King’s Speech

Lord Redwood Excerpts

Thursday 14th May 2026 Lords Chamber

[Lord Redwood (Con)]

My Lords, the noble Lord, Lord Alderdice, is right to warn us all that our relative prosperity and power is waning.

I have always been happy to fully support this Government’s main aim, as set out in the general election and repeated in all the economic speeches that I have heard them make. They are right that this country can achieve so much more. It can grow much faster. It can unleash enterprise and develop more business. However, I fear that my noble friend Lady Finn set out in her brilliant speech just how, for almost two years now, this Government have done everything wrong if we wish to promote growth. They have clobbered entrepreneurs instead of praising them; they have taxed people instead of rewarding them; they have taken incentives out and made it more difficult to employ young people—they seem to have a grudge against young people. Now we are presented, in this gracious Speech, with what they think is one golden thread that 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 to help the Government think this through. Quite often, Ministers here and elsewhere tell us that we have suffered a 4% GDP loss as a result of Brexit. But all the graphs and charts of what happened to GDP between 2016 and today, in the leading European countries and here, show that there is absolutely no sign of an extra 4% drop as a result of either our voting to leave or actually leaving. If you ask Government Ministers why they think there has been a 4% drop, they say that the OBR has said it. But the OBR report is a forecast, which says that between 2020 and 2035, the British economy might grow its productivity 0.25% per annum less than if we had not left the EU. It is not forecasting any drop in GDP at all; it is not even forecasting a drop in productivity—it says that 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. Ministers must be honest with themselves and the public: there was no 4% drop, and their reset will not recover the 4% that they wrongly allege has disappeared.

Let us explore the idea that increasing trade would uniquely provide growth. I fear that Ministers are again mistaken, because our trade with the European Union results in a very large trade deficit, particularly in goods. It sells us a lot more than we sell it, so if we could agree a set of policies with the EU that might increase the exports of each side by, say, 10%, which is quite a sizeable number, the deficit would rise and our GDP would fall, because the EU would export much more to us than we export to it 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. To have the same volume, we would need to grow our exports by 17% to match the 10% growth in the EU’s exports. If you wanted to get more GDP, you would have to grow our exports a lot faster than the European Union because—I repeat to the Government—exports add to our GDP, but imports do not. If we import more German cars and close a UK car factory, our GDP goes down; it does not miraculously go up because our trade figures with the EU have gone up.

That is exactly the Government’s strategy, thanks mainly to their net-zero policies. My noble friend Lord Lilley set it all out very well. They are literally going to ban us making any diesel or petrol cars from 2030, five years earlier than they would stupidly ban them on the continent. Do they not see that that means that we would close our factories first, and definitely lose all the jobs, while Europe was still thinking about making more of these cars that people want to buy? The Government will say, “Well, we’re going to buy battery cars”. Yes, some people will buy battery cars if they cannot buy diesel or petrol cars, but most of them will probably be imported from China, or they might be made in eastern Europe and imported via that route, so the Government will not get more jobs, growth or economic activity from that source.

Here is my friendly proposal. I really want this country to do well; I want this Government to do well. I know that they are not about to fall—Prime Ministers might come and go, but they will presumably carry on governing—so I say to them: please govern well. Instead of having the wrong idea that promoting more imports from Europe and perhaps a few more exports to Europe will miraculously transform the position, I want them to put in place in Britain a series of policies for import substitution.

It is much easier for small companies to sell to people, shops and businesses near them than to go through all the hassle of exporting, however much red tape the Government think they can reduce. That would give our small businesses more chance by creating more opportunity for British production. It should be much cheaper and easier to replace imports than to try to develop exports to markets with different languages and customs which may not like what you are doing or offering. I know this well from my experience running industrial businesses, when we found that 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 who loved the countries and spoke the language, but it was still much more difficult to sell there than it was to the English-speaking world, including America, or to Asian countries where English was the common business language.

We need to lift the ban on making our own petrol and diesel cars, because they have 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 they too have been leading exports to the continent. We need to get energy prices down, as my noble friend Lord Lilley rightly said. We have in the past exported a lot of petrochemicals and refined oil product, and if we are shutting all our refineries, petrochemical works, ethylene plants and so on, we will not export anything like that volume in the future.

The Government need a dose of reality and common sense and an examination of the data. It is not good enough for Ministers to say, “We will get the British economy to grow as soon as we have signed away our powers to make our own business laws and given some more money to Brussels”. They cannot identify billions of pounds of extra exports we can make at a time when they, through their policies, are ensuring that we export fewer and fewer cars and chemicals and less and less oil, gas and refined product, and are in the process of closing 21 plastics recycling plants.

As my noble friend Lord Hunt set out in another brilliant speech, there is no plan to save steel. Indeed, I heard the Minister say in her opening remarks that it is still the Government’s policy to go over to electric arc furnaces. They need to be honest to the workers in Scunthorpe: the Government are not going to permanently save the Scunthorpe jobs. They still want to sack all those people, but just a bit later, after they have wasted billions of pounds of public money on keeping open a works that is struggling to compete, in the way that my noble friend set out. I ask the Government to please level with the workers in Scunthorpe about the fact that their plan is anti-blast furnace and anti-burning coal in any sense, and to come to a decent settlement with them. The workers should not think that the Government have a solution to steel, because they clearly do not.