken. The incoming tide of EU law is once again flowing up the estuaries and up the rivers of this country's independence. My Lords, only once we've ended this constant attempt to try to pretend the British people didn't take a decision, only then will we get back to a proper relationship without passive aggressiveness on the EU side, without a chip on the shoulder on ours, we know what needs to be done. We need to reverse the reset.
We need to remove EU law and foreign courts, and we need to do that in the whole country, in Northern Ireland, as well as in GB. Next time I hope we'll finish the job. It needs to be done and it can't come soon enough.
There's been a lot of back and forth. But at no point in that period has this country ever been at the heart of Europe, and I doubt very much that it ever will be, for we do not share the goals of those who run and manage the European Union. And if you look back over that period, we've spent almost our entire period of EU membership under both parties resisting any kind of European defence agreement. And indeed the Polish Foreign Minister last year, I think it was, was celebrating the fact that we left because Europe could now get on with doing such an agreement.
That's not being at the heart of Europe. Neither party wanted to be part of part of the Justice and Home Affairs agreement. Neither party wanted to join Schengen. And of course, the reason we're not in the euro is thanks to the many efforts of the man who is now apparently an an adviser to the current Prime Minister, the former Chancellor, Gordon Brown. And the truth is that any policy that's based on trying to put this country at the heart of Europe will be based on an illusion, and it will lead the policy makers astray.
And I suggest that's exactly what is happening. That's the first reason. The second reason Ministers ask us to believe that there has been significant economic damage to leaving the EU. Unfortunately for them, the truth is that our growth pattern has not changed compared to our European comparators. However, you cut the figures, Brexit doesn't show up and the noble Lord Lord Redwood has already embarked on this point. But if you look at the world Bank figures since the 2008 crash, if you think 2016 was the inflection point before 2016, we grew about the same speed as Germany faster than France.
After 2016, it was the other way round. If you think 2020 was the inflection point well, before 2020, we grew a bit slower than Germany, faster than France. Since 2020, we've grown faster than both. And if you think 2022 to 24 is the most important period, well, then we grew faster than France, faster than Germany, faster than the eurozone. And indeed, there is an alternative world where Ministers might be talking about this morning's growth figures as reinforcing what the British economy could achieve outside the European Union.
For, of course, none of the reset measures are actually in force yet. I don't expect to hear that argument, of course, from the front bench today. Now, what is going on then? Why can you not see Brexit in the figures? Well, my view is that there has been some small effect transitional effect from leaving the single market and the customs union. Maybe it's 1% of GDP. Maybe it's 1.5% of GDP. Hard to tell. I certainly wouldn't put it as anything like as high as the the OBR.
But of course that's not the only thing that's going on. We have done reforms since 2020. We have happily stayed out of the worst of the EU's legislation, and in particular, EU laws and AI have helped make this country the third centre in the world for AI brought in much investment. And indeed, that's probably the major reason for the growth figures that we've been seeing. We have reformed some financial services. We have reduced tariffs to the rest of the world and made food cheaper.
And indeed, the government itself has just done another wave of that, which makes one think they must think there's some value in it. We've done innovation in food, gene editing, less obsessional bands of pesticides and so on. Of course I wish we'd done more. We should have done much more. But what we have done very plausibly makes up additional growth of perhaps 1 to 1.5%. And that's why you can't see Brexit in the figures. The cost of Brexit, such as they are, are paid, the benefits are still to come and there are many more to be had.
But sadly, this government is doing the best it can to squander them. The real economic risks don't come from Brexit at all. They come from bad policy making here and in the European Union. And perhaps that's why the latest Deloitte poll of CFOs says that CFOs are now more worried about, and I quote, economic weakness in the euro area and the possibility of a renewed euro crisis than they are worried about the effects of Brexit. So perhaps in summing up, I hope the Minister might, instead of repeating the zombie figures of 4% or 6% or 8% or or whatever, could he comment perhaps, on what the real world data is actually showing us, and therefore explain why it's so important for us to give away our legislative and economic power to deal with the problem, which doesn't exist.
Finally, my Lords, the third reason the government's messed up the negotiations. It didn't know what it was doing in opposition. It's clear to see what happens in opposition. It believed that the EU would simply warm to it, and it would be easy to negotiate something better than the TCA while remaining in the so-called red lines. It believed that some of the outstanding problems from the TCA were outstanding, because we'd simply chosen not to deal with them for ideological reasons, rather than because the EU was not interested in negotiating collaborative solutions, and they thought a few token offers in the manifesto and lots of warm words would fix things.
Well, they didn't and they haven't. And I imagine our negotiators are a bit more realistic now. But instead of drawing the correct conclusion that it would be better to try and make the TCA work and focus on economic reform in this country, they can't admit the misdiagnosis. They've got sucked into the machine. They realise what they promised can't be delivered, so their only option to avoid looking like they got it all wrong is to take whatever the EU is prepared to offer.
So now they're in the traditional position of British government's collusion with the EU about what's being agreed, the EU saying that if you accept our way of doing things, then we will help you tell your own people there's nothing to see here. This really is the only explanation for why the government's achieved so little while being dragged so far from its manifesto commitments. They're simply misleading the British people about what's going on. Let's have a final look at what their manifesto actually said.
It promised only four things actually help for touring artists. They've got nothing mutual recognition qualifications, they've got nothing. UK, EU security pact, they've got an agreement to attend meetings. Veterinary agreement. That's the fourth. Well, they've got that, but they've got a lot else. Besides, they've been sucked into the EU single market on food. Against that, they've agreed lots of things that were never in the manifesto. Where in the manifesto is the 12 year session of fishing grounds? Where in the manifesto is the commitment to dynamic alignment and obeying EU laws with no say? Where is the Product Standards Act that allowed Ministers to align with the EU by fiat? Where is the commitment to follow EU rules on cars? Where is joining EU carbon pricing? Where is joining the single market for electricity? Where is joining the EU's customs union rules for carbon intensive goods? Where is rejoining Erasmus for £1 billion a year? Where is the youth mobility scheme? That is apparently going to be more ambitious than ever, according to the PM on Monday, the answer is is nowhere.
The dams of the red lines are long since broken. The incoming tide of EU law is once again flowing up the estuaries and up the rivers of this country's independence. My Lords, only once we've ended this constant attempt to try to pretend the British people didn't take a decision, only then will we get back to a proper relationship without passive aggressiveness on the EU side, without a chip on the shoulder on ours, we know what needs to be done. We need to reverse the reset.
We need to remove EU law and foreign courts, and we need to do that in the whole country, in Northern Ireland, as well as in GB. Next time I hope we'll finish the job. It needs to be done and it can't come soon enough.
13:23
Lord Sharpe of Epsom (Conservative)
-
-
Lord Sharpe of Epsom (Conservative)
I'd like to start on an area that I feel was largely ignored in that I feel was largely ignored in The King's Speech, because, unfortunately for small businesses across the country, the King's across the country, the King's Speech offered very little and business groups had once again urged the government to use the King's Speech to address the long King's Speech to address the long standing iniquity of business rates, which was a reform that the government itself promised in its manifesto and has not delivered.
The shops, the pubs, the restaurants, the cafes, the leisure venues and the small firms that sustain our high streets are still waiting. And what they see in the meantime is not relief, but further layers of administrative obligation. Now we do, of course, acknowledge and tentatively welcome the late payments Bill, and we look forward to reading it closely. But the devil will be in the detail. And to be factually accurate, that is counterbalanced by other things such as the Overnight Visitor Levy Bill, which is more properly and commonly known as the holiday tax.
Now that has already been rejected publicly and forcefully by hundreds of business leaders across the hospitality, tourism and leisure sectors who understand that it would lead to fewer visitors, higher prices, lower margins and the gradual erosion of lower local economies that depend upon domestic tourism for their vitality. My Lords, how does that generate growth? And we look forward to it. Further scrutiny on it. My Lords, under this government, businesses have been taxed more heavily in their decisions to hire, regulated more extensively in how they operate, treated less as partners in national recovery than as convenient sources of revenue and targets for political demonstration.
Unemployment, including the particularly troubling matter of youth unemployment. As my noble friend Baroness Finn pointed out very powerfully, has continued to rise during this government's tenure. And one might ask how it was ever supposed to be otherwise, when the cost of taking on an additional employee was raised as a matter of deliberate policy. While the Prime Minister is occupied with fighting members of his own Cabinet
**** Possible New Speaker ****
for possession of his job, young people are finding that there are no jobs available to them. Yeah.
**** Possible New Speaker ****
Yeah. My Lords, the government's response to a weakening labour market has been to pass the Employment Rights Act that imposed Employment Rights Act that imposed billions of pounds of additional burdens upon employers who are already navigating an exceptionally already navigating an exceptionally difficult environment. We were told with some confidence that this would empower workers. Yet many of would empower workers. Yet many of the new entitlements that it creates cannot in practice be realised at all, because the tribunal system is so overwhelmed that claimants face delays of such length as to render their rights in any functional sense illusory.
Workers do not win businesses who bear the cost and uncertainty, regardless of the outcome, do not win. The beneficiaries, if there are any, tend to be the trade unions whose institutional strength is enhanced by precisely this kind of legislation and whose leadership is at this very moment, preparing to bring down the Prime Minister, bring further disruption to London through tube strikes that will harm the small businesses and hospitality venues that have
**** Possible New Speaker ****
already endured more than enough. Yeah, yeah. My Lords, I would like to turn to the government's proposed to the government's proposed competition Reform Bill. Now, superficially, we should welcome this. But on close reading of the bill's precis, it says the bill's precis, it says the following. And I quote, market reviews can take over three years. The bill will speed these up so The bill will speed these up so that when markets are not working properly, such as when consumers face high prices or businesses face face high prices or businesses face barriers to entry, competition problems are identified, identified and addressed more quickly, end quote.
My Lords, neither high prices nor barriers to entry necessarily signify that markets are not working properly. In fact, they can signify precisely the opposite. So we should be concerned by the suggestion that market reviews should be accelerated whenever consumers face high prices or businesses face barriers to entry. My Lords, as we read it, the proposed removal of the independent CMA panel in phase two investigations risks reducing the independence of decision making and increasing the potential for political influence over competition cases.
So can I ask the noble Lord, the Minister, a very precise question. What safeguards will ensure that decisions remain independent of Ministers? For my Lords, it is not the case that in many sectors high prices are not caused by a lack of competition, but they are caused by the direct consequences of this government's policies. Businesses are facing higher employment costs, higher employer national insurance contributions, increased regulation, rising compliance burdens and as my noble friend Lord Lilley mentioned in his brilliant speech, the highest energy costs in the OECD.
In those circumstances, prices may rise because firms are trying to survive the costs imposed upon them. The government must be careful not to punish businesses in haste for pressures that Ministers themselves have helped to create. And the same applies to barriers to entry. Often, those barriers are not the result of private market abuse, but of public policy. Higher labour costs, tax burdens, licensing requirements, requirements, planning restrictions and regulation that make it harder for new firms to enter a market. If the government genuinely wants more competition, it should begin by examining the burdens that it places on enterprise.
High prices can be a signal that insufficient supply, sorry that supply is insufficient, and that new entrants have an opportunity, therefore to compete. And over time, that increased supply can place downward pressure on prices, which is, incidentally, an experiment the government ought to try with oil and gas. If regulators rush to intervene before market forces have had the chance to work, they may distort the incentives, deter investment and produce unintended consequences. So faster reviews are not necessarily better reviews.
The test should be whether they are fair, proportionate and properly grounded in an understanding of how markets actually operate. My learning, my Lords, turning to the Regulating for Growth Bill. Like my noble friend Baroness Penn, the first thing I would recommend is that the government change the name of this bill, because you cannot regulate your way towards growth. We, of course, want to see further innovation in the UK, in particular with emerging technologies and the end I. But when looking at the proposed AI sandboxes in this bill, can I ask a couple of questions? Will the government tell us how they will maintain the UK's highest standard IP and copyright protections, including within the AI sandboxes? And following on from my noble friend Lord Frost comments, how do the AI sandboxes square with the reset? As we have heard, the AI, the European Union is not as far advanced when it comes to AI as we are.
My Lords, to conclude, yesterday I read an economics brief that is very widely respected in the city, and it concluded thus, and I quote, the smaller structural reforms on housing, employment, transport, pensions and minimum wages have been unequivocally damaging to economic growth. My Lords. That's what the markets thinks. That's why they charge us the highest interest rates since 2008. And I venture to suggest that nothing in the King's Speech will change that. What a very sad indictment of this government's growth agenda.
The shops, the pubs, the restaurants, the cafes, the leisure venues and the small firms that sustain our high streets are still waiting. And what they see in the meantime is not relief, but further layers of administrative obligation. Now we do, of course, acknowledge and tentatively welcome the late payments Bill, and we look forward to reading it closely. But the devil will be in the detail. And to be factually accurate, that is counterbalanced by other things such as the Overnight Visitor Levy Bill, which is more properly and commonly known as the holiday tax.
Now that has already been rejected publicly and forcefully by hundreds of business leaders across the hospitality, tourism and leisure sectors who understand that it would lead to fewer visitors, higher prices, lower margins and the gradual erosion of lower local economies that depend upon domestic tourism for their vitality. My Lords, how does that generate growth? And we look forward to it. Further scrutiny on it. My Lords, under this government, businesses have been taxed more heavily in their decisions to hire, regulated more extensively in how they operate, treated less as partners in national recovery than as convenient sources of revenue and targets for political demonstration.
Unemployment, including the particularly troubling matter of youth unemployment. As my noble friend Baroness Finn pointed out very powerfully, has continued to rise during this government's tenure. And one might ask how it was ever supposed to be otherwise, when the cost of taking on an additional employee was raised as a matter of deliberate policy. While the Prime Minister is occupied with fighting members of his own Cabinet
**** Possible New Speaker ****
for possession of his job, young people are finding that there are no jobs available to them. Yeah.
**** Possible New Speaker ****
Yeah. My Lords, the government's response to a weakening labour market has been to pass the Employment Rights Act that imposed Employment Rights Act that imposed billions of pounds of additional burdens upon employers who are already navigating an exceptionally already navigating an exceptionally difficult environment. We were told with some confidence that this would empower workers. Yet many of would empower workers. Yet many of the new entitlements that it creates cannot in practice be realised at all, because the tribunal system is so overwhelmed that claimants face delays of such length as to render their rights in any functional sense illusory.
Workers do not win businesses who bear the cost and uncertainty, regardless of the outcome, do not win. The beneficiaries, if there are any, tend to be the trade unions whose institutional strength is enhanced by precisely this kind of legislation and whose leadership is at this very moment, preparing to bring down the Prime Minister, bring further disruption to London through tube strikes that will harm the small businesses and hospitality venues that have
**** Possible New Speaker ****
already endured more than enough. Yeah, yeah. My Lords, I would like to turn to the government's proposed to the government's proposed competition Reform Bill. Now, superficially, we should welcome this. But on close reading of the bill's precis, it says the bill's precis, it says the following. And I quote, market reviews can take over three years. The bill will speed these up so The bill will speed these up so that when markets are not working properly, such as when consumers face high prices or businesses face face high prices or businesses face barriers to entry, competition problems are identified, identified and addressed more quickly, end quote.
My Lords, neither high prices nor barriers to entry necessarily signify that markets are not working properly. In fact, they can signify precisely the opposite. So we should be concerned by the suggestion that market reviews should be accelerated whenever consumers face high prices or businesses face barriers to entry. My Lords, as we read it, the proposed removal of the independent CMA panel in phase two investigations risks reducing the independence of decision making and increasing the potential for political influence over competition cases.
So can I ask the noble Lord, the Minister, a very precise question. What safeguards will ensure that decisions remain independent of Ministers? For my Lords, it is not the case that in many sectors high prices are not caused by a lack of competition, but they are caused by the direct consequences of this government's policies. Businesses are facing higher employment costs, higher employer national insurance contributions, increased regulation, rising compliance burdens and as my noble friend Lord Lilley mentioned in his brilliant speech, the highest energy costs in the OECD.
In those circumstances, prices may rise because firms are trying to survive the costs imposed upon them. The government must be careful not to punish businesses in haste for pressures that Ministers themselves have helped to create. And the same applies to barriers to entry. Often, those barriers are not the result of private market abuse, but of public policy. Higher labour costs, tax burdens, licensing requirements, requirements, planning restrictions and regulation that make it harder for new firms to enter a market. If the government genuinely wants more competition, it should begin by examining the burdens that it places on enterprise.
High prices can be a signal that insufficient supply, sorry that supply is insufficient, and that new entrants have an opportunity, therefore to compete. And over time, that increased supply can place downward pressure on prices, which is, incidentally, an experiment the government ought to try with oil and gas. If regulators rush to intervene before market forces have had the chance to work, they may distort the incentives, deter investment and produce unintended consequences. So faster reviews are not necessarily better reviews.
The test should be whether they are fair, proportionate and properly grounded in an understanding of how markets actually operate. My learning, my Lords, turning to the Regulating for Growth Bill. Like my noble friend Baroness Penn, the first thing I would recommend is that the government change the name of this bill, because you cannot regulate your way towards growth. We, of course, want to see further innovation in the UK, in particular with emerging technologies and the end I. But when looking at the proposed AI sandboxes in this bill, can I ask a couple of questions? Will the government tell us how they will maintain the UK's highest standard IP and copyright protections, including within the AI sandboxes? And following on from my noble friend Lord Frost comments, how do the AI sandboxes square with the reset? As we have heard, the AI, the European Union is not as far advanced when it comes to AI as we are.
My Lords, to conclude, yesterday I read an economics brief that is very widely respected in the city, and it concluded thus, and I quote, the smaller structural reforms on housing, employment, transport, pensions and minimum wages have been unequivocally damaging to economic growth. My Lords. That's what the markets thinks. That's why they charge us the highest interest rates since 2008. And I venture to suggest that nothing in the King's Speech will change that. What a very sad indictment of this government's growth agenda.
13:30
Lord Robertson of Port Ellen (Labour)
-
-
Lord Robertson of Port Ellen (Labour)
Yes, yes. >> Yes, yes. >> My Lords, I declare an interest as a senior. >> Councillor with the group.
**** Possible New Speaker ****
Councillor with the group. The opening lines of the Gracious Speech. Do hit the nail on Gracious Speech. Do hit the nail on the head. It says an increasingly dangerous and volatile world threatens the United Kingdom with the conflict in the Middle East. Only one more recent example every element of the nation's energy, defence and economic security will be tested. And indeed, we are being tested. I want to remind the House what we said in the Strategic Defence Review last year when I was the lead reviewer, but which was adopted by the Prime Minister and indeed by the government.
It said this. The UK and its allies are once again directly threatened by other states with advanced military forces, and it went on. The UK is already under daily attack. All of that is true, and it's troubling enough. But as the Prime Minister himself said at the Munich Security Conference only a few weeks ago, time and again, leaders have looked the other way, only rearming when disaster is upon them. This time it must be different because all the signs are there.
These are these are tough words. And if we had that promised national conversation about defence, I'm sure that the country would agree with the Prime Minister. Why would I raise the subject of defence in this economic growth debate? That's a fair it's a fair question. But although the Prime Minister has made these grave forecasts, we still have no clarity in this speech or in the Munich speech about the steps necessary to get to the agreed 3.5% of GNP by 2035.
And I remind the House that that figure would add £36 billion to the present, 70 billion that we already spend on defence. These are eye watering figures, but 30 countries committed to them at The Hague summit, and President Trump is watching all the time in his introduction to the document accompanying the King's Speech programme. This document here, the Prime Minister highlights the Iran conflict. He says. I quote that in the light of that conflict, we need to move with greater urgency.
And that builds on what he said in Munich when he said we must build our hard power because that is the currency of the age. And he went on, so together we must rise to the moment. We must spend more, deliver more and coordinate more. So I make two points about the powerful Munich speech. First of all, there must have been a page missing from it, the one which logically went on to say what additional funds the British government was committing to spend to acquire that necessary hard power.
Without that, without that commitment, it is simply rhetoric. And my second point is that the Prime Minister needs to that the Prime Minister needs to make that speech again. I, with its solemn and worrying warning about a potential Russian attack on NATO before the end of the decade, before the end of the decade, that is, in three years time. And make that speech not just in Munich but in Manchester, Middlesbrough and Mallaig and many others as well.
So I repeat now what I have recently said, and it caused a degree of controversy. I have to say, we are underprepared, we are underinsured, we are under attack and we are not safe. It's a blunt message which the country needs to hear and from the top of government to only when people realise the dangers that we face and the threats to them and to their children's futures, will the Chancellor and our advisers be willing or forced to make the budgetary trade offs to spend more and deliver more? So I would like to ask my my my friend the Treasury Minister today to answer this question.
When will the Treasury set out the steps to get to the 3.5%, plus 1.5% promise that The Hague made with summit? The next summit is only eight weeks away and our country is now 10th in NATO's league table for spending. Now, I appreciate that the government has already pledged to increase expenditure to 2.5% by 2027, and this has to be welcomed. But is this nearly enough? In the light of the challenges and threats that are facing us at the moment, NATO and Secure are are forecasting a possible Russian military attack on the alliance in just three years time.
Why are we sleeping? Why are we not all of us rearming at pace now and rebuilding the hard power so necessary to deter current and future threats to our land, to our sovereignty, and to our democratic way of life? I've said it before, but it needs repeating as well. When the lights go out, when the hospitals close and the data centres melt and the ATM stopped working, then the public will rightly say to all of us, to all of us, why do you not do something to sort this out before? And if we're attacked, if somehow we're attacked with cruise and ballistic missiles, when deterrence fails, will we stand in the ruins of our cities and our homes and our schools and proudly say, well, yes, we protected the fiscal rules.
And as the Minister today, if you'll consider this question, what if we don't increase defence expenditure and rebuild deterrence in the way that the government has agreed in the defence review? Will the Chancellor and the Treasury accept the blame for our continued weakness and our open and the open door that it represents to our aggressor and fast learning adversaries? The Gracious Speech is is not strong on defence and our adversaries will will note that and draw some conclusions.
And the absence of the Defence Readiness Bill is a major failing in it. But it does say something. It says my government will also uphold the United Kingdom's unbreakable commitment to NATO and our NATO allies, including through a sustained increase in defence spending, and I welcome that promise. But what does it mean? How much does it mean and when will it mean? The threat is immediate? In Ukraine, we can see it. It's very real and it's very nasty.
It's no longer theoretical under the threshold. It's happening now. When will we see the steps and the commitment to the 3.5%? Only when we do will the British people feel safer than they are today. I conclude with the words of Denis Healey. Speaking in 1967. He said, once we cut our defence expenditure to the extent where our security is imperilled, we have no houses, we have no hospitals, we have no schools. We have a heap of ashes.
It was wise then. It's a warning
**** Possible New Speaker ****
today. And sure to follow the noble Lord with an extremely powerful and searing critique of the government, and to help the noble Lord, the and to help the noble Lord, the Minister, in his summing up, let me suggest some parts that he might like to cut. I know that he likes like to cut. I know that he likes to refer always in his speeches to the Liz Truss mini budget. I think he's mentioned it about 53 times. he's mentioned it about 53 times.
So he can cut that out. He can cut that out entirely. All of us, I think on this side of the House would agree it was a disaster. We would agree. The last government left office with taxes too high,
**** Possible New Speaker ****
Councillor with the group. The opening lines of the Gracious Speech. Do hit the nail on Gracious Speech. Do hit the nail on the head. It says an increasingly dangerous and volatile world threatens the United Kingdom with the conflict in the Middle East. Only one more recent example every element of the nation's energy, defence and economic security will be tested. And indeed, we are being tested. I want to remind the House what we said in the Strategic Defence Review last year when I was the lead reviewer, but which was adopted by the Prime Minister and indeed by the government.
It said this. The UK and its allies are once again directly threatened by other states with advanced military forces, and it went on. The UK is already under daily attack. All of that is true, and it's troubling enough. But as the Prime Minister himself said at the Munich Security Conference only a few weeks ago, time and again, leaders have looked the other way, only rearming when disaster is upon them. This time it must be different because all the signs are there.
These are these are tough words. And if we had that promised national conversation about defence, I'm sure that the country would agree with the Prime Minister. Why would I raise the subject of defence in this economic growth debate? That's a fair it's a fair question. But although the Prime Minister has made these grave forecasts, we still have no clarity in this speech or in the Munich speech about the steps necessary to get to the agreed 3.5% of GNP by 2035.
And I remind the House that that figure would add £36 billion to the present, 70 billion that we already spend on defence. These are eye watering figures, but 30 countries committed to them at The Hague summit, and President Trump is watching all the time in his introduction to the document accompanying the King's Speech programme. This document here, the Prime Minister highlights the Iran conflict. He says. I quote that in the light of that conflict, we need to move with greater urgency.
And that builds on what he said in Munich when he said we must build our hard power because that is the currency of the age. And he went on, so together we must rise to the moment. We must spend more, deliver more and coordinate more. So I make two points about the powerful Munich speech. First of all, there must have been a page missing from it, the one which logically went on to say what additional funds the British government was committing to spend to acquire that necessary hard power.
Without that, without that commitment, it is simply rhetoric. And my second point is that the Prime Minister needs to that the Prime Minister needs to make that speech again. I, with its solemn and worrying warning about a potential Russian attack on NATO before the end of the decade, before the end of the decade, that is, in three years time. And make that speech not just in Munich but in Manchester, Middlesbrough and Mallaig and many others as well.
So I repeat now what I have recently said, and it caused a degree of controversy. I have to say, we are underprepared, we are underinsured, we are under attack and we are not safe. It's a blunt message which the country needs to hear and from the top of government to only when people realise the dangers that we face and the threats to them and to their children's futures, will the Chancellor and our advisers be willing or forced to make the budgetary trade offs to spend more and deliver more? So I would like to ask my my my friend the Treasury Minister today to answer this question.
When will the Treasury set out the steps to get to the 3.5%, plus 1.5% promise that The Hague made with summit? The next summit is only eight weeks away and our country is now 10th in NATO's league table for spending. Now, I appreciate that the government has already pledged to increase expenditure to 2.5% by 2027, and this has to be welcomed. But is this nearly enough? In the light of the challenges and threats that are facing us at the moment, NATO and Secure are are forecasting a possible Russian military attack on the alliance in just three years time.
Why are we sleeping? Why are we not all of us rearming at pace now and rebuilding the hard power so necessary to deter current and future threats to our land, to our sovereignty, and to our democratic way of life? I've said it before, but it needs repeating as well. When the lights go out, when the hospitals close and the data centres melt and the ATM stopped working, then the public will rightly say to all of us, to all of us, why do you not do something to sort this out before? And if we're attacked, if somehow we're attacked with cruise and ballistic missiles, when deterrence fails, will we stand in the ruins of our cities and our homes and our schools and proudly say, well, yes, we protected the fiscal rules.
And as the Minister today, if you'll consider this question, what if we don't increase defence expenditure and rebuild deterrence in the way that the government has agreed in the defence review? Will the Chancellor and the Treasury accept the blame for our continued weakness and our open and the open door that it represents to our aggressor and fast learning adversaries? The Gracious Speech is is not strong on defence and our adversaries will will note that and draw some conclusions.
And the absence of the Defence Readiness Bill is a major failing in it. But it does say something. It says my government will also uphold the United Kingdom's unbreakable commitment to NATO and our NATO allies, including through a sustained increase in defence spending, and I welcome that promise. But what does it mean? How much does it mean and when will it mean? The threat is immediate? In Ukraine, we can see it. It's very real and it's very nasty.
It's no longer theoretical under the threshold. It's happening now. When will we see the steps and the commitment to the 3.5%? Only when we do will the British people feel safer than they are today. I conclude with the words of Denis Healey. Speaking in 1967. He said, once we cut our defence expenditure to the extent where our security is imperilled, we have no houses, we have no hospitals, we have no schools. We have a heap of ashes.
It was wise then. It's a warning
**** Possible New Speaker ****
today. And sure to follow the noble Lord with an extremely powerful and searing critique of the government, and to help the noble Lord, the and to help the noble Lord, the Minister, in his summing up, let me suggest some parts that he might like to cut. I know that he likes like to cut. I know that he likes to refer always in his speeches to the Liz Truss mini budget. I think he's mentioned it about 53 times. he's mentioned it about 53 times.
So he can cut that out. He can cut that out entirely. All of us, I think on this side of the House would agree it was a disaster. We would agree. The last government left office with taxes too high,
13:39
Lord Bridges of Headley (Conservative)
-
-
Lord Bridges of Headley (Conservative)
spending too high, debt too high, largely, but not entirely due to Covid and the energy shock. But of Covid and the energy shock. But of course, his government, the noble Lords government, now holds the record of the longest of long term borrowing costs, soaring to the borrowing costs, soaring to the highest level for 28 years, largely thanks to the government's thanks to the government's self-inflicted chaos. So rather, my Lords, than him talking about the last government's faults, which I assume we are all agree on this side of the House we are responsible for.
Might I gently suggest the noble Lord focuses on what he's responsible for, and that's the current state of the economy and where we go from here. And that brings me to the Gracious Speech. And as a number of my noble friends have said, Baroness Penn and of course the noble Lord, Lord Robertson. A recurrent theme is the government's wish to strengthen our security and resilience. And it's an aim which we can all agree on. But the question as regards the economy is how do we achieve it? Now the Chancellor has a special word for it secure and omics.
In her view, state intervention, regulation, spending more on welfare in the NHS all builds welfare in the NHS all builds economic resilience. And with that resilience comes growth. But as a number of my noble friends have, secure omics is delivering completely the reverse lethargic growth, higher debt and economy more vulnerable to shocks. Just to consider a very few facts, between 2024 and 2020, 2024, 2025 and 2028 2930. Welfare spending will rise by 75 billion to £389 billion.
Debt will rise and with it debt interest spending £105 billion in 220 245, it will hit £134 billion by 20 2930. And as the Chancellor likes to remind us, one in every £10 the public sector now spends goes on debt interest. That's four times what we spend on nurses. And as the noble Lord Robertson has just pointed out, at a time when war is raging in Europe and there is a standoff in the Middle East, this makes it even more difficult to increase defence spending.
The rise in welfare spending this year alone, just the rise would be enough to pay for 15 Royal Navy frigates. So, my Lords, secure Onomics. What is it doing? It's making us less secure, both in terms of our economy and in terms of our national security. Now, I know the noble Lord, when he sums up, will try and dispute all this, and he will, I'm sure, point to this so-called Regulating for Growth Bill. Now, I will absolutely welcome any measures to ease regulatory burdens on business, and I particularly welcome the concept of strengthening the growth duty.
We do absolutely have to fundamentally rebalance our risk appetite in this country, and we have to encourage more risk taking, more innovation, more enterprise. But my Lords, surely if the government really were on the side of businesses and helping get regulations off their back, they would not have implemented the Employment Rights Act, which will increase costs by 5 billion a year, not to mention hitting employers with national Insurance. Maybe when he sums up, the noble Lord can square the circle.
And then there is the so-called reset in relations with the EU, which the Chancellor views and I quote, as a strategic imperative for deeper integration between the UK and the EU in our shared need for greater economic resilience. Now, my Lords, this argument assumes that the EU economy is becoming more resilient and more competitive, and closer alignment to the EU will in turn benefit Britain. But as my noble friend Baroness Finn pointed out, and I want to dwell on what's happening in Europe suggests otherwise.
18 months ago, in the landmark report that the noble Lord, Lord Liddle, referred to, Mario Draghi warned that Europe would need to change radically to meet the economic challenges it faces. But instead of radicalism, many in Europe are concerned that the EU is sinking ever deeper into the economic mire. Why? Its institutions, its culture and the very nature of being a rules based system means it's finding it very hard to find a regulatory reverse gear. At the weekend, the CEO of one of the world's biggest banks, UBS, pointed to the EU's record of, and I quote, no growth and, quote, a clear divergence in productivity compared with rival economic powers.
This is what he said. If it would be overregulation only in banking, one could probably live with it. We have regulation overregulation across the board. That's the real problem. The amount of bureaucracy, the lack of innovation that goes on is a fact. And here this the CEO of Germany's BASF, the world's largest chemical producer. He said Europe is losing industrial capacity at a rate we've never seen before. This is a structural trend in competitiveness. Now, my Lord, you may think this is big business whingeing.
Well hear this. We are on the brink of an existential crisis. That's the Prime Minister of Belgium. Speaking about European competitiveness in February. All this. We lack an appetite for risk. We're out of state with the shifting world. We are overregulating. That's President Macron. All this. The single market was once created to form the most competitive economic area in the world, but instead we have become world champion of overregulation. We must now put a stick in the wheels of this machine in Brussels to put an end to this constant regulation from the European Union's legislative machine.
That, my friends, my Lords, is Chancellor Mertes. So despite the tough talk from Berlin, from Paris, this has yet to yield any results in Brussels. Efforts to make Europe more competitive, more productive and more innovative are, to put it mildly, spluttering. And that begs the question before we even get to the price the government is willing to pay to forge closer relations with Europe. The noble Lord, the Minister needs to answer this question. Given the EU's leaders lament Europe's lack of competitiveness and growth, and seem unable themselves to do anything about it.
Why? Why would closer alignment of our economy with
**** Possible New Speaker ****
The EU benefit the UK and why would it help build British would it help build British economic resilience? My Lords, this Gracious Speech is the latest scene in the tragedy of this Labour in the tragedy of this Labour government. When it came to office, the Economic Affairs Committee, which the noble Lord Lord Burns sat which the noble Lord Lord Burns sat on and at the time I. Chairing. We warned that tough decisions needed to be taken. This Parliament to put the UKs finances back on a sustainable path.
The government was given a massive majority to take those tough decisions, but my Lords, they made the wrong tough decisions because they believe economic growth comes from regulation, from the state and from Whitehall. Its a government, my Lords, that refuses to confront the brutal reality. We are spending too much. We are taxing too much. It believes we can afford more welfare and less wealth creation. It is a government that thinks more and more regulation will increase economic security, whereas it increases costs.
It crushes job creation, it makes inflation stickier, which in turn keeps the cost of borrowing high. My Lords, the Labour Party may change their leader, but they wont change any of these beliefs. So this tragedy will continue. This Gracious Speech will do little to stop our country becoming weaker, more vulnerable, less resilient, less secure. The very opposite of what the government and all of us want.
Might I gently suggest the noble Lord focuses on what he's responsible for, and that's the current state of the economy and where we go from here. And that brings me to the Gracious Speech. And as a number of my noble friends have said, Baroness Penn and of course the noble Lord, Lord Robertson. A recurrent theme is the government's wish to strengthen our security and resilience. And it's an aim which we can all agree on. But the question as regards the economy is how do we achieve it? Now the Chancellor has a special word for it secure and omics.
In her view, state intervention, regulation, spending more on welfare in the NHS all builds welfare in the NHS all builds economic resilience. And with that resilience comes growth. But as a number of my noble friends have, secure omics is delivering completely the reverse lethargic growth, higher debt and economy more vulnerable to shocks. Just to consider a very few facts, between 2024 and 2020, 2024, 2025 and 2028 2930. Welfare spending will rise by 75 billion to £389 billion.
Debt will rise and with it debt interest spending £105 billion in 220 245, it will hit £134 billion by 20 2930. And as the Chancellor likes to remind us, one in every £10 the public sector now spends goes on debt interest. That's four times what we spend on nurses. And as the noble Lord Robertson has just pointed out, at a time when war is raging in Europe and there is a standoff in the Middle East, this makes it even more difficult to increase defence spending.
The rise in welfare spending this year alone, just the rise would be enough to pay for 15 Royal Navy frigates. So, my Lords, secure Onomics. What is it doing? It's making us less secure, both in terms of our economy and in terms of our national security. Now, I know the noble Lord, when he sums up, will try and dispute all this, and he will, I'm sure, point to this so-called Regulating for Growth Bill. Now, I will absolutely welcome any measures to ease regulatory burdens on business, and I particularly welcome the concept of strengthening the growth duty.
We do absolutely have to fundamentally rebalance our risk appetite in this country, and we have to encourage more risk taking, more innovation, more enterprise. But my Lords, surely if the government really were on the side of businesses and helping get regulations off their back, they would not have implemented the Employment Rights Act, which will increase costs by 5 billion a year, not to mention hitting employers with national Insurance. Maybe when he sums up, the noble Lord can square the circle.
And then there is the so-called reset in relations with the EU, which the Chancellor views and I quote, as a strategic imperative for deeper integration between the UK and the EU in our shared need for greater economic resilience. Now, my Lords, this argument assumes that the EU economy is becoming more resilient and more competitive, and closer alignment to the EU will in turn benefit Britain. But as my noble friend Baroness Finn pointed out, and I want to dwell on what's happening in Europe suggests otherwise.
18 months ago, in the landmark report that the noble Lord, Lord Liddle, referred to, Mario Draghi warned that Europe would need to change radically to meet the economic challenges it faces. But instead of radicalism, many in Europe are concerned that the EU is sinking ever deeper into the economic mire. Why? Its institutions, its culture and the very nature of being a rules based system means it's finding it very hard to find a regulatory reverse gear. At the weekend, the CEO of one of the world's biggest banks, UBS, pointed to the EU's record of, and I quote, no growth and, quote, a clear divergence in productivity compared with rival economic powers.
This is what he said. If it would be overregulation only in banking, one could probably live with it. We have regulation overregulation across the board. That's the real problem. The amount of bureaucracy, the lack of innovation that goes on is a fact. And here this the CEO of Germany's BASF, the world's largest chemical producer. He said Europe is losing industrial capacity at a rate we've never seen before. This is a structural trend in competitiveness. Now, my Lord, you may think this is big business whingeing.
Well hear this. We are on the brink of an existential crisis. That's the Prime Minister of Belgium. Speaking about European competitiveness in February. All this. We lack an appetite for risk. We're out of state with the shifting world. We are overregulating. That's President Macron. All this. The single market was once created to form the most competitive economic area in the world, but instead we have become world champion of overregulation. We must now put a stick in the wheels of this machine in Brussels to put an end to this constant regulation from the European Union's legislative machine.
That, my friends, my Lords, is Chancellor Mertes. So despite the tough talk from Berlin, from Paris, this has yet to yield any results in Brussels. Efforts to make Europe more competitive, more productive and more innovative are, to put it mildly, spluttering. And that begs the question before we even get to the price the government is willing to pay to forge closer relations with Europe. The noble Lord, the Minister needs to answer this question. Given the EU's leaders lament Europe's lack of competitiveness and growth, and seem unable themselves to do anything about it.
Why? Why would closer alignment of our economy with
**** Possible New Speaker ****
The EU benefit the UK and why would it help build British would it help build British economic resilience? My Lords, this Gracious Speech is the latest scene in the tragedy of this Labour in the tragedy of this Labour government. When it came to office, the Economic Affairs Committee, which the noble Lord Lord Burns sat which the noble Lord Lord Burns sat on and at the time I. Chairing. We warned that tough decisions needed to be taken. This Parliament to put the UKs finances back on a sustainable path.
The government was given a massive majority to take those tough decisions, but my Lords, they made the wrong tough decisions because they believe economic growth comes from regulation, from the state and from Whitehall. Its a government, my Lords, that refuses to confront the brutal reality. We are spending too much. We are taxing too much. It believes we can afford more welfare and less wealth creation. It is a government that thinks more and more regulation will increase economic security, whereas it increases costs.
It crushes job creation, it makes inflation stickier, which in turn keeps the cost of borrowing high. My Lords, the Labour Party may change their leader, but they wont change any of these beliefs. So this tragedy will continue. This Gracious Speech will do little to stop our country becoming weaker, more vulnerable, less resilient, less secure. The very opposite of what the government and all of us want.
13:47
Lord Strasburger (Liberal Democrat)
-
-
Lord Strasburger (Liberal Democrat)
My Lords, I rise to address the impact of Brexit on one of our impact of Brexit on one of our largest economic sectors, which is the creative arts sectors, and to the creative arts sectors, and to reflect on that impact, what that impact tells us about the direction of our economy and the changing mood of the country. Because in the years since Brexit, it is not only our cultural life that has been affected, our capacity to grow, our economy has also been damaged.
Before Brexit, the creative industries contributed over £110 billion annually to UK GDP and were the largest sector of our economy after financial services. They were also among the fastest growing parts of our economy, expanding at nearly twice the rate of the wider economic base. They were export driven, innovation led and deeply integrated with European markets. That matters because growth in a modern economy increasingly depends on precisely these kinds of sectors. Mobile, knowledge based and internationally connected.
Yet Brexit has introduced friction at every stage of that model. The conservative government promised to protect the creative industries from the downsides of Brexit, and then completely omitted them from the Trade and Co-operation agreement of which the noble Lord Lord Frost has just told us. He's so proud. Touring the backbone of income for many musicians and performers now involves visas, work permits, cabotage limits and complex tax arrangements. The result is not simply inconvenience but lost activity.
Tours are shortened, scaled back or cancelled altogether. These are lost earnings, lost exports, lost contributions to our GDP. A generation of talent has been lost. Young people who would have become our performers, our designers, our skilled support staff of the future are now scratching a living with Uber or Deliveroo and could be lost to our creative arts forever. Collaboration has also been hit. Co-Productions, joint ventures and cross border projects, once routine, are now more complex and costly to organise, that reduces not only output but also innovation.
As the exchange of ideas becomes harder, investment follows the same pattern. When access to European markets becomes less predictable. Investment investment decisions shift. Productions relocate away from the UK companies themselves, relocate elsewhere, and over time, that weakens the UK's position as a hub for creative enterprises. Taken together, these effects represent a drag on growth in a sector that should be helping to drive it, and the consequences ripple outward. The creative industries support tourism, hospitality and regional economies across the United Kingdom, and when creative activity declines, so too does the wider economic ecosystem.
That depends on it. So this is not a niche concern. It's part of a broader pattern that reduces trade intensity, lower business investment and slower growth than we might otherwise have achieved. If we're serious about restoring growth. Real sustained export led growth, then we must reduce those barriers. We must reconnect with our largest and closest market, and we must rebuild the conditions in which sectors like the creative industries can thrive. Now, so far, my Lords, I've restricted my remarks to the economic benefits of the European Union.
But perhaps more important and more urgent than the obvious financial upsides is the need to face up to the rapid collapse of the international order that existed at the time of the referendum. Since then, in just ten years, the world has become not merely more complicated, but more dangerous and less predictable. We have seen war return to Europe, persistent threats from hostile states, cyber attacks, terrorism, energy shocks and growing pressure on the rules based international order.
The second Trump presidency has added a further layer of volatility by unsettling alliances, sharpening transatlantic Atlantic uncertainty and encouraging a more transactional approach to international relations. And as we've as we've recently heard from the noble Lord, Lord Robertson, we've come to the painful realisation that our military capacity is not what it was, and we can't afford to do much about it in the foreseeable future. In these conditions, the case for Britain to work more closely with its neighbours is compelling.
A country of our size cannot best protect its interests and its citizens by standing apart from the institutions and partnerships that help anchor stability. That is precisely why the need to work with our European neighbours, and to do so from a position of influence rather than isolation, has become even more pressing. In a nutshell, my Lords, the changes to the world since 2016 have vindicated cooperation, not detachment. My Lords, the British people can sense that.
They can see that our economy and our national security are being threatened by the isolation brought by Brexit. That is reflected in the polls by an increasing majority in favour of abandoning the failed experiment of Brexit and rejoining the EU. This is a significant and sustained shift in public opinion, and democracy is not a one time instruction. It's an ongoing conversation between the public and those who represent them. When the facts change and when the public sentiment evolves.
It is our duty to respond. My Lords, in order to rejuvenate our creative industries, to boost growth in our economy more generally, and to bolster the stability and security our people need. We must get started now. On rejoining the European Union. There is no time to waste. My Lord, I'd like to take.
Before Brexit, the creative industries contributed over £110 billion annually to UK GDP and were the largest sector of our economy after financial services. They were also among the fastest growing parts of our economy, expanding at nearly twice the rate of the wider economic base. They were export driven, innovation led and deeply integrated with European markets. That matters because growth in a modern economy increasingly depends on precisely these kinds of sectors. Mobile, knowledge based and internationally connected.
Yet Brexit has introduced friction at every stage of that model. The conservative government promised to protect the creative industries from the downsides of Brexit, and then completely omitted them from the Trade and Co-operation agreement of which the noble Lord Lord Frost has just told us. He's so proud. Touring the backbone of income for many musicians and performers now involves visas, work permits, cabotage limits and complex tax arrangements. The result is not simply inconvenience but lost activity.
Tours are shortened, scaled back or cancelled altogether. These are lost earnings, lost exports, lost contributions to our GDP. A generation of talent has been lost. Young people who would have become our performers, our designers, our skilled support staff of the future are now scratching a living with Uber or Deliveroo and could be lost to our creative arts forever. Collaboration has also been hit. Co-Productions, joint ventures and cross border projects, once routine, are now more complex and costly to organise, that reduces not only output but also innovation.
As the exchange of ideas becomes harder, investment follows the same pattern. When access to European markets becomes less predictable. Investment investment decisions shift. Productions relocate away from the UK companies themselves, relocate elsewhere, and over time, that weakens the UK's position as a hub for creative enterprises. Taken together, these effects represent a drag on growth in a sector that should be helping to drive it, and the consequences ripple outward. The creative industries support tourism, hospitality and regional economies across the United Kingdom, and when creative activity declines, so too does the wider economic ecosystem.
That depends on it. So this is not a niche concern. It's part of a broader pattern that reduces trade intensity, lower business investment and slower growth than we might otherwise have achieved. If we're serious about restoring growth. Real sustained export led growth, then we must reduce those barriers. We must reconnect with our largest and closest market, and we must rebuild the conditions in which sectors like the creative industries can thrive. Now, so far, my Lords, I've restricted my remarks to the economic benefits of the European Union.
But perhaps more important and more urgent than the obvious financial upsides is the need to face up to the rapid collapse of the international order that existed at the time of the referendum. Since then, in just ten years, the world has become not merely more complicated, but more dangerous and less predictable. We have seen war return to Europe, persistent threats from hostile states, cyber attacks, terrorism, energy shocks and growing pressure on the rules based international order.
The second Trump presidency has added a further layer of volatility by unsettling alliances, sharpening transatlantic Atlantic uncertainty and encouraging a more transactional approach to international relations. And as we've as we've recently heard from the noble Lord, Lord Robertson, we've come to the painful realisation that our military capacity is not what it was, and we can't afford to do much about it in the foreseeable future. In these conditions, the case for Britain to work more closely with its neighbours is compelling.
A country of our size cannot best protect its interests and its citizens by standing apart from the institutions and partnerships that help anchor stability. That is precisely why the need to work with our European neighbours, and to do so from a position of influence rather than isolation, has become even more pressing. In a nutshell, my Lords, the changes to the world since 2016 have vindicated cooperation, not detachment. My Lords, the British people can sense that.
They can see that our economy and our national security are being threatened by the isolation brought by Brexit. That is reflected in the polls by an increasing majority in favour of abandoning the failed experiment of Brexit and rejoining the EU. This is a significant and sustained shift in public opinion, and democracy is not a one time instruction. It's an ongoing conversation between the public and those who represent them. When the facts change and when the public sentiment evolves.
It is our duty to respond. My Lords, in order to rejuvenate our creative industries, to boost growth in our economy more generally, and to bolster the stability and security our people need. We must get started now. On rejoining the European Union. There is no time to waste. My Lord, I'd like to take.
13:56
Lord Johnson of Lainston (Conservative)
-
-
Lord Johnson of Lainston (Conservative)
A slightly different tack and praise the government for some of the bills put forward in the most the bills put forward in the most gracious speech. But before I do, I'd like to admit to a slightly shady secret that I'm a capitalist shady secret that I'm a capitalist and I like making money, and I'm on the boards of companies, and I invest in businesses that will hopefully be benefited if the government actually gets its act together and carries through on some of the wonderful things in this great speech.
The first is the competition reform bill, and we've had some extremely good interjections from my noble friend Lord Sharpe, Lord hunt, and other noble Lords who have rightly pointed out the importance of making sure the Competition and Markets Authority functions properly. But my concern, and I realise I'm speaking on this subject with Lords surrounding me, who probably created these legislative functions in the first place, is that we have an upside down competition under the Thatcherite model used to be to try and break things up, to have as many smaller companies as possible to reduce prices and increase competition.
But the reality is now, in the AI age, we need super companies. We actually need to go the other way. We need to encourage conglomeration and amalgamation in order to create companies that are big enough, that can become global super champions, which will allow this country to stay at the centre of the AI arms race. So I would ask the government, and I hope they will take this into account, that competition reform isn't simply about making the CMA work better. And my goodness it does.
It's also about changing the very nature of how the competition process works to enable us to not reduce competition through reducing the number of companies offering goods and services, but making sure we understand the nuances around creating the sorts of companies that will allow us to have power in what is now a winner takes all economy. The second bill I would like to heap praise on is the regulating for growth. I was the better regulation Minister and rather like the title of this bill, that's the greatest oxymoronic ministerial title, probably in the Western world.
The idea that you can regulate for growth is slightly bizarre. One of the points I'd like to draw the government's attention to is that whilst these measures that they have outlined are good, and the last conservative government wholeheartedly supported this. Indeed, by introducing some of these principles in the regulatory reform white paper concepts such as sandbox powers and very importantly, strengthening the growth duty of regulators, holding them to account on that most important task that actually their function is not to stop things from happening, but to allow things to happen in an orderly fashion.
But one of the most serious issues I came across in government, and I still think we suffer from today, are the issues around the layering of regulations and the conflict between different government bodies, departments and quangos that make it very difficult for businesses to navigate. One good example was the company that came to me that was creating artificial dog food. Now I have a caramel coloured, long haired miniature dachshund called Daisy, and her health is of paramount importance to me. So I'm the last person who would want her to consume anything that might be dangerous.
But this innovative small company had to go to the Department for the environment. They were then sent to the dog, the Animal Food Standards Agency, who then sent them back to the Food Administration that sent them back to the Department for the environment. They went round and round and round, and no one Minister or agency would actually take responsibility for the universe in which they were operating. So if we are going to design an economy for the future, and if these regulatory bodies are going to put growth and innovation at the centre, then we have to have more rationalisation in terms of who takes responsibility about the areas that they govern, or we're going to continue to have overlapping responsibilities.
The second part of the regulatory agenda that needs reforming is that around the environment, and I'm afraid that the environmental controls, I'm told by property developers and people who wish to build are now are far more significant hindrance to their ability to actually do what we need, which is to build infrastructure and houses and the planning process itself. I myself and I should declare another interest in trying to build an outside study area. It's an old piggery, but it's not that simple.
Last November I got planning permission, but I couldn't get full planning permission because I had to do a bat survey. So I said, well, let's send for the Bat survey, man. But of course, I can't send for the Bat survey man until May, because that's when the bats start to fall in love with each other. The romance season of the bats. So eventually I waited until May. So we've lost six months already. The Batman comes called Tristan. He wears a gilet. He turns up with an infrared camera.
He sits night after night. This is not a joke. This is a true story. For seven nights trying to film my bats in an intimate embrace. I almost imagine Sir David Attenborough, the great centenarian, crouched in a safari suit, talking through about Lord Johnson's domestic bat environment and then putting it on some sort of nature film that cost me thousands of pounds. And it took months. And the outcome? The mitigation, was to put a bat box up outside my piggery. Now we've lost the plot.
The process has become the principle rather than the outcome. The bat box cost £60. I would have loved to put up. In fact, I probably would have put one up anyway, so why not look at the outcomes rather than the process? If all I had to do at the beginning was have a choice, put a black box up or go through a tortuous process, we would have the same outcome and we've lost our way. When it comes to understanding how we regulate and what we're regulating, for which in this instance is to protect bats.
The last bill I would like to congratulate the government on, and I'm glad to see Lord Livermore back in his usual place, is the Enhancing Financial Services bill. Well, a few months ago I raised regulation in finance as an issue and a question, and the Minister laughed. Well, he's not laughing now. In fact, he's taking it so seriously. He's actually pioneering a new bill to help the financial services industry, which we have, and I'm afraid our government and Lord Bridges of Headley rightly pointed this out, did nothing but denigrate financial services from 2010.
But if I may, in the few minutes remaining to me, ask the Minister to take note of a few key points. The first is consumer duty. This bizarre idea that somehow we have to be responsible for so many parties down the chain makes it impossible for us to create proper financial products. All companies, noble Lords, have a consumer duty. We all have a duty to the customer who uses our products. The idea that we have to regulate for that is just causing more problems, more complexity, and creates an ever Byzantine amount of paperwork that consumers click.
I accept or I agree, thinking they're protected. Well, actually they're not. The second thing I would like the government to look closely at is MiFID two. I used to, as a Minister, offer a prize. I wasn't allowed to offer money for obvious reasons of probity and integrity. So it was a bottle of wine for any person who could give me a benefit to humankind of MiFID two. One person put their hand up and said lawyers. Well noble Lords, if you are lawyers in this house, I'm afraid you don't count.
And that prize, by the way, still stands. It destroyed the research capabilities on small companies. And with it the A market and the small company market. The last point I want to mention is institution to institution sales. We're very obsessed with compliance and regulation around how we sell to the retail market. And we should be. But when it comes to institutions, to institutions, we should allow a thousand flowers to bloom. We should really make it our ambition to ensure that if you are dealing into institution where there is no risk for individuals to be mis sold, we should really almost be allowed to do whatever we like, because that's how you create strong financial innovation.
The last comment I would leave on financial service regulation is a very worrying outcome from a report written by the Financial Services Committee in this House, which was presented a few months ago about how the FCA had created a climate of fear in how they managed their affairs. Now I draw a noble Lords attention to this. This is a very serious point that a regulator has actually created a culture of fear rather than one of innovation and growth.
And I would ask the Minister, I wrote to the FCA asking for a response to this. They obviously haven't bothered to write back, but I would ask the Minister to impress upon them that their job is not to create fear. It is to create a successful financial services sector that allows us all to have wealth.
The first is the competition reform bill, and we've had some extremely good interjections from my noble friend Lord Sharpe, Lord hunt, and other noble Lords who have rightly pointed out the importance of making sure the Competition and Markets Authority functions properly. But my concern, and I realise I'm speaking on this subject with Lords surrounding me, who probably created these legislative functions in the first place, is that we have an upside down competition under the Thatcherite model used to be to try and break things up, to have as many smaller companies as possible to reduce prices and increase competition.
But the reality is now, in the AI age, we need super companies. We actually need to go the other way. We need to encourage conglomeration and amalgamation in order to create companies that are big enough, that can become global super champions, which will allow this country to stay at the centre of the AI arms race. So I would ask the government, and I hope they will take this into account, that competition reform isn't simply about making the CMA work better. And my goodness it does.
It's also about changing the very nature of how the competition process works to enable us to not reduce competition through reducing the number of companies offering goods and services, but making sure we understand the nuances around creating the sorts of companies that will allow us to have power in what is now a winner takes all economy. The second bill I would like to heap praise on is the regulating for growth. I was the better regulation Minister and rather like the title of this bill, that's the greatest oxymoronic ministerial title, probably in the Western world.
The idea that you can regulate for growth is slightly bizarre. One of the points I'd like to draw the government's attention to is that whilst these measures that they have outlined are good, and the last conservative government wholeheartedly supported this. Indeed, by introducing some of these principles in the regulatory reform white paper concepts such as sandbox powers and very importantly, strengthening the growth duty of regulators, holding them to account on that most important task that actually their function is not to stop things from happening, but to allow things to happen in an orderly fashion.
But one of the most serious issues I came across in government, and I still think we suffer from today, are the issues around the layering of regulations and the conflict between different government bodies, departments and quangos that make it very difficult for businesses to navigate. One good example was the company that came to me that was creating artificial dog food. Now I have a caramel coloured, long haired miniature dachshund called Daisy, and her health is of paramount importance to me. So I'm the last person who would want her to consume anything that might be dangerous.
But this innovative small company had to go to the Department for the environment. They were then sent to the dog, the Animal Food Standards Agency, who then sent them back to the Food Administration that sent them back to the Department for the environment. They went round and round and round, and no one Minister or agency would actually take responsibility for the universe in which they were operating. So if we are going to design an economy for the future, and if these regulatory bodies are going to put growth and innovation at the centre, then we have to have more rationalisation in terms of who takes responsibility about the areas that they govern, or we're going to continue to have overlapping responsibilities.
The second part of the regulatory agenda that needs reforming is that around the environment, and I'm afraid that the environmental controls, I'm told by property developers and people who wish to build are now are far more significant hindrance to their ability to actually do what we need, which is to build infrastructure and houses and the planning process itself. I myself and I should declare another interest in trying to build an outside study area. It's an old piggery, but it's not that simple.
Last November I got planning permission, but I couldn't get full planning permission because I had to do a bat survey. So I said, well, let's send for the Bat survey, man. But of course, I can't send for the Bat survey man until May, because that's when the bats start to fall in love with each other. The romance season of the bats. So eventually I waited until May. So we've lost six months already. The Batman comes called Tristan. He wears a gilet. He turns up with an infrared camera.
He sits night after night. This is not a joke. This is a true story. For seven nights trying to film my bats in an intimate embrace. I almost imagine Sir David Attenborough, the great centenarian, crouched in a safari suit, talking through about Lord Johnson's domestic bat environment and then putting it on some sort of nature film that cost me thousands of pounds. And it took months. And the outcome? The mitigation, was to put a bat box up outside my piggery. Now we've lost the plot.
The process has become the principle rather than the outcome. The bat box cost £60. I would have loved to put up. In fact, I probably would have put one up anyway, so why not look at the outcomes rather than the process? If all I had to do at the beginning was have a choice, put a black box up or go through a tortuous process, we would have the same outcome and we've lost our way. When it comes to understanding how we regulate and what we're regulating, for which in this instance is to protect bats.
The last bill I would like to congratulate the government on, and I'm glad to see Lord Livermore back in his usual place, is the Enhancing Financial Services bill. Well, a few months ago I raised regulation in finance as an issue and a question, and the Minister laughed. Well, he's not laughing now. In fact, he's taking it so seriously. He's actually pioneering a new bill to help the financial services industry, which we have, and I'm afraid our government and Lord Bridges of Headley rightly pointed this out, did nothing but denigrate financial services from 2010.
But if I may, in the few minutes remaining to me, ask the Minister to take note of a few key points. The first is consumer duty. This bizarre idea that somehow we have to be responsible for so many parties down the chain makes it impossible for us to create proper financial products. All companies, noble Lords, have a consumer duty. We all have a duty to the customer who uses our products. The idea that we have to regulate for that is just causing more problems, more complexity, and creates an ever Byzantine amount of paperwork that consumers click.
I accept or I agree, thinking they're protected. Well, actually they're not. The second thing I would like the government to look closely at is MiFID two. I used to, as a Minister, offer a prize. I wasn't allowed to offer money for obvious reasons of probity and integrity. So it was a bottle of wine for any person who could give me a benefit to humankind of MiFID two. One person put their hand up and said lawyers. Well noble Lords, if you are lawyers in this house, I'm afraid you don't count.
And that prize, by the way, still stands. It destroyed the research capabilities on small companies. And with it the A market and the small company market. The last point I want to mention is institution to institution sales. We're very obsessed with compliance and regulation around how we sell to the retail market. And we should be. But when it comes to institutions, to institutions, we should allow a thousand flowers to bloom. We should really make it our ambition to ensure that if you are dealing into institution where there is no risk for individuals to be mis sold, we should really almost be allowed to do whatever we like, because that's how you create strong financial innovation.
The last comment I would leave on financial service regulation is a very worrying outcome from a report written by the Financial Services Committee in this House, which was presented a few months ago about how the FCA had created a climate of fear in how they managed their affairs. Now I draw a noble Lords attention to this. This is a very serious point that a regulator has actually created a culture of fear rather than one of innovation and growth.
And I would ask the Minister, I wrote to the FCA asking for a response to this. They obviously haven't bothered to write back, but I would ask the Minister to impress upon them that their job is not to create fear. It is to create a successful financial services sector that allows us all to have wealth.
14:04
Baroness Bi (Labour)
-
-
Baroness Bi (Labour)
My Lords, I follow that speech and will cover many of the areas that Lord Johnson has covered. But that Lord Johnson has covered. But I welcome the focus on economic growth, trade and our partnership growth, trade and our partnership with the EU contained in the Gracious Speech. It's imperative that we take measures to improve our rate of growth in order to offer hope to the many people who feel that society no longer works for them, and I'm particularly concerned about the impact on young people, not just those who are not in employment, education or training, but for the many others who do everything right and then find that they're not able to find a job that reflects their training and their aspirations, and that they're not able to buy a home or to start a family.
History is full of examples of revolution started by disaffected young people who don't have a stake in the society in which they are living, and I am concerned about the impact on the future of our democracy. If we're not able to grow the economy to meet their legitimate expectations. We're all now hearing a clamour for bold change coming from my colleagues in the other place, and I join it to this extent. The broader geopolitical situation means that we need to choose whether to seek growth primarily through deregulation, as the United States has done, or through closer dynamic alignment with the European Union, our largest and nearest market.
I accept that both routes have the potential to offer us higher growth than we're currently experiencing. However, as a keen enthusiast, I know we can't have the benefits of both. While accepting the discipline of neither. The choice we make whether to follow a US model or be more closely aligned to the EU has to run through all our decision making from tax regulation skills, capital markets and energy costs. Like my noble friend Lord Liddle, I urge the government to choose alignment with the EU and hope the British public has an opportunity to reverse Brexit in due course.
We ultimately belong in the European Union, not just because it makes economic sense, but because we share the same values and as our neighbours, and we need to work together with them to enhance our joint defence capability. The importance of which Lord Robertson has so eloquently explained in a world of large economic blocs, we are exposed. And although I applaud the government's progress on free trade agreements, the increase in growth which these FTAs are able to achieve does not make up for the loss of access to the single market and customs union.
I also accept, not least because of the manner in which we left, that the EU is understandably hesitant in responding to our overtures, but the review of the TCA due this year and the upcoming EU UK summit provide an opportunity to make meaningful progress within the current framework to achieve business mobility, youth mobility, mutual recognition of professional qualifications and civil judicial cooperation, which will all help to boost growth. Increasing growth depends on strengthening those sectors in which Britain is genuinely world class, and I agree with your Johnson that financial and professional services are some of our world beating industries.
The sector generates jobs, tax revenues and exports, but it is overregulated with compliance costs for just financial services exceeding £30 billion each year. I accept the regulation is necessary for growth, but it must be targeted and proportionate. In the past, our approach to EU regulation was often to over comply and gold plate requirements. So as we consider dynamic alignment in the future, I urge the government to adopt the method advocated by Marie Kondo and consider those regulations which spark joy and discard those which we no longer need.
Now, as a lawyer and here I want to declare my interest as the chair of a law firm. I hesitate to suggest fewer laws, thereby depriving my colleagues of the prospect of advising clients at attractive hourly rates. But too often, new laws and regulations are issued in response to a failure or scandal, when existing legislation should simply be enforced. Solicitors from sole practitioners to those in larger firms, are now contemplating the prospect of being regulated by the Financial Conduct Authority, which to date has no experience of overseeing professional services.
And this is for anti-money laundering, a role which has been performed thus far by the Solicitors Regulatory Authority, which is one of 15 regulators and bodies whose requirements and guidelines we are currently required to observe in the UK. I am bemused by the fact that in London we are deemed to need ever more regulation, overseen by growing numbers of regulators, whereas colleagues in New York or Paris or Frankfurt seem to get by perfectly adequately with a local bar association and compliance with the laws which apply to the rest of society.
Now, I note, many noble Lords have discussed concerns about overregulation, but I'm afraid my experience in the legal sector is replicated in many other areas of the economy. So we do need to be much bolder in deciding what regulatory oversight is actually needed to protect consumers, preserve stability and sustain confidence with significant input from those sectors themselves, as they have a primary interest in maintaining their good reputation and to remove the rest. My Lords, we need proportionate regulation, alignment with the EU and support for our great industries, especially financial and professional services, to drive the generation.
History is full of examples of revolution started by disaffected young people who don't have a stake in the society in which they are living, and I am concerned about the impact on the future of our democracy. If we're not able to grow the economy to meet their legitimate expectations. We're all now hearing a clamour for bold change coming from my colleagues in the other place, and I join it to this extent. The broader geopolitical situation means that we need to choose whether to seek growth primarily through deregulation, as the United States has done, or through closer dynamic alignment with the European Union, our largest and nearest market.
I accept that both routes have the potential to offer us higher growth than we're currently experiencing. However, as a keen enthusiast, I know we can't have the benefits of both. While accepting the discipline of neither. The choice we make whether to follow a US model or be more closely aligned to the EU has to run through all our decision making from tax regulation skills, capital markets and energy costs. Like my noble friend Lord Liddle, I urge the government to choose alignment with the EU and hope the British public has an opportunity to reverse Brexit in due course.
We ultimately belong in the European Union, not just because it makes economic sense, but because we share the same values and as our neighbours, and we need to work together with them to enhance our joint defence capability. The importance of which Lord Robertson has so eloquently explained in a world of large economic blocs, we are exposed. And although I applaud the government's progress on free trade agreements, the increase in growth which these FTAs are able to achieve does not make up for the loss of access to the single market and customs union.
I also accept, not least because of the manner in which we left, that the EU is understandably hesitant in responding to our overtures, but the review of the TCA due this year and the upcoming EU UK summit provide an opportunity to make meaningful progress within the current framework to achieve business mobility, youth mobility, mutual recognition of professional qualifications and civil judicial cooperation, which will all help to boost growth. Increasing growth depends on strengthening those sectors in which Britain is genuinely world class, and I agree with your Johnson that financial and professional services are some of our world beating industries.
The sector generates jobs, tax revenues and exports, but it is overregulated with compliance costs for just financial services exceeding £30 billion each year. I accept the regulation is necessary for growth, but it must be targeted and proportionate. In the past, our approach to EU regulation was often to over comply and gold plate requirements. So as we consider dynamic alignment in the future, I urge the government to adopt the method advocated by Marie Kondo and consider those regulations which spark joy and discard those which we no longer need.
Now, as a lawyer and here I want to declare my interest as the chair of a law firm. I hesitate to suggest fewer laws, thereby depriving my colleagues of the prospect of advising clients at attractive hourly rates. But too often, new laws and regulations are issued in response to a failure or scandal, when existing legislation should simply be enforced. Solicitors from sole practitioners to those in larger firms, are now contemplating the prospect of being regulated by the Financial Conduct Authority, which to date has no experience of overseeing professional services.
And this is for anti-money laundering, a role which has been performed thus far by the Solicitors Regulatory Authority, which is one of 15 regulators and bodies whose requirements and guidelines we are currently required to observe in the UK. I am bemused by the fact that in London we are deemed to need ever more regulation, overseen by growing numbers of regulators, whereas colleagues in New York or Paris or Frankfurt seem to get by perfectly adequately with a local bar association and compliance with the laws which apply to the rest of society.
Now, I note, many noble Lords have discussed concerns about overregulation, but I'm afraid my experience in the legal sector is replicated in many other areas of the economy. So we do need to be much bolder in deciding what regulatory oversight is actually needed to protect consumers, preserve stability and sustain confidence with significant input from those sectors themselves, as they have a primary interest in maintaining their good reputation and to remove the rest. My Lords, we need proportionate regulation, alignment with the EU and support for our great industries, especially financial and professional services, to drive the generation.
14:11
Lord Jackson of Peterborough (Conservative)
-
-
Lord Jackson of Peterborough (Conservative)
My Lords, I rise to take part in this debate and in beginning, I this debate and in beginning, I would like to very strongly commend the noble Lord Robertson of Port Ellen, whose. Not in his place for his coruscating criticism of the government's dilatory approach to government's dilatory approach to defence and national security, which I think was a courageous contribution. I intend to confine my remarks, my Lords, to the government's proposals for dynamic alignment, now rebadged euphemistically as a putative European Partnership Bill, the details of which are as yet unclear.
Your Lordships' House may be aware that the European Affairs Committee is currently conducting an inquiry into the policy, and is still the only discrete body in Parliament interrogating this government's wider policies in respect of the EU and UK relations. Almost ten years ago, the British people made a decision to leave the European Union, the single market and the customs union. They chose to return sovereignty to the United Kingdom, and that was the democratic will of the British people. And it risks being overturned by politicians who never accepted the validity or the potential benefits of Brexit.
The government is pushing for closer alignment with the EU, but they have gone far beyond any mandate they can claim from their manifesto. They have decided to define themselves by a close relationship with the EU. In his speech at the beginning of this week, the Prime Minister admitted that he felt it was necessary to go beyond what was stated in 2024 and that at the next EU summit, he wants to, quote, Put Britain at the heart of Europe. But he refused to admit whether he would ditch the red lines in his manifesto, which ruled out membership of the EU single market or customs union, and instead committed to, quote, take us closer, unquote.
This is an attempt to deflect from the failures of the government failures demonstrated by their devastating and unprecedented losses in the local elections last week. Rather than take responsibility for their unforced errors and U-turns, they blame the decision, which has allowed this country to take back its sovereignty. The government is wilfully betraying the people of this country in staking out such an ideological position, and they know it. Reforms UK's gains in the local elections show this. Frankly, leave.
Voters do not trust this Labour Party and the government's announcements in the Gracious Speech only validate this argument and the disrespect they have for those opinions. As it happens, YouGov polling for Queen Mary College has actually found that only 9% of Labour voters believe that a UK tariff policy should be decided by a non EU UK entity. My Lords, in our alternative summary to the European Affairs Committee report unfinished business resetting the UK EU relationship, published last year, we showed how the government's EU reset objectives had expanded over time.
By the end of the year, this government intends to publish a bill, including mechanisms which would align the UK to EU law. But in order to gain the privilege of losing our ability to make our own trade and energy policies, the UK will have to pay and be subject to the Fee Act of the European Court of Justice. The EU's objectives were leaked in a negotiating paper in 2024. In it, they made clear the strong desire for the extension of the pre-existing arrangements on reciprocal fisheries access and the support amongst EU member states for UK, EU Youth Experience Scheme and a UK return to the Erasmus+ scheme, which, incidentally comes at significant cost to UK, British British taxpayers with little or no value for money analysis.
The key EU objectives of the 24 negotiation document have been agreed to by the UK. The EU has now made it clear that if the government are determined to push for closer alignment with the single market, then we will have to pay in the region of £1 billion a year into the European Union's budget, something that we have not had to do since we were members, and this completely undermines the UK's political and financial autonomy. This would be understandable, where Ministers who have brought forward a comprehensive, robust cost benefit analysis of how dynamic alignment may benefit British business.
But they have not. Our committee has received substantial evidence that the true cost of this policy of dynamic alignment will be a hit of £15 billion to our economy, as it will destroy UK regulatory headroom by importing EU anti-competitive market distortions. British exceptionalism in areas such as gene editing, novel foods, AI and of course, animal welfare standards will be stymied by such a foolhardy policy, all for a minuscule gain in GDP over the long term. Based on contested figures pulled together by lobby groups.
A gain of just 0.1% of GDP, according to the centre for European Reform, with a sector specific SPS agreement, or just 0.0. 4% of GDP for youth mobility and touring and a touring artists regime in the near to medium term. Because. Because we already know that the estimates of the so-called damage of UK. Of the UK economy of Brexit is based on dodgy figures and has been comprehensively rebutted. For instance, the NBER working paper used recently by the Chancellor, which claims, quote by as much as 8%.
Unquote. Hit to the UK economy, was derived by comparing growth in the UK GDP per capita with the averages of a wide range of other countries with many different characteristics, and UK underpin underperformance since 2016 was solely attributed to Brexit and ignored other key factors such as Covid, the Ukraine war and the energy crisis which impacted different economies in different ways. My Lords, we know as a fact that UK growth in GDP per capita has been only a little below France and better than both Italy and Canada, as well as Germany.
And of course, those Brexit sceptic commentators invariably ignore our hugely successful improvement in services exported to the EU since 2016. And that's why the City of London is now wary of linking regulations to a single European jurisdiction. My Lords dynamic alignment will also require at least five years of complex primary legislation, and runs the risk of severe retaliation by non-EU countries as as their world develop, for instance, a structural incompatibility with our obligations under, for instance, the TPP.
This is bad for our economy. For instance, in terms of our UK exports of pharmaceuticals to the United States worth £11 billion, that is at risk of 100% tariff in order for us. Let's face it, to protect the EU agricultural sector, Ministers have completely ignored the fact that mutual recognition and equivalence are tools used by most mature economies, trading globally as a means to reduce regulatory friction whilst protecting parliamentary sovereignty. If the government continues to yield to the EU's demands, the UK will be committed to contributing to EU cohesion funding and we will have to pay financial contributions to help reduce economic, social and territorial disparities within the EU.
We will actually be paying the European Union for the privilege of undermining our own global competitiveness, and dynamic alignment offers us nothing that we don't already have. Finally, my Lords, these proposals have significant ramifications for parliamentary sovereignty. Ministers intend to use Statutory Instruments to bypass parliamentary scrutiny. Every time that the EU updates the rules, which we are forcibly aligned with. And to compound this, we will have no real influence over EU regulations making progress process merely the opaque illusion of so-called decision shaping about which Ministers have not yet opined.
My Lords, the government has a choice to make, change tack and uphold the commitments and democratic will of the British people, produce a budget which cuts business taxes, which reduces regulation and welfare spending, and boost jobs and skills, and secures new global trading opportunities, or turn its back on the people it claims to serve and shackle our country to a declining, overregulated dirigiste market, which will hobble British enterprise and innovation in a vain attempt to prop up a discredited administration and a struggling Prime Minister.
Your Lordships' House may be aware that the European Affairs Committee is currently conducting an inquiry into the policy, and is still the only discrete body in Parliament interrogating this government's wider policies in respect of the EU and UK relations. Almost ten years ago, the British people made a decision to leave the European Union, the single market and the customs union. They chose to return sovereignty to the United Kingdom, and that was the democratic will of the British people. And it risks being overturned by politicians who never accepted the validity or the potential benefits of Brexit.
The government is pushing for closer alignment with the EU, but they have gone far beyond any mandate they can claim from their manifesto. They have decided to define themselves by a close relationship with the EU. In his speech at the beginning of this week, the Prime Minister admitted that he felt it was necessary to go beyond what was stated in 2024 and that at the next EU summit, he wants to, quote, Put Britain at the heart of Europe. But he refused to admit whether he would ditch the red lines in his manifesto, which ruled out membership of the EU single market or customs union, and instead committed to, quote, take us closer, unquote.
This is an attempt to deflect from the failures of the government failures demonstrated by their devastating and unprecedented losses in the local elections last week. Rather than take responsibility for their unforced errors and U-turns, they blame the decision, which has allowed this country to take back its sovereignty. The government is wilfully betraying the people of this country in staking out such an ideological position, and they know it. Reforms UK's gains in the local elections show this. Frankly, leave.
Voters do not trust this Labour Party and the government's announcements in the Gracious Speech only validate this argument and the disrespect they have for those opinions. As it happens, YouGov polling for Queen Mary College has actually found that only 9% of Labour voters believe that a UK tariff policy should be decided by a non EU UK entity. My Lords, in our alternative summary to the European Affairs Committee report unfinished business resetting the UK EU relationship, published last year, we showed how the government's EU reset objectives had expanded over time.
By the end of the year, this government intends to publish a bill, including mechanisms which would align the UK to EU law. But in order to gain the privilege of losing our ability to make our own trade and energy policies, the UK will have to pay and be subject to the Fee Act of the European Court of Justice. The EU's objectives were leaked in a negotiating paper in 2024. In it, they made clear the strong desire for the extension of the pre-existing arrangements on reciprocal fisheries access and the support amongst EU member states for UK, EU Youth Experience Scheme and a UK return to the Erasmus+ scheme, which, incidentally comes at significant cost to UK, British British taxpayers with little or no value for money analysis.
The key EU objectives of the 24 negotiation document have been agreed to by the UK. The EU has now made it clear that if the government are determined to push for closer alignment with the single market, then we will have to pay in the region of £1 billion a year into the European Union's budget, something that we have not had to do since we were members, and this completely undermines the UK's political and financial autonomy. This would be understandable, where Ministers who have brought forward a comprehensive, robust cost benefit analysis of how dynamic alignment may benefit British business.
But they have not. Our committee has received substantial evidence that the true cost of this policy of dynamic alignment will be a hit of £15 billion to our economy, as it will destroy UK regulatory headroom by importing EU anti-competitive market distortions. British exceptionalism in areas such as gene editing, novel foods, AI and of course, animal welfare standards will be stymied by such a foolhardy policy, all for a minuscule gain in GDP over the long term. Based on contested figures pulled together by lobby groups.
A gain of just 0.1% of GDP, according to the centre for European Reform, with a sector specific SPS agreement, or just 0.0. 4% of GDP for youth mobility and touring and a touring artists regime in the near to medium term. Because. Because we already know that the estimates of the so-called damage of UK. Of the UK economy of Brexit is based on dodgy figures and has been comprehensively rebutted. For instance, the NBER working paper used recently by the Chancellor, which claims, quote by as much as 8%.
Unquote. Hit to the UK economy, was derived by comparing growth in the UK GDP per capita with the averages of a wide range of other countries with many different characteristics, and UK underpin underperformance since 2016 was solely attributed to Brexit and ignored other key factors such as Covid, the Ukraine war and the energy crisis which impacted different economies in different ways. My Lords, we know as a fact that UK growth in GDP per capita has been only a little below France and better than both Italy and Canada, as well as Germany.
And of course, those Brexit sceptic commentators invariably ignore our hugely successful improvement in services exported to the EU since 2016. And that's why the City of London is now wary of linking regulations to a single European jurisdiction. My Lords dynamic alignment will also require at least five years of complex primary legislation, and runs the risk of severe retaliation by non-EU countries as as their world develop, for instance, a structural incompatibility with our obligations under, for instance, the TPP.
This is bad for our economy. For instance, in terms of our UK exports of pharmaceuticals to the United States worth £11 billion, that is at risk of 100% tariff in order for us. Let's face it, to protect the EU agricultural sector, Ministers have completely ignored the fact that mutual recognition and equivalence are tools used by most mature economies, trading globally as a means to reduce regulatory friction whilst protecting parliamentary sovereignty. If the government continues to yield to the EU's demands, the UK will be committed to contributing to EU cohesion funding and we will have to pay financial contributions to help reduce economic, social and territorial disparities within the EU.
We will actually be paying the European Union for the privilege of undermining our own global competitiveness, and dynamic alignment offers us nothing that we don't already have. Finally, my Lords, these proposals have significant ramifications for parliamentary sovereignty. Ministers intend to use Statutory Instruments to bypass parliamentary scrutiny. Every time that the EU updates the rules, which we are forcibly aligned with. And to compound this, we will have no real influence over EU regulations making progress process merely the opaque illusion of so-called decision shaping about which Ministers have not yet opined.
My Lords, the government has a choice to make, change tack and uphold the commitments and democratic will of the British people, produce a budget which cuts business taxes, which reduces regulation and welfare spending, and boost jobs and skills, and secures new global trading opportunities, or turn its back on the people it claims to serve and shackle our country to a declining, overregulated dirigiste market, which will hobble British enterprise and innovation in a vain attempt to prop up a discredited administration and a struggling Prime Minister.
14:20
Lord McNicol of West Kilbride (Labour)
-
-
Lord McNicol of West Kilbride (Labour)
Yeah. >> My Lord, it's a privilege to speak in response to His Majesty's Gracious Speech, and I am grateful Gracious Speech, and I am grateful to my noble friends who moved and seconded the address with such seconded the address with such witty eloquence. I want to use my time to speak about two issues. Two issues that I think are critical to the future of the country, and that's social mobility and artificial intelligence, not as parallel tracks, but as a single challenge and a single opportunity.
The journey that brought me to this chamber started a long way from Westminster. I grew up in West Kilbride, on the west coast of Scotland. Many of those around me held a simple belief work hard, keep learning, grasp the opportunities and doors can open. My journey was the product of the architecture built into British society. Architecture that had decided deliberately that all individuals should share equal opportunities to succeed and fulfil their potential, no matter their postcode or their parentage.
My Lords, that architecture was built by the people of this Parliament, by previous Labour government's. Attlee's government created the welfare state to declare that no talent across Britain should ever go to waste. And when Harold Wilson spoke of the white heat of technology, he was making a promise to working people that technology would lift people up, not leave them behind. The architecture of social mobility was built by labour hands with labour values, and it's those same values that must shape what comes next.
My Lords, we must be honest. The architecture has weakened, the scaffold of social mobility has decayed, hollowed out after years of underfunding and neglect. The Institute for Fiscal Studies, the IFS, confirms that spending on classroom based adult education stands at 40% below what it did in 2009 and 2010, and even those who do break through face a class pay gap. Professionals from working class backgrounds earn, on average, £6,000 less per year than other colleagues. Just look at the good work that KPMG did, analysing their own professional staff and the people working for that organisation.
Their data shows this. And yet, arriving alongside this decline is a technology of extraordinary potential. Artificial intelligence. But AI is not neutral by design, deployed without intention, without structure, without political will. AI will not heal divides in our society. It could actually deepen them. Ask. As the McKinsey Global Institute has put it, AI's productivity gains will not be evenly distributed unless government actively intervenes to shape adoption. And that is precisely the challenge and our responsibility.
So the question before this House and for the government is whether the arrival of AI becomes, becomes a moment we can use to rebuild that ladder of social mobility, or a moment that we see it to continue to slip. My Lord, I welcome the government's approach to AI so far. After years of drift and missed opportunities, we finally have a government with a vision and the courage to drive an AI agenda rooted in opportunity. The AI growth labs announced by DSIT and are now operational in priority sectors including healthcare, professional services, transport and advanced manufacturing, representing a significant step forward by creating controlled real world sandboxes where regulations can be temporarily adjusted to test AI innovation responsibly.
The labs are designed to cut unnecessary bureaucracy while maintaining safeguards, and the commitment to bring AI tutoring to 450,000 disadvantaged children. Is social mobility in action and skills? England will provide skilled training with AI tools for millions of workers across the country. I welcome and commend this agenda, but we need to go further, and I want to put three asks directly to the Minister to respond to. Firstly. Britain must not be a passenger in the AI revolution.
We must build sovereign capabilities right here, not import our future. The sovereign AI fund is a start, but this government must go further. It must create the industrial conditions, the infrastructure, the investment and the strategy for Britain to develop and grow its own AI capabilities. And this is not only an economic argument. AI infrastructure built in Britain means jobs created in Britain, in the towns and cities that have been overlooked for too long. Industrial mission must reach Motherwell, Merthyr and Middlesbrough.
Second, we must make further education. One of the vehicles for this agenda. The practical, technical, hands on skills taught in our colleges and sixth forms are not secondary to this mission. They are central to it. It will be these skills that help build our future infrastructure, our AI skills agenda must reach every type of learner. And third is perhaps a bit more personal to me. AI is coming to every workplace in the country. As a Labour government, we must guarantee that this transformation is led jointly by businesses and the workforce.
Workers who shape the technology will trust it, will adopt it and will ultimately benefit from it. My Lords, I will close by returning to where I began. The government's own AI skills for Life and Work report, published earlier this year, stated plainly that the concentration of AI capabilities among a small, highly educated, highly compensated proportion of the workforce risks creating a divide in AI acceptability and adoption. That divide marks precisely onto the fault lines of class, region, education and opportunity that have defined our social mobility challenges for decades.
There is nothing inevitable about that. Whether AI becomes the greatest equalising force of our age, or the latest mechanism to enriching privilege is a political choice. My journey to this chamber was made possible because those who came before us made those right. Political choices. Do not let that opportunity pass. Construct the architecture. Restore Britain's commitment to social and make it last. Thank you.
The journey that brought me to this chamber started a long way from Westminster. I grew up in West Kilbride, on the west coast of Scotland. Many of those around me held a simple belief work hard, keep learning, grasp the opportunities and doors can open. My journey was the product of the architecture built into British society. Architecture that had decided deliberately that all individuals should share equal opportunities to succeed and fulfil their potential, no matter their postcode or their parentage.
My Lords, that architecture was built by the people of this Parliament, by previous Labour government's. Attlee's government created the welfare state to declare that no talent across Britain should ever go to waste. And when Harold Wilson spoke of the white heat of technology, he was making a promise to working people that technology would lift people up, not leave them behind. The architecture of social mobility was built by labour hands with labour values, and it's those same values that must shape what comes next.
My Lords, we must be honest. The architecture has weakened, the scaffold of social mobility has decayed, hollowed out after years of underfunding and neglect. The Institute for Fiscal Studies, the IFS, confirms that spending on classroom based adult education stands at 40% below what it did in 2009 and 2010, and even those who do break through face a class pay gap. Professionals from working class backgrounds earn, on average, £6,000 less per year than other colleagues. Just look at the good work that KPMG did, analysing their own professional staff and the people working for that organisation.
Their data shows this. And yet, arriving alongside this decline is a technology of extraordinary potential. Artificial intelligence. But AI is not neutral by design, deployed without intention, without structure, without political will. AI will not heal divides in our society. It could actually deepen them. Ask. As the McKinsey Global Institute has put it, AI's productivity gains will not be evenly distributed unless government actively intervenes to shape adoption. And that is precisely the challenge and our responsibility.
So the question before this House and for the government is whether the arrival of AI becomes, becomes a moment we can use to rebuild that ladder of social mobility, or a moment that we see it to continue to slip. My Lord, I welcome the government's approach to AI so far. After years of drift and missed opportunities, we finally have a government with a vision and the courage to drive an AI agenda rooted in opportunity. The AI growth labs announced by DSIT and are now operational in priority sectors including healthcare, professional services, transport and advanced manufacturing, representing a significant step forward by creating controlled real world sandboxes where regulations can be temporarily adjusted to test AI innovation responsibly.
The labs are designed to cut unnecessary bureaucracy while maintaining safeguards, and the commitment to bring AI tutoring to 450,000 disadvantaged children. Is social mobility in action and skills? England will provide skilled training with AI tools for millions of workers across the country. I welcome and commend this agenda, but we need to go further, and I want to put three asks directly to the Minister to respond to. Firstly. Britain must not be a passenger in the AI revolution.
We must build sovereign capabilities right here, not import our future. The sovereign AI fund is a start, but this government must go further. It must create the industrial conditions, the infrastructure, the investment and the strategy for Britain to develop and grow its own AI capabilities. And this is not only an economic argument. AI infrastructure built in Britain means jobs created in Britain, in the towns and cities that have been overlooked for too long. Industrial mission must reach Motherwell, Merthyr and Middlesbrough.
Second, we must make further education. One of the vehicles for this agenda. The practical, technical, hands on skills taught in our colleges and sixth forms are not secondary to this mission. They are central to it. It will be these skills that help build our future infrastructure, our AI skills agenda must reach every type of learner. And third is perhaps a bit more personal to me. AI is coming to every workplace in the country. As a Labour government, we must guarantee that this transformation is led jointly by businesses and the workforce.
Workers who shape the technology will trust it, will adopt it and will ultimately benefit from it. My Lords, I will close by returning to where I began. The government's own AI skills for Life and Work report, published earlier this year, stated plainly that the concentration of AI capabilities among a small, highly educated, highly compensated proportion of the workforce risks creating a divide in AI acceptability and adoption. That divide marks precisely onto the fault lines of class, region, education and opportunity that have defined our social mobility challenges for decades.
There is nothing inevitable about that. Whether AI becomes the greatest equalising force of our age, or the latest mechanism to enriching privilege is a political choice. My journey to this chamber was made possible because those who came before us made those right. Political choices. Do not let that opportunity pass. Construct the architecture. Restore Britain's commitment to social and make it last. Thank you.
14:28
Baroness Bennett of Manor Castle (Green Party)
-
-
Baroness Bennett of Manor Castle (Green Party)
My Lords. I thank everyone who's participated in this interesting debate. Even if we know the debate. Even if we know the country's attention is largely directed otherwise today. No, I'm not talking about what's happening not talking about what's happening within the Labour Party, but in many areas around the country, the politics that has the most immediate impact on the lives of people and communities is changing. New councillors and new leaders of councillors are settling into their role. 587 of them are green councillors, two of them green elected mayors.
Our first in Hackney, Waltham Forest, Norwich, Hastings and Lewisham. Greens are settling into control of those councils and in news just in. The Green Party's Matt Jenkins has just been elected leader of Worcestershire County Council, displacing a chaotic Reform Party leadership. He'll no doubt be working closely in Worcester City with the wonderful 26 year old musician Tor Pingree, who is taking over as mayor. As Greens, we are really showing that politics can be done differently, and Worcester Woman and many others are taking note.
I must also note the imbalance in the votes just been cast and the number of Greens in your Lordships chamber. It'd be nice if that could change in the near future. But turning to the specifics of today's debate, I try to praise where I can. So I'm pleased to see the desire to build a closer partnership with the EU. I hope we are very soon going to restore, at least to our young people, some of the freedoms and opportunities that they have lost since Brexit, as we need to see the country moving closer to a customs union, to the single market and eventually returning to membership.
Unlike the noble Lord, Lord Jackson, I know that the people's democratic will is not set in stone, does not last for decades or century. It can change. And I know that the public understands that if you're in a hole, you shouldn't keep digging. But directly on our main subject, the economy. I want to thank the noble Lord Lord Burns, who offered the chamber a sombre, realistic view of the UK's prospects as a middle ranking power with an ageing population in a world of, as he said, long term global slowdown in which it looks as if that pattern will continue.
That showed a realism that we might expect from the crossbenchers, but urgently need other corners of the House to grasp. The noble Lord from the crossbench is also acknowledged, and I thank him for recognising that there are alternative economic views to those that have put us into this mess. That not everyone in this chamber regards regards growth as the Holy Grail. What we are not hearing from the Tory benches or the Labour frontbench is any assessment of whose growth is it? Is it the few getting richer while the rest of us get poorer? Are we building up even further an unstable, insecure financial sector that concentrates wealth in a few hands, in a few parts of the country? Are we ensuring our economy can endure climate, geopolitical health shocks, resilience rather than spindly, fragile poles propping up the GDP figures? What costs are we bearing on exploited human bodies? As the right reverend Prelate, the Bishop of Newcastle said, or costs on the already parlous state of nature on these islands and around the world? What costs do future generations bear for any growth that we seek today? Now the noble Lady, Baroness Anderson of Stoke on Trent, spoke about in aiming towards strengthening and reforming our foundations prosperity in every corner of the economy.
But that deserves to be contrasted with the Prime Minister's introduction to the speech, which talks about creating more highly paid jobs. But if we want prosperity in every corner, surely we need to ensure that every job is at least a decently paid job, one that gives individuals and households security, stability and ability to live well now and plan for the future. With after housing costs 20% of the population living in poverty. The words we heard from the Chancellor this morning, summarised by the Guardian as if it ain't broke, don't fix it, are going to ring very hollow indeed for many people.
Those in that poverty and those nearing it and fearing it, who are finding themselves running faster and faster just to barely survive economically. So what would instead? starters, urgent action is needed to bring down controls, nationalising water, freezing energy prices, and taxing wealth. And of course, people, particularly those living economically on the edge, are being subjected to an increasingly depleted, polluted environment, which we're understanding more and more every day is terrible for their health. Yes.
Where is the environment in this speech? We have awful, indefensible environmentally and economically. Just look at the financial carbon bubble we face already. Plans to expand airports and road building and slashing of regulation of nuclear power plants. Whose back garden are those plants likely to end up in? Not Chelsea or the Cotswolds, we can be sure. My noble friend Baroness Jones will be covering more of this next week. Additionally, we have in the promised Regulating for Growth Bill a vow to strengthen the growth duty for Natural England, the Environment Agency and the Health and Safety Executive.
The government is lining up with the Tory benches with an ideological attachment to so-called slashing red tape, an approach that has left us with the unhealthy nation we have now. Your Lordships House has heard me often on the subject of chemicals regulation, an issue raised this morning by Greenpeace, counting the more than 100 pesticides likely to have been sprayed on your Sunday roast, seven of which are banned in the EU. So we might at least see some positive steps there.
But I want to come back to the health of the population. Our ageing population. Why is there nothing about this in this speech? Nothing about it in the government's presentations of it. Healthy life expectancy in the UK, the average number of years a person can expect to live in good health fell by two years in the past decade. Healthy life expectancy has now fallen below the state pension age of 66, in more than 90% of areas. In more than 1 in 10 local areas.
Healthy life expectancy is below 55 years. So what else is missing? Those who advocate for animal welfare are rightly fuming at one gaping hole. As recently as December 2025, DEFRA published its Animal Welfare Strategy for England, a document that sets out a series of commitments intended to raise standards, strengthen protections and position the UK as a global leader in animal welfare. In its 2024 election manifesto. Labour promised to improve access to nature, promote biodiversity and protect our landscapes and wildlife.
Perhaps the the noble Lord, Lord Livermore, can tell me more about the government's plans to deliver on this, given they're missing from the speech. I also have to mention a report out this week about the state of our universities from the Education Select Committee, which warns that the government has no clear plans for universities facing insolvency or protections for students who could be caught in that trap. The committee says that 24 universities are at risk of insolvency and closure within 12 months.
Many of them, of course, are economically crucial to the communities in which they placed. Finally, a couple of other missing things. I declare my vice presidency of the National Association of Local Councils. The government had failed, promised to act on remote and hybrid council meetings. That's lacking. Also measures to strengthen the framework for standards. So I started with local government and I returned to it. The levels of government that with adequate resources and power, could strengthen many of the foundations of our society, the health of our people, the supply of healthy food, the support for vulnerable children and adults could rebuild our society in a way that Whitehall, at least under successive legacy parties, has demonstrated it is unable to do, and that this speech, whether the legislative programme is delivered or.
We have a whole new one in a few weeks time, is certainly not going to do.
Our first in Hackney, Waltham Forest, Norwich, Hastings and Lewisham. Greens are settling into control of those councils and in news just in. The Green Party's Matt Jenkins has just been elected leader of Worcestershire County Council, displacing a chaotic Reform Party leadership. He'll no doubt be working closely in Worcester City with the wonderful 26 year old musician Tor Pingree, who is taking over as mayor. As Greens, we are really showing that politics can be done differently, and Worcester Woman and many others are taking note.
I must also note the imbalance in the votes just been cast and the number of Greens in your Lordships chamber. It'd be nice if that could change in the near future. But turning to the specifics of today's debate, I try to praise where I can. So I'm pleased to see the desire to build a closer partnership with the EU. I hope we are very soon going to restore, at least to our young people, some of the freedoms and opportunities that they have lost since Brexit, as we need to see the country moving closer to a customs union, to the single market and eventually returning to membership.
Unlike the noble Lord, Lord Jackson, I know that the people's democratic will is not set in stone, does not last for decades or century. It can change. And I know that the public understands that if you're in a hole, you shouldn't keep digging. But directly on our main subject, the economy. I want to thank the noble Lord Lord Burns, who offered the chamber a sombre, realistic view of the UK's prospects as a middle ranking power with an ageing population in a world of, as he said, long term global slowdown in which it looks as if that pattern will continue.
That showed a realism that we might expect from the crossbenchers, but urgently need other corners of the House to grasp. The noble Lord from the crossbench is also acknowledged, and I thank him for recognising that there are alternative economic views to those that have put us into this mess. That not everyone in this chamber regards regards growth as the Holy Grail. What we are not hearing from the Tory benches or the Labour frontbench is any assessment of whose growth is it? Is it the few getting richer while the rest of us get poorer? Are we building up even further an unstable, insecure financial sector that concentrates wealth in a few hands, in a few parts of the country? Are we ensuring our economy can endure climate, geopolitical health shocks, resilience rather than spindly, fragile poles propping up the GDP figures? What costs are we bearing on exploited human bodies? As the right reverend Prelate, the Bishop of Newcastle said, or costs on the already parlous state of nature on these islands and around the world? What costs do future generations bear for any growth that we seek today? Now the noble Lady, Baroness Anderson of Stoke on Trent, spoke about in aiming towards strengthening and reforming our foundations prosperity in every corner of the economy.
But that deserves to be contrasted with the Prime Minister's introduction to the speech, which talks about creating more highly paid jobs. But if we want prosperity in every corner, surely we need to ensure that every job is at least a decently paid job, one that gives individuals and households security, stability and ability to live well now and plan for the future. With after housing costs 20% of the population living in poverty. The words we heard from the Chancellor this morning, summarised by the Guardian as if it ain't broke, don't fix it, are going to ring very hollow indeed for many people.
Those in that poverty and those nearing it and fearing it, who are finding themselves running faster and faster just to barely survive economically. So what would instead? starters, urgent action is needed to bring down controls, nationalising water, freezing energy prices, and taxing wealth. And of course, people, particularly those living economically on the edge, are being subjected to an increasingly depleted, polluted environment, which we're understanding more and more every day is terrible for their health. Yes.
Where is the environment in this speech? We have awful, indefensible environmentally and economically. Just look at the financial carbon bubble we face already. Plans to expand airports and road building and slashing of regulation of nuclear power plants. Whose back garden are those plants likely to end up in? Not Chelsea or the Cotswolds, we can be sure. My noble friend Baroness Jones will be covering more of this next week. Additionally, we have in the promised Regulating for Growth Bill a vow to strengthen the growth duty for Natural England, the Environment Agency and the Health and Safety Executive.
The government is lining up with the Tory benches with an ideological attachment to so-called slashing red tape, an approach that has left us with the unhealthy nation we have now. Your Lordships House has heard me often on the subject of chemicals regulation, an issue raised this morning by Greenpeace, counting the more than 100 pesticides likely to have been sprayed on your Sunday roast, seven of which are banned in the EU. So we might at least see some positive steps there.
But I want to come back to the health of the population. Our ageing population. Why is there nothing about this in this speech? Nothing about it in the government's presentations of it. Healthy life expectancy in the UK, the average number of years a person can expect to live in good health fell by two years in the past decade. Healthy life expectancy has now fallen below the state pension age of 66, in more than 90% of areas. In more than 1 in 10 local areas.
Healthy life expectancy is below 55 years. So what else is missing? Those who advocate for animal welfare are rightly fuming at one gaping hole. As recently as December 2025, DEFRA published its Animal Welfare Strategy for England, a document that sets out a series of commitments intended to raise standards, strengthen protections and position the UK as a global leader in animal welfare. In its 2024 election manifesto. Labour promised to improve access to nature, promote biodiversity and protect our landscapes and wildlife.
Perhaps the the noble Lord, Lord Livermore, can tell me more about the government's plans to deliver on this, given they're missing from the speech. I also have to mention a report out this week about the state of our universities from the Education Select Committee, which warns that the government has no clear plans for universities facing insolvency or protections for students who could be caught in that trap. The committee says that 24 universities are at risk of insolvency and closure within 12 months.
Many of them, of course, are economically crucial to the communities in which they placed. Finally, a couple of other missing things. I declare my vice presidency of the National Association of Local Councils. The government had failed, promised to act on remote and hybrid council meetings. That's lacking. Also measures to strengthen the framework for standards. So I started with local government and I returned to it. The levels of government that with adequate resources and power, could strengthen many of the foundations of our society, the health of our people, the supply of healthy food, the support for vulnerable children and adults could rebuild our society in a way that Whitehall, at least under successive legacy parties, has demonstrated it is unable to do, and that this speech, whether the legislative programme is delivered or.
We have a whole new one in a few weeks time, is certainly not going to do.
14:38
Lord Kirkhope of Harrogate (Conservative)
-
-
Lord Kirkhope of Harrogate (Conservative)
My Lords, it will probably come as no great surprise to the House as no great surprise to the House to say that I have a slightly different view about Europe than my noble friend Lord Jackson, who noble friend Lord Jackson, who spoke a little while ago. As the co-chair of the Europe All-Party parliamentary Group, I can think of parliamentary Group, I can think of few questions more central to the prospects for economic growth in this country than the state of our relationship with the European Union and how we choose to take it forward.
And therefore pleased that the King's Speech includes legislation to ease the passage of future negotiations with European partners. The European Partnership Bill deserves some support, but it will require very careful scrutiny to ensure that it delivers positive outcomes without engendering fresh divisions on this clearly still sensitive area. The European Union remains by a considerable distance, our largest trading partner in 2024. Exports of goods and services to the EU were worth some £358 billion. However, analysis suggests that as a result of our leaving the Union by 2025, our GDP per head was between 6 and 8% lower than it otherwise would have been, with business investment lower by something in the order of 12 to 18%.
In financial services alone, more than 440 firms have moved part of their operations from the United Kingdom to the European Union, taking with them assets of roughly £900 billion. That is shocking, as these are jobs and economic opportunities that we simply cannot afford to lose. At a moment when national growth has particularly recently been so anaemic. It is in that context that I very much welcome the announcement on Monday that the government intends to place Britain once more at the heart of Europe, and I assume that the proposed legislation will be designed to help that.
But, my Lords, the admittedly positive rhetoric of this government can be no substitute for tangible progress on so many of the opportunities that arose from last year's UK EU summit. Following the very welcome reset in those relations achieved by Rishi Sunak with the Windsor framework, we are still waiting to see tangible results on a youth experience scheme on a full sanitary and phytosanitary agreement for our farmers and food producers on the mutual recognition of professional qualifications and on a proper resolution to the challenges currently facing our touring artists and
**** Possible New Speaker ****
Musicians. There are references to these matters in the proposed legislation, but time moves on and legislation, but time moves on and the government must move further and faster if British businesses are to feel any meaningful relief are to feel any meaningful relief from the costs and bureaucracy with which they have been saddled. This which they have been saddled. This will, of course, require compromise on both sides. We must be honest with ourselves and with the public about the trade offs required and what closer co-operation might entail in practice.
The agreements being negotiated on sanitary and phytosanitary measures, on the linking of our emission trading schemes and on participation in the EU's internal electricity market, will all, by common agreement of both sides and as accepted by government in their proposals, require a measure of dynamic alignment with relevant EU rules. That is in principle a sensible course, provided it is undertaken with due regard to this country's regulatory autonomy and the proper authority of our Parliament. Of course, if we wish to benefit from a new partnership with our European neighbours and the considerable economic advantages attached to this, then we also have to be prepared to make a fair contribution to the relevant EU budgets, as the Norwegians and the Swiss have done for many decades, and we should be honest and up front with the electorate on that.
But equally, the Commission and the Member States must also demonstrate a positive and pragmatic approach, and to show willing to offer exceptions to dynamic alignment rules where it is sensible to do so. And importantly, as the noble Lord Bridges alluded to, for them to make changes at their end to affect the deregulation and reform that the EU itself patently requires at this time. There remains, however, the question of how this should all be done. Any proposals to align ourselves with the European Union by way of Henry VII's powers, without this House having a full and ongoing say, is, in my view, simply wrong in principle, as the Supreme Court set out in the Miller litigation.
Leaving the European Union required the consent of Parliament. It is therefore only right that what are, in my view, welcome. Attempts to move closer to Europe should also be subjected to the fullest parliamentary scrutiny. In proper respect for our sovereignty. To be fair, the new proposals do suggest parliamentary scrutiny at all stages, but the Minister must, even at this early stage, give clear assurances that this will include all proposals and to both primary and secondary legislation. However, even as we pursue these important opportunities, there are other and more immediate routes by which we can cooperate with our European partners for significant economic gain.
We should now explore them without waiting for more legislation. The Comprehensive and Progressive Agreement for Trans-Pacific partnership is one such route. The UK is already part of this expanding platform, representing some 15% of global GDP and the prospect of the European Union itself. Acceding to that agreement is something which could give considerable opportunities for us all. And as Mark Carney, the Prime Minister of Canada, rightly observed at the World Economic Forum earlier this year, it is incumbent upon the middle powers to act together, and there could be no more obvious expression of that principle than for the EU and the CPP to draw closer.
It would allow us to rebuild our relationship with our fellow European democracies, whilst harnessing the dynamism of the Indo Pacific. And it would signal a profound shift in the architecture of world trade towards the interests of the middle powers. The two blocs should be encouraged to streamline the unnecessarily cumbersome accession process. Our own, having taken some eight years and to prioritise long term prosperity. My Lords, we are now facing serious geopolitical challenges and as recent events have made clear, the era in which we could rely completely on our closest partner across the Atlantic for support has patently been put in doubt.
Our security and our economic prosperity now lie more directly with Europe. It falls to this government to make sure that the forthcoming UK EU summit is more than simply another exercise in warm words and offers of legislation at some point in the future. We must deliver the substantive reset that British businesses, British workers and the UK's national interests urgently require, and we must deliver it quickly.
And therefore pleased that the King's Speech includes legislation to ease the passage of future negotiations with European partners. The European Partnership Bill deserves some support, but it will require very careful scrutiny to ensure that it delivers positive outcomes without engendering fresh divisions on this clearly still sensitive area. The European Union remains by a considerable distance, our largest trading partner in 2024. Exports of goods and services to the EU were worth some £358 billion. However, analysis suggests that as a result of our leaving the Union by 2025, our GDP per head was between 6 and 8% lower than it otherwise would have been, with business investment lower by something in the order of 12 to 18%.
In financial services alone, more than 440 firms have moved part of their operations from the United Kingdom to the European Union, taking with them assets of roughly £900 billion. That is shocking, as these are jobs and economic opportunities that we simply cannot afford to lose. At a moment when national growth has particularly recently been so anaemic. It is in that context that I very much welcome the announcement on Monday that the government intends to place Britain once more at the heart of Europe, and I assume that the proposed legislation will be designed to help that.
But, my Lords, the admittedly positive rhetoric of this government can be no substitute for tangible progress on so many of the opportunities that arose from last year's UK EU summit. Following the very welcome reset in those relations achieved by Rishi Sunak with the Windsor framework, we are still waiting to see tangible results on a youth experience scheme on a full sanitary and phytosanitary agreement for our farmers and food producers on the mutual recognition of professional qualifications and on a proper resolution to the challenges currently facing our touring artists and
**** Possible New Speaker ****
Musicians. There are references to these matters in the proposed legislation, but time moves on and legislation, but time moves on and the government must move further and faster if British businesses are to feel any meaningful relief are to feel any meaningful relief from the costs and bureaucracy with which they have been saddled. This which they have been saddled. This will, of course, require compromise on both sides. We must be honest with ourselves and with the public about the trade offs required and what closer co-operation might entail in practice.
The agreements being negotiated on sanitary and phytosanitary measures, on the linking of our emission trading schemes and on participation in the EU's internal electricity market, will all, by common agreement of both sides and as accepted by government in their proposals, require a measure of dynamic alignment with relevant EU rules. That is in principle a sensible course, provided it is undertaken with due regard to this country's regulatory autonomy and the proper authority of our Parliament. Of course, if we wish to benefit from a new partnership with our European neighbours and the considerable economic advantages attached to this, then we also have to be prepared to make a fair contribution to the relevant EU budgets, as the Norwegians and the Swiss have done for many decades, and we should be honest and up front with the electorate on that.
But equally, the Commission and the Member States must also demonstrate a positive and pragmatic approach, and to show willing to offer exceptions to dynamic alignment rules where it is sensible to do so. And importantly, as the noble Lord Bridges alluded to, for them to make changes at their end to affect the deregulation and reform that the EU itself patently requires at this time. There remains, however, the question of how this should all be done. Any proposals to align ourselves with the European Union by way of Henry VII's powers, without this House having a full and ongoing say, is, in my view, simply wrong in principle, as the Supreme Court set out in the Miller litigation.
Leaving the European Union required the consent of Parliament. It is therefore only right that what are, in my view, welcome. Attempts to move closer to Europe should also be subjected to the fullest parliamentary scrutiny. In proper respect for our sovereignty. To be fair, the new proposals do suggest parliamentary scrutiny at all stages, but the Minister must, even at this early stage, give clear assurances that this will include all proposals and to both primary and secondary legislation. However, even as we pursue these important opportunities, there are other and more immediate routes by which we can cooperate with our European partners for significant economic gain.
We should now explore them without waiting for more legislation. The Comprehensive and Progressive Agreement for Trans-Pacific partnership is one such route. The UK is already part of this expanding platform, representing some 15% of global GDP and the prospect of the European Union itself. Acceding to that agreement is something which could give considerable opportunities for us all. And as Mark Carney, the Prime Minister of Canada, rightly observed at the World Economic Forum earlier this year, it is incumbent upon the middle powers to act together, and there could be no more obvious expression of that principle than for the EU and the CPP to draw closer.
It would allow us to rebuild our relationship with our fellow European democracies, whilst harnessing the dynamism of the Indo Pacific. And it would signal a profound shift in the architecture of world trade towards the interests of the middle powers. The two blocs should be encouraged to streamline the unnecessarily cumbersome accession process. Our own, having taken some eight years and to prioritise long term prosperity. My Lords, we are now facing serious geopolitical challenges and as recent events have made clear, the era in which we could rely completely on our closest partner across the Atlantic for support has patently been put in doubt.
Our security and our economic prosperity now lie more directly with Europe. It falls to this government to make sure that the forthcoming UK EU summit is more than simply another exercise in warm words and offers of legislation at some point in the future. We must deliver the substantive reset that British businesses, British workers and the UK's national interests urgently require, and we must deliver it quickly.
14:45
Lord Stoneham of Droxford (Liberal Democrat)
-
-
Lord Stoneham of Droxford (Liberal Democrat)
It's a pleasure to follow Lord Kirkhope, whose. >> Views I've listened to over the last nine years with great care and whose views today I totally agree whose views today I totally agree with. For the past nine years, I've only been able to make speeches in the House when somebody hasn't the House when somebody hasn't turned up or no one's wanted to do it at 7:00 on a Thursday. So it's good to speak again and regain my my freedom, my overriding interest, I have to say, particularly as I've been going around the doorsteps over the last couple of months, is to think through what we have to do to counter populism and reform in this country.
And I think the sorry tale of static living standards, low growth and poor productivity in our national economy is one of the compounding factors that has contributed to the problems we now have in the national scene. And it must be the objective of the government to get more growth, and it must succeed, and the government has to focus on growth. We've heard from Lord Robertson in a very strong speech today about how our national defence security needs to be funded.
We need to pay for an ageing population and a proper system of social care. We need to recover and reverse the decline in services and infrastructure, which low growth has imposed on us, and we have to find a successful response to climate change. I want to just concentrate on three areas of policy. A lot of policy areas have been covered today, but I'd like to just concentrate on three, which are important, I think, to the growth objective in the long term, medium term and short term.
In the long term, the government's industrial strategy, in its various other reports that it's done are key. It requires commitment, energy and determination to see these documents implemented. And above all, it needs, if possible, the continuity of Ministers completely committed to them to make our products and our services more competitive. I'd like to just draw attention to one aspect which I think needs particular attention. We are a great nation of innovators and entrepreneurs. We have world class innovation, but it too often fails to capture the economic returns from this work before scale is reached.
Our ideas are often traded on and taken overseas. So I welcome last year's report, Bleeding to Death the Science and Technology Growth Emergency by the Science Committee, and indeed the government's response to it. Our world class universities have to be a major source of this potential, and our world class capital markets need to be responsive to the needs of high growth technical companies. Government also needs to be sensitive and supportive. And frankly, also, we need cross-party support for these long term policies to be enacted.
My own area of Hampshire, with its wonderful universities, its medical schools, its Farnborough Air facilities and research, has the potential to treat repeat what it was in the 1930s with its aeronautical industries before the German bombers dissipated it. We've almost achieved our local government reorganisation, but now we need to get on with the appointment of the new councils and a mayor election, which the government has postponed to 2028. In their latest pronouncements. For goodness sake, let's get on and do it at the same time as new council structures are introduced or elected on next year.
The medium term objective I'd like just to talk about is our re-engagement with Europe. I'm not sure what the government legislation will achieve, but I'm obviously supportive of it. I think Brexit was a tragedy as far as I'm concerned. As far as the country is concerned, I have yet to hear really today, people talking about the benefits we've got from it, but 30% of the country are still against it. So we should not underestimate the difficulties of re-engaging and taking public opinion with us.
I think one of the results of our debate today from from Lord Lilley Lord Redwood Lord Dixon Lord Frost is we just need some independent assessment of what these benefits, advantages and disadvantages are. We're going to have constant going backwards and forwards. I know where I stand and I, I, I agree with what Lord Kirk said in the last speech. And I think my, my party and others, I advocate advocating priority to go into the customs union. I think that's because it's the easiest thing possibly to do politically.
But in my view, the benefits of the single market are greater. And if there's political pain, we might just as well go for that rather than for the customs union on on it, on its own setting. The objective might make also, that objective might make it easier for us not to be seen by Europe as trying to cherry pick on other message. Finally, I'd like just to go to the short term, and I declare my interests in land and housing.
I think it's not been revealed yet, but I think the information that seems to be coming from the housing sector on housing starts is pretty serious in the first quarter of this year. And I think we're finding that this problem is going to get worse with the rise of interest rates. If it happens with the Iran war continues, and we will then be in an emergency situation for all those who've been trying to restore the housing sector and to provide the houses that young people want.
A number of house builders are already beginning to bail out of buying land. They there is some indication that some could collapse, and we need the government to look at this very, very carefully. I've always thought that social housing could be used in downturns in in the construction industry. And at the moment the housing sector are laying higher construction costs, lack of viability and a cautious about development. The government may have to intervene, and I hope they will use this opportunity to offer to buy private, unsold stock to sustain the industry, which otherwise could be a major setback, but also will now provide an opportunity for expand the amount of social housing that we have in this country.
So I commend to the government three areas of priority turning innovation and entrepreneurship into scale, restoring our rightful role in Europe and acting promptly now in the housing sector to avoid calamity and job losses in construction. They can't afford to delay or bluster. They must act decisively here.
And I think the sorry tale of static living standards, low growth and poor productivity in our national economy is one of the compounding factors that has contributed to the problems we now have in the national scene. And it must be the objective of the government to get more growth, and it must succeed, and the government has to focus on growth. We've heard from Lord Robertson in a very strong speech today about how our national defence security needs to be funded.
We need to pay for an ageing population and a proper system of social care. We need to recover and reverse the decline in services and infrastructure, which low growth has imposed on us, and we have to find a successful response to climate change. I want to just concentrate on three areas of policy. A lot of policy areas have been covered today, but I'd like to just concentrate on three, which are important, I think, to the growth objective in the long term, medium term and short term.
In the long term, the government's industrial strategy, in its various other reports that it's done are key. It requires commitment, energy and determination to see these documents implemented. And above all, it needs, if possible, the continuity of Ministers completely committed to them to make our products and our services more competitive. I'd like to just draw attention to one aspect which I think needs particular attention. We are a great nation of innovators and entrepreneurs. We have world class innovation, but it too often fails to capture the economic returns from this work before scale is reached.
Our ideas are often traded on and taken overseas. So I welcome last year's report, Bleeding to Death the Science and Technology Growth Emergency by the Science Committee, and indeed the government's response to it. Our world class universities have to be a major source of this potential, and our world class capital markets need to be responsive to the needs of high growth technical companies. Government also needs to be sensitive and supportive. And frankly, also, we need cross-party support for these long term policies to be enacted.
My own area of Hampshire, with its wonderful universities, its medical schools, its Farnborough Air facilities and research, has the potential to treat repeat what it was in the 1930s with its aeronautical industries before the German bombers dissipated it. We've almost achieved our local government reorganisation, but now we need to get on with the appointment of the new councils and a mayor election, which the government has postponed to 2028. In their latest pronouncements. For goodness sake, let's get on and do it at the same time as new council structures are introduced or elected on next year.
The medium term objective I'd like just to talk about is our re-engagement with Europe. I'm not sure what the government legislation will achieve, but I'm obviously supportive of it. I think Brexit was a tragedy as far as I'm concerned. As far as the country is concerned, I have yet to hear really today, people talking about the benefits we've got from it, but 30% of the country are still against it. So we should not underestimate the difficulties of re-engaging and taking public opinion with us.
I think one of the results of our debate today from from Lord Lilley Lord Redwood Lord Dixon Lord Frost is we just need some independent assessment of what these benefits, advantages and disadvantages are. We're going to have constant going backwards and forwards. I know where I stand and I, I, I agree with what Lord Kirk said in the last speech. And I think my, my party and others, I advocate advocating priority to go into the customs union. I think that's because it's the easiest thing possibly to do politically.
But in my view, the benefits of the single market are greater. And if there's political pain, we might just as well go for that rather than for the customs union on on it, on its own setting. The objective might make also, that objective might make it easier for us not to be seen by Europe as trying to cherry pick on other message. Finally, I'd like just to go to the short term, and I declare my interests in land and housing.
I think it's not been revealed yet, but I think the information that seems to be coming from the housing sector on housing starts is pretty serious in the first quarter of this year. And I think we're finding that this problem is going to get worse with the rise of interest rates. If it happens with the Iran war continues, and we will then be in an emergency situation for all those who've been trying to restore the housing sector and to provide the houses that young people want.
A number of house builders are already beginning to bail out of buying land. They there is some indication that some could collapse, and we need the government to look at this very, very carefully. I've always thought that social housing could be used in downturns in in the construction industry. And at the moment the housing sector are laying higher construction costs, lack of viability and a cautious about development. The government may have to intervene, and I hope they will use this opportunity to offer to buy private, unsold stock to sustain the industry, which otherwise could be a major setback, but also will now provide an opportunity for expand the amount of social housing that we have in this country.
So I commend to the government three areas of priority turning innovation and entrepreneurship into scale, restoring our rightful role in Europe and acting promptly now in the housing sector to avoid calamity and job losses in construction. They can't afford to delay or bluster. They must act decisively here.
14:53
Baroness McIntosh of Pickering (Conservative)
-
-
Baroness McIntosh of Pickering (Conservative)
My Lords, I'm delighted to follow the noble Lord Lord Stoneham of Droxford, who's so recently been of Droxford, who's so recently been released from his duties as what you might call the enforcer of policy on the Liberal Democrat policy on the Liberal Democrat backbenches. It was a joy to hear his contribution. I welcome the opportunity to speak in the debate on the Humble Address, and I congratulate the opening contributions from the proposer and seconder in their speeches. I was honoured to have coincided with the noble Lady Baroness Crawley in our time together in the European Parliament and pay tribute to her work both.
And here also. I was hugely impressed by the contribution from Lord Roe of West Wickham, and who has served this country with great distinction in both a military capacity and more recently with the fire service, and we look forward to many contributions of his in the future. I find myself in agreement with much of what was said in the last two speeches. I particularly like to build on the points raised by the right reverend Prelate. In her contribution, the Lord Bishop of Newcastle in particular, the challenge of the rural economy and the contribution that farming and food production can play in economic growth in rural areas.
This presents both a challenge and an opportunity. Obviously, we've seen challenges of energy supply. We've seen the challenges to farming from the hostilities in Ukraine, the ongoing hostilities both there and in the Middle East, and more recently, the clean energy proposals put forward by this government, which are primed to take 10% of some of the best farmland out of production. Whereas I believe there should be looking at other alternatives, such as nuclear. So I do welcome the contribution that nuclear will make going forward.
I'd like to pause for a moment and look at the European Partnership bill. Unlike many others, I've been following the SPS agreement and the negotiations there, and I do hope that this approach will lead to something more along the lines of the frictionless trade we were promised at the time of the referendum. Other promises noble Lords might recall were take back control. Well, in areas like immigration, that certainly has not materialised, but there is a lot that could be achieved on an ongoing basis through the SPS agreement and also building on that in this new European Partnership Bill.
I'd like to ask the noble Lord, the Minister, in summing up here in particular, if we could look at bottom, if I could spell that out, the border target operating model, which is still relatively recent in its introduction, is that something that the government is going to look at and review and refine as part of this agreement? Because I think there is scope. We were very late in putting any checks in place on imports of food and drink and plants and horticulture from EU countries, whereas our producers obviously have had delays and barriers put in by the checks and balances imposed on imports of our goods there.
So I'd be very interested to know whether or not this there is scope for further refinement of what is a relatively new development in that regard, and that is something that I would welcome in particular. I'd also like to understand some of the thinking as to why the government has proceeded on the basis of dynamic alignment in an agreement with Europe, whether other countries which are competitors to our farmers, such as New Zealand, have achieved an agreement on SPS and imports and exports with the EU of equivalence.
That is something that our farming community here would greatly have favoured, and I hope that the government will keep an open door in this regard. And I think there is coalition of agreement across the House that equivalence is a better way to proceed. Dynamic alignment would automatically mean we would have to follow EU rules, and it could retain barriers that I think it is the will of the government and of this House, that we remove the existing barriers, and we do not wish to see new barriers put in its place.
So I'd like to voice a vote of confidence in the government's negotiating skills, that we can look more to equivalence than dialect dynamic alignment. And I think that would greatly help our farmers and food producers in this country. I do hope that the government, in their clean energy proposals, that we're going to have another clean energy bill before us, that they will seek to protect the countryside as we know it. I think it is unacceptable that those who live in the countryside are going to face these massive installations, such as, indeed, the very village in which my noble friend Lord Kirkhope lives, where my goddaughter and niece also lives, the little village of Scotland and adjoining Lord Lingfield are facing all sorts of horrors, with two solar battery solar farms and a huge battery installation married to the pylons and overhead power lines that will have to transport this into the grid.
I make a plea to the government in looking to the grid, not to be obsessing about a national grid. Why are we not looking at a local grid, making sure that the electricity and energy generated can be consumed as close to the point of production as possible? I think that would be a much better way forward. If I could turn to the water bill, which I welcome both the Cunliffe review and the subsequent Water White Paper and the proposals, as were outlined in the King's Speech.
I think, however, I would add a word of caution that there are challenges of merging the economic regulation of the water sector and environmental regulation into one body. What I think clearly is missing since we left the European Union is the role of the EU Commission, backed up by the possible referral to the European Court of Justice, which had real teeth and underlying infringements by any water company. That, together with privatisation, I think has dramatically changed the way that the water sector cleaned up the act, both of our rivers and our seas in the 1980s, and I'm delighted that that took place under a conservative government.
And it is an achievement of which I, for one, am personally very proud of. So I hope that the government will take the opportunity of the water Bill also to give water companies the tools they require to do the job. I welcome the reference to looking at pre pipe solutions. I think that's where it's going woefully wrong at the moment that all the emphasis seems to be on, let's deal with the water, let's call it sewage coming out of these 4 or 5 bedroom homes.
Whereas we should actually look at pre pipe solutions that these planning applications should only be granted if there is capacity for the waste and the sewage to be disposed of safely. So let's give water companies the power to do the job. Let's make them statutory consultees in particularly major planning applications of all kinds. That includes data centres as well, as well as major housing developments and other situations as well. Let's look at more natural solutions to flooding and water resilience, making sustainable drainage systems mandatory.
And let's have more slow the flow. Water schemes such as we currently enjoy in Pickering, which has prevented Pickering and the downward communities from flooding. So I look forward to scrutinising these bills as they appear before this House. I'd like to lend my support to what the government is trying to do, but I do believe that we do need to look at, for example, areas of equivalence rather than dynamic alignment, and make sure that we do have joined up thinking when it comes to farming, food production and energy supply.
And here also. I was hugely impressed by the contribution from Lord Roe of West Wickham, and who has served this country with great distinction in both a military capacity and more recently with the fire service, and we look forward to many contributions of his in the future. I find myself in agreement with much of what was said in the last two speeches. I particularly like to build on the points raised by the right reverend Prelate. In her contribution, the Lord Bishop of Newcastle in particular, the challenge of the rural economy and the contribution that farming and food production can play in economic growth in rural areas.
This presents both a challenge and an opportunity. Obviously, we've seen challenges of energy supply. We've seen the challenges to farming from the hostilities in Ukraine, the ongoing hostilities both there and in the Middle East, and more recently, the clean energy proposals put forward by this government, which are primed to take 10% of some of the best farmland out of production. Whereas I believe there should be looking at other alternatives, such as nuclear. So I do welcome the contribution that nuclear will make going forward.
I'd like to pause for a moment and look at the European Partnership bill. Unlike many others, I've been following the SPS agreement and the negotiations there, and I do hope that this approach will lead to something more along the lines of the frictionless trade we were promised at the time of the referendum. Other promises noble Lords might recall were take back control. Well, in areas like immigration, that certainly has not materialised, but there is a lot that could be achieved on an ongoing basis through the SPS agreement and also building on that in this new European Partnership Bill.
I'd like to ask the noble Lord, the Minister, in summing up here in particular, if we could look at bottom, if I could spell that out, the border target operating model, which is still relatively recent in its introduction, is that something that the government is going to look at and review and refine as part of this agreement? Because I think there is scope. We were very late in putting any checks in place on imports of food and drink and plants and horticulture from EU countries, whereas our producers obviously have had delays and barriers put in by the checks and balances imposed on imports of our goods there.
So I'd be very interested to know whether or not this there is scope for further refinement of what is a relatively new development in that regard, and that is something that I would welcome in particular. I'd also like to understand some of the thinking as to why the government has proceeded on the basis of dynamic alignment in an agreement with Europe, whether other countries which are competitors to our farmers, such as New Zealand, have achieved an agreement on SPS and imports and exports with the EU of equivalence.
That is something that our farming community here would greatly have favoured, and I hope that the government will keep an open door in this regard. And I think there is coalition of agreement across the House that equivalence is a better way to proceed. Dynamic alignment would automatically mean we would have to follow EU rules, and it could retain barriers that I think it is the will of the government and of this House, that we remove the existing barriers, and we do not wish to see new barriers put in its place.
So I'd like to voice a vote of confidence in the government's negotiating skills, that we can look more to equivalence than dialect dynamic alignment. And I think that would greatly help our farmers and food producers in this country. I do hope that the government, in their clean energy proposals, that we're going to have another clean energy bill before us, that they will seek to protect the countryside as we know it. I think it is unacceptable that those who live in the countryside are going to face these massive installations, such as, indeed, the very village in which my noble friend Lord Kirkhope lives, where my goddaughter and niece also lives, the little village of Scotland and adjoining Lord Lingfield are facing all sorts of horrors, with two solar battery solar farms and a huge battery installation married to the pylons and overhead power lines that will have to transport this into the grid.
I make a plea to the government in looking to the grid, not to be obsessing about a national grid. Why are we not looking at a local grid, making sure that the electricity and energy generated can be consumed as close to the point of production as possible? I think that would be a much better way forward. If I could turn to the water bill, which I welcome both the Cunliffe review and the subsequent Water White Paper and the proposals, as were outlined in the King's Speech.
I think, however, I would add a word of caution that there are challenges of merging the economic regulation of the water sector and environmental regulation into one body. What I think clearly is missing since we left the European Union is the role of the EU Commission, backed up by the possible referral to the European Court of Justice, which had real teeth and underlying infringements by any water company. That, together with privatisation, I think has dramatically changed the way that the water sector cleaned up the act, both of our rivers and our seas in the 1980s, and I'm delighted that that took place under a conservative government.
And it is an achievement of which I, for one, am personally very proud of. So I hope that the government will take the opportunity of the water Bill also to give water companies the tools they require to do the job. I welcome the reference to looking at pre pipe solutions. I think that's where it's going woefully wrong at the moment that all the emphasis seems to be on, let's deal with the water, let's call it sewage coming out of these 4 or 5 bedroom homes.
Whereas we should actually look at pre pipe solutions that these planning applications should only be granted if there is capacity for the waste and the sewage to be disposed of safely. So let's give water companies the power to do the job. Let's make them statutory consultees in particularly major planning applications of all kinds. That includes data centres as well, as well as major housing developments and other situations as well. Let's look at more natural solutions to flooding and water resilience, making sustainable drainage systems mandatory.
And let's have more slow the flow. Water schemes such as we currently enjoy in Pickering, which has prevented Pickering and the downward communities from flooding. So I look forward to scrutinising these bills as they appear before this House. I'd like to lend my support to what the government is trying to do, but I do believe that we do need to look at, for example, areas of equivalence rather than dynamic alignment, and make sure that we do have joined up thinking when it comes to farming, food production and energy supply.
15:02
Lord Murphy of Torfaen (Labour)
-
-
Lord Murphy of Torfaen (Labour)
I noticed earlier on in the >> I noticed earlier on in the chamber that two of my predecessors as Secretary to Wales talked about as Secretary to Wales talked about steel. I'd like to just briefly touch on that, although it isn't the thrust of what my remarks will be about. I think it's about 60 years to the day that I attended a great rally in Sophia Gardens in Cardiff when Harold Wilson, the Prime Minister of the day, addressed us about steel nationalisation and he announced that that would be one of his first tasks.
It happened in 1967 and a great roar went up from the very large Labour Party crowd in Sophia Gardens. They were the days, weren't they, when we had those crowds there. But it reminds me that steel was hugely important not to Wales, but for our country. Integral to it, and so I'm not quite sure I agree with everything that Lord Falconer of Thoroton said. I agree with him on the emphasis for doing something about steel, and I do seriously and very seriously agree with the government on what they're going to do in their bill.
But I want to touch on, in my remarks on the European Union bill that's in front of us, and it again, has some very colourful and spirited contribution from the other side of the chamber on this issue. But what everyone took one side in the Brexit debate. The reality is that 20 odd miles away, 350 million people live and trade with us and therefore is the biggest trading partner that we've got. And it simply doesn't make sense that we don't trade with them in the best way we could possibly do.
It makes sense that with regard to the food and drink, the SPS arrangements, that we should ensure that they are in place for the industry and the business that wants those changes to come about. In my successor as Member of Parliament for the Right Honourable Nick Thomas-symonds, is doing a very good job in that regard. So it is with Erasmus. Doesn't it make sense that we have the Erasmus too, for our young people in all parts of the United Kingdom? Of course it does.
And therefore, I think those proposals are hugely important. My noble friend Lord Robertson made, as he always does, a spectacularly impressive speech about where we are with regard to defence and our global position. And I do hope that the government listens to him on his wise words. But what he did do was to tell us that the landscape in our world has changed dramatically over the last number of years, and so has the landscape with regard to the 11 million of us who live in devolved administrations in the United Kingdom.
When I was the Secretary for Wales in Northern Ireland, there was a Labour government in Cardiff, there was a Labour government in London, and there was a Labour government in Edinburgh. There was no Labour government in Northern Ireland. There was direct rule. And so I negotiated with myself on those particular issues that it was an important factor in those early days. But the world has changed. The world changed last Thursday in Wales, of course, when Plaid Cymru is now the governing party in Wales, Scotland.
After 19 years, the SNP still rule there. And in Northern Ireland, which I'll come to in a second, is rather different. But in Scotland, which voted to remain in the European Union, and where the Scottish Nationalist Party is a pro-European party, Scotland under a Labour government and indeed under an SNP one has benefited enormously from its membership of the European Union. Wales absolutely, enormously. We had the objective one. Money has come to us all those years ago, which brought billions of pounds for investment in Wales.
Wales voted to leave, but the plight of summary government is a pro-European government. In Northern Ireland, 56% of the people voted to remain. But as your Lordships know, there is deep division, generally speaking, not exclusively nationalist voted to remain and unionists wanted to leave the European Union. And the problem we then had when Brexit came was how can you reconcile the terms of the Good Friday Agreement, which was firmly based on a common membership of the European Union, the Irish government and the British government were both partners in the Union.
It meant that we could negotiate that agreement on very different terms for what had happened many years before objective money came to Northern Ireland. Billions of pounds again, social fund money, but particularly, of course, peace money came to Northern Ireland. And that meant that the nationalist and the unionist communities had to negotiate at local level in order to acquire that money on which help the peace process. And so when Brexit came, what do you do? The problem then was that Ireland remains in the European Union, and the United Kingdom is coming out of it.
And so we had the protocol, which wasn't very good. It was a start. But in fact, had they been at the time and there wasn't, the institutions in Northern Ireland, both the executive and the Assembly, that I believe they could have solved the issue of how to deal with it themselves. As it was, it was imposed and didn't work. And then we had the Windsor framework, and that was better, certainly, although in between the institutions had collapsed and which brought the Windsor framework about.
But that has been proven to be very complex, huge bureaucracy for business, and it is a democratic deficit. And so the government last year asked me to do a review into it, which I did. I made 17 recommendations. The government has accepted them. It means that we are going to have a one stop shop in Northern Ireland so people could overcome the bureaucracy. And in addition to that, steps have been taken to deal with the democratic deficit. And when we look at this EU bill that comes and the issues which surround the democratic deficit, which people argue will occur if we adopt it, then you need only look to Northern Ireland to see whether we can adopt some of the new proposals to ensure we ameliorate those difficulties.
And so I hope that in Northern Ireland, the government and I now ask my noble friend, the Minister from the Treasury, always from the Treasury, very important, that the money which has come to Northern Ireland as a result of the review that I did. But also we need more money to ensure that those recommendations are put into practice, and also that all political parties in Northern Ireland are involved on it. But my other plea to the government in the negotiations that are to come with the European Union Bill is the involvement of all the devolved administrations in this particular issue, even though it is an SNP government in Edinburgh and a primary government in Cardiff.
It does mean we have to take the people along with us and there are very different views. Of course there are, but all I know is that only benefits can come from this bill. If industry wants it, if business wants it, if the academic community in our country wants it, then surely it must be a good thing. And so it has my fullest support. Since July 2024, the wheel has fallen off. Our economy. Tax revenues and growth have fallen, and as a result of choices that Labour has made, the consequences of blighted lives made us more vulnerable to external shocks.
Living standards have stopped improving whilst we're less secure at home. So whilst government spokesman line up to blame Donald Trump, Brexit, the Tories, climate change, farmers, bankers, billionaires, everybody. Last week
It happened in 1967 and a great roar went up from the very large Labour Party crowd in Sophia Gardens. They were the days, weren't they, when we had those crowds there. But it reminds me that steel was hugely important not to Wales, but for our country. Integral to it, and so I'm not quite sure I agree with everything that Lord Falconer of Thoroton said. I agree with him on the emphasis for doing something about steel, and I do seriously and very seriously agree with the government on what they're going to do in their bill.
But I want to touch on, in my remarks on the European Union bill that's in front of us, and it again, has some very colourful and spirited contribution from the other side of the chamber on this issue. But what everyone took one side in the Brexit debate. The reality is that 20 odd miles away, 350 million people live and trade with us and therefore is the biggest trading partner that we've got. And it simply doesn't make sense that we don't trade with them in the best way we could possibly do.
It makes sense that with regard to the food and drink, the SPS arrangements, that we should ensure that they are in place for the industry and the business that wants those changes to come about. In my successor as Member of Parliament for the Right Honourable Nick Thomas-symonds, is doing a very good job in that regard. So it is with Erasmus. Doesn't it make sense that we have the Erasmus too, for our young people in all parts of the United Kingdom? Of course it does.
And therefore, I think those proposals are hugely important. My noble friend Lord Robertson made, as he always does, a spectacularly impressive speech about where we are with regard to defence and our global position. And I do hope that the government listens to him on his wise words. But what he did do was to tell us that the landscape in our world has changed dramatically over the last number of years, and so has the landscape with regard to the 11 million of us who live in devolved administrations in the United Kingdom.
When I was the Secretary for Wales in Northern Ireland, there was a Labour government in Cardiff, there was a Labour government in London, and there was a Labour government in Edinburgh. There was no Labour government in Northern Ireland. There was direct rule. And so I negotiated with myself on those particular issues that it was an important factor in those early days. But the world has changed. The world changed last Thursday in Wales, of course, when Plaid Cymru is now the governing party in Wales, Scotland.
After 19 years, the SNP still rule there. And in Northern Ireland, which I'll come to in a second, is rather different. But in Scotland, which voted to remain in the European Union, and where the Scottish Nationalist Party is a pro-European party, Scotland under a Labour government and indeed under an SNP one has benefited enormously from its membership of the European Union. Wales absolutely, enormously. We had the objective one. Money has come to us all those years ago, which brought billions of pounds for investment in Wales.
Wales voted to leave, but the plight of summary government is a pro-European government. In Northern Ireland, 56% of the people voted to remain. But as your Lordships know, there is deep division, generally speaking, not exclusively nationalist voted to remain and unionists wanted to leave the European Union. And the problem we then had when Brexit came was how can you reconcile the terms of the Good Friday Agreement, which was firmly based on a common membership of the European Union, the Irish government and the British government were both partners in the Union.
It meant that we could negotiate that agreement on very different terms for what had happened many years before objective money came to Northern Ireland. Billions of pounds again, social fund money, but particularly, of course, peace money came to Northern Ireland. And that meant that the nationalist and the unionist communities had to negotiate at local level in order to acquire that money on which help the peace process. And so when Brexit came, what do you do? The problem then was that Ireland remains in the European Union, and the United Kingdom is coming out of it.
And so we had the protocol, which wasn't very good. It was a start. But in fact, had they been at the time and there wasn't, the institutions in Northern Ireland, both the executive and the Assembly, that I believe they could have solved the issue of how to deal with it themselves. As it was, it was imposed and didn't work. And then we had the Windsor framework, and that was better, certainly, although in between the institutions had collapsed and which brought the Windsor framework about.
But that has been proven to be very complex, huge bureaucracy for business, and it is a democratic deficit. And so the government last year asked me to do a review into it, which I did. I made 17 recommendations. The government has accepted them. It means that we are going to have a one stop shop in Northern Ireland so people could overcome the bureaucracy. And in addition to that, steps have been taken to deal with the democratic deficit. And when we look at this EU bill that comes and the issues which surround the democratic deficit, which people argue will occur if we adopt it, then you need only look to Northern Ireland to see whether we can adopt some of the new proposals to ensure we ameliorate those difficulties.
And so I hope that in Northern Ireland, the government and I now ask my noble friend, the Minister from the Treasury, always from the Treasury, very important, that the money which has come to Northern Ireland as a result of the review that I did. But also we need more money to ensure that those recommendations are put into practice, and also that all political parties in Northern Ireland are involved on it. But my other plea to the government in the negotiations that are to come with the European Union Bill is the involvement of all the devolved administrations in this particular issue, even though it is an SNP government in Edinburgh and a primary government in Cardiff.
It does mean we have to take the people along with us and there are very different views. Of course there are, but all I know is that only benefits can come from this bill. If industry wants it, if business wants it, if the academic community in our country wants it, then surely it must be a good thing. And so it has my fullest support. Since July 2024, the wheel has fallen off. Our economy. Tax revenues and growth have fallen, and as a result of choices that Labour has made, the consequences of blighted lives made us more vulnerable to external shocks.
Living standards have stopped improving whilst we're less secure at home. So whilst government spokesman line up to blame Donald Trump, Brexit, the Tories, climate change, farmers, bankers, billionaires, everybody. Last week
15:10
Lord Fuller (Conservative)
-
-
Lord Fuller (Conservative)
the public pinned the tail on the donkey. They know who's to blame and Labour must now grasp that it's and Labour must now grasp that it's nobody else's fault but their own. Blaming everybody else for the way Blaming everybody else for the way in which our neighbours are faring less worse than ourselves isn't a less worse than ourselves isn't a strategy, it's a delusion. Now the Gracious Speech spoke about the cost of living, but renters rights have hiked rents to new highs, reduced supply so that the few with impaired credit or difficult circumstances won't get a roof over their head.
The government signals its intention to stop the scourge of a whole generation sitting idle. But the truth is, their Employment Rights Act stopped youngsters from getting their first Saturday job, or employers taking a chance on a graduate making a start on their careers. Everybody wants to do more for the high street, but Labour's business rates reforms have driven high street pubs and restaurants to oblivion, and now new tourism taxes will reduce demand for hospitality for an industry that's already on its knees.
No Donald Trump or Brexit hasn't done this at every step. Well-Meaning, honest intentions have made things worse, and that's because all the worthy measures announced yesterday Labour's basic ignorance of economics is the golden thread that stitches together one policy disaster with another. Working people who pay their taxes become disproportionately poorer. Unemployment is at a five year high. Inflation is showing all the signs of running out of control. Gilts are at over 20 year highs. Labour's choices have caused this.
Labour told us they would tread more lightly on our lives, in pursuance of the economic growth that would make us richer. Now we look forward to more state intervention, market distortions and counterproductive interferences that chill investment, raise uncertainty and make Britain a less attractive to do the business that pays for the state. The government should be supported in its desire to help people upskill. But like the worst sort of apprentice, Labour isn't learning on the job. There is continued denialism around the Laffer curve and tax yields.
My Lords, 0.1% of taxpayers pay 10% of all the tax raised, 10% of taxpayers contribute nearly a third of state revenues. It would be rational to attempt more of them to set up here, so that working people bear less of the taxation burden. Instead, they're chased away. It's just crazy. Worse, Labour have chosen a casual disregard for the de-industrialisation that flows from the highest energy taxes, a costs borne by our factories and chemical industries, all of which make us more reliant on strangers and makes the promise of AI investment a pipe dream.
We've seen a class war on private schools that costs more than. It saves a tax on the farmers who feed us, a tax on country sports followers who keep those country pubs going in the winter, and the cancellation of drivers of twin cab trucks who get up in the morning to work for all of us, then got the message on the cost of living with new taxes, fertiliser, taxes that will increase the prices of bread, beer and biscuits and the weekly shop unleashing an inflation disaster.
Just at the moment, the EU is stepping back from these fertiliser taxes because in all these simplistic ideas have been introduced without concerns for the second order consequences, either for the economic reality or fiscal responsibility. Everything in the Gracious Speech is grounded in ignorance. How business and trade generates wealth for ourselves. And now we get to the hub of the matter because honestly, held views do not trump economic realities. Wishful thinking is admirable. It's not a crime, but it's no substitute for proper economic understanding, because the trouble is that the Labour benches don't know the difference between the profit and loss and the balance sheet between income and capital, between assets and revenue.
To them, it's just money. And we'll have that. This financial ignorance, especially in the other place, and the economic illiteracy of their front bench, is tragic. Quite simply, they just don't understand economics. They may not like it, but believing in the bond market that channels the kindness of strangers to our shores and enables us to pay for our pensions, defence and education. Denial of that simple truth is ignorance. I only wish His Majesty had announced a measure that would enforce mandatory economic lessons for the Frontbenches.
But I live in hope. But if it was, we wouldn't see ourselves being hog tied to the EU that wants to erect a high tariff wall to keep everybody else out, and one in which we don't even have a say ourselves. Protectionism will not make us richer or grow our economy in a month of Sundays. And who knew if you made it more expensive to hire youngsters, youth unemployment would rise. Or that if you tax family businesses who employ millions and whose assets have been grown in trust for the next generation, then fresh investment will collapse.
Or even the effect of new, unadvertised changes to charitable legacies that will decimate gifts in wills to good causes, a direct harm to those who labour professes to represent. So to turn to the Gracious Speech, the idea of shaping markets sounds attractive to the untrained ear, but the state has a poor record in in picking winners and the active state. Sounds to me like introducing more risks. Distortions that harm investment, increased risks and damages growth. And when the government talks to business about partnerships, it's time to reach for your pocket book.
Governing is much more than the pursuit of petty grievances, pet projects and sixth form obsessions. At some point, the penny needs to drop that the people who pay their taxes are tired of being milked, creating 300 civil service jobs at the GB energy quango in Aberdeen is less important than protecting the thousand jobs a month in the Granite City that are disappearing, that placing a carpet of solar panels on our best and most versatile land makes our grid structurally unstable and damages our food security.
That the callous hounding of former soldiers in their twilight years harms our defences. And all the breakfast clubs in the world aren't going to repair the problems that Labour has created for itself. The greatest speech was an opportunity to weave an economic golden thread through a government in a hurry to provide the right incentives for those who just want to work hard and improve their lot, whilst rolling out the red carpet from those around the world who will co-invest in our future and contribute their taxes along the way, and in so doing, provide the fiscal headroom to pay for some of the initiatives in that speech.
To reduce humanitarian need to build social housing, to revisit Hillsborough quite extreme and impose ID cards, their choices, but without a complete understanding of what makes the economy tick, without appreciating the power of incentives, not understanding that, unleashing the creativity, innovation and optimism of the British people will make a richness in every sense of the world word, the government is doomed to fail. And so we get to the denouement because with the resignation of the Health Secretary and media reports of the Cabinet marching on Downing Street, I asked the Minister whether the Labour Party would be better off spending the next six months going on mandatory economics training, rather than fighting each other in a way that makes our nation poorer whilst making the Gracious Speech and this debate
**** Possible New Speaker ****
irrelevant. My Lords, yesterday's Gracious
**** Possible New Speaker ****
My Lords, yesterday's Gracious Speech set out government's agenda focussed on growth, investment, security and restoring Britain's standing in the world. And it comes standing in the world. And it comes at a moment when the country urgently needs honesty about the urgently needs honesty about the economic choices we face and the inheritance we got from the last
The government signals its intention to stop the scourge of a whole generation sitting idle. But the truth is, their Employment Rights Act stopped youngsters from getting their first Saturday job, or employers taking a chance on a graduate making a start on their careers. Everybody wants to do more for the high street, but Labour's business rates reforms have driven high street pubs and restaurants to oblivion, and now new tourism taxes will reduce demand for hospitality for an industry that's already on its knees.
No Donald Trump or Brexit hasn't done this at every step. Well-Meaning, honest intentions have made things worse, and that's because all the worthy measures announced yesterday Labour's basic ignorance of economics is the golden thread that stitches together one policy disaster with another. Working people who pay their taxes become disproportionately poorer. Unemployment is at a five year high. Inflation is showing all the signs of running out of control. Gilts are at over 20 year highs. Labour's choices have caused this.
Labour told us they would tread more lightly on our lives, in pursuance of the economic growth that would make us richer. Now we look forward to more state intervention, market distortions and counterproductive interferences that chill investment, raise uncertainty and make Britain a less attractive to do the business that pays for the state. The government should be supported in its desire to help people upskill. But like the worst sort of apprentice, Labour isn't learning on the job. There is continued denialism around the Laffer curve and tax yields.
My Lords, 0.1% of taxpayers pay 10% of all the tax raised, 10% of taxpayers contribute nearly a third of state revenues. It would be rational to attempt more of them to set up here, so that working people bear less of the taxation burden. Instead, they're chased away. It's just crazy. Worse, Labour have chosen a casual disregard for the de-industrialisation that flows from the highest energy taxes, a costs borne by our factories and chemical industries, all of which make us more reliant on strangers and makes the promise of AI investment a pipe dream.
We've seen a class war on private schools that costs more than. It saves a tax on the farmers who feed us, a tax on country sports followers who keep those country pubs going in the winter, and the cancellation of drivers of twin cab trucks who get up in the morning to work for all of us, then got the message on the cost of living with new taxes, fertiliser, taxes that will increase the prices of bread, beer and biscuits and the weekly shop unleashing an inflation disaster.
Just at the moment, the EU is stepping back from these fertiliser taxes because in all these simplistic ideas have been introduced without concerns for the second order consequences, either for the economic reality or fiscal responsibility. Everything in the Gracious Speech is grounded in ignorance. How business and trade generates wealth for ourselves. And now we get to the hub of the matter because honestly, held views do not trump economic realities. Wishful thinking is admirable. It's not a crime, but it's no substitute for proper economic understanding, because the trouble is that the Labour benches don't know the difference between the profit and loss and the balance sheet between income and capital, between assets and revenue.
To them, it's just money. And we'll have that. This financial ignorance, especially in the other place, and the economic illiteracy of their front bench, is tragic. Quite simply, they just don't understand economics. They may not like it, but believing in the bond market that channels the kindness of strangers to our shores and enables us to pay for our pensions, defence and education. Denial of that simple truth is ignorance. I only wish His Majesty had announced a measure that would enforce mandatory economic lessons for the Frontbenches.
But I live in hope. But if it was, we wouldn't see ourselves being hog tied to the EU that wants to erect a high tariff wall to keep everybody else out, and one in which we don't even have a say ourselves. Protectionism will not make us richer or grow our economy in a month of Sundays. And who knew if you made it more expensive to hire youngsters, youth unemployment would rise. Or that if you tax family businesses who employ millions and whose assets have been grown in trust for the next generation, then fresh investment will collapse.
Or even the effect of new, unadvertised changes to charitable legacies that will decimate gifts in wills to good causes, a direct harm to those who labour professes to represent. So to turn to the Gracious Speech, the idea of shaping markets sounds attractive to the untrained ear, but the state has a poor record in in picking winners and the active state. Sounds to me like introducing more risks. Distortions that harm investment, increased risks and damages growth. And when the government talks to business about partnerships, it's time to reach for your pocket book.
Governing is much more than the pursuit of petty grievances, pet projects and sixth form obsessions. At some point, the penny needs to drop that the people who pay their taxes are tired of being milked, creating 300 civil service jobs at the GB energy quango in Aberdeen is less important than protecting the thousand jobs a month in the Granite City that are disappearing, that placing a carpet of solar panels on our best and most versatile land makes our grid structurally unstable and damages our food security.
That the callous hounding of former soldiers in their twilight years harms our defences. And all the breakfast clubs in the world aren't going to repair the problems that Labour has created for itself. The greatest speech was an opportunity to weave an economic golden thread through a government in a hurry to provide the right incentives for those who just want to work hard and improve their lot, whilst rolling out the red carpet from those around the world who will co-invest in our future and contribute their taxes along the way, and in so doing, provide the fiscal headroom to pay for some of the initiatives in that speech.
To reduce humanitarian need to build social housing, to revisit Hillsborough quite extreme and impose ID cards, their choices, but without a complete understanding of what makes the economy tick, without appreciating the power of incentives, not understanding that, unleashing the creativity, innovation and optimism of the British people will make a richness in every sense of the world word, the government is doomed to fail. And so we get to the denouement because with the resignation of the Health Secretary and media reports of the Cabinet marching on Downing Street, I asked the Minister whether the Labour Party would be better off spending the next six months going on mandatory economics training, rather than fighting each other in a way that makes our nation poorer whilst making the Gracious Speech and this debate
**** Possible New Speaker ****
irrelevant. My Lords, yesterday's Gracious
**** Possible New Speaker ****
My Lords, yesterday's Gracious Speech set out government's agenda focussed on growth, investment, security and restoring Britain's standing in the world. And it comes standing in the world. And it comes at a moment when the country urgently needs honesty about the urgently needs honesty about the economic choices we face and the inheritance we got from the last
15:19
Baroness Gill (Labour)
-
-
Baroness Gill (Labour)
government. I found it rich listening to Lord Fuller, my noble listening to Lord Fuller, my noble Lord Fuller, because we are creating the mess that you left us with. And I think, you know, the government deserves credit for government deserves credit for recognising that Britain cannot prosper through isolation. Recent prosper through isolation. Recent trade agreements with India and Republic of Korea, and stronger engagement with the UAE are positive steps that will create opportunities for British businesses.
But we must also level with the public. Those agreements are not large enough to compensate for the weakened trade we have with Europe, our largest market, our closest economic partner. For years, the British public were sold a narrative that leaving the European Union would automatically unleash growth and prosperity. Instead, over the last six years, Britain has experienced weaker growth, lower business investment, reduced exports and stagnant productivity compared with many comparable economies.
The consequences are no longer abstract economic arguments. They are being felt directly in people's lives. Small businesses that once traded freely across Europe now face customs checks, export paperwork, VAT complications and regulatory barriers that mean simply they cannot absorb. Food. Exporters have lost markets. Manufacturers have faced delays and rising supply chain costs. Independent retailers importing goods from Europe have had little choice but to pass increased costs onto the consumers, and ordinary families have paid the price.
Higher food prices, labour shortages, increased transport costs and supply chain disruptions have all contributed to pressures on household budgets. During an already severe cost of living crisis. Britain outside the EU has not become more economically dynamic in many ways. It has become more economically constrained. But this debate is now more about is now about more than economies alone. It is about Britain's place in an increasingly dangerous world. The war in Ukraine has fundamentally changed Europe's security landscape.
Russian aggression has reminded us that peace and stability can never be taken for granted. At the same time, the growing threat posed by Iran through regional destabilisation, proxy conflicts, cyber threats and support for extremist groups demonstrates how interconnected modern security challenges have become. This, these crises and the threats we face were eloquently articulated by my friend Lord Robertson. And I think it's important that this House and the government takes his speech and his comments very, very seriously because we're in this environment and Britain cannot afford strategic isolation outside the European Union.
We are no longer fully integrated into many of the defence, industrial, procurement and strategic initiatives shaping Europe's future security architecture. That matters not only militarily but economically too. Defence procurement, advanced manufacturing, cyber security, energy resilience and technology investment increasingly depend on large scale European cooperation. No serious country can confront these challenges alone. Intelligence sharing, sanctions enforcement, energy security and defence, manufacturing, and technological resilience all require deeper collaboration with our neighbours.
The idea that Britain can go it alone in a world shaped by Russian aggression, instability in the Middle East and intensifying global competition is not realism. It is a dangerous illusion. This is why the debate must move beyond simply managing Brexit towards correcting its long term consequences. Rebuilding a closer partnership with Europe is no longer optional. It is essential, and ultimately, Britain should be prepared to make the case for rejoining the European Union because the economic case is overwhelming.
Rejoining the EU would restore Britain's access to the single market and customs union, removing barriers that currently damage trade and investment and growth. It would also strengthen supply chains, restore investor confidence and make exporting easier for British businesses once again. Independent economic analysis has consistently suggested that closer integration with Europe could increase UK GDP by several percentage points over time, adding tens of billions of pounds to the economy, increasing tax revenues and improving productivity, and supporting higher wages and living standards.
That would mean lower costs for businesses, cheaper imports for consumers and renewed investment in science and manufacturing, and greater opportunities for the creative and young people to work and study across Europe. It would also mean that Britain once again helping shape the the decisions that affect our continent, rather than standing United States, more attractive to the investors and better able to compete in a rapidly changing world. Yesterday's Gracious Speech acknowledged that Britain needs growth, stability and renewed international leadership.
The challenge now is to match that ambition with honesty and courage to admit where mistakes have been made, reject the politics of isolation and pursue a serious new relationship with Europe that restores prosperity and strengthens our security. Because the greatest danger facing Britain today is not change. It is refusing to change course. When the evidence is clear for all of us to see. My Lords, like others.
But we must also level with the public. Those agreements are not large enough to compensate for the weakened trade we have with Europe, our largest market, our closest economic partner. For years, the British public were sold a narrative that leaving the European Union would automatically unleash growth and prosperity. Instead, over the last six years, Britain has experienced weaker growth, lower business investment, reduced exports and stagnant productivity compared with many comparable economies.
The consequences are no longer abstract economic arguments. They are being felt directly in people's lives. Small businesses that once traded freely across Europe now face customs checks, export paperwork, VAT complications and regulatory barriers that mean simply they cannot absorb. Food. Exporters have lost markets. Manufacturers have faced delays and rising supply chain costs. Independent retailers importing goods from Europe have had little choice but to pass increased costs onto the consumers, and ordinary families have paid the price.
Higher food prices, labour shortages, increased transport costs and supply chain disruptions have all contributed to pressures on household budgets. During an already severe cost of living crisis. Britain outside the EU has not become more economically dynamic in many ways. It has become more economically constrained. But this debate is now more about is now about more than economies alone. It is about Britain's place in an increasingly dangerous world. The war in Ukraine has fundamentally changed Europe's security landscape.
Russian aggression has reminded us that peace and stability can never be taken for granted. At the same time, the growing threat posed by Iran through regional destabilisation, proxy conflicts, cyber threats and support for extremist groups demonstrates how interconnected modern security challenges have become. This, these crises and the threats we face were eloquently articulated by my friend Lord Robertson. And I think it's important that this House and the government takes his speech and his comments very, very seriously because we're in this environment and Britain cannot afford strategic isolation outside the European Union.
We are no longer fully integrated into many of the defence, industrial, procurement and strategic initiatives shaping Europe's future security architecture. That matters not only militarily but economically too. Defence procurement, advanced manufacturing, cyber security, energy resilience and technology investment increasingly depend on large scale European cooperation. No serious country can confront these challenges alone. Intelligence sharing, sanctions enforcement, energy security and defence, manufacturing, and technological resilience all require deeper collaboration with our neighbours.
The idea that Britain can go it alone in a world shaped by Russian aggression, instability in the Middle East and intensifying global competition is not realism. It is a dangerous illusion. This is why the debate must move beyond simply managing Brexit towards correcting its long term consequences. Rebuilding a closer partnership with Europe is no longer optional. It is essential, and ultimately, Britain should be prepared to make the case for rejoining the European Union because the economic case is overwhelming.
Rejoining the EU would restore Britain's access to the single market and customs union, removing barriers that currently damage trade and investment and growth. It would also strengthen supply chains, restore investor confidence and make exporting easier for British businesses once again. Independent economic analysis has consistently suggested that closer integration with Europe could increase UK GDP by several percentage points over time, adding tens of billions of pounds to the economy, increasing tax revenues and improving productivity, and supporting higher wages and living standards.
That would mean lower costs for businesses, cheaper imports for consumers and renewed investment in science and manufacturing, and greater opportunities for the creative and young people to work and study across Europe. It would also mean that Britain once again helping shape the the decisions that affect our continent, rather than standing United States, more attractive to the investors and better able to compete in a rapidly changing world. Yesterday's Gracious Speech acknowledged that Britain needs growth, stability and renewed international leadership.
The challenge now is to match that ambition with honesty and courage to admit where mistakes have been made, reject the politics of isolation and pursue a serious new relationship with Europe that restores prosperity and strengthens our security. Because the greatest danger facing Britain today is not change. It is refusing to change course. When the evidence is clear for all of us to see. My Lords, like others.
15:27
Baroness Ludford (Liberal Democrat)
-
-
Baroness Ludford (Liberal Democrat)
I wish to speak about EU partnership and I very much agree partnership and I very much agree with the remarks of the noble Lady, Baroness Gill, as my Lib Dem group Baroness Gill, as my Lib Dem group leader, Lord Purvis of Tweed said yesterday, it is a strategic priority that we make real progress priority that we make real progress for a reunion with our close allies in the customs union and single market, and then EU membership, which remains our long term objective.
The reason for this Liberal Democrat clear and ambitious aspiration is that it makes sense for both our security and our economy. So it is very hard headed on the geopolitical and security aspects to be debated next Thursday. I just repeat my own view, for what it's worth, that the that Prime Minister Starmer has done a good job on Ukraine and in placing the UK as a firm member of the security partnership in Europe with maybe a new European Security Council.
And thank goodness for that, given the dangerous and unpredictable state of the world, as others, including my noble friend Lord Strasburger pointed out. But in trade and economic affairs, progress is pretty slow. While the need is pressing. And it is absurd for some to say that voters have to be stuck with a decision made a decade ago. It is striking that this is an example of where the boldness that dissatisfied Labour voices are currently calling for is missing. Labour's red lines, including on free movement, are not in the national interest free movement in Europe, especially now with more prosperous economies in central and Eastern Europe than there were 20 years ago, means much lower immigration than we've had under conservative governments.
Opened the door to immigration from around the world. I in. I entirely agree with the noble Lord, Lord Liddle, that the Brexit damage dwarfs the tiny benefits of any post-Brexit trade deals. We. We. We are familiar with the figures. Brexit has reduced our GDP by up to 8% between 4 and 8%, which means a loss per capita of £3,700 per capita and around £90 billion in foregone tax revenue. A Brexit black hole. As far as I know, there are no specific proposals in the government's plans for easing of trade in services.
But perhaps a noble Lady. The Minister could correct me if I'm wrong. My noble friend Lord Strasburger rightly stressed the importance and overlooked importance of the creative arts sector bashed by Brexit. The topic of services is also raised by the Law Society, which points out that the reset has so far failed to produce any proposals for legally binding, legally binding arrangements to address services trade, such as legal services, for which the EU is a £3 billion market for the UK.
They want action on business mobility as well as youth mobility and mutual recognition of professional qualifications. I'd be interested to know if there's anything in the pipeline on these, and if there's any prospect of progress on civil Jewish judicial cooperation, improving access to justice and consumer protection for British and EU citizens. We also, of course, need progress on police and criminal cooperation. As my noble friend Lord Fox said in opening. But civil legal alignment is very relevant to the economic debate we're having today.
Top of the list for a new deal with the EU is on food and drink, trade on the mouth, twisting sanitary and phytosanitary agreement. This would represent significant improvement in slimming Brexit red tape by removing physical routine checks and the burden of certification, documentation and registration. The chief vet I heard on the radio I think it was just this morning, but it was a bit early, pointed out the importance of tackling threats of diseases like swine liver, that this SPS agreement could provide because the UK would get access to EU databases and intelligence that will aid detection.
It will be important not only for UK, EU trade but also for trade, particularly in agri food within the UK, as it will align the rules in GB and Northern Ireland and help to address the hesitation we have heard about on the Northern Ireland Scrutiny Committee. For GB firms to do business with those in Northern Ireland. The removal of the quote not for EU label through an interaction of the Windsor framework and an SPS agreement will also be very helpful.
I applaud the work that the noble Lord, Lord Murphy, who spoke earlier, did in his important review, and I'm glad that the government has accepted his recommendations. The. The Minister, Lady Anderson, referred earlier to the work on Inter Trade UK of the noble Lady Baroness Prosser, and I know from my membership with her on the Northern Ireland Scrutiny Committee how well qualified she is for that vital work I attended last night. A reception at the Irish Embassy for trade NI, which brings together retail, hospitality and manufacturing businesses.
Their document points out that whilst all economies have been impacted by inflation, Northern Ireland businesses have had to absorb higher post-Brexit trading and logistics costs linked to the Windsor framework, particularly those importing goods from Great Britain, and one of their priorities is to mitigate supply chain and post-Brexit cost pressures, including certification and logistics burdens. However, an SPS agreement will still leave the customs declarations and requirements that all UK exporters to the EU have to contend with, hence the value of what the Lib Dems are calling for in the immediate, which is a customs union with the EU which, as my noble friend Lord Fox stressed, could turbocharge growth.
I think I heard the noble Lady Baroness Anderson earlier referred to upholding British standards. Well, the EU partnership Bill will provide a mechanism for the UK to dynamically align with EU law sector by sector, not only those already being worked on, but perhaps other future deals. Now the upside here is free flowing, frictionless trade. The downside is that we will have to take our instructions on the facts from Brussels. Brussels without having a say. I think anyone who has ever been involved in EU legislative decision making, whether as an MEP like me or in the Council of Ministers, will find that hard to swallow.
And despite the fashionable claim of decision shaping any British influence in contributing thoughts and suggestions will be modest. As the saying goes, if you're not on the table then you're probably on the menu, so I will accept that while the UK has to make a start somewhere in reversing the disaster of Brexit, this undemocratic lack of a voice cannot last long, nor can Henry VII's powers. But while it lasts, we have to strengthen UK influence in UK. In EU bodies, boosting the role and capacity of our mission in Brussels, relations with the European Parliament and its committees, as well as the Commission with the Parliamentary Partnership Assembly and with important input from business and civil society.
And we need to think carefully about how Parliament is going to be involved in this process. And the other place needs to think about its arrangements, because it currently doesn't even have a European committee. There have been derogatory remarks made about regulation, but the noble Lady, Baroness McIntosh, made an excellent point about the effectiveness of EU enforcement. The only reason we have the Thames Tideway super sewer is because, with a push from the European Parliament following a petition from me 20 years ago, the Commission took infringement action and the Court of Justice ruled.
Compare that to the feeble performance of Ofwat and the Environment Agency in allowing ongoing sewage discharges. The King's Speech yesterday referred to maintenance of stability. I hope we are going to get stable government going forward, which is able to carry through an ambitious
**** Possible New Speaker ****
programme of EU research. My Lords, Lord Shinkwin is taking part remotely. I invite Lord
**** Possible New Speaker ****
Shinkwin to speak. My thoughts. My noble friend
**** Possible New Speaker ****
My thoughts. My noble friend Lord Hunt of Wirral mentioned value for money, taxpayers and businesses, for money, taxpayers and businesses, confidence to contribute to economic growth, whether through the consumption of goods and services, investment or job creation must go hand in hand with the confidence that all government policy is developed and evaluated
The reason for this Liberal Democrat clear and ambitious aspiration is that it makes sense for both our security and our economy. So it is very hard headed on the geopolitical and security aspects to be debated next Thursday. I just repeat my own view, for what it's worth, that the that Prime Minister Starmer has done a good job on Ukraine and in placing the UK as a firm member of the security partnership in Europe with maybe a new European Security Council.
And thank goodness for that, given the dangerous and unpredictable state of the world, as others, including my noble friend Lord Strasburger pointed out. But in trade and economic affairs, progress is pretty slow. While the need is pressing. And it is absurd for some to say that voters have to be stuck with a decision made a decade ago. It is striking that this is an example of where the boldness that dissatisfied Labour voices are currently calling for is missing. Labour's red lines, including on free movement, are not in the national interest free movement in Europe, especially now with more prosperous economies in central and Eastern Europe than there were 20 years ago, means much lower immigration than we've had under conservative governments.
Opened the door to immigration from around the world. I in. I entirely agree with the noble Lord, Lord Liddle, that the Brexit damage dwarfs the tiny benefits of any post-Brexit trade deals. We. We. We are familiar with the figures. Brexit has reduced our GDP by up to 8% between 4 and 8%, which means a loss per capita of £3,700 per capita and around £90 billion in foregone tax revenue. A Brexit black hole. As far as I know, there are no specific proposals in the government's plans for easing of trade in services.
But perhaps a noble Lady. The Minister could correct me if I'm wrong. My noble friend Lord Strasburger rightly stressed the importance and overlooked importance of the creative arts sector bashed by Brexit. The topic of services is also raised by the Law Society, which points out that the reset has so far failed to produce any proposals for legally binding, legally binding arrangements to address services trade, such as legal services, for which the EU is a £3 billion market for the UK.
They want action on business mobility as well as youth mobility and mutual recognition of professional qualifications. I'd be interested to know if there's anything in the pipeline on these, and if there's any prospect of progress on civil Jewish judicial cooperation, improving access to justice and consumer protection for British and EU citizens. We also, of course, need progress on police and criminal cooperation. As my noble friend Lord Fox said in opening. But civil legal alignment is very relevant to the economic debate we're having today.
Top of the list for a new deal with the EU is on food and drink, trade on the mouth, twisting sanitary and phytosanitary agreement. This would represent significant improvement in slimming Brexit red tape by removing physical routine checks and the burden of certification, documentation and registration. The chief vet I heard on the radio I think it was just this morning, but it was a bit early, pointed out the importance of tackling threats of diseases like swine liver, that this SPS agreement could provide because the UK would get access to EU databases and intelligence that will aid detection.
It will be important not only for UK, EU trade but also for trade, particularly in agri food within the UK, as it will align the rules in GB and Northern Ireland and help to address the hesitation we have heard about on the Northern Ireland Scrutiny Committee. For GB firms to do business with those in Northern Ireland. The removal of the quote not for EU label through an interaction of the Windsor framework and an SPS agreement will also be very helpful.
I applaud the work that the noble Lord, Lord Murphy, who spoke earlier, did in his important review, and I'm glad that the government has accepted his recommendations. The. The Minister, Lady Anderson, referred earlier to the work on Inter Trade UK of the noble Lady Baroness Prosser, and I know from my membership with her on the Northern Ireland Scrutiny Committee how well qualified she is for that vital work I attended last night. A reception at the Irish Embassy for trade NI, which brings together retail, hospitality and manufacturing businesses.
Their document points out that whilst all economies have been impacted by inflation, Northern Ireland businesses have had to absorb higher post-Brexit trading and logistics costs linked to the Windsor framework, particularly those importing goods from Great Britain, and one of their priorities is to mitigate supply chain and post-Brexit cost pressures, including certification and logistics burdens. However, an SPS agreement will still leave the customs declarations and requirements that all UK exporters to the EU have to contend with, hence the value of what the Lib Dems are calling for in the immediate, which is a customs union with the EU which, as my noble friend Lord Fox stressed, could turbocharge growth.
I think I heard the noble Lady Baroness Anderson earlier referred to upholding British standards. Well, the EU partnership Bill will provide a mechanism for the UK to dynamically align with EU law sector by sector, not only those already being worked on, but perhaps other future deals. Now the upside here is free flowing, frictionless trade. The downside is that we will have to take our instructions on the facts from Brussels. Brussels without having a say. I think anyone who has ever been involved in EU legislative decision making, whether as an MEP like me or in the Council of Ministers, will find that hard to swallow.
And despite the fashionable claim of decision shaping any British influence in contributing thoughts and suggestions will be modest. As the saying goes, if you're not on the table then you're probably on the menu, so I will accept that while the UK has to make a start somewhere in reversing the disaster of Brexit, this undemocratic lack of a voice cannot last long, nor can Henry VII's powers. But while it lasts, we have to strengthen UK influence in UK. In EU bodies, boosting the role and capacity of our mission in Brussels, relations with the European Parliament and its committees, as well as the Commission with the Parliamentary Partnership Assembly and with important input from business and civil society.
And we need to think carefully about how Parliament is going to be involved in this process. And the other place needs to think about its arrangements, because it currently doesn't even have a European committee. There have been derogatory remarks made about regulation, but the noble Lady, Baroness McIntosh, made an excellent point about the effectiveness of EU enforcement. The only reason we have the Thames Tideway super sewer is because, with a push from the European Parliament following a petition from me 20 years ago, the Commission took infringement action and the Court of Justice ruled.
Compare that to the feeble performance of Ofwat and the Environment Agency in allowing ongoing sewage discharges. The King's Speech yesterday referred to maintenance of stability. I hope we are going to get stable government going forward, which is able to carry through an ambitious
**** Possible New Speaker ****
programme of EU research. My Lords, Lord Shinkwin is taking part remotely. I invite Lord
**** Possible New Speaker ****
Shinkwin to speak. My thoughts. My noble friend
**** Possible New Speaker ****
My thoughts. My noble friend Lord Hunt of Wirral mentioned value for money, taxpayers and businesses, for money, taxpayers and businesses, confidence to contribute to economic growth, whether through the consumption of goods and services, investment or job creation must go hand in hand with the confidence that all government policy is developed and evaluated
15:36
Lord Shinkwin (Conservative)
-
-
Lord Shinkwin (Conservative)
through the lens of value for money. Confidence in each of two sides of Confidence in each of two sides of the same coin. At a time when the cost of living is. As we've heard cost of living is. As we've heard during this debate, increasing immeasurably, it is surely even immeasurably, it is surely even more essential that taxpayers know that their money will not be wasted. My Lords, I hope we can all agree that however many noughts there are, the principle remains the same value for money, transparency and trust matter.
That is why I am introducing a private member's bill on value for money in the policy area, where it could be argued value for money has never been more important. Disability. At a time when the disability employment gap remains at around 30%, and the increasing cost of disability benefits threatens to bankrupt the very welfare system on which so many depend. My bill will enable transparency specifically in relation to what government departments are spending on employer disability membership organisations.
It will provide for scrutiny of both the criteria used to safeguard value for money, and the extent to which those criteria have been met. At the moment, it's far from clear what those criteria are and whether they are being met. The Business Disability Forum is a case in point. This is an organisation which, according to analysis by Professor Tim Holt at King's College London, and professor Nick Beighton at Bayes Business School of more than 132,000 job adverts and survey data from more than 160,000 employees, is failing to deliver better outcomes for its members, whose members are less likely than non-members to offer guaranteed interviews in the recruitment process to disabled applicants, and none of whose members offered well.
And just 3.6% of his adverts offer reasonable adjustments on account of disability. Moreover, BGF members are proportionately more likely to employ disabled people than are non-members, and disabled members employed by BGF member organisations report poorer job related mental health and lower job satisfaction than those employed by non-members. Yet bizarrely, according to the same research, government departments are among the highest contributors to the. With the Cabinet Office spending £26,400 for its 2020 425 partnership status, membership and the Department of Transport spending 25,200 of taxpayers money spending 25,200 of taxpayers money as well.
In 2025 alone, BGF earns 652,580 in government contracts. That's more than double the previous year. I'd be grateful if the noble Lord Prime Minister to explain both how that represents value for money and how such an arrangement does not qualify as borderline corruption. I don't use that term lightly, and I'm not accusing the government of corruption, but I do worry that it has got itself into an invidious position whereby it's giving taxpayers money to an organisation, the BGF, that is at the same time seeking to influence government policy.
Yesterday's failure by the government to honour in the King's Speech its manifesto promise of legislation to mandate the reporting of ethnicity and disability pay gap reporting by organisations of more than 250 employees provides a prime example of the pernicious influence in favour of the status quo, to the disadvantage of both disabled people and the taxpayer. Indeed, the research I've mentioned shows that a transparent, mandatory reporting system wouldn't cost BGF members in a particularly favourable light.
Furthermore, the introduction of generic rules for organisations with over 250 employees could also result in a dramatic fall in their syntax, given that they rely on charging members for bespoke solutions. So the sustainability of its business model depends on the status quo. And while this happens, the taxpayer foots the bill. Now, as a conservative, I subscribe absolutely to the wisdom of if it ain't broke, don't fix it. But my Lords, no one to possibly.
Artie, that disability employment ain't broke and doesn't need fixing urgently. It may not be a panacea, but on the basis that what gets measured gets done. Mandatory reporting would help by injecting transparency and consistency into how we incentivise and reward employers to harness the untapped talent of disabled people and people from minority ethnic backgrounds. Through recruitment and, crucially, to their progression to everyone's benefits. It is a win win situation, which is why Diane Grayson, the founder of the Ethnicity Paid campaign, and I are deeply disappointed that the legislation was not in the King's Speech.
In closing and on a cross-party basis, to enable Lords Minister to say what message he thinks its omission sends to disabled people and people from minority ethnic backgrounds about the commitment this government has to extending equality of opportunity and to the. Asked it to confirm that the legislations are missing in yesterday's King's Speech does not preclude such a measure still being introduced in this session.
That is why I am introducing a private member's bill on value for money in the policy area, where it could be argued value for money has never been more important. Disability. At a time when the disability employment gap remains at around 30%, and the increasing cost of disability benefits threatens to bankrupt the very welfare system on which so many depend. My bill will enable transparency specifically in relation to what government departments are spending on employer disability membership organisations.
It will provide for scrutiny of both the criteria used to safeguard value for money, and the extent to which those criteria have been met. At the moment, it's far from clear what those criteria are and whether they are being met. The Business Disability Forum is a case in point. This is an organisation which, according to analysis by Professor Tim Holt at King's College London, and professor Nick Beighton at Bayes Business School of more than 132,000 job adverts and survey data from more than 160,000 employees, is failing to deliver better outcomes for its members, whose members are less likely than non-members to offer guaranteed interviews in the recruitment process to disabled applicants, and none of whose members offered well.
And just 3.6% of his adverts offer reasonable adjustments on account of disability. Moreover, BGF members are proportionately more likely to employ disabled people than are non-members, and disabled members employed by BGF member organisations report poorer job related mental health and lower job satisfaction than those employed by non-members. Yet bizarrely, according to the same research, government departments are among the highest contributors to the. With the Cabinet Office spending £26,400 for its 2020 425 partnership status, membership and the Department of Transport spending 25,200 of taxpayers money spending 25,200 of taxpayers money as well.
In 2025 alone, BGF earns 652,580 in government contracts. That's more than double the previous year. I'd be grateful if the noble Lord Prime Minister to explain both how that represents value for money and how such an arrangement does not qualify as borderline corruption. I don't use that term lightly, and I'm not accusing the government of corruption, but I do worry that it has got itself into an invidious position whereby it's giving taxpayers money to an organisation, the BGF, that is at the same time seeking to influence government policy.
Yesterday's failure by the government to honour in the King's Speech its manifesto promise of legislation to mandate the reporting of ethnicity and disability pay gap reporting by organisations of more than 250 employees provides a prime example of the pernicious influence in favour of the status quo, to the disadvantage of both disabled people and the taxpayer. Indeed, the research I've mentioned shows that a transparent, mandatory reporting system wouldn't cost BGF members in a particularly favourable light.
Furthermore, the introduction of generic rules for organisations with over 250 employees could also result in a dramatic fall in their syntax, given that they rely on charging members for bespoke solutions. So the sustainability of its business model depends on the status quo. And while this happens, the taxpayer foots the bill. Now, as a conservative, I subscribe absolutely to the wisdom of if it ain't broke, don't fix it. But my Lords, no one to possibly.
Artie, that disability employment ain't broke and doesn't need fixing urgently. It may not be a panacea, but on the basis that what gets measured gets done. Mandatory reporting would help by injecting transparency and consistency into how we incentivise and reward employers to harness the untapped talent of disabled people and people from minority ethnic backgrounds. Through recruitment and, crucially, to their progression to everyone's benefits. It is a win win situation, which is why Diane Grayson, the founder of the Ethnicity Paid campaign, and I are deeply disappointed that the legislation was not in the King's Speech.
In closing and on a cross-party basis, to enable Lords Minister to say what message he thinks its omission sends to disabled people and people from minority ethnic backgrounds about the commitment this government has to extending equality of opportunity and to the. Asked it to confirm that the legislations are missing in yesterday's King's Speech does not preclude such a measure still being introduced in this session.
15:45
Lord Sikka (Labour)
-
-
Lord Sikka (Labour)
My Lords, it. >> Will take a long time to undo the damage done by 14 years of conservative rule. However, that conservative rule. However, that task has been made difficult as the government's ambition on so many government's ambition on so many fronts is not matched by actions. I welcome the attempts to build closer relationship with the European Union, though that won't fully undo the damage inflicted by Brexit. The energy resilience proposed by the Energy Independence Bill and the increase and extension of windfall tax on electricity generators from 45% to 55%, as promised by the Electricity Generator Levy Bill, is most welcome.
Can the Minister explain why there is no comprehensive plan to kerb profiteering by energy companies? Since 2020, their UK operations have made profits of over 125,000,000,000/120 000 people in this country die in fuel poverty every year. Surely that deserves some kind of a government response. I have misgivings about the Highway Financing Bill, which promotes the dreaded private finance initiative, though under another name. Previous PFI schemes resulted in £6 repayment for every £1 of private investment in infrastructure.
Government can fund projects at lower costs through borrowing, or it can also issue public bonds. But such alternatives are ignored. The. The 129 pages of background notes miss out the word manufacturing altogether, even though every £1 of manufacturing activity supports a further £1.8 through multiplier effects. Can the Minister explain the government's plans for self-sufficiency in semiconductors? Rare earth minerals, bricks, cement, auto, medicines and other essential items to increase economic resilience? The regulatory consolidation offered by the Enhancing Financial Services Bill is welcome, though I am concerned that the reforms are framed around phrases such as competitiveness and regulatory simplification, which are buzzwords for deregulation.
They have so far facilitated abolition of the post 2008 crash constraints and weaken consumer protection. The government's briefing notes make no mention of the social cost of deregulation. So can the Minister explain also why there is no attempt to regulate private equity, which is devouring a hospitals, care homes, veterinary services, supermarkets, water, energy, retail and other businesses? The so-called industry friendly reforms of the Financial Ombudsman will weaken consumer protection, and there is a complete silence on how the UK institutions cover up fraud and financial abuses.
We are still waiting for investigation of the 1991 closure of the fraud ridden Bank of Credit and Commerce International. In this House, I have asked questions about the failure to tackle HSBC after. After it was fined $1.9 billion in the US in 2012 for facilitating money laundering. The then Chancellor, George Osborne, and regulator secretly urged the US authorities to go easy on the bank. The response to my questions in this House has been ministerial silence.
On numerous occasions in this House I have referred to hmo's frauds which date back to year 2002 and between 2002 and 2007, regulatory inertia and ministerial indifference have denied compensation to victims, even after the courts have established criminality. What good is an ombudsman system when Ministers and regulators sweep financial crimes under the carpet? There are mixed messages from the government about nationalisation. I welcome nationalisation of British Steel, but why are other steel producers not to be nationalised? Tata steel also receives a subsidies government in return has not taken an equity stake or a seat on the board.
Why is this free money being given to companies for distribution to their dividend, to their shareholders? I welcome the Railways and Passenger Benefits Bill to establish Great British Railways and Unite track and train management under a single body. However, why is no attempt made to bring lucrative freight and rolling stock companies into public ownership? These rolling stock companies have a profit margin of 41.6%. There is absolutely no justification for that. People are being told that nationalisation of rail passenger services and British Steel is in the public interest.
Well, so is nationalisation of water, energy, mail, social care and other essential services. Why are those things after political agenda altogether sustained economic growth, which is the government's aim, cannot be achieved unless people have good purchasing power. 25.3 million people live in households below the minimum income standard. A major cause is the erosion of workers share of gross value added. That is GVA. In 1975, workers share of GVA was 71.9%. By 2025. Despite economic growth in the intervening years, it has declined to 59.7%.
There is a huge transfer of wealth from labour to capital, and it has coincided with lower rates of corporation tax. The headline corporation tax rate in 1974 was 52%, compared to 25% now. The massive increase in capital share of the economy has not resulted in higher investment in productive assets. In 2025, the UK invested 18.9% of GDP in productive assets. That is the lowest amongst G7 nations. For the last 30 years, the UK has been at or near the bottom of the OECD League of Investment.
Inevitably, productivity and economic growth is low. So can the Minister explain how the government will boost workers share of G. V A and why there is no reform of corporate governance and short termism in the City of London? People's purchasing power could be boosted by progressive taxation, but that is not on the agenda. The poorest 20% pay a higher proportion of income in direct and indirect taxes, compared to the richest 20%. At the same time, capital gains and dividends are taxed at lower marginal rates than wages.
How do you expect people to buy things? Problems are compounded by the freeze on income tax. Personal allowance In April 2021, the conservative government froze the annual personal allowance at 12,520 £570. Labour government continued with it. If personal allowance had increased in line with inflation, it would today be £16,048 due to the freeze. Someone earning £20,000 will pay an additional £696 in income tax in this tax year alone. Adherence to regressive conservative policies by this government cannot deliver resilient households.
Overall, the government has some good policies, but in the absence of transformative policies, it will be difficult to declare sustained economic growth and resilient households. I urge the government to change course. Well, I.
Can the Minister explain why there is no comprehensive plan to kerb profiteering by energy companies? Since 2020, their UK operations have made profits of over 125,000,000,000/120 000 people in this country die in fuel poverty every year. Surely that deserves some kind of a government response. I have misgivings about the Highway Financing Bill, which promotes the dreaded private finance initiative, though under another name. Previous PFI schemes resulted in £6 repayment for every £1 of private investment in infrastructure.
Government can fund projects at lower costs through borrowing, or it can also issue public bonds. But such alternatives are ignored. The. The 129 pages of background notes miss out the word manufacturing altogether, even though every £1 of manufacturing activity supports a further £1.8 through multiplier effects. Can the Minister explain the government's plans for self-sufficiency in semiconductors? Rare earth minerals, bricks, cement, auto, medicines and other essential items to increase economic resilience? The regulatory consolidation offered by the Enhancing Financial Services Bill is welcome, though I am concerned that the reforms are framed around phrases such as competitiveness and regulatory simplification, which are buzzwords for deregulation.
They have so far facilitated abolition of the post 2008 crash constraints and weaken consumer protection. The government's briefing notes make no mention of the social cost of deregulation. So can the Minister explain also why there is no attempt to regulate private equity, which is devouring a hospitals, care homes, veterinary services, supermarkets, water, energy, retail and other businesses? The so-called industry friendly reforms of the Financial Ombudsman will weaken consumer protection, and there is a complete silence on how the UK institutions cover up fraud and financial abuses.
We are still waiting for investigation of the 1991 closure of the fraud ridden Bank of Credit and Commerce International. In this House, I have asked questions about the failure to tackle HSBC after. After it was fined $1.9 billion in the US in 2012 for facilitating money laundering. The then Chancellor, George Osborne, and regulator secretly urged the US authorities to go easy on the bank. The response to my questions in this House has been ministerial silence.
On numerous occasions in this House I have referred to hmo's frauds which date back to year 2002 and between 2002 and 2007, regulatory inertia and ministerial indifference have denied compensation to victims, even after the courts have established criminality. What good is an ombudsman system when Ministers and regulators sweep financial crimes under the carpet? There are mixed messages from the government about nationalisation. I welcome nationalisation of British Steel, but why are other steel producers not to be nationalised? Tata steel also receives a subsidies government in return has not taken an equity stake or a seat on the board.
Why is this free money being given to companies for distribution to their dividend, to their shareholders? I welcome the Railways and Passenger Benefits Bill to establish Great British Railways and Unite track and train management under a single body. However, why is no attempt made to bring lucrative freight and rolling stock companies into public ownership? These rolling stock companies have a profit margin of 41.6%. There is absolutely no justification for that. People are being told that nationalisation of rail passenger services and British Steel is in the public interest.
Well, so is nationalisation of water, energy, mail, social care and other essential services. Why are those things after political agenda altogether sustained economic growth, which is the government's aim, cannot be achieved unless people have good purchasing power. 25.3 million people live in households below the minimum income standard. A major cause is the erosion of workers share of gross value added. That is GVA. In 1975, workers share of GVA was 71.9%. By 2025. Despite economic growth in the intervening years, it has declined to 59.7%.
There is a huge transfer of wealth from labour to capital, and it has coincided with lower rates of corporation tax. The headline corporation tax rate in 1974 was 52%, compared to 25% now. The massive increase in capital share of the economy has not resulted in higher investment in productive assets. In 2025, the UK invested 18.9% of GDP in productive assets. That is the lowest amongst G7 nations. For the last 30 years, the UK has been at or near the bottom of the OECD League of Investment.
Inevitably, productivity and economic growth is low. So can the Minister explain how the government will boost workers share of G. V A and why there is no reform of corporate governance and short termism in the City of London? People's purchasing power could be boosted by progressive taxation, but that is not on the agenda. The poorest 20% pay a higher proportion of income in direct and indirect taxes, compared to the richest 20%. At the same time, capital gains and dividends are taxed at lower marginal rates than wages.
How do you expect people to buy things? Problems are compounded by the freeze on income tax. Personal allowance In April 2021, the conservative government froze the annual personal allowance at 12,520 £570. Labour government continued with it. If personal allowance had increased in line with inflation, it would today be £16,048 due to the freeze. Someone earning £20,000 will pay an additional £696 in income tax in this tax year alone. Adherence to regressive conservative policies by this government cannot deliver resilient households.
Overall, the government has some good policies, but in the absence of transformative policies, it will be difficult to declare sustained economic growth and resilient households. I urge the government to change course. Well, I.
15:54
Lord Tyrie (Non-affiliated)
-
-
Lord Tyrie (Non-affiliated)
Was hoping I could agree with something, but I'm not sure I can. something, but I'm not sure I can. So I've decided only to say I very much hope that the noble Lord will find something, at least something in my speech. He can agree with. What I want to address is the fact that we are becoming a poor relation among advanced countries, and I want to say something about how we can improve Britain's economic performance. But rather than make a lot of detailed suggestions, I'm going to make only one substantive point, which is that we've been here before several times, and we got out of the mess.
We were here, in a way, in 1945, and we were certainly here in the late 1970s, actually, worse problems. And we found answers. Britain's economic performance improved dramatically in the 80s and 90s. Now, in order to find the answer for the 2020s, a number of conditions need to be met. First. I think the penny needs to drop among the political and bureaucratic establishment and among the wider public, that the UK is in very serious difficulties.
Second, we need a workable recovery plan and considerable intellectual energy, which needs to be deployed by politicians to find some answers, some plausible answers to the problems. And that will only occur once the penny has dropped. And third, politicians will need to have enough courage to implement some pretty radical policies and to secure acquiescence for them from the public. And none of those conditions are currently being met. Such evidences can be found comparing the mood of the 1970s would now suggest that while the public are depressed at the moment about the economic performance of the UK, they're worried about the cost of living crisis.
None of that is at 1970s proportions at the moment. The recent reversals of welfare reform by the government tell us something about the lack of courage at the top points being made openly now by parts of other parts of the Labour leadership and Labour's manifesto can scarcely amounted to a bold recovery plan. I note that Wes Streeting recently told Lord Mance Mandelson in a WhatsApp message which has been leaked, that Labour Party had quotes. No growth strategy at all.
I don't know whether that will become more relevant in the weeks ahead. And in any case, on that last point, less people think I'm making a party political point. I think this administration is only as short of intellectual capital as those of the catastrophically short termist administrations of the Cameron and Johnson years. They've got a lot to answer for, but I think that the rot set in earlier, I think successive governments, conservative coalition and Labour have all been managing the legacy of the Brown inheritance and far more than is generally appreciated.
What do I mean by that? I mean that policy was built around the notion of what became built around the notion that growth could be stimulated by technocratic redirection of both public and private investment by the government and by government incentives and with the with the benefit of independently administered regulation of of increasing parts of the economy, very large parts of the economy. This was, and I think it still is believed by many, the way to leave plenty of scope for politicians to enable them to focus on redistributive objectives and all that should take place within a relatively permissive public expenditure
**** Possible New Speaker ****
Framework. And while tolerating the complexity that comes with deploying and extending attack deploying and extending attack system deeper and deeper into fulfilling redistributive goals, fulfilling redistributive goals, the Cameron led government brought public expenditure back under control. But for the most part, it control. But for the most part, it failed to challenge most of the rest of that consensus. So what rest of that consensus. So what might signal a break with the consensus? Well, the main challenges are coming from the Greens and reform their right to rail against the new economic establishment that now clusters around that consensus.
But the solutions that they're coming forward with, such as they are, are incoherent and inchoate. And they simply. Well, the numbers don't add up. On current evidence, the concern must be that if they were elected, they would represent an escape from reality and just a postponement of the reckoning. Now, I've just been theorising up to now, how was what I'm saying? How could it be reflected in practical policies? Well, as a country we have been struggling towards something of a consensus on a few of them.
The need for radical reform of planning, although too little and too slow on the need to rejoin the single market or something similar. There's been some dispute about that today, but it's worth pointing out that most, or at least a large proportion of those who voted for Brexit thought we were going to retain very close links on the need to deploy tough regulatory tools to stimulate competition. I don't think enough has been done there. But several other central policies are still considered unacceptably radical.
We need tax cuts accompanied by deep simplification of the tax system, and it will have to be paid for by reductions in welfare. Few dare talk about that. A number of policies would be considered political suicide. For example, the need to encourage immigration in parts of the care and health system, and the need to facilitate the retention of large numbers of very high quality foreign graduates who are currently leaving once they get their degrees. Trump is busy pushing them out.
Surely we should have a better policy for trying to persuade them to come here. Many people also quietly agree that an unacceptable price is being paid for the crash program of fossil fuel reduction, but there's no consensus on the policy implications of reversing it or reconsidering it. Now, I've named for their tax simplification, EU renegotiation. Tolerance and acceptance of fossil fuels for the foreseeable future, and targeted accommodation of immigration. None of these are magic bullets, but they'll all make a contribution.
There's very little appreciation in the political establishment of the need for a step shift, a radical shift towards them, nor the need to jolt expectations among a wider public. Plain speaking, is in scarce supply. I think AI is a jolt to the economy and to public expectations will be much bigger than anything that we're seeing delivered by the government, which seems extraordinarily immobilised by its own very large majority. Now, having said all that, Kemi Badenoch is doing some plain speaking.
And it's not just coming from the right. Here's an extract from a recent publication of the Labour Growth Group. I think out this week or last week, and I'm quoting the planning system rations land, the energy system, rations, power regulation protects incumbents while crushing challenges. Well, I think both Kemi and I would agree with all of that. Even if we wouldn't agree with all the solutions in those in that document, I end where I began, but I'll put it differently.
The UK's problems derive from politics. So do the solutions. It is possible, fundamentally to improve Britain's economic performance. We're not prisoners of. The global growth rate. As has been implied on 1 or 2 occasions in this debate. It's been done before and it can be done again. What's required is a full appreciation of the problem and the guts to implement radical supply side solutions. We're a long way from that. And until we get there, the UK will continue to struggle on in the slow lane of middle powers.
We were here, in a way, in 1945, and we were certainly here in the late 1970s, actually, worse problems. And we found answers. Britain's economic performance improved dramatically in the 80s and 90s. Now, in order to find the answer for the 2020s, a number of conditions need to be met. First. I think the penny needs to drop among the political and bureaucratic establishment and among the wider public, that the UK is in very serious difficulties.
Second, we need a workable recovery plan and considerable intellectual energy, which needs to be deployed by politicians to find some answers, some plausible answers to the problems. And that will only occur once the penny has dropped. And third, politicians will need to have enough courage to implement some pretty radical policies and to secure acquiescence for them from the public. And none of those conditions are currently being met. Such evidences can be found comparing the mood of the 1970s would now suggest that while the public are depressed at the moment about the economic performance of the UK, they're worried about the cost of living crisis.
None of that is at 1970s proportions at the moment. The recent reversals of welfare reform by the government tell us something about the lack of courage at the top points being made openly now by parts of other parts of the Labour leadership and Labour's manifesto can scarcely amounted to a bold recovery plan. I note that Wes Streeting recently told Lord Mance Mandelson in a WhatsApp message which has been leaked, that Labour Party had quotes. No growth strategy at all.
I don't know whether that will become more relevant in the weeks ahead. And in any case, on that last point, less people think I'm making a party political point. I think this administration is only as short of intellectual capital as those of the catastrophically short termist administrations of the Cameron and Johnson years. They've got a lot to answer for, but I think that the rot set in earlier, I think successive governments, conservative coalition and Labour have all been managing the legacy of the Brown inheritance and far more than is generally appreciated.
What do I mean by that? I mean that policy was built around the notion of what became built around the notion that growth could be stimulated by technocratic redirection of both public and private investment by the government and by government incentives and with the with the benefit of independently administered regulation of of increasing parts of the economy, very large parts of the economy. This was, and I think it still is believed by many, the way to leave plenty of scope for politicians to enable them to focus on redistributive objectives and all that should take place within a relatively permissive public expenditure
**** Possible New Speaker ****
Framework. And while tolerating the complexity that comes with deploying and extending attack deploying and extending attack system deeper and deeper into fulfilling redistributive goals, fulfilling redistributive goals, the Cameron led government brought public expenditure back under control. But for the most part, it control. But for the most part, it failed to challenge most of the rest of that consensus. So what rest of that consensus. So what might signal a break with the consensus? Well, the main challenges are coming from the Greens and reform their right to rail against the new economic establishment that now clusters around that consensus.
But the solutions that they're coming forward with, such as they are, are incoherent and inchoate. And they simply. Well, the numbers don't add up. On current evidence, the concern must be that if they were elected, they would represent an escape from reality and just a postponement of the reckoning. Now, I've just been theorising up to now, how was what I'm saying? How could it be reflected in practical policies? Well, as a country we have been struggling towards something of a consensus on a few of them.
The need for radical reform of planning, although too little and too slow on the need to rejoin the single market or something similar. There's been some dispute about that today, but it's worth pointing out that most, or at least a large proportion of those who voted for Brexit thought we were going to retain very close links on the need to deploy tough regulatory tools to stimulate competition. I don't think enough has been done there. But several other central policies are still considered unacceptably radical.
We need tax cuts accompanied by deep simplification of the tax system, and it will have to be paid for by reductions in welfare. Few dare talk about that. A number of policies would be considered political suicide. For example, the need to encourage immigration in parts of the care and health system, and the need to facilitate the retention of large numbers of very high quality foreign graduates who are currently leaving once they get their degrees. Trump is busy pushing them out.
Surely we should have a better policy for trying to persuade them to come here. Many people also quietly agree that an unacceptable price is being paid for the crash program of fossil fuel reduction, but there's no consensus on the policy implications of reversing it or reconsidering it. Now, I've named for their tax simplification, EU renegotiation. Tolerance and acceptance of fossil fuels for the foreseeable future, and targeted accommodation of immigration. None of these are magic bullets, but they'll all make a contribution.
There's very little appreciation in the political establishment of the need for a step shift, a radical shift towards them, nor the need to jolt expectations among a wider public. Plain speaking, is in scarce supply. I think AI is a jolt to the economy and to public expectations will be much bigger than anything that we're seeing delivered by the government, which seems extraordinarily immobilised by its own very large majority. Now, having said all that, Kemi Badenoch is doing some plain speaking.
And it's not just coming from the right. Here's an extract from a recent publication of the Labour Growth Group. I think out this week or last week, and I'm quoting the planning system rations land, the energy system, rations, power regulation protects incumbents while crushing challenges. Well, I think both Kemi and I would agree with all of that. Even if we wouldn't agree with all the solutions in those in that document, I end where I began, but I'll put it differently.
The UK's problems derive from politics. So do the solutions. It is possible, fundamentally to improve Britain's economic performance. We're not prisoners of. The global growth rate. As has been implied on 1 or 2 occasions in this debate. It's been done before and it can be done again. What's required is a full appreciation of the problem and the guts to implement radical supply side solutions. We're a long way from that. And until we get there, the UK will continue to struggle on in the slow lane of middle powers.
16:03
Lord Moynihan of Chelsea (Conservative)
-
-
Lord Moynihan of Chelsea (Conservative)
This week, the Prime Minister, >> This week, the Prime Minister, if indeed he still is the Prime Minister, I'm not sure, abandoned Minister, I'm not sure, abandoned his red lines to stealthily reintegrate with the EU to change our laws to their laws, with the UK having very little say in what those laws will in future be. The direction of travel of the government's reset is not just a betrayal of Brexit, it is a blundering destruction of our future economic opportunities.
The long bond today, my Lords, trades 10% lower than it did at any time during the Truss administration. Brexit is the noble Lord Liddle, who's not in his place. I see claimed. Oh, I do apologise. Oh I you've gone further back. My my Lord, I apologise. But but but it has not cost our economy as was ably demolished by my noble friends Lord Redwood and Lord Frost. Indeed, the OBR, in their claim that there's been a diminution, have published my ten page letter to them rebutting their claim.
But interestingly, they've made no attempt to respond to it. Here are the facts. The City of London. Our key strength has flourished, as even the economist, with some embarrassment admitted. And that's because we have diverged from the EU. Our key text sector has flourished thanks to avoiding the EU's disastrous AI act, the UK's Precision Breeding Act has given us a genuine first mover advantage in gene editing, with high lipid barley, low asparagine, wheat, climate resistant camelina cancer beating tomatoes and many more in the pipeline.
We have escaped the over 13,000 new EU regulations and the 12000 new EU directives that have been created since we left this country. Contrary to the noble Lord Strasburger place, I see it in your place. Noble Lord does not does not want to rejoin the EU. When voters have asked, do you want to retain control of our laws? Do you want to retain the pound? Do you want above all to retain control of our borders? You get that same solid rejection as they got ten years ago.
This government is wrong to sense electoral advantage in crawling back to the EU. Let's look at what is already planned and agreed for this reset. British fisheries handed away to the EU for 12 years. The enormous cost of that not even assessed the efficient Turing degree program abandoned for the far less useful Erasmus short term travel scheme. And we pay £815 million a year for that change. Dynamic alignment with EU rules across food, agriculture, the electricity market and carbon pricing with their court.
The European Court of Justice adjudicating on any dispute. Guess how those rulings are going to go? My Lords, the EU, eager as ever to exploit our needy gullibility and rooker's for astonishing sums of money, is apparently demanding a further £1 billion a year just for this first set of dynamic alignment agreements. Yet those agreements, mostly consisting of concessions and payments by us, will be a negative for our economy. The government says, unconvincingly, that dynamic alignment will benefit the economy by 5 billion.
The Growth Commission says it will cost us 15 billion. The chief alleged positive is the SPS agreement removing the need for export certificates that cost 120 to £250 each in total some £70 million a year. But my Lords, those fees are charged by us. We could remove them at any time, but we don't. It's almost as if someone wants us not to, so as to push us in the direction of rejoining the entire value of all UK agricultural exports is £12.8 billion, less than half of 1% of the economy.
So we pay £1 billion a year, £1 billion to save £70 million and claim a mysterious £5 billion benefit from that. I think we should ask the government to pull the other one. My Lords, Norway and Switzerland pay nothing to be in the electricity market, nor should we pay anything. But my Lords, that's not what it's about. Joining means assenting to the EU's requirement that 42.5% of all our energy must come from renewables by 2030. Our current target is for renewables to be 100% of electricity, which is only 20% of our total electricity usage by 2030.
So our current target is less than half of what we will have to sign up to. It's an impossible new target. And as Catherine Porter has shown, and as we have seen in Spain, the more renewables in the mix, the more brownouts and blackouts. As for the carbon tax deal, it's mainly for six commodities steel and iron, aluminium, fertiliser, cement, electricity and hydrogen. Dynamic alignment will mean we no longer pay carbon tax on exports of those products to the EU, but our exports of those commodities to the EU are nugatory and will be required to charge a carbon tax on our much larger imports from the rest of the world.
So our competitive position, my Lords, will decline and the EU's will improve. Well done. Worse, if we enslave ourselves to existing and all future EU rules in these areas, the entire UK economy in these sectors will be required to adhere to these rules. All we produce in these sectors, whether for UK sales or for export to the rest of the world, must follow these rules. What are these rules, for example? Totally different, although no better packaging rules. So changing packaging will be a huge expense for British producers across the economy.
Pesticide residue rules based not on scientific evidence, but on the kindergarten level idea of the precautionary principle. UK farmers will have to change what pesticides they all use. And above all, unless the government secures a carve out. And the chances of that, of course, are particularly this government are extremely low. Our world leading position in gene editing will disappear. Yeah, bang goes the finest and most productive gene editing cluster in Europe. 100 or more companies supported by eight world class research institutes.
Any products developed there won't be allowed in the UK. The cluster will collapse. Yet another huge hit to the economy. Changes will also apply to all goods we import from the rest of the world. The UK is Fresh Produce Consortium forecasts thousands of additional and unnecessary border delays, considerably more inspections, more paperwork and port congestion restrictions on Moroccan cucumbers, Indian mangoes, South African citrus, US sweet potatoes, California almonds and on and on, adding £400 million to supply chain costs.
The UK consumer, who will pay for all of that in inflated prices, may, don't you think, make their views on that known at the next election? Dynamic alignment will clash with our new trade deals such as CT, Cptpp not being able to comply with both, we will necessarily end up taken either to the WTO court or to the European Court of Justice. More cost, more woe, more confusion. My Lords, the problems with our economy do not come from Brexit. They come from net zero.
As my noble friends Lord Lilley and Lord Redwood so clearly explained. And for the government's willingness to make not working more attractive in this country than working for removing just those two problems and develop further the regulatory freedoms that Brexit allows. And we can flourish. Finally, my Lords, how can we be happy to hear this week that this inept government now plans to double down on its already disastrous surrender plan to the EU? In the vain, an economically illiterate hope that doing so will prove either popular or beneficial.
**** Possible New Speaker ****
Yeah yeah yeah yeah yeah yeah. That goes Liz Truss's trusted
**** Possible New Speaker ****
That goes Liz Truss's trusted advisor. I think we all know how that turned out. My Lords, in 2014, that turned out. My Lords, in 2014, Labour won 411 seats on 33.7% of Labour won 411 seats on 33.7% of the vote and a turnout of 59.7%. And last week, the results were And last week, the results were fragmented across 6 or 7 parties. There were gains for reform the Lib Dems and Greens in England, and
The long bond today, my Lords, trades 10% lower than it did at any time during the Truss administration. Brexit is the noble Lord Liddle, who's not in his place. I see claimed. Oh, I do apologise. Oh I you've gone further back. My my Lord, I apologise. But but but it has not cost our economy as was ably demolished by my noble friends Lord Redwood and Lord Frost. Indeed, the OBR, in their claim that there's been a diminution, have published my ten page letter to them rebutting their claim.
But interestingly, they've made no attempt to respond to it. Here are the facts. The City of London. Our key strength has flourished, as even the economist, with some embarrassment admitted. And that's because we have diverged from the EU. Our key text sector has flourished thanks to avoiding the EU's disastrous AI act, the UK's Precision Breeding Act has given us a genuine first mover advantage in gene editing, with high lipid barley, low asparagine, wheat, climate resistant camelina cancer beating tomatoes and many more in the pipeline.
We have escaped the over 13,000 new EU regulations and the 12000 new EU directives that have been created since we left this country. Contrary to the noble Lord Strasburger place, I see it in your place. Noble Lord does not does not want to rejoin the EU. When voters have asked, do you want to retain control of our laws? Do you want to retain the pound? Do you want above all to retain control of our borders? You get that same solid rejection as they got ten years ago.
This government is wrong to sense electoral advantage in crawling back to the EU. Let's look at what is already planned and agreed for this reset. British fisheries handed away to the EU for 12 years. The enormous cost of that not even assessed the efficient Turing degree program abandoned for the far less useful Erasmus short term travel scheme. And we pay £815 million a year for that change. Dynamic alignment with EU rules across food, agriculture, the electricity market and carbon pricing with their court.
The European Court of Justice adjudicating on any dispute. Guess how those rulings are going to go? My Lords, the EU, eager as ever to exploit our needy gullibility and rooker's for astonishing sums of money, is apparently demanding a further £1 billion a year just for this first set of dynamic alignment agreements. Yet those agreements, mostly consisting of concessions and payments by us, will be a negative for our economy. The government says, unconvincingly, that dynamic alignment will benefit the economy by 5 billion.
The Growth Commission says it will cost us 15 billion. The chief alleged positive is the SPS agreement removing the need for export certificates that cost 120 to £250 each in total some £70 million a year. But my Lords, those fees are charged by us. We could remove them at any time, but we don't. It's almost as if someone wants us not to, so as to push us in the direction of rejoining the entire value of all UK agricultural exports is £12.8 billion, less than half of 1% of the economy.
So we pay £1 billion a year, £1 billion to save £70 million and claim a mysterious £5 billion benefit from that. I think we should ask the government to pull the other one. My Lords, Norway and Switzerland pay nothing to be in the electricity market, nor should we pay anything. But my Lords, that's not what it's about. Joining means assenting to the EU's requirement that 42.5% of all our energy must come from renewables by 2030. Our current target is for renewables to be 100% of electricity, which is only 20% of our total electricity usage by 2030.
So our current target is less than half of what we will have to sign up to. It's an impossible new target. And as Catherine Porter has shown, and as we have seen in Spain, the more renewables in the mix, the more brownouts and blackouts. As for the carbon tax deal, it's mainly for six commodities steel and iron, aluminium, fertiliser, cement, electricity and hydrogen. Dynamic alignment will mean we no longer pay carbon tax on exports of those products to the EU, but our exports of those commodities to the EU are nugatory and will be required to charge a carbon tax on our much larger imports from the rest of the world.
So our competitive position, my Lords, will decline and the EU's will improve. Well done. Worse, if we enslave ourselves to existing and all future EU rules in these areas, the entire UK economy in these sectors will be required to adhere to these rules. All we produce in these sectors, whether for UK sales or for export to the rest of the world, must follow these rules. What are these rules, for example? Totally different, although no better packaging rules. So changing packaging will be a huge expense for British producers across the economy.
Pesticide residue rules based not on scientific evidence, but on the kindergarten level idea of the precautionary principle. UK farmers will have to change what pesticides they all use. And above all, unless the government secures a carve out. And the chances of that, of course, are particularly this government are extremely low. Our world leading position in gene editing will disappear. Yeah, bang goes the finest and most productive gene editing cluster in Europe. 100 or more companies supported by eight world class research institutes.
Any products developed there won't be allowed in the UK. The cluster will collapse. Yet another huge hit to the economy. Changes will also apply to all goods we import from the rest of the world. The UK is Fresh Produce Consortium forecasts thousands of additional and unnecessary border delays, considerably more inspections, more paperwork and port congestion restrictions on Moroccan cucumbers, Indian mangoes, South African citrus, US sweet potatoes, California almonds and on and on, adding £400 million to supply chain costs.
The UK consumer, who will pay for all of that in inflated prices, may, don't you think, make their views on that known at the next election? Dynamic alignment will clash with our new trade deals such as CT, Cptpp not being able to comply with both, we will necessarily end up taken either to the WTO court or to the European Court of Justice. More cost, more woe, more confusion. My Lords, the problems with our economy do not come from Brexit. They come from net zero.
As my noble friends Lord Lilley and Lord Redwood so clearly explained. And for the government's willingness to make not working more attractive in this country than working for removing just those two problems and develop further the regulatory freedoms that Brexit allows. And we can flourish. Finally, my Lords, how can we be happy to hear this week that this inept government now plans to double down on its already disastrous surrender plan to the EU? In the vain, an economically illiterate hope that doing so will prove either popular or beneficial.
**** Possible New Speaker ****
Yeah yeah yeah yeah yeah yeah. That goes Liz Truss's trusted
**** Possible New Speaker ****
That goes Liz Truss's trusted advisor. I think we all know how that turned out. My Lords, in 2014, that turned out. My Lords, in 2014, Labour won 411 seats on 33.7% of Labour won 411 seats on 33.7% of the vote and a turnout of 59.7%. And last week, the results were And last week, the results were fragmented across 6 or 7 parties. There were gains for reform the Lib Dems and Greens in England, and
16:13
Lord Bruce of Bennachie (Liberal Democrat)
-
-
Lord Bruce of Bennachie (Liberal Democrat)
heavy losses for Labour and the Conservatives. And reform was actually down compared with last year, although you wouldn't know it by the comments. But what is clear is that first past the post in the is that first past the post in the present circumstances is likely to produce distorted results, leaving most voters dissatisfied with the most voters dissatisfied with the outcome. And that in itself possibly explains why the turnout is down now. In Scotland we had Scottish Parliament elections and turnout was there down two, and the vote share for the SNP and Labour and the Conservatives were sharply down reform and the Lib Dems were up and the Greens were marginally up at that election in Scotland was widely described as a kind of election.
My take and I was knocking on quite a lot of doors, is that most people wanted to see measures to turn Scotland around to, to, to, to address declining education standards. Waiting times in the health service, provide care support, focus on the weak economy and address the cost of living. Independence was not the issue, and the fact that the SNP are absurdly claiming a mandate as a distraction for their monumental failure on all the issues for which they actually have direct responsibility and their incompetence in government will result and is going to result in a massive financial unfunded deficit, with alarming consequences coming down the track in Scotland.
You know something as important as breaking up the UK needs an honest and open debate and overwhelming support from the population, and there is no such support and there isn't an open debate and there is no idea of where it's heading. But one economic issue, which was live in the Scottish debate, was the energy industry. The offshore oil and gas sector is in natural long term decline. Renewable energy investment is increasing. However, this is anything but a zero sum game.
The jobs created by renewable energy are not as numerous or as well paid as oil and gas, nor are many of them interchangeable. And in this debate reform, let's be honest, are aggressive climate change deniers and would reverse the renewables policy and actually destroy the jobs that are being created in that sector. The Conservatives also prioritise oil and gas over renewables, and would delay or possibly abandon net zero targets. So. But the fact is that thanks to the Iran war and the actual pace of transition, the UK is facing higher costs and relying increasingly on imported gas, mostly from the USA and from security compromised Middle East.
And we'll have significantly economically recovered those of our own. So there's a contradiction here. We've actually signed a contract with Norway to bring gas from their gas fields through our gas fields, which apparently we're not going to exploit. I have been a long term supporter of policies to achieve net zero. I was writing pamphlets in favour of renewable energy in the 1970s, but I've always agreed that the transition will take time, both in terms of jobs and investment and in terms of energy diversification.
My Lords, net zero net zero means just that. Even when achieved, there will still be oil and gas in the mix. It makes no sense, especially faces we now are with the insecurity of dependence on the Middle East to accelerate the rundown of our own naturally depleting resources and increasing imports from Trump's America, which may also prove uncertain as there are calls for America to keep it at home. We are currently losing around 700 jobs a month, and major operators such as our own BP and Harbour Energy are talking of complete withdrawal from the UK continental shelf.
BP are talking about withdrawal from British Oil and Gas, a government that is struggling for growth should think very carefully about policies which actually destroy jobs and investment, and I hope the Minister will address this issue because there is growing pressure for the government to do so. Briefing on the Energy Independence Bill says the aim is to, I quote, manage existing oil and gas fields for their lifetime through legislation to introduce transitional energy certificates and show climate leadership by meeting the manifesto commitment not to issue new licence to explore new fields.
There is therefore scope for enhanced recovery from existing fields by reducing the tax burden and allowing associated drilling that's compatible with the government's policy. Without such changes, the lifetime of existing fields is likely to prove short. And also the argument that because world oil prices determine the price we pay, there is no benefit in producing production ignores energy security, balance of payments, benefits and the retention of jobs and investment in the UK instead of exporting them to the USA and elsewhere.
On another tack, my Lords, as a member of the International Relations and Defence Committee, with our illustrious chair sitting opposite me, my information on the impact of the war in Ukraine and the depleted state of UK's defence has been brought pretty sharply home to me. I am actually astonished that defence and security does not have a higher salience in the debate in Scotland, when we know Russian ships, subs and planes are cruising our sea and air space all the time, the contract to build frigates for Norway on the Clyde, as well as for the home fleet, is surely positive, especially when the Scottish Government struggles to build ferry boats.
But the idea that closing our air and marine bases, which is presumably what an independent Scotland would be doing, would make Scotland safer, is mind boggling. Naive? The Defence Investment Plan is long overdue. It's urgently needed if we're not to signal weakness to our enemies, and it needs to focus on the capacity we have and that we can quickly develop. Which leads me to my final point, which binds everything together. Reconnecting with the EU. Leaving the EU was a monumental error that weakened the UK and the EU, and I have to say, had the vote taken place when the Ukraine war was underway and Trump was ensconced in the white House, I'm certain the result would have been different.
As it is, we've been left bobbing around in the uncertain waters of the northwest Atlantic. Scotland voted to remain in the EU, but many have not recognised. The world is much changed for the UK, including Scotland. The way back is not clear or straightforward. I accept that our standing in the world is diminished, but asking for a reset while ruling out rejoining will sharply limit what can be achieved. The EU will not want to go down the Swiss route of myriad and ever changing treaties and rules.
Of course we should strengthen our relationships with Canada, Australia, New Zealand and the Commonwealth and others, but we should be clear we accept the reset is to set in a train a process for Britain to become a fully participating part of the. Of the European Union and for our own domestic reasons, we also need to adopt a reformed and more proportional electoral system. If we do not, we could end up with a government with a strong electoral majority with under 30% of the vote vote.
I doubt if the EU would have confidence in any agreement. Well, that is a real possibility. Otherwise we will be outsiders paying heavily for the privilege of trading on terms we have no part in shaping. EU negotiators will surely reach a point of saying thus far and no further unless you rejoin. So, my Lords, the situation is quite clear. We have a voting system that will give confidence that the UK can rejoin and stay within the EU, and we will recognise that unless we take a clear and decisive decision, we are
**** Possible New Speaker ****
going to drift in the Northwest Atlantic for the foreseeable future. Amen. Lord.
**** Possible New Speaker ****
Amen. Lord. Before I. Make a contribution to this extremely interesting debate, can I pay a small tribute to those who are connoisseurs of these debates will recognise the late Lord will recognise the late Lord Skidelsky, who died unexpectedly and sadly last month. I feel particularly close to him because although he was born in Harbin, Manchuria, and I was born in Preston, Lancashire, rather than a long way away, we were both born in the same month, 1930, dying, and then we both went to Cambridge University in the same period.
He to read history and me to read economics. Of course he's famous, most famous for his contributions to this house, for his three volume history of the Life of John Maynard Keynes, the greatest economist in history. In my humble Cambridge, perhaps Cambridge already. Opinion, and I see a certain descent on the side. But we can disagree about that. But of course, I think he gained perhaps most joy from his final book on the subject, which
My take and I was knocking on quite a lot of doors, is that most people wanted to see measures to turn Scotland around to, to, to, to address declining education standards. Waiting times in the health service, provide care support, focus on the weak economy and address the cost of living. Independence was not the issue, and the fact that the SNP are absurdly claiming a mandate as a distraction for their monumental failure on all the issues for which they actually have direct responsibility and their incompetence in government will result and is going to result in a massive financial unfunded deficit, with alarming consequences coming down the track in Scotland.
You know something as important as breaking up the UK needs an honest and open debate and overwhelming support from the population, and there is no such support and there isn't an open debate and there is no idea of where it's heading. But one economic issue, which was live in the Scottish debate, was the energy industry. The offshore oil and gas sector is in natural long term decline. Renewable energy investment is increasing. However, this is anything but a zero sum game.
The jobs created by renewable energy are not as numerous or as well paid as oil and gas, nor are many of them interchangeable. And in this debate reform, let's be honest, are aggressive climate change deniers and would reverse the renewables policy and actually destroy the jobs that are being created in that sector. The Conservatives also prioritise oil and gas over renewables, and would delay or possibly abandon net zero targets. So. But the fact is that thanks to the Iran war and the actual pace of transition, the UK is facing higher costs and relying increasingly on imported gas, mostly from the USA and from security compromised Middle East.
And we'll have significantly economically recovered those of our own. So there's a contradiction here. We've actually signed a contract with Norway to bring gas from their gas fields through our gas fields, which apparently we're not going to exploit. I have been a long term supporter of policies to achieve net zero. I was writing pamphlets in favour of renewable energy in the 1970s, but I've always agreed that the transition will take time, both in terms of jobs and investment and in terms of energy diversification.
My Lords, net zero net zero means just that. Even when achieved, there will still be oil and gas in the mix. It makes no sense, especially faces we now are with the insecurity of dependence on the Middle East to accelerate the rundown of our own naturally depleting resources and increasing imports from Trump's America, which may also prove uncertain as there are calls for America to keep it at home. We are currently losing around 700 jobs a month, and major operators such as our own BP and Harbour Energy are talking of complete withdrawal from the UK continental shelf.
BP are talking about withdrawal from British Oil and Gas, a government that is struggling for growth should think very carefully about policies which actually destroy jobs and investment, and I hope the Minister will address this issue because there is growing pressure for the government to do so. Briefing on the Energy Independence Bill says the aim is to, I quote, manage existing oil and gas fields for their lifetime through legislation to introduce transitional energy certificates and show climate leadership by meeting the manifesto commitment not to issue new licence to explore new fields.
There is therefore scope for enhanced recovery from existing fields by reducing the tax burden and allowing associated drilling that's compatible with the government's policy. Without such changes, the lifetime of existing fields is likely to prove short. And also the argument that because world oil prices determine the price we pay, there is no benefit in producing production ignores energy security, balance of payments, benefits and the retention of jobs and investment in the UK instead of exporting them to the USA and elsewhere.
On another tack, my Lords, as a member of the International Relations and Defence Committee, with our illustrious chair sitting opposite me, my information on the impact of the war in Ukraine and the depleted state of UK's defence has been brought pretty sharply home to me. I am actually astonished that defence and security does not have a higher salience in the debate in Scotland, when we know Russian ships, subs and planes are cruising our sea and air space all the time, the contract to build frigates for Norway on the Clyde, as well as for the home fleet, is surely positive, especially when the Scottish Government struggles to build ferry boats.
But the idea that closing our air and marine bases, which is presumably what an independent Scotland would be doing, would make Scotland safer, is mind boggling. Naive? The Defence Investment Plan is long overdue. It's urgently needed if we're not to signal weakness to our enemies, and it needs to focus on the capacity we have and that we can quickly develop. Which leads me to my final point, which binds everything together. Reconnecting with the EU. Leaving the EU was a monumental error that weakened the UK and the EU, and I have to say, had the vote taken place when the Ukraine war was underway and Trump was ensconced in the white House, I'm certain the result would have been different.
As it is, we've been left bobbing around in the uncertain waters of the northwest Atlantic. Scotland voted to remain in the EU, but many have not recognised. The world is much changed for the UK, including Scotland. The way back is not clear or straightforward. I accept that our standing in the world is diminished, but asking for a reset while ruling out rejoining will sharply limit what can be achieved. The EU will not want to go down the Swiss route of myriad and ever changing treaties and rules.
Of course we should strengthen our relationships with Canada, Australia, New Zealand and the Commonwealth and others, but we should be clear we accept the reset is to set in a train a process for Britain to become a fully participating part of the. Of the European Union and for our own domestic reasons, we also need to adopt a reformed and more proportional electoral system. If we do not, we could end up with a government with a strong electoral majority with under 30% of the vote vote.
I doubt if the EU would have confidence in any agreement. Well, that is a real possibility. Otherwise we will be outsiders paying heavily for the privilege of trading on terms we have no part in shaping. EU negotiators will surely reach a point of saying thus far and no further unless you rejoin. So, my Lords, the situation is quite clear. We have a voting system that will give confidence that the UK can rejoin and stay within the EU, and we will recognise that unless we take a clear and decisive decision, we are
**** Possible New Speaker ****
going to drift in the Northwest Atlantic for the foreseeable future. Amen. Lord.
**** Possible New Speaker ****
Amen. Lord. Before I. Make a contribution to this extremely interesting debate, can I pay a small tribute to those who are connoisseurs of these debates will recognise the late Lord will recognise the late Lord Skidelsky, who died unexpectedly and sadly last month. I feel particularly close to him because although he was born in Harbin, Manchuria, and I was born in Preston, Lancashire, rather than a long way away, we were both born in the same month, 1930, dying, and then we both went to Cambridge University in the same period.
He to read history and me to read economics. Of course he's famous, most famous for his contributions to this house, for his three volume history of the Life of John Maynard Keynes, the greatest economist in history. In my humble Cambridge, perhaps Cambridge already. Opinion, and I see a certain descent on the side. But we can disagree about that. But of course, I think he gained perhaps most joy from his final book on the subject, which
16:23
Lord Horam (Conservative)
-
-
Lord Horam (Conservative)
was his usual impish humour after the The Financial Problems of 2008, the The Financial Problems of 2008, The Return of the master, he made his last speech from the Crossbenches. In our last economic debate, and he endured all debate, and he endured all economists, to use less jargon and speak more directly and simply to the people, so they couldn't understand what this important subject was all about. He will be greatly missed. On the subject of today's debate, I would agree that we all agree that all parties agree that the government's fundamental view that economic growth is central to what they hope to hope to achieve when they came in, and which we hoped, as from all parties hope to agree, is absolutely right.
The problem is that if you state that you really all, all political common sense and all political history clearly indicate that you have to pursue it with really single minded determination, this is the essence of it. And city Lord Burns sitting on the opposite benches. He was there when Margaret Thatcher was Prime Minister at the very centre of the Treasury, and he will recognise that it was not entirely a smooth process. There were many critics of monetarism there, pulling Lord Moynihan is shaking his head behind again.
Many critics of monetarism at the time, but the central fact is, she persisted, there were no U-turns, you know the lady's not for turning. She carried on, despite all the difficulties, and John Redwood, I think, would agree with me on this. All the difficulties, and emerged triumphant to set the basis for 2030 years of sensible economic growth to end Britain being the. The disaster of Europe. And I think that is what requires. And then just to prove my my essential British fairness, take the Blair government.
The Blair government came in after and was handed a much better hand by the major government and in all respects realised it had to assert its own economic competence. So it did very sensibly, was not to actually rush in with particular socialist or semi-socialist bills and so forth, but to actually accept the conservative spending programme, which it did for two years. And only in the third year did Gordon Brown think it was sensible enough to increase National Insurance contributions to pay for a big increase in National Health Service funding.
That was an entirely sensible, professional political point of view this time. On the other hand, the government rushed in immediately with increased increases in the National Health Service, with workers rights pledges, with inheritance tax on all a gamut of Labour proposals which in their own terms made on their own grounds, made some sort of sense. But they're all anti-growth, anti-business and therefore they could not in any way be reconciled with their objective, their central objective of going for economic growth or to bring things up to an international level and up to date.
Look abroad, the social democratic governments of the world can do things properly by economic growth. Anthony Albanese, the Prime Minister of Australia, first of all, sensibly accepted the Liberals bracket. Conservative bracket proposals on immigration which solved their problems in a way we tried to do over Rwanda, was ditched by the incoming Labour government and then on building on that, he has cut taxes on the ground for middle class people in Australia on the grounds that this improves incentives and they really do need to get their economy growing.
Not only that, but he has doubled down on the expansion of oil and gas and fossil fuels in Australia, which Australia big suppliers. So it's quite clear that a Labour government is is somewhere in the world is capable of doing sensible things equally in Canada. Mark Carney, a Liberal government, has in fact resiled on a previous proposal to improve capital gains tax in order to increase, improve entrepreneurial skills and to encourage entrepreneurship in the Canadian economy to improve their business prospects.
And he too has doubled down on the on the exploration of oil and gas in Alberta and elsewhere in Canada. Now, this is just sensible thing. By a left of centre government. I mean, the sad thing is we do appear to have a left of centre of government here, which is totally incapable of getting a group of people together, whether it's the present group or some alternative group. We do not know who can do the sensible things which even the social democratic government could do.
So there we are, the, the, the and the things we need to do, as has been said, are not rocket science. We need to do something about energy pricing. Energy pricing is destroying not the only the old industries, the new industries in the data banks. We need to reduce the work. We reduce the size of the civil servants and look at pensions, civil service, pensions. We need, as Lord Blunkett was saying, an article in the Guardian. I do read the Guardian occasionally in the library.
I don't take it at home, but I leave reading in the library. Lord Blunkett is saying we need a massive programme to get employers to take apprentices on in scale, not the puny, ridiculous scheme we've had for the last few years under Labour and Conservative. This really needs a big improvement. So this, this government is this. This country does have real potential. Unfortunately, we really do have a government which is unable to see that. The fundamental thing to refer to Lord Caine again, is to is to release the animal spirits of
**** Possible New Speaker ****
business. Then we might make some progress. Yeah.
**** Possible New Speaker ****
My Lords. Firstly, let me pay tribute, if I may, to the person preceding me I may, to the person preceding me in the debate, Lord Horam not only to pay tribute to his long service, but also the delicate way in which but also the delicate way in which he stepped around the debate between the Monetarists and Keynesians. The debate. I would Keynesians. The debate. I would always enjoy observing. Also, if I could pay tribute to some other contributions. Lord Stoneham
The problem is that if you state that you really all, all political common sense and all political history clearly indicate that you have to pursue it with really single minded determination, this is the essence of it. And city Lord Burns sitting on the opposite benches. He was there when Margaret Thatcher was Prime Minister at the very centre of the Treasury, and he will recognise that it was not entirely a smooth process. There were many critics of monetarism there, pulling Lord Moynihan is shaking his head behind again.
Many critics of monetarism at the time, but the central fact is, she persisted, there were no U-turns, you know the lady's not for turning. She carried on, despite all the difficulties, and John Redwood, I think, would agree with me on this. All the difficulties, and emerged triumphant to set the basis for 2030 years of sensible economic growth to end Britain being the. The disaster of Europe. And I think that is what requires. And then just to prove my my essential British fairness, take the Blair government.
The Blair government came in after and was handed a much better hand by the major government and in all respects realised it had to assert its own economic competence. So it did very sensibly, was not to actually rush in with particular socialist or semi-socialist bills and so forth, but to actually accept the conservative spending programme, which it did for two years. And only in the third year did Gordon Brown think it was sensible enough to increase National Insurance contributions to pay for a big increase in National Health Service funding.
That was an entirely sensible, professional political point of view this time. On the other hand, the government rushed in immediately with increased increases in the National Health Service, with workers rights pledges, with inheritance tax on all a gamut of Labour proposals which in their own terms made on their own grounds, made some sort of sense. But they're all anti-growth, anti-business and therefore they could not in any way be reconciled with their objective, their central objective of going for economic growth or to bring things up to an international level and up to date.
Look abroad, the social democratic governments of the world can do things properly by economic growth. Anthony Albanese, the Prime Minister of Australia, first of all, sensibly accepted the Liberals bracket. Conservative bracket proposals on immigration which solved their problems in a way we tried to do over Rwanda, was ditched by the incoming Labour government and then on building on that, he has cut taxes on the ground for middle class people in Australia on the grounds that this improves incentives and they really do need to get their economy growing.
Not only that, but he has doubled down on the expansion of oil and gas and fossil fuels in Australia, which Australia big suppliers. So it's quite clear that a Labour government is is somewhere in the world is capable of doing sensible things equally in Canada. Mark Carney, a Liberal government, has in fact resiled on a previous proposal to improve capital gains tax in order to increase, improve entrepreneurial skills and to encourage entrepreneurship in the Canadian economy to improve their business prospects.
And he too has doubled down on the on the exploration of oil and gas in Alberta and elsewhere in Canada. Now, this is just sensible thing. By a left of centre government. I mean, the sad thing is we do appear to have a left of centre of government here, which is totally incapable of getting a group of people together, whether it's the present group or some alternative group. We do not know who can do the sensible things which even the social democratic government could do.
So there we are, the, the, the and the things we need to do, as has been said, are not rocket science. We need to do something about energy pricing. Energy pricing is destroying not the only the old industries, the new industries in the data banks. We need to reduce the work. We reduce the size of the civil servants and look at pensions, civil service, pensions. We need, as Lord Blunkett was saying, an article in the Guardian. I do read the Guardian occasionally in the library.
I don't take it at home, but I leave reading in the library. Lord Blunkett is saying we need a massive programme to get employers to take apprentices on in scale, not the puny, ridiculous scheme we've had for the last few years under Labour and Conservative. This really needs a big improvement. So this, this government is this. This country does have real potential. Unfortunately, we really do have a government which is unable to see that. The fundamental thing to refer to Lord Caine again, is to is to release the animal spirits of
**** Possible New Speaker ****
business. Then we might make some progress. Yeah.
**** Possible New Speaker ****
My Lords. Firstly, let me pay tribute, if I may, to the person preceding me I may, to the person preceding me in the debate, Lord Horam not only to pay tribute to his long service, but also the delicate way in which but also the delicate way in which he stepped around the debate between the Monetarists and Keynesians. The debate. I would Keynesians. The debate. I would always enjoy observing. Also, if I could pay tribute to some other contributions. Lord Stoneham
16:31
Lord Pitkeathley of Camden Town (Labour)
-
-
Lord Pitkeathley of Camden Town (Labour)
earlier on reminded us of the world class skills and reputation that we have in this country that we must have in this country that we must value. There can't be many in this House that have an understanding of our relationship with the EU and our relationship with the EU and its and its benefits than my noble friends, Lords, Murphy and Liddle. friends, Lords, Murphy and Liddle. I would also pay tribute to my noble friend Lord Barber, who reminded us that public value and reminded us that public value and delivery matter a great deal.
And of course, I'm sure we all will continue to heed the wise words of my noble friend Lord Robertson. My Lords, I always approach debates on economic growth with a certain humility as a musician, regeneration chief executive, and now a member of your Lordships House, I have managed to experience three industries not universally associated with rapid productivity growth. But, my Lords, the advantages of your Lordships House. One of the advantages is that we are sometimes able to take a longer view than the immediacy of daily politics allows elsewhere.
From that perspective, it seems to me that many of the challenges facing Britain today are cumulative rather than sudden productivity, weakness, under-investment, uneven regional growth, fragile infrastructure and declining public confidence that has developed over time. And that is why I broadly welcome the strategic tone of this King's speech. As someone who has spent much of my professional life working in and around regeneration, business improvement and economic development, I have seen at close quarters both the strengths and frustrations of the British economy.
We remain an extraordinarily creative and entrepreneurial country. As many have already noted today. But too often we make it unnecessarily difficult for that potential to flourish consistently. I therefore welcome the emphasis on economic security, industrial resilience and infrastructure investment. I also, along with many in this House, welcome the proposed European Partnership Bill. Without revisiting old arguments, it is surely sensible to seek the most constructive and friction reducing relationship possible with our nearest trading partners, particularly for the benefit of smaller businesses, which are often least able to absorb complexity and uncertainty.
Similarly, the focus on late payments and protections for small firms may appear technical, but such matters have significant cumulative effects across the wider economy. My Lords, I also hope we will continue to think carefully about the implications of technological change, especially AI, of which many in this House are already acutely aware. Britain should indeed absolutely seek to lead an innovation, as well as look at the long term economic resilience, not simply on technical capability, but also to be aware of public confidence, social cohesion and widespread opportunity.
If citizens feel excluded from the benefits of economic transformation, political consent for change itself will weaken. And for that reason, I particularly welcome the speech emphasis, speeches, emphasis on opportunity, skills and inclusion alongside growth, economic policy succeeds most sustainably when people feel they have a meaningful stake in the future being created. Well, there's no legislative programme can resolve every challenge immediately, but I believe this speech reflects a serious attempt to address long term structural issues with greater realism and strategic intent, and it is in that spirit and in support of my noble friends, the Ministers, that I support the motion.
And of course, I'm sure we all will continue to heed the wise words of my noble friend Lord Robertson. My Lords, I always approach debates on economic growth with a certain humility as a musician, regeneration chief executive, and now a member of your Lordships House, I have managed to experience three industries not universally associated with rapid productivity growth. But, my Lords, the advantages of your Lordships House. One of the advantages is that we are sometimes able to take a longer view than the immediacy of daily politics allows elsewhere.
From that perspective, it seems to me that many of the challenges facing Britain today are cumulative rather than sudden productivity, weakness, under-investment, uneven regional growth, fragile infrastructure and declining public confidence that has developed over time. And that is why I broadly welcome the strategic tone of this King's speech. As someone who has spent much of my professional life working in and around regeneration, business improvement and economic development, I have seen at close quarters both the strengths and frustrations of the British economy.
We remain an extraordinarily creative and entrepreneurial country. As many have already noted today. But too often we make it unnecessarily difficult for that potential to flourish consistently. I therefore welcome the emphasis on economic security, industrial resilience and infrastructure investment. I also, along with many in this House, welcome the proposed European Partnership Bill. Without revisiting old arguments, it is surely sensible to seek the most constructive and friction reducing relationship possible with our nearest trading partners, particularly for the benefit of smaller businesses, which are often least able to absorb complexity and uncertainty.
Similarly, the focus on late payments and protections for small firms may appear technical, but such matters have significant cumulative effects across the wider economy. My Lords, I also hope we will continue to think carefully about the implications of technological change, especially AI, of which many in this House are already acutely aware. Britain should indeed absolutely seek to lead an innovation, as well as look at the long term economic resilience, not simply on technical capability, but also to be aware of public confidence, social cohesion and widespread opportunity.
If citizens feel excluded from the benefits of economic transformation, political consent for change itself will weaken. And for that reason, I particularly welcome the speech emphasis, speeches, emphasis on opportunity, skills and inclusion alongside growth, economic policy succeeds most sustainably when people feel they have a meaningful stake in the future being created. Well, there's no legislative programme can resolve every challenge immediately, but I believe this speech reflects a serious attempt to address long term structural issues with greater realism and strategic intent, and it is in that spirit and in support of my noble friends, the Ministers, that I support the motion.
16:35
Lord Kempsell (Conservative)
-
-
Lord Kempsell (Conservative)
Lords. I listened with great >> Lords. I listened with great interest to the many excellent speeches in this debate today, and speeches in this debate today, and I want to commend my noble friends, Lord Jackson of Peterborough and Lord Moynihan of Chelsea in particular for their outstanding contributions. But it is to another speech that I wish to return, because I have been turning it over in my mind. The speech on the 5th of July, 2024 that the Prime Minister gave when he stood on Downing Street and delivered his first statement in office.
Now, if noble Lords can't recall it word for word, I don't blame them. The reset button has been hit many times since then, but in that first address, as Prime Minister to the British people, the current residents of ten Downing Street, or at least he was, when I checked a few moments ago, set out his agenda for the country. And when I reread those words, it dawned on me that he made barely any mention of the economy. Given how the government has performed over the 678 days since, that oversight now makes perfect sense.
Under Labour, the British economy is like a mirror reflecting the worst instincts of the Prime Minister. Slow to move, overly biased towards an outdated rulebook and now dangerously close to implosion. As noble Lords have reminded us throughout this debate, since 2024, growth has been relentlessly flat and the IMF has now downgraded the UK's growth forecast to 0.8%, the largest downgrade in the G7. All this despite the government claiming that growth would be its watchword and its number one priority.
Indeed, the Prime Minister himself once famously said growth is the answer. But under this government, growth has only become an ever more pressing question, and hard working people across the country today are seeing Westminster at its worst, the civil war consuming the Labour Party is more than a story in this postcode district. Outside these confines, Labour chaos is causing real damage to what was already a struggling and fragile economy. 6 a.m. Britain The strivers and risk takers who build businesses, create jobs and strive for a better life for themselves and their families hoped for answers from the gracious speech.
But again, it has transpired that the government has nothing to say to them and the situation is at breaking point. For my own generation, under this government, unemployment has increased and the OBR says it will get worse for young people. The unemployment rate is now a scandalous 15.8%, up 2.4% since Labour came to office. So my contribution to this debate today is on behalf of the 1 million young people not in work, not in education and not in training, a statistic that is now worse than that in Spain, worse than that in Greece, the economies we used to point at as the international high watermark of youth unemployment, the crippling rise in employers NICs stole their entry level jobs.
The very opportunity that noble Ministers refer to as trying to be created by this government is in fact, being crushed by it. That means no first job on the high street to get your working life off the ground. No casual work to fit around your studies, and too few high quality apprenticeships. For example, for those whose families simply cannot afford university education, the Item Club forecasts that the labour market will weaken significantly this year, and the British Chambers of Commerce find that 41% of businesses are worried about business rates, up 7% on last year.
So it's no surprise to me whatsoever that business investment is down, decreasing by 2.5% in the last quarter of 2025. And as we know, on the macro side, borrowing costs are surging. This government is paying £305 million a day just to service the cost of debt interest. And this week, gilts hit an 18 year high thanks to Number Ten's instability, higher than in any other G7 country. And all of this from the party that told the electorates that grown ups are now back in charge.
When he was elected, they called the Prime Minister Mr. Rules. But as he reaches the end of his time in office, we can only say he is Mr. Chaos. And what is the answer presented by the government in the Gracious Speech? What is the plan set out today? It is to waste endless hours of parliamentary time in this forthcoming session on unwanted EU integration, turning away from the dynamic and high growth partner economies that are traditionally strengthened by their trade with the UK.
Back to the outmoded plans of the past. So, my Lords, I urge noble Ministers to intercede with their colleagues in the other place and ask them to bring an end to the chaos and instability that we see today to put jobs and prosperity first, to get the economy motoring and to let growth flower. If they do not, we can only conclude that the economic legacy of this government will be the same as every other Labour administration in history higher taxes, higher borrowing, higher unemployment, lower growth.
And will it be the case that in the desk drawer in number 11, there will be another note left behind saying, I'm sorry, there is no money left. If that's the case, we will only be able to conclude that once more Labour has done it again.
Now, if noble Lords can't recall it word for word, I don't blame them. The reset button has been hit many times since then, but in that first address, as Prime Minister to the British people, the current residents of ten Downing Street, or at least he was, when I checked a few moments ago, set out his agenda for the country. And when I reread those words, it dawned on me that he made barely any mention of the economy. Given how the government has performed over the 678 days since, that oversight now makes perfect sense.
Under Labour, the British economy is like a mirror reflecting the worst instincts of the Prime Minister. Slow to move, overly biased towards an outdated rulebook and now dangerously close to implosion. As noble Lords have reminded us throughout this debate, since 2024, growth has been relentlessly flat and the IMF has now downgraded the UK's growth forecast to 0.8%, the largest downgrade in the G7. All this despite the government claiming that growth would be its watchword and its number one priority.
Indeed, the Prime Minister himself once famously said growth is the answer. But under this government, growth has only become an ever more pressing question, and hard working people across the country today are seeing Westminster at its worst, the civil war consuming the Labour Party is more than a story in this postcode district. Outside these confines, Labour chaos is causing real damage to what was already a struggling and fragile economy. 6 a.m. Britain The strivers and risk takers who build businesses, create jobs and strive for a better life for themselves and their families hoped for answers from the gracious speech.
But again, it has transpired that the government has nothing to say to them and the situation is at breaking point. For my own generation, under this government, unemployment has increased and the OBR says it will get worse for young people. The unemployment rate is now a scandalous 15.8%, up 2.4% since Labour came to office. So my contribution to this debate today is on behalf of the 1 million young people not in work, not in education and not in training, a statistic that is now worse than that in Spain, worse than that in Greece, the economies we used to point at as the international high watermark of youth unemployment, the crippling rise in employers NICs stole their entry level jobs.
The very opportunity that noble Ministers refer to as trying to be created by this government is in fact, being crushed by it. That means no first job on the high street to get your working life off the ground. No casual work to fit around your studies, and too few high quality apprenticeships. For example, for those whose families simply cannot afford university education, the Item Club forecasts that the labour market will weaken significantly this year, and the British Chambers of Commerce find that 41% of businesses are worried about business rates, up 7% on last year.
So it's no surprise to me whatsoever that business investment is down, decreasing by 2.5% in the last quarter of 2025. And as we know, on the macro side, borrowing costs are surging. This government is paying £305 million a day just to service the cost of debt interest. And this week, gilts hit an 18 year high thanks to Number Ten's instability, higher than in any other G7 country. And all of this from the party that told the electorates that grown ups are now back in charge.
When he was elected, they called the Prime Minister Mr. Rules. But as he reaches the end of his time in office, we can only say he is Mr. Chaos. And what is the answer presented by the government in the Gracious Speech? What is the plan set out today? It is to waste endless hours of parliamentary time in this forthcoming session on unwanted EU integration, turning away from the dynamic and high growth partner economies that are traditionally strengthened by their trade with the UK.
Back to the outmoded plans of the past. So, my Lords, I urge noble Ministers to intercede with their colleagues in the other place and ask them to bring an end to the chaos and instability that we see today to put jobs and prosperity first, to get the economy motoring and to let growth flower. If they do not, we can only conclude that the economic legacy of this government will be the same as every other Labour administration in history higher taxes, higher borrowing, higher unemployment, lower growth.
And will it be the case that in the desk drawer in number 11, there will be another note left behind saying, I'm sorry, there is no money left. If that's the case, we will only be able to conclude that once more Labour has done it again.
16:42
Baroness Kramer (Liberal Democrat)
-
-
Baroness Kramer (Liberal Democrat)
Hear, hear. >> Lord Lord Fox has had to leave the cold. Lurgy got him, and undoubtedly it will now get me over undoubtedly it will now get me over the weekend. But. But the point that he made the core point of his speech, which is the significance now the need now for ambitious and strong leadership, I think is almost the central point of the debate that we've had today. And I hope the government is very much going to take that on board, because in the turbulence that we face, domestic turbulence, overseas turbulence, its impact on the cost of living for ordinary people is really quite devastating.
That the government, in response, has now got to deliver bold action. I am not sure that this King's speech meets that test. My Lords and I say to the government, stop pussyfooting in the European Partnership Bill and seize the opportunity. Lord Livermore has talked in the past about the 6 to 8% scarring of the economy in 2025. I've seen the numbers. I'm with him that I'll leave him to argue that case with the Conservatives, who don't appear to have taken note of them.
But I also want to point to a speech by Lord Strasburger when he talked about the specific damage done to one of our most important industries, the creative industry, by Brexit. And I could bring before this house industry, after industry to make exactly the same case. And for those who think that Brexit has not been a huge damage, go out and speak with industry after industry, and I defy anyone to continue to make that particular statement. My Lord, youth mobility schemes.
**** Possible New Speaker ****
That's a. Doesn't she speak to the NFU who don't want to rejoin Europe because they believe the divergences from EU rules since Brexit have EU rules since Brexit have benefited them enormously, and doing away with those divergences doing away with those divergences would cost 600 to £800 million a year just for PGP, £500 million a year for fisheries.
**** Possible New Speaker ****
year for fisheries. We may be speaking to the people at the NFU, but I suggest you go out and start speaking to individual farmers, and he's going to find that the agricultural sector has been really badly hit. But by the process of that, we've been through that. It also underscores the inadequacy of just trying to fill this with trade agreements. And I listened to a lot of the ideas that came from the conservative benches, and if you added them together, you'd be lucky to get 1 to 2% growth.
Even if you were able to implement a positive way. That doesn't anywhere near offset the 6 to 8% damage. But again, I'm going to leave the Minister to continue with that argument. But what I want to say is that this is an important time to seize, to be much more ambitious on the European front, because, of course, I support youth mobility schemes, recognition of professional qualifications, reduction of red tape. But this is the time when we need to be going for a bespoke customs union and also building that trust, as well as building the British economy that will enable us to be on a trajectory towards the single market and eventually to rejoining.
But if I look just at the customs union, I think it is widely accepted now that the impact of that would put 25 billion more into the UK economy in every year, and that is money that could bring some relief to both our debt numbers. It could help us deal with this need for additional investment in defence, and it could in turn, help struggling people. My Lords, missing from the King's Speech that is action to turn around the sad trajectory of small businesses.
And I applaud the late payments Bill. But can I say to the government it's time to grasp the nettle and completely revise business rates to keep small businesses viable, and it's time to force the energy companies to offer competitive pricing to small businesses. I do not know what is holding the government back from referring that industry to the CMA, because it is clearly not offering options, competitive options to small business, and we are paying a huge price for that.
That's a a scheme for apprentices. That's very important, but it's meaningless if we keep losing small businesses because they're the people that can actually take on apprentices, and they are often the only real source of jobs in our most deprived communities. And what about access to finance for small businesses? The British Business Bank has made a commitment to support community development banks and financial institutions. That's laudable, but the government has given it pennies to work with a sector that can lend, at best, £150 million in the UK lends over $300 billion in the US, the complete backbone to small business provides the secure foundation for its economy.
Will the new legislation allow the National Wealth Fund to step into that space and let us properly grow the community development, investment financing sector? Now, these benches will scrutinise very carefully the Enhancing Financial Services Bill. It hasn't been much discussed today, but I notice the government, in its brief in this count as other messages that we heard from the conservative benches. Finally in its briefing, recognises that the financial sector has suffered quite severely because of Brexit and has been stagnant, while other areas have been growing.
And it's salami slice by salami slice. The EU is building capacity in financial services across a network of cities, and often in partnership with British firms. People talk fluently now of Lloyds of Brussels. LCH that has replaced the term London Clearing House and LCH Paris is becoming a major force, and this will become far worse if, in June 2028, the EU decides to limit its grant of equivalent status to UK central counterparties, a risk not just that we lose trillions in derivatives clearing business, but also the financial operations that co-locate with CC could make that call to co-locate that elsewhere.
And neither the EU bill nor the Financial Services Bill seem to deal with any of this. The Enhancing Financial Services Bill intends to enable credit unions to expand. We've called for that for some time and that should help with financial inclusion. But we need a far more far reaching strategy, including clarification of the future of banking hubs, consolidation of the PSR and the SDA can be successful if it's done with care, but I am much more concerned about plans to scrap much of the certification regime.
That sets the standard for senior management, recruiting and accountability in the banking world. Before the certification requirements were brought in, senior bankers simply hired their friends. I was shocked and going round to HR department after HR department to discover they didn't even require CDs or check references. If someone was referred by a senior banker within their own organisation. And it accounts for a lot of the failures that we've had to deal with historically. But that to deal with historically.
But that I also suggest that. The. Well. I also suggest that the parliamentary Commission that. Sorry that the members here who question the importance of certification regime that. Sir, go and look at the Parliamentary Commission on Banking Standards. Evidence that we got from senior bankers. And this is around the issue of individual responsibility, because the changes that I can see to the certification regime weaken individual responsibility and return to the concept of collective responsibility. It was on that basis that bankers were absolutely shocked that they should have been expected to call out any kinds of concerns, any kinds of failure in management, or to carry the can for what went wrong.
And this is an industry that genuinely needs good regulation. I don't care if it's streamlined. That's always an advantage. But we have to recognise the importance of regulating this industry. I'm equally concerned about changes to ring fencing, the co-mingling of retail and investment banking was a major factor in the 2007 eight crisis. The free money from retail deposits fuelled casino type investment. Retail banking dropped credit standards, mis sold products like PPI and switched to short term funding.
And anyone thinks that reducing the ring fence will help the financing of small businesses. Think again. The major banks have restructured their operations and staffing in ways that make cash flow lending impossible, except to large clients, and I cannot see how this bill tackles risks outside the recognised institutions. I've been truly concerned with the government's lovefest with private credit, which we saw in the pension Schemes bill. Private markets play an important role in financing productive investment, but these markets, which now exceed $18 trillion, as said by Sarah Breeden, deputy governor of the Bank of England, have not yet been tested at that scale and complexity by a broad based macroeconomic shock.
In a higher rate environment, there is little transparency. Underwriting standards are weak, the loans are sliced and diced, and liquidity is very limited and private credit is now deeply wound into the banks, insurance companies and pension funds through lending arrangements, interconnection matters and in potential bubbles in tech and AI valuations. The play by hedge funds now in the gilts market, and it becomes evident that risk has not gone from the financial sector. It has simply taken a new shape.
Now, this Bill is a chance to make sure our regulators have the powers and capacity to respond. I'm afraid there's a current complacency and that is very dangerous. And this bill is also an opportunity to urgently address the issues of digital currency, both fiat and stablecoin. Too many powers have been switched from parliament to the regulators. Digital is not just a variation on plumbing sterling's stablecoin. Should it be redeemable at par, for one example, or what quality of assets are required to back it? I suggest not coal, gold and bitcoin.
That's a who controls the exchanges that can shut off transactions at will. And at the international level. What happens to the UK monetary sovereignty when future cross-border trade is dominated by dollar and renminbi stablecoin. These issues are above the pay grade of the FCA and the Bank of England, and they need to come to Parliament. My Lords, we will support the expansion of the sandbox for regulating, for regulating, for growth. But later in the week, my colleague and friend Lord Clement-Jones will speak extensively, I think, on the risks of getting on a deregulation bandwagon without looking extremely carefully, particularly as we're dealing with issues of AI.
We saw what damage has been done by the failure to regulate social media early enough, a price paid by vulnerable people and by many of our youngsters that. So this is not to be repeated in AI. So again, beware the sort of worship of a deregulation programme. We'll also look closely at the Highways (Financing) Bill that to make sure that the Rab funding is not a way to burden ordinary people with funding costs, that the capital markets have rejected, that it has a place, but we have to be careful with it.
And Lord Fox has detailed our support that but but with care for for for for for for nationalisation of, of the steel industry that as we try and sort out its role and the need for a long term strategy that has to underpin that particular process. But I want to thank Lord Stoneham for focusing on housing, which is an issue that I think hasn't been extensively debated today, but is absolutely underpinning to the future of our economy and also to his focus on industrial strategy.
We will work hard to ensure that the Competition Reform Bill ensures an independent CMA with teeth. This should not be a proposal to try and weaken the CMA. It should be a proposal to strengthen it in very much changing times. But none of this, frankly, is enough. I think our work is going to be to put together a programme of much greater ambition, an ambition that's a can be managed without excessive risk. But that takes real
**** Possible New Speaker ****
care and real energy. I thank. Everyone who has taken part in
**** Possible New Speaker ****
Everyone who has taken part in today's debate, and I thank the noble Lady, the Minister, for her crisp and helpful summary of the crisp and helpful summary of the new legislative programme. At the beginning of the day, the most important economic aim for the UK is to achieve increased growth rates as the government, initially, rates as the government, initially, long ago in 2024, insisted was their priority. There is nothing in the Gracious Speech which suggests that this is still the major objective 2% growth which we have achieved over the 200 years or so to 2008, would make all the
That the government, in response, has now got to deliver bold action. I am not sure that this King's speech meets that test. My Lords and I say to the government, stop pussyfooting in the European Partnership Bill and seize the opportunity. Lord Livermore has talked in the past about the 6 to 8% scarring of the economy in 2025. I've seen the numbers. I'm with him that I'll leave him to argue that case with the Conservatives, who don't appear to have taken note of them.
But I also want to point to a speech by Lord Strasburger when he talked about the specific damage done to one of our most important industries, the creative industry, by Brexit. And I could bring before this house industry, after industry to make exactly the same case. And for those who think that Brexit has not been a huge damage, go out and speak with industry after industry, and I defy anyone to continue to make that particular statement. My Lord, youth mobility schemes.
**** Possible New Speaker ****
That's a. Doesn't she speak to the NFU who don't want to rejoin Europe because they believe the divergences from EU rules since Brexit have EU rules since Brexit have benefited them enormously, and doing away with those divergences doing away with those divergences would cost 600 to £800 million a year just for PGP, £500 million a year for fisheries.
**** Possible New Speaker ****
year for fisheries. We may be speaking to the people at the NFU, but I suggest you go out and start speaking to individual farmers, and he's going to find that the agricultural sector has been really badly hit. But by the process of that, we've been through that. It also underscores the inadequacy of just trying to fill this with trade agreements. And I listened to a lot of the ideas that came from the conservative benches, and if you added them together, you'd be lucky to get 1 to 2% growth.
Even if you were able to implement a positive way. That doesn't anywhere near offset the 6 to 8% damage. But again, I'm going to leave the Minister to continue with that argument. But what I want to say is that this is an important time to seize, to be much more ambitious on the European front, because, of course, I support youth mobility schemes, recognition of professional qualifications, reduction of red tape. But this is the time when we need to be going for a bespoke customs union and also building that trust, as well as building the British economy that will enable us to be on a trajectory towards the single market and eventually to rejoining.
But if I look just at the customs union, I think it is widely accepted now that the impact of that would put 25 billion more into the UK economy in every year, and that is money that could bring some relief to both our debt numbers. It could help us deal with this need for additional investment in defence, and it could in turn, help struggling people. My Lords, missing from the King's Speech that is action to turn around the sad trajectory of small businesses.
And I applaud the late payments Bill. But can I say to the government it's time to grasp the nettle and completely revise business rates to keep small businesses viable, and it's time to force the energy companies to offer competitive pricing to small businesses. I do not know what is holding the government back from referring that industry to the CMA, because it is clearly not offering options, competitive options to small business, and we are paying a huge price for that.
That's a a scheme for apprentices. That's very important, but it's meaningless if we keep losing small businesses because they're the people that can actually take on apprentices, and they are often the only real source of jobs in our most deprived communities. And what about access to finance for small businesses? The British Business Bank has made a commitment to support community development banks and financial institutions. That's laudable, but the government has given it pennies to work with a sector that can lend, at best, £150 million in the UK lends over $300 billion in the US, the complete backbone to small business provides the secure foundation for its economy.
Will the new legislation allow the National Wealth Fund to step into that space and let us properly grow the community development, investment financing sector? Now, these benches will scrutinise very carefully the Enhancing Financial Services Bill. It hasn't been much discussed today, but I notice the government, in its brief in this count as other messages that we heard from the conservative benches. Finally in its briefing, recognises that the financial sector has suffered quite severely because of Brexit and has been stagnant, while other areas have been growing.
And it's salami slice by salami slice. The EU is building capacity in financial services across a network of cities, and often in partnership with British firms. People talk fluently now of Lloyds of Brussels. LCH that has replaced the term London Clearing House and LCH Paris is becoming a major force, and this will become far worse if, in June 2028, the EU decides to limit its grant of equivalent status to UK central counterparties, a risk not just that we lose trillions in derivatives clearing business, but also the financial operations that co-locate with CC could make that call to co-locate that elsewhere.
And neither the EU bill nor the Financial Services Bill seem to deal with any of this. The Enhancing Financial Services Bill intends to enable credit unions to expand. We've called for that for some time and that should help with financial inclusion. But we need a far more far reaching strategy, including clarification of the future of banking hubs, consolidation of the PSR and the SDA can be successful if it's done with care, but I am much more concerned about plans to scrap much of the certification regime.
That sets the standard for senior management, recruiting and accountability in the banking world. Before the certification requirements were brought in, senior bankers simply hired their friends. I was shocked and going round to HR department after HR department to discover they didn't even require CDs or check references. If someone was referred by a senior banker within their own organisation. And it accounts for a lot of the failures that we've had to deal with historically. But that to deal with historically.
But that I also suggest that. The. Well. I also suggest that the parliamentary Commission that. Sorry that the members here who question the importance of certification regime that. Sir, go and look at the Parliamentary Commission on Banking Standards. Evidence that we got from senior bankers. And this is around the issue of individual responsibility, because the changes that I can see to the certification regime weaken individual responsibility and return to the concept of collective responsibility. It was on that basis that bankers were absolutely shocked that they should have been expected to call out any kinds of concerns, any kinds of failure in management, or to carry the can for what went wrong.
And this is an industry that genuinely needs good regulation. I don't care if it's streamlined. That's always an advantage. But we have to recognise the importance of regulating this industry. I'm equally concerned about changes to ring fencing, the co-mingling of retail and investment banking was a major factor in the 2007 eight crisis. The free money from retail deposits fuelled casino type investment. Retail banking dropped credit standards, mis sold products like PPI and switched to short term funding.
And anyone thinks that reducing the ring fence will help the financing of small businesses. Think again. The major banks have restructured their operations and staffing in ways that make cash flow lending impossible, except to large clients, and I cannot see how this bill tackles risks outside the recognised institutions. I've been truly concerned with the government's lovefest with private credit, which we saw in the pension Schemes bill. Private markets play an important role in financing productive investment, but these markets, which now exceed $18 trillion, as said by Sarah Breeden, deputy governor of the Bank of England, have not yet been tested at that scale and complexity by a broad based macroeconomic shock.
In a higher rate environment, there is little transparency. Underwriting standards are weak, the loans are sliced and diced, and liquidity is very limited and private credit is now deeply wound into the banks, insurance companies and pension funds through lending arrangements, interconnection matters and in potential bubbles in tech and AI valuations. The play by hedge funds now in the gilts market, and it becomes evident that risk has not gone from the financial sector. It has simply taken a new shape.
Now, this Bill is a chance to make sure our regulators have the powers and capacity to respond. I'm afraid there's a current complacency and that is very dangerous. And this bill is also an opportunity to urgently address the issues of digital currency, both fiat and stablecoin. Too many powers have been switched from parliament to the regulators. Digital is not just a variation on plumbing sterling's stablecoin. Should it be redeemable at par, for one example, or what quality of assets are required to back it? I suggest not coal, gold and bitcoin.
That's a who controls the exchanges that can shut off transactions at will. And at the international level. What happens to the UK monetary sovereignty when future cross-border trade is dominated by dollar and renminbi stablecoin. These issues are above the pay grade of the FCA and the Bank of England, and they need to come to Parliament. My Lords, we will support the expansion of the sandbox for regulating, for regulating, for growth. But later in the week, my colleague and friend Lord Clement-Jones will speak extensively, I think, on the risks of getting on a deregulation bandwagon without looking extremely carefully, particularly as we're dealing with issues of AI.
We saw what damage has been done by the failure to regulate social media early enough, a price paid by vulnerable people and by many of our youngsters that. So this is not to be repeated in AI. So again, beware the sort of worship of a deregulation programme. We'll also look closely at the Highways (Financing) Bill that to make sure that the Rab funding is not a way to burden ordinary people with funding costs, that the capital markets have rejected, that it has a place, but we have to be careful with it.
And Lord Fox has detailed our support that but but with care for for for for for for nationalisation of, of the steel industry that as we try and sort out its role and the need for a long term strategy that has to underpin that particular process. But I want to thank Lord Stoneham for focusing on housing, which is an issue that I think hasn't been extensively debated today, but is absolutely underpinning to the future of our economy and also to his focus on industrial strategy.
We will work hard to ensure that the Competition Reform Bill ensures an independent CMA with teeth. This should not be a proposal to try and weaken the CMA. It should be a proposal to strengthen it in very much changing times. But none of this, frankly, is enough. I think our work is going to be to put together a programme of much greater ambition, an ambition that's a can be managed without excessive risk. But that takes real
**** Possible New Speaker ****
care and real energy. I thank. Everyone who has taken part in
**** Possible New Speaker ****
Everyone who has taken part in today's debate, and I thank the noble Lady, the Minister, for her crisp and helpful summary of the crisp and helpful summary of the new legislative programme. At the beginning of the day, the most important economic aim for the UK is to achieve increased growth rates as the government, initially, rates as the government, initially, long ago in 2024, insisted was their priority. There is nothing in the Gracious Speech which suggests that this is still the major objective 2% growth which we have achieved over the 200 years or so to 2008, would make all the
16:56
Baroness Neville-Rolfe (Conservative)
-
-
Baroness Neville-Rolfe (Conservative)
difference to our prospects. My Lords, it is unfortunate, indeed depressing, that the government has depressing, that the government has in reality given up on any real attempt to achieve such results. The government have made much of this morning's morning's better this morning's morning's better news about the first three months of 2026. Let us see if this is of 2026. Let us see if this is sustained, given the political turmoil of the last few weeks, sadly continuing today, as my noble friend Baroness Penn has said, the half measures and lack of vision are representative of this government's unpopular incremental approach.
My Lords, we have set out in detail what needs to be done in our alternative King's Speech a much more exciting policy programme than the government's. In particular, we must ease the pressures that are holding back ambition, enterprise and small businesses and are costing jobs. So extra National insurance contributions and business rates are two of the clearest examples. We must stop sending the message that success, investment and wealth creation are things to be punished. Lower tax thresholds, VAT on school fees, the extension of inheritance tax, higher stamp duty all introduced by the present government, and repeated talk of a wealth tax.
These all risk driving away the very people, capital and confidence that our economy needs. We have a government that is not facing up to what needs to be done, and the bond markets are reflecting that. The UK rate has hit 5.1% and is above that in Greece at 3.6%, and indeed that in all major economies, this is a higher level and a bigger premium than during the time of Liz Truss, to which Ministers are prone to refer so scornfully in the trade.
This is known as a moron premium. Now, that might seem an unkind description of the government front bench who are ultimately responsible for these matters, but the facts do stand out. Clearly. The government has been going in the wrong direction from the start by imposing higher taxes on business and individuals alike, and more and more regulation on everyone, while making no sustained effort to deal with welfare reform, as we have heard, and allowing a welfare bill, which has increased by £18 billion this year to £333 billion, with overall welfare spending projected to reach £409.6 billion in 2030 31, they will not do what is needed because they are frightened of their own backbenchers.
I fear we did not get enough done on welfare when we were in government, but the need for economies is much clearer now. Yet nothing has been done and there's nothing in the King's speech. This failure is behind Kemi Badenoch proposal in the alternative King's speech for a welfare reform Bill. This would restrict eligibility for Pip. It would provide face to face, not online assessment reform. Sick notes, reinstate the two child benefit limit under Universal Credit, and prevent those who are not British citizens from accessing so much welfare.
These will be the strong, necessary reforms that the present administration is sadly incapable of making. Let me now turn to the debate on the specific proposals in the King's Speech. Although it has been the major focus of the debate, I do not plan to go into detail on the European Partnership Bill. As my noble friend Lady Finn, has dealt with this well in her powerful and lively introduction. We have had important interventions, however, from a number of my noble friends, Lord Redwood and Lord Lillie have analysed the pattern of growth and the balance of trade with the EU, especially in goods.
I know a friend Lord Jackson of Peterborough from his perspective as a member of our respected European Affairs Committee, has pointed out that to gain privileges in the EU, the UK will have to pay and be subject in part to the fiat of the ECJ. He and my noble friend Lord Kirkhope have emphasised the vital importance of ongoing ongoing parliamentary scrutiny and my noble friend lady McIntosh of Pickering rightly asked about the future of the border target operating model.
I would just add that the cost of the EU reset will be greater than the benefits, especially with the negotiations being led by the Prime Minister. He doesn't seem able to engage with the EU without giving things away. So 12 years with the French and the Spanish plundering our waters rather than the originally envisaged five years and free access for young people, more of whom will want to come here than the reverse. So the EU should be paying us even our growth in AI and gene editing could be at risk from dynamic alignment.
As the noble Lords Lord
**** Possible New Speaker ****
Frost and my noble friend Lord Moynihan pointed out into precautionary speeches. Moreover, our vital trade agreements with Australia, Japan, India, Canada and the US, especially on pharmaceuticals where good work has pharmaceuticals where good work has been done, could come under pressure as dynamic alignment pushes into new parts of the aqui. So you can see that on these benches, we do not share the starry eyed optimism of some speakers on the EU reset, and there is still no progress on the overdue Defence investment plan.
Now, in a decisive contribution, the noble Lord Lord Robertson of Port Ellen pointed out that there seem to be a passage missing from the King's Speech on the additional funds needed to acquire the hard power we need to deter current and future threats. And indeed, my noble friend Lord Bridges of Headley pointed out in an excellent speech that security come comes with growth and fragile and fragile public services are a real security issue. You cannot spend more on defence if your debt servicing costs are soaring.
I now focus on three other areas employment regulation and productivity, and the high price of energy and its industrial impact. The prospects for employment are disturbing. Unemployment is at 4.9% and a terrifying 15.8% amongst 19 to 24 year olds. As we have just heard from the my noble friend Lord Kempsell, that's above Spain and Greece. Moreover, the Item Club report this week that they forecast 163,000 further layoffs this year. The truth is, the incentive to work has weakened as benefits have risen, and the combination of the Employment Rights Bill of NICs and hefty minimum wage increases have made hiring risky and expensive for employers, especially as Lord Kempsell Lord Kempsell said, in the vital entry level jobs for our young people.
AI is changing the marketplace at record speed, which means flexibility is more important than ever. And yet we are moving away from that. This is also an example of the growing blight of regulation, an area of concern for many noble Lords today, including my noble friend Lord Johnson of Lainston and my noble friend Lord Fuller. There is increasing evidence that excessive regulation acts as a drag on productivity, deterring investment, slowing decision making and making it harder for businesses to grow. It is particularly difficult for SMEs, as we've heard from the right Reverend Bishop of Newcastle and from the noble Lady, Lady Cramer, we often agree on issues relating to small business.
I know the noble Lord the Minister shares, at least in part, my concern about this regulatory area, and I note the government's announcements of an Enhancing Financial Services Bill, a competition reform bill and a Regulating for Growth Bill. It appears that the government might finally have begun to recognise the scale of the problem. But like my noble friend Lord Johnson, we are not convinced and we will examine the proposals as they come forward very carefully. Now the civil service has expanded significantly with costs in pay, unfunded pensions and support costs.
The shift to the public sector reduces productivity, as output per head is lower than in the private sector. Now it's government's job to get a grip of this. And unfortunately of that grip, there is little sign in the Gracious Speech. There is no sign of tackling the size of the civil service or productivity staffing practices such as working from home. Now the greatest Gracious Speech did promise proposals to strengthen its delivery, accountability, innovation and productivity. And perhaps the Minister will kindly explain what that will mean and whether there will be legislation on any of this.
Above all, as so many have said, we have a severe problem with energy prices and energy regulation, which is set to get worse with the proposed EU reset. Cheap, reliable energy is essential to competitiveness. We cannot be ideological about something so fundamental to living standards and to the capacity for economic growth. We need to open up the North Sea rather than leave it to Norway to take advantage of it. The government's Energy Independence Bill is going in completely the wrong direction.
Ruling out licences for new oil and gas fields. If the government wants to make energy more affordable and accessible, why do they continue to refuse to utilise the energy resources that we have got at home? State intervention to subsidise bills is not the answer to this problem. When we have the resources to increase domestic supply in the North Sea, and as my noble friend Lord Lilley pointed out, we've. We've crushed our major goods exporting sectors and we can't export what we can't produce.
The government's makes much of their net zero policies. But I put it to them that if you end up with the highest energy prices in the developed world, their policy is not the object of admiration. The government so often claims, but actually an example of self harm. My noble friend Lord Hunt of Wirral reminded us of the lack of a credible plan for making British Steel competitive, which he rightly described as a daily call on the taxpayer for business that Ministers cannot guarantee will be viable.
This the electric vehicle mandate, high energy prices together are having a devastating effect on the cost of goods, especially of vehicles. My noble friend Lord Sharpe of Epsom highlighted how little the Gracious Speech does for SMEs already facing an exceptionally difficult environment, not least the new holiday tax on top of higher NICs and business rates. Compliance, the compliance burden, the energy costs, the planning restrictions and, I would add horrific delays in the tribunals that will police the Mistaken Employment Rights Bill, costing business at least £5 billion.
And as my noble friend Lord Horam said, so many of the government's measures are anti-growth and anti-business. Once the backbone of Britain. My Lords, in conclusion, the central question before us is whether this legislative programme meets the scale of the economic challenge facing our country. I am afraid that it does not. Britain does not need more reviews, more strategies, more consultations, more regulation or more ministerial powers. It needs growth. It needs a government prepared to take the difficult decisions that growth requires to reduce the burden of tax, to cut back needless regulation, to make work pay, to restore incentives, to bring welfare spending under control, and to ensure that British industry have access to energy that is affordable, reliable and secure.
That is why the official opposition will scrutinise this programme relentlessly, where the government bring forward measures that genuinely improve competitiveness, simplify regulation, support business and increase growth. We will engage constructively, but where they add new burdens, Duc, difficult choices weaken our competitiveness or pretend that process process is a substitute for reform. We will oppose them. My Lords, we are in a mess and this programme will not solve our problems.
My Lords, we have set out in detail what needs to be done in our alternative King's Speech a much more exciting policy programme than the government's. In particular, we must ease the pressures that are holding back ambition, enterprise and small businesses and are costing jobs. So extra National insurance contributions and business rates are two of the clearest examples. We must stop sending the message that success, investment and wealth creation are things to be punished. Lower tax thresholds, VAT on school fees, the extension of inheritance tax, higher stamp duty all introduced by the present government, and repeated talk of a wealth tax.
These all risk driving away the very people, capital and confidence that our economy needs. We have a government that is not facing up to what needs to be done, and the bond markets are reflecting that. The UK rate has hit 5.1% and is above that in Greece at 3.6%, and indeed that in all major economies, this is a higher level and a bigger premium than during the time of Liz Truss, to which Ministers are prone to refer so scornfully in the trade.
This is known as a moron premium. Now, that might seem an unkind description of the government front bench who are ultimately responsible for these matters, but the facts do stand out. Clearly. The government has been going in the wrong direction from the start by imposing higher taxes on business and individuals alike, and more and more regulation on everyone, while making no sustained effort to deal with welfare reform, as we have heard, and allowing a welfare bill, which has increased by £18 billion this year to £333 billion, with overall welfare spending projected to reach £409.6 billion in 2030 31, they will not do what is needed because they are frightened of their own backbenchers.
I fear we did not get enough done on welfare when we were in government, but the need for economies is much clearer now. Yet nothing has been done and there's nothing in the King's speech. This failure is behind Kemi Badenoch proposal in the alternative King's speech for a welfare reform Bill. This would restrict eligibility for Pip. It would provide face to face, not online assessment reform. Sick notes, reinstate the two child benefit limit under Universal Credit, and prevent those who are not British citizens from accessing so much welfare.
These will be the strong, necessary reforms that the present administration is sadly incapable of making. Let me now turn to the debate on the specific proposals in the King's Speech. Although it has been the major focus of the debate, I do not plan to go into detail on the European Partnership Bill. As my noble friend Lady Finn, has dealt with this well in her powerful and lively introduction. We have had important interventions, however, from a number of my noble friends, Lord Redwood and Lord Lillie have analysed the pattern of growth and the balance of trade with the EU, especially in goods.
I know a friend Lord Jackson of Peterborough from his perspective as a member of our respected European Affairs Committee, has pointed out that to gain privileges in the EU, the UK will have to pay and be subject in part to the fiat of the ECJ. He and my noble friend Lord Kirkhope have emphasised the vital importance of ongoing ongoing parliamentary scrutiny and my noble friend lady McIntosh of Pickering rightly asked about the future of the border target operating model.
I would just add that the cost of the EU reset will be greater than the benefits, especially with the negotiations being led by the Prime Minister. He doesn't seem able to engage with the EU without giving things away. So 12 years with the French and the Spanish plundering our waters rather than the originally envisaged five years and free access for young people, more of whom will want to come here than the reverse. So the EU should be paying us even our growth in AI and gene editing could be at risk from dynamic alignment.
As the noble Lords Lord
**** Possible New Speaker ****
Frost and my noble friend Lord Moynihan pointed out into precautionary speeches. Moreover, our vital trade agreements with Australia, Japan, India, Canada and the US, especially on pharmaceuticals where good work has pharmaceuticals where good work has been done, could come under pressure as dynamic alignment pushes into new parts of the aqui. So you can see that on these benches, we do not share the starry eyed optimism of some speakers on the EU reset, and there is still no progress on the overdue Defence investment plan.
Now, in a decisive contribution, the noble Lord Lord Robertson of Port Ellen pointed out that there seem to be a passage missing from the King's Speech on the additional funds needed to acquire the hard power we need to deter current and future threats. And indeed, my noble friend Lord Bridges of Headley pointed out in an excellent speech that security come comes with growth and fragile and fragile public services are a real security issue. You cannot spend more on defence if your debt servicing costs are soaring.
I now focus on three other areas employment regulation and productivity, and the high price of energy and its industrial impact. The prospects for employment are disturbing. Unemployment is at 4.9% and a terrifying 15.8% amongst 19 to 24 year olds. As we have just heard from the my noble friend Lord Kempsell, that's above Spain and Greece. Moreover, the Item Club report this week that they forecast 163,000 further layoffs this year. The truth is, the incentive to work has weakened as benefits have risen, and the combination of the Employment Rights Bill of NICs and hefty minimum wage increases have made hiring risky and expensive for employers, especially as Lord Kempsell Lord Kempsell said, in the vital entry level jobs for our young people.
AI is changing the marketplace at record speed, which means flexibility is more important than ever. And yet we are moving away from that. This is also an example of the growing blight of regulation, an area of concern for many noble Lords today, including my noble friend Lord Johnson of Lainston and my noble friend Lord Fuller. There is increasing evidence that excessive regulation acts as a drag on productivity, deterring investment, slowing decision making and making it harder for businesses to grow. It is particularly difficult for SMEs, as we've heard from the right Reverend Bishop of Newcastle and from the noble Lady, Lady Cramer, we often agree on issues relating to small business.
I know the noble Lord the Minister shares, at least in part, my concern about this regulatory area, and I note the government's announcements of an Enhancing Financial Services Bill, a competition reform bill and a Regulating for Growth Bill. It appears that the government might finally have begun to recognise the scale of the problem. But like my noble friend Lord Johnson, we are not convinced and we will examine the proposals as they come forward very carefully. Now the civil service has expanded significantly with costs in pay, unfunded pensions and support costs.
The shift to the public sector reduces productivity, as output per head is lower than in the private sector. Now it's government's job to get a grip of this. And unfortunately of that grip, there is little sign in the Gracious Speech. There is no sign of tackling the size of the civil service or productivity staffing practices such as working from home. Now the greatest Gracious Speech did promise proposals to strengthen its delivery, accountability, innovation and productivity. And perhaps the Minister will kindly explain what that will mean and whether there will be legislation on any of this.
Above all, as so many have said, we have a severe problem with energy prices and energy regulation, which is set to get worse with the proposed EU reset. Cheap, reliable energy is essential to competitiveness. We cannot be ideological about something so fundamental to living standards and to the capacity for economic growth. We need to open up the North Sea rather than leave it to Norway to take advantage of it. The government's Energy Independence Bill is going in completely the wrong direction.
Ruling out licences for new oil and gas fields. If the government wants to make energy more affordable and accessible, why do they continue to refuse to utilise the energy resources that we have got at home? State intervention to subsidise bills is not the answer to this problem. When we have the resources to increase domestic supply in the North Sea, and as my noble friend Lord Lilley pointed out, we've. We've crushed our major goods exporting sectors and we can't export what we can't produce.
The government's makes much of their net zero policies. But I put it to them that if you end up with the highest energy prices in the developed world, their policy is not the object of admiration. The government so often claims, but actually an example of self harm. My noble friend Lord Hunt of Wirral reminded us of the lack of a credible plan for making British Steel competitive, which he rightly described as a daily call on the taxpayer for business that Ministers cannot guarantee will be viable.
This the electric vehicle mandate, high energy prices together are having a devastating effect on the cost of goods, especially of vehicles. My noble friend Lord Sharpe of Epsom highlighted how little the Gracious Speech does for SMEs already facing an exceptionally difficult environment, not least the new holiday tax on top of higher NICs and business rates. Compliance, the compliance burden, the energy costs, the planning restrictions and, I would add horrific delays in the tribunals that will police the Mistaken Employment Rights Bill, costing business at least £5 billion.
And as my noble friend Lord Horam said, so many of the government's measures are anti-growth and anti-business. Once the backbone of Britain. My Lords, in conclusion, the central question before us is whether this legislative programme meets the scale of the economic challenge facing our country. I am afraid that it does not. Britain does not need more reviews, more strategies, more consultations, more regulation or more ministerial powers. It needs growth. It needs a government prepared to take the difficult decisions that growth requires to reduce the burden of tax, to cut back needless regulation, to make work pay, to restore incentives, to bring welfare spending under control, and to ensure that British industry have access to energy that is affordable, reliable and secure.
That is why the official opposition will scrutinise this programme relentlessly, where the government bring forward measures that genuinely improve competitiveness, simplify regulation, support business and increase growth. We will engage constructively, but where they add new burdens, Duc, difficult choices weaken our competitiveness or pretend that process process is a substitute for reform. We will oppose them. My Lords, we are in a mess and this programme will not solve our problems.
17:10
Lord Livermore (Labour)
-
-
Lord Livermore (Labour)
Amen, Amen. >> Amen, Amen. >> My Lords, I thank His Majesty for his gracious speech and all noble Lords for their thoughtful noble Lords for their thoughtful contributions today. I congratulate my noble friend Baroness Anderson on her excellent opening speech, on her excellent opening speech, and it is now a great privilege to close this debate this evening. It is nearly two years since the first King's speech of this Labour government, and two years since the first time I stood at this despatch box with the honour of being a Treasury Minister.
In the many debates I have spoken in. In that time this House has provided an education like no other, and I am very grateful for the kindness and the good humour shown to me by so many noble Lords. It is a privilege to learn from the knowledge, the expertise and the real world experience that combines to make the collective wisdom of this House. May I, in particular, pay tribute to the noble Ladies Baroness Neville-Rolfe and Baroness Kramer. We have not yet agreed as often as I was perhaps hoping.
But they are always warm and decent in all their dealings with me, and I am certain all noble Lords recognise their commitment to serving this House. I look forward to continuing to work with both noble Ladies on the measures contained in this King's speech. My Lords, as the noble Baroness, Lady Finn, noted in her opening speech, the noble Baroness Neville-Rolfe noted in her closing speech. Over the past two years, economic growth has been this government's number one priority. Economic stability has been the cornerstone of our approach, and we have seen in recent days the economic damage done by the risk of deviating from that approach and the importance of sticking to our economic plan.
Now is not the time to put our economic stability at risk. In our first budget, we took action to fix the foundations of the economy by repairing the £22 billion black hole in the public finances left by the previous government. As my noble friend Lord Barber of Chittlehampton said in his contribution, focusing on how we spend public money, a theme also raised by the noble Lord Lord Shinkwin at the Spending Review last summer, we stuck to our fiscal rules, keeping a tight grip on day to day spending and getting debt down on a downward path while investing an additional £120 billion in growth.
Driving infrastructure like roads, rail and record levels of R&D. In our second budget last November, we built greater resilience by doubling the headroom against the stability rule and cutting borrowing as a share of GDP in every year of the forecast. This year's spring forecast showed that our plan was the right one. Inflation was at 3% and set to fall to target. Borrowing was set to fall more over this Parliament than in any other G7 economy. GDP per capita was forecast to rise by 5.6% over the parliament, compared to a fall of 0.2% in the previous parliament, and we increased headroom to over £23 billion.
Unemployment was coming down, real wages were continuing to rise and borrowing in the year to February fell by £20 billion compared to last year. Many noble Lords spoke today about economic growth, including the noble Ladies, Baroness Finn and Baroness Neville-Rolfe noble Lords Lord Burns, Lord Redwood, Lord Bridges of Headley, Lord Stoneham of Droxford, Lord Fuller, Lord Horam and Lord Kempsell, and my noble friends Baroness Bray and Lord Pitkeathley of Camden Town. Today's data release shows that growth was faster than previously estimated at the end of last year, and accelerated sharply in the first quarter of this year at 0.6%, making us the fastest growing economy in the G7.
As a result of the action we have taken, Britain today is in a stronger position to withstand the uncertainty created by the conflict in the Middle East, which is putting pressure on energy markets and creating renewed fragility in trade and supply chains. We did not start this war and we did not join it, but it will have consequences for our country and our economy. The government is continuing to plan for every eventuality, as well as dealing with the economic costs already being felt by families and businesses.
And the IMF have described our plan as, quote, the appropriate response to the conflict. The decisions we take going forward will continue to be responsive to a changing world and responsible in the national interest. The noble Ladies, Baroness Finn and Baroness Penn spoke about the importance of energy security. The government has announced steps to delink the price of electricity from the price of gas, protecting households and businesses from rising bills caused by gas price spikes. This includes offering voluntary, long term fixed contracts to existing low carbon generators, not on fixed price contracts more widely.
We're investing in clean, clean, home-grown energy, in renewables and in nuclear, and in 2025, we imported 17% less gas than in 2021. And gas generation now sets the wholesale price for electricity. Around a third less frequently than it did in the early 2020s. Several noble Lords spoke this evening and today about defence spending, including noble Ladies, Baroness Penn and Baroness Neville-Rolfe. Noble Lords Lord Burns, Lord Alderdice, Lord Bruce of Bennachie and of course, my noble friend Lord Robertson of Port Ellen.
We are delivering the biggest sustained increase in defence spending since the Cold War. We're investing £270 billion over this Parliament. After years of our armed forces being neglected under the previous government, we will increase defence spending to 2.6% of GDP from 2027. And we're increasing spending on defence by £5 billion in this year alone. Our ambition is to reach 3% in the next Parliament when fiscal and economic conditions allow, and the Defence Investment Plan will be published in due course.
Some noble Lords also mentioned welfare spending, including noble Baroness, Lady Fin, Lady Pen, Lady Neville-rolfe and the noble Lord Lord Tyrie. This government inherited, as many noble Lords know from the previous government, a broken welfare system, and we are committed to ensuring welfare spending is fair and sustainable. Through the Milburn Report into young People and work, as well as the Timms Review of Personal independence Payments, we will ensure we have a system of benefits and employment support that meets the needs of people and the economy.
My Lords, as well as immediate support with the cost of living, must also continue to build growth that is secure and resilient. As my noble friend Baroness O'Grady of Upper Holloway said, who also spoke about the importance of our industrial strategy and rightly said that we must continue to turn around the UK's productivity performance and build an investment led growth model. We will do that through stability, investment and reform. Stability to create a strong foundation for businesses to plan and invest.
Public investment to deliver growth, driving infrastructure and to crowd in private investment and reform to systematically remove the barriers to growth across the economy. My noble friend Lord McNicol of West Kilbride, spoke about the importance of AI to future growth and to social mobility, which was the key theme of the Chancellor's recent Mais Lecture. As the noble Lord, Lord Byrne said, much of the issues facing us are for future fiscal events, but they are also the priorities upon which the pro-growth legislation set out in the Gracious Speech is being delivered.
Firstly, we are introducing legislation to reform regulations and to remove the barriers to growth faced by businesses, including in financial services. The UK is the world's largest net exporter of financial services and a leading global financial centre, but we also face rapidly growing competition from other markets. As noted by the noble Lady Baroness Kramer. That is why our Financial Services and Markets Bill will maintain the UK's competitive advantage by delivering key parts of the Chancellor's Leeds reforms, the most wide ranging package of reforms to financial services regulation in more than a decade, and grateful to the noble Lords, Lord Burns and Lord Johnson of Lainston for their support for this Bill in their speeches today.
Alongside this, the new Competition Reform Bill will improve decision making in mergers and markets, investigations, speeding up the work of the Competition and Markets Authority and ensuring its remedies are regularly reviewed. The Lord Sharpe of Epsom noble Lord Lord Sharpe of Epsom asked about safeguards to ensure decisions remain independent. We will ensure appropriate governance and procedures. Procedural safeguards to maintain expert decision making that is independent of government. The noble Lord Lord Fox and my noble friend Lord Pitkeathley mentioned the Small Business Protections Bill, which will tackle the scourge of late payments which cost the UK economy £11 billion each year and leads to the closure of 38 UK businesses every day.
This was mentioned, too, by the noble Lord Lord Sharpe of Epsom, who also asked about the future business rate reform mentioned to by the noble Lady Baroness Kramer, which the government remains committed to reforming. Over the course of this Parliament, noble Ladies Baroness Penn and Baroness Finn spoke about the importance of regulatory reform, something I agree with. The Regulating for Growth Bill will strengthen the duty on regulators to promote economic growth. Mentioned by the noble Lord Lord Bridges of Headley, and will introduce new sandboxing powers so that businesses can test cutting edge new products and technologies safely.
To address the question posed by the right reverend Prelate, the Bishop of Newcastle. There will be no dilution to the protections provided by the regulatory system as a result of this bill. Maximising growth and innovation are key to this country's future success, but this will never be at the expense of wider protections. Secondly, we are building resilience to protect the critical critical infrastructure needed for growth. As the Prime Minister said earlier this week, steel is strategically important to our economy and to our national resilience.
That is why we acted last year to avoid a sudden halt to production at Scunthorpe, protecting workers and the community that depend on the site. While we are now bringing forward legislation to give us options to protect Britain's steelmaking capability, the British Steel Bill was focussed on by noble Lords Lord Fox Lord Hunt of Wirral and My Noble Friends. Baroness O'Grady of Upper Holloway, Lord Murphy of Torfaen and Lord Sikka. Since our intervention to stop steel production in Scunthorpe coming to a halt last year, we've been talking to British Steel's owners to find a realistic solution for the business.
It hasn't been possible to agree a commercial sale with the current owners, and we don't believe an agreement can be met which delivers value for money for taxpayers. British Steel is an important asset for UK steel, making it plays a strategic role for UK critical national infrastructure. Our wider steel sector objectives, local jobs and the economy given its unique production capabilities, securing the long term future of the UK steel sector relies on both public and private investment for modernisation. The Nuclear Regulation Bill mentioned by the noble Lady Baroness McIntosh of Pickering, will modernise the way that new nuclear projects are regulated so we can deliver safe, secure and affordable nuclear power and infrastructure sooner while maintaining strong environmental protections on energy.
The Energy Independence Bill will help to protect households against volatile fossil fuel markets, create more highly skilled jobs across the UK and mobilise investment in clean technologies. The noble Baroness, Lady Fin and Lady Neville-rolfe spoke about the importance of the North Sea, something which I agree with. We must harness our domestic supply of oil and gas production from the North Sea. That is why we are managing existing fields for the entire lifetime, including by allowing tiebacks for those fields to ensure they remain viable in advance of legislation.
We've published further details on Tiebacks, which external analysis have predicted could result in tens of millions more barrels of oil being available for UK supply. Our Clean Water Bill will help to build a resilient water system to supply businesses and attract investment, and I'm grateful to the noble Lady Baroness McIntosh of Pickering for her support for the Bill and for the Cunliffe Review. As the Chancellor set out in her May's lecture, we're also delivering on our manifesto commitment to transfer power out of Westminster by granting new revenue raising powers to local leaders in the Overnight Visitor Levy Bill mentioned by the noble Lord Lord Sharpe of Epsom, the right reverend Prelate, the Bishop of Newcastle spoke about the importance of connectivity.
I agree and we're improving connectivity to unlock growth in our economy today. Too many parts of Britain lack reliable transport connections and the agglomeration benefits that come with them. Northern Powerhouse Rail will help build a northern economy that reaches its full potential. The Northern Powerhouse Rail Bill, touched on by the noble Lord Lord Burns, is an essential part of delivering this transformational scheme. It confirms the high speed route from Manchester to Millington, providing faster and more frequent services for people and businesses across the North's key economic centres.
We are also delivering on our commitment to support a third runway at Heathrow. Our hub airport connects us to emerging markets all over the world, opening up new opportunities for growth. But for decades, Heathrow's growth has been constrained. Our civil aviation Bill will support Heathrow expansion and that of the entire aviation sector by reforming airport slot allocation and modernising airspace to meet future needs. My Lords, economic resilience in an uncertain world cannot be about turning inwards. Britain's future prosperity will not be built in isolation, but through partnership with those who share our interests and share our values.
And no partnership is more important than that between the UK and our European neighbours. Many noble Lords focus today in their contributions on the EU partnership Bill, including the noble Baroness, Lady Finn, Lady Bennett of Manor Castle, lady McIntosh of Pickering, Lady Ludford, the right reverend Prelate, the Bishop of Newcastle, noble Lords. Lord Fox Lord Lilley Lord Redwood Lord Frost Lord Bridges of Headley Lord Jackson of Peterborough Lord Kirkhope of Harrogate. Lord Stoneham of Droxford Lord Tyrie Lord Moynihan of Chelsea Lord Kempsell and my noble Friends Lord Liddle Baroness Bi Lord Murphy of Torfaen and Baroness Gill.
The noble Lord, Lord Frost, with apparently no irony, accused his government of messing up negotiations. The. The truth is, Brexit has done deep and lasting damage to our economy. Recent independent statistics indicate its GDP impact could be as much as 8%. The noble Lord, Lord Redwood, spoke about the OBR figures. They show clearly that by the end of this Parliament, the British economy will be £100 billion smaller than it otherwise would have been, which the OBR continued to believe is happening.
The reality is that Brexit has created new trade barriers, equivalent to a 13% increase in tariffs for manufacturing and a 21% increase in tariffs for services. Goods exports have fallen by 19%. Some £42 billion 20,000 small businesses no longer export to the EU at all. It has meant higher costs for businesses, shrinking markets for UK exporters and our strategic industries exposed and has damaged many other sectors, including the creative industries. As Lord Strasburger, Baroness Kramer, Baroness Ludford all reminded us, my noble friend Lord Liddle and the noble Lord Lord Kirkhope of Harrogate said we should be more ambitious and we should move quickly.
I agree. Just as the last government was defined by breaking Britain's relationship with Europe, this government should be defined by rebuilding our relationship with Europe. We are already making significant progress on agri food, electricity emissions trading and Erasmus. But there is a strategic imperative for deeper integration between the UK and the EU, and we must look towards a new and stable future relationship. The noble Lord Lord Fox and my noble friend Baroness O'Grady of Upper Holloway asked about Made in Europe and we are of course engaging with the EU on this vital issue.
I can't say more than that at present. In answer to noble Lady Baroness McIntosh of Pickering, we will be pausing further implementation of the. Be TOM while we negotiate new arrangements with the EU, where it is in our national interest to align with EU regulation, we should be prepared to do so, including in further areas of the single market. That alignment should be forward looking and durable, providing the certainty that businesses on both sides need to invest and to grow. The EU partnership in this King's Speech will enable us to implement our agreement with the EU on electricity emissions, trading and food and drink now and in the future, and where it is in our national interest to align with the EU regulation, including in the single market.
This bill enables us to do so. Several noble Lords spoke about the customs Union, including the noble Lords, Lord Fox, the noble Lady's Baroness Kramer and Baroness Ludford. Some of my noble friends spoke about eventually rejoining the EU, including Baroness Buy and Baroness Gill. At the next EU summit. We will set out a new direction for Britain with significant moves forward on trade, the economy, defence and security, as well as an ambitious youth experience scheme, all of which will create a platform on which we can build as we go forwards.
The prize is considerable costs for doing business reduced for UK companies, new opportunities to export, new experiences for travel, work and study for our young people. A more reliable and efficient energy system across Europe. Scale ups gaining access to deeper pools of capital talent and greater choice for consumers, helping to bring down prices and inflation. Closer alignment with the European Union is clearly the right choice for Britain in our national interest. The noble Baroness, Lady Finn, asked about parliamentary scrutiny. We are committed to being open and transparent in our engagement with Parliament regarding implementation of the summit outcomes and further negotiations to put into effect what the UK and EU have agreed, as well as throughout passage of the Bill itself.
We are making commitments to introduce new laws. As always, Parliament will play its role in scrutinising the the legislation that implements those commitments. We look forward to working with Parliament on the exact arrangements for scrutiny of the legislation as negotiations progress. The noble Lady Baroness Finn also asked about fiscal contributions spoken about to by my noble friend Lord Liddle, and the noble Lord Lord Kirkhope of Harrogate. We accept the principle that when the UK participates in an EU instrument programme or other activity, we should make a fair financial contribution to its budget to cover the costs of our participation.
Any UK financial contribution will be subject to negotiations with the EU, and no contributions have yet been made or agreed upon. The government is clear that agreements made with the EU must be in the national interest and that whilst trade offs will be required, these are worth making by the benefits to the UK. Exceed the costs. My noble friend Lord Murphy of Torfaen spoke about the importance of this bill to Northern Ireland and I am of course, very grateful to him for the work he did on his review into the Windsor framework.
The application of these agreements alongside the Windsor framework, will sweep away the majority of regulatory barriers for businesses moving agri food goods. This will support GB to Northern Ireland and EU movements as well as boosting exports. Businesses moving goods into Northern Ireland will continue to be able to use the vital facilitations under the Windsor framework for the limited number of requirements not covered by these agreements. Northern Ireland will also benefit from lower energy prices and assurances that there will be no divergent approach to emissions trading.
My Lords, this government has consistently made the responsible choices to bring stability to our economy and to raise economic growth through our economic plan. The spring forecast showed that this plan is the right one, with lower inflation and borrowing, higher living standards and a growing economy. As a result, Britain today is in a stronger position to withstand whatever uncertainty comes our way. We did not start the war in the Middle East and we did not join it. But it will have consequences for all of us.
That is why we have taken action to deal with the economic costs already being felt by families and businesses. But we must also build prosperity that is secure and resilient in a fast changing world. This is the basis upon which the pro-growth legislation set out in the Gracious Speech is being delivered. This legislation will remove barriers to growth faced by businesses. It will build resilience to protect the critical infrastructure needed for growth, and it will improve connectivity and boost trade to unlock growth, including through a deeper economic partnership with the EU.
Those are the right choices. This is the right economic plan to build a stronger and more secure economy for our country's future.
**** Possible New Speaker ****
The.
**** Possible New Speaker ****
The. My Lords, I beg to move the debate. Be now adjourned until Monday, the 18th of May.
**** Possible New Speaker ****
Monday, the 18th of May. The question. The question is that this debate be again adjourned
**** Possible New Speaker ****
that this debate be again adjourned until Monday, the 18th of May. As content. Content.
**** Possible New Speaker ****
Content. The contrary not content. The contents have it. My Lords, I beg to move that the House do now adjourn.
In the many debates I have spoken in. In that time this House has provided an education like no other, and I am very grateful for the kindness and the good humour shown to me by so many noble Lords. It is a privilege to learn from the knowledge, the expertise and the real world experience that combines to make the collective wisdom of this House. May I, in particular, pay tribute to the noble Ladies Baroness Neville-Rolfe and Baroness Kramer. We have not yet agreed as often as I was perhaps hoping.
But they are always warm and decent in all their dealings with me, and I am certain all noble Lords recognise their commitment to serving this House. I look forward to continuing to work with both noble Ladies on the measures contained in this King's speech. My Lords, as the noble Baroness, Lady Finn, noted in her opening speech, the noble Baroness Neville-Rolfe noted in her closing speech. Over the past two years, economic growth has been this government's number one priority. Economic stability has been the cornerstone of our approach, and we have seen in recent days the economic damage done by the risk of deviating from that approach and the importance of sticking to our economic plan.
Now is not the time to put our economic stability at risk. In our first budget, we took action to fix the foundations of the economy by repairing the £22 billion black hole in the public finances left by the previous government. As my noble friend Lord Barber of Chittlehampton said in his contribution, focusing on how we spend public money, a theme also raised by the noble Lord Lord Shinkwin at the Spending Review last summer, we stuck to our fiscal rules, keeping a tight grip on day to day spending and getting debt down on a downward path while investing an additional £120 billion in growth.
Driving infrastructure like roads, rail and record levels of R&D. In our second budget last November, we built greater resilience by doubling the headroom against the stability rule and cutting borrowing as a share of GDP in every year of the forecast. This year's spring forecast showed that our plan was the right one. Inflation was at 3% and set to fall to target. Borrowing was set to fall more over this Parliament than in any other G7 economy. GDP per capita was forecast to rise by 5.6% over the parliament, compared to a fall of 0.2% in the previous parliament, and we increased headroom to over £23 billion.
Unemployment was coming down, real wages were continuing to rise and borrowing in the year to February fell by £20 billion compared to last year. Many noble Lords spoke today about economic growth, including the noble Ladies, Baroness Finn and Baroness Neville-Rolfe noble Lords Lord Burns, Lord Redwood, Lord Bridges of Headley, Lord Stoneham of Droxford, Lord Fuller, Lord Horam and Lord Kempsell, and my noble friends Baroness Bray and Lord Pitkeathley of Camden Town. Today's data release shows that growth was faster than previously estimated at the end of last year, and accelerated sharply in the first quarter of this year at 0.6%, making us the fastest growing economy in the G7.
As a result of the action we have taken, Britain today is in a stronger position to withstand the uncertainty created by the conflict in the Middle East, which is putting pressure on energy markets and creating renewed fragility in trade and supply chains. We did not start this war and we did not join it, but it will have consequences for our country and our economy. The government is continuing to plan for every eventuality, as well as dealing with the economic costs already being felt by families and businesses.
And the IMF have described our plan as, quote, the appropriate response to the conflict. The decisions we take going forward will continue to be responsive to a changing world and responsible in the national interest. The noble Ladies, Baroness Finn and Baroness Penn spoke about the importance of energy security. The government has announced steps to delink the price of electricity from the price of gas, protecting households and businesses from rising bills caused by gas price spikes. This includes offering voluntary, long term fixed contracts to existing low carbon generators, not on fixed price contracts more widely.
We're investing in clean, clean, home-grown energy, in renewables and in nuclear, and in 2025, we imported 17% less gas than in 2021. And gas generation now sets the wholesale price for electricity. Around a third less frequently than it did in the early 2020s. Several noble Lords spoke this evening and today about defence spending, including noble Ladies, Baroness Penn and Baroness Neville-Rolfe. Noble Lords Lord Burns, Lord Alderdice, Lord Bruce of Bennachie and of course, my noble friend Lord Robertson of Port Ellen.
We are delivering the biggest sustained increase in defence spending since the Cold War. We're investing £270 billion over this Parliament. After years of our armed forces being neglected under the previous government, we will increase defence spending to 2.6% of GDP from 2027. And we're increasing spending on defence by £5 billion in this year alone. Our ambition is to reach 3% in the next Parliament when fiscal and economic conditions allow, and the Defence Investment Plan will be published in due course.
Some noble Lords also mentioned welfare spending, including noble Baroness, Lady Fin, Lady Pen, Lady Neville-rolfe and the noble Lord Lord Tyrie. This government inherited, as many noble Lords know from the previous government, a broken welfare system, and we are committed to ensuring welfare spending is fair and sustainable. Through the Milburn Report into young People and work, as well as the Timms Review of Personal independence Payments, we will ensure we have a system of benefits and employment support that meets the needs of people and the economy.
My Lords, as well as immediate support with the cost of living, must also continue to build growth that is secure and resilient. As my noble friend Baroness O'Grady of Upper Holloway said, who also spoke about the importance of our industrial strategy and rightly said that we must continue to turn around the UK's productivity performance and build an investment led growth model. We will do that through stability, investment and reform. Stability to create a strong foundation for businesses to plan and invest.
Public investment to deliver growth, driving infrastructure and to crowd in private investment and reform to systematically remove the barriers to growth across the economy. My noble friend Lord McNicol of West Kilbride, spoke about the importance of AI to future growth and to social mobility, which was the key theme of the Chancellor's recent Mais Lecture. As the noble Lord, Lord Byrne said, much of the issues facing us are for future fiscal events, but they are also the priorities upon which the pro-growth legislation set out in the Gracious Speech is being delivered.
Firstly, we are introducing legislation to reform regulations and to remove the barriers to growth faced by businesses, including in financial services. The UK is the world's largest net exporter of financial services and a leading global financial centre, but we also face rapidly growing competition from other markets. As noted by the noble Lady Baroness Kramer. That is why our Financial Services and Markets Bill will maintain the UK's competitive advantage by delivering key parts of the Chancellor's Leeds reforms, the most wide ranging package of reforms to financial services regulation in more than a decade, and grateful to the noble Lords, Lord Burns and Lord Johnson of Lainston for their support for this Bill in their speeches today.
Alongside this, the new Competition Reform Bill will improve decision making in mergers and markets, investigations, speeding up the work of the Competition and Markets Authority and ensuring its remedies are regularly reviewed. The Lord Sharpe of Epsom noble Lord Lord Sharpe of Epsom asked about safeguards to ensure decisions remain independent. We will ensure appropriate governance and procedures. Procedural safeguards to maintain expert decision making that is independent of government. The noble Lord Lord Fox and my noble friend Lord Pitkeathley mentioned the Small Business Protections Bill, which will tackle the scourge of late payments which cost the UK economy £11 billion each year and leads to the closure of 38 UK businesses every day.
This was mentioned, too, by the noble Lord Lord Sharpe of Epsom, who also asked about the future business rate reform mentioned to by the noble Lady Baroness Kramer, which the government remains committed to reforming. Over the course of this Parliament, noble Ladies Baroness Penn and Baroness Finn spoke about the importance of regulatory reform, something I agree with. The Regulating for Growth Bill will strengthen the duty on regulators to promote economic growth. Mentioned by the noble Lord Lord Bridges of Headley, and will introduce new sandboxing powers so that businesses can test cutting edge new products and technologies safely.
To address the question posed by the right reverend Prelate, the Bishop of Newcastle. There will be no dilution to the protections provided by the regulatory system as a result of this bill. Maximising growth and innovation are key to this country's future success, but this will never be at the expense of wider protections. Secondly, we are building resilience to protect the critical critical infrastructure needed for growth. As the Prime Minister said earlier this week, steel is strategically important to our economy and to our national resilience.
That is why we acted last year to avoid a sudden halt to production at Scunthorpe, protecting workers and the community that depend on the site. While we are now bringing forward legislation to give us options to protect Britain's steelmaking capability, the British Steel Bill was focussed on by noble Lords Lord Fox Lord Hunt of Wirral and My Noble Friends. Baroness O'Grady of Upper Holloway, Lord Murphy of Torfaen and Lord Sikka. Since our intervention to stop steel production in Scunthorpe coming to a halt last year, we've been talking to British Steel's owners to find a realistic solution for the business.
It hasn't been possible to agree a commercial sale with the current owners, and we don't believe an agreement can be met which delivers value for money for taxpayers. British Steel is an important asset for UK steel, making it plays a strategic role for UK critical national infrastructure. Our wider steel sector objectives, local jobs and the economy given its unique production capabilities, securing the long term future of the UK steel sector relies on both public and private investment for modernisation. The Nuclear Regulation Bill mentioned by the noble Lady Baroness McIntosh of Pickering, will modernise the way that new nuclear projects are regulated so we can deliver safe, secure and affordable nuclear power and infrastructure sooner while maintaining strong environmental protections on energy.
The Energy Independence Bill will help to protect households against volatile fossil fuel markets, create more highly skilled jobs across the UK and mobilise investment in clean technologies. The noble Baroness, Lady Fin and Lady Neville-rolfe spoke about the importance of the North Sea, something which I agree with. We must harness our domestic supply of oil and gas production from the North Sea. That is why we are managing existing fields for the entire lifetime, including by allowing tiebacks for those fields to ensure they remain viable in advance of legislation.
We've published further details on Tiebacks, which external analysis have predicted could result in tens of millions more barrels of oil being available for UK supply. Our Clean Water Bill will help to build a resilient water system to supply businesses and attract investment, and I'm grateful to the noble Lady Baroness McIntosh of Pickering for her support for the Bill and for the Cunliffe Review. As the Chancellor set out in her May's lecture, we're also delivering on our manifesto commitment to transfer power out of Westminster by granting new revenue raising powers to local leaders in the Overnight Visitor Levy Bill mentioned by the noble Lord Lord Sharpe of Epsom, the right reverend Prelate, the Bishop of Newcastle spoke about the importance of connectivity.
I agree and we're improving connectivity to unlock growth in our economy today. Too many parts of Britain lack reliable transport connections and the agglomeration benefits that come with them. Northern Powerhouse Rail will help build a northern economy that reaches its full potential. The Northern Powerhouse Rail Bill, touched on by the noble Lord Lord Burns, is an essential part of delivering this transformational scheme. It confirms the high speed route from Manchester to Millington, providing faster and more frequent services for people and businesses across the North's key economic centres.
We are also delivering on our commitment to support a third runway at Heathrow. Our hub airport connects us to emerging markets all over the world, opening up new opportunities for growth. But for decades, Heathrow's growth has been constrained. Our civil aviation Bill will support Heathrow expansion and that of the entire aviation sector by reforming airport slot allocation and modernising airspace to meet future needs. My Lords, economic resilience in an uncertain world cannot be about turning inwards. Britain's future prosperity will not be built in isolation, but through partnership with those who share our interests and share our values.
And no partnership is more important than that between the UK and our European neighbours. Many noble Lords focus today in their contributions on the EU partnership Bill, including the noble Baroness, Lady Finn, Lady Bennett of Manor Castle, lady McIntosh of Pickering, Lady Ludford, the right reverend Prelate, the Bishop of Newcastle, noble Lords. Lord Fox Lord Lilley Lord Redwood Lord Frost Lord Bridges of Headley Lord Jackson of Peterborough Lord Kirkhope of Harrogate. Lord Stoneham of Droxford Lord Tyrie Lord Moynihan of Chelsea Lord Kempsell and my noble Friends Lord Liddle Baroness Bi Lord Murphy of Torfaen and Baroness Gill.
The noble Lord, Lord Frost, with apparently no irony, accused his government of messing up negotiations. The. The truth is, Brexit has done deep and lasting damage to our economy. Recent independent statistics indicate its GDP impact could be as much as 8%. The noble Lord, Lord Redwood, spoke about the OBR figures. They show clearly that by the end of this Parliament, the British economy will be £100 billion smaller than it otherwise would have been, which the OBR continued to believe is happening.
The reality is that Brexit has created new trade barriers, equivalent to a 13% increase in tariffs for manufacturing and a 21% increase in tariffs for services. Goods exports have fallen by 19%. Some £42 billion 20,000 small businesses no longer export to the EU at all. It has meant higher costs for businesses, shrinking markets for UK exporters and our strategic industries exposed and has damaged many other sectors, including the creative industries. As Lord Strasburger, Baroness Kramer, Baroness Ludford all reminded us, my noble friend Lord Liddle and the noble Lord Lord Kirkhope of Harrogate said we should be more ambitious and we should move quickly.
I agree. Just as the last government was defined by breaking Britain's relationship with Europe, this government should be defined by rebuilding our relationship with Europe. We are already making significant progress on agri food, electricity emissions trading and Erasmus. But there is a strategic imperative for deeper integration between the UK and the EU, and we must look towards a new and stable future relationship. The noble Lord Lord Fox and my noble friend Baroness O'Grady of Upper Holloway asked about Made in Europe and we are of course engaging with the EU on this vital issue.
I can't say more than that at present. In answer to noble Lady Baroness McIntosh of Pickering, we will be pausing further implementation of the. Be TOM while we negotiate new arrangements with the EU, where it is in our national interest to align with EU regulation, we should be prepared to do so, including in further areas of the single market. That alignment should be forward looking and durable, providing the certainty that businesses on both sides need to invest and to grow. The EU partnership in this King's Speech will enable us to implement our agreement with the EU on electricity emissions, trading and food and drink now and in the future, and where it is in our national interest to align with the EU regulation, including in the single market.
This bill enables us to do so. Several noble Lords spoke about the customs Union, including the noble Lords, Lord Fox, the noble Lady's Baroness Kramer and Baroness Ludford. Some of my noble friends spoke about eventually rejoining the EU, including Baroness Buy and Baroness Gill. At the next EU summit. We will set out a new direction for Britain with significant moves forward on trade, the economy, defence and security, as well as an ambitious youth experience scheme, all of which will create a platform on which we can build as we go forwards.
The prize is considerable costs for doing business reduced for UK companies, new opportunities to export, new experiences for travel, work and study for our young people. A more reliable and efficient energy system across Europe. Scale ups gaining access to deeper pools of capital talent and greater choice for consumers, helping to bring down prices and inflation. Closer alignment with the European Union is clearly the right choice for Britain in our national interest. The noble Baroness, Lady Finn, asked about parliamentary scrutiny. We are committed to being open and transparent in our engagement with Parliament regarding implementation of the summit outcomes and further negotiations to put into effect what the UK and EU have agreed, as well as throughout passage of the Bill itself.
We are making commitments to introduce new laws. As always, Parliament will play its role in scrutinising the the legislation that implements those commitments. We look forward to working with Parliament on the exact arrangements for scrutiny of the legislation as negotiations progress. The noble Lady Baroness Finn also asked about fiscal contributions spoken about to by my noble friend Lord Liddle, and the noble Lord Lord Kirkhope of Harrogate. We accept the principle that when the UK participates in an EU instrument programme or other activity, we should make a fair financial contribution to its budget to cover the costs of our participation.
Any UK financial contribution will be subject to negotiations with the EU, and no contributions have yet been made or agreed upon. The government is clear that agreements made with the EU must be in the national interest and that whilst trade offs will be required, these are worth making by the benefits to the UK. Exceed the costs. My noble friend Lord Murphy of Torfaen spoke about the importance of this bill to Northern Ireland and I am of course, very grateful to him for the work he did on his review into the Windsor framework.
The application of these agreements alongside the Windsor framework, will sweep away the majority of regulatory barriers for businesses moving agri food goods. This will support GB to Northern Ireland and EU movements as well as boosting exports. Businesses moving goods into Northern Ireland will continue to be able to use the vital facilitations under the Windsor framework for the limited number of requirements not covered by these agreements. Northern Ireland will also benefit from lower energy prices and assurances that there will be no divergent approach to emissions trading.
My Lords, this government has consistently made the responsible choices to bring stability to our economy and to raise economic growth through our economic plan. The spring forecast showed that this plan is the right one, with lower inflation and borrowing, higher living standards and a growing economy. As a result, Britain today is in a stronger position to withstand whatever uncertainty comes our way. We did not start the war in the Middle East and we did not join it. But it will have consequences for all of us.
That is why we have taken action to deal with the economic costs already being felt by families and businesses. But we must also build prosperity that is secure and resilient in a fast changing world. This is the basis upon which the pro-growth legislation set out in the Gracious Speech is being delivered. This legislation will remove barriers to growth faced by businesses. It will build resilience to protect the critical infrastructure needed for growth, and it will improve connectivity and boost trade to unlock growth, including through a deeper economic partnership with the EU.
Those are the right choices. This is the right economic plan to build a stronger and more secure economy for our country's future.
**** Possible New Speaker ****
The.
**** Possible New Speaker ****
The. My Lords, I beg to move the debate. Be now adjourned until Monday, the 18th of May.
**** Possible New Speaker ****
Monday, the 18th of May. The question. The question is that this debate be again adjourned
**** Possible New Speaker ****
that this debate be again adjourned until Monday, the 18th of May. As content. Content.
**** Possible New Speaker ****
Content. The contrary not content. The contents have it. My Lords, I beg to move that the House do now adjourn.