Covid-19: Economic Recovery

Lord Vaizey of Didcot Excerpts

Tuesday 20th April 2021 Grand Committee

[Lord Vaizey of Didcot (Con) [V]]

My Lords, this is a great opportunity to talk about the British economy and how we will recover from the pandemic. If you had asked me a few months ago what kind of economy we would be facing, I would have predicted that it would be completely wrecked. But, though I am not a trained economist, the economy seems to be doing much better than expected. We have lower unemployment than we expected, we have a booming stock market and we have rising house prices. Those are not necessarily good news for everyone in our country, but they are certainly very strong economic indicators that we will recover very quickly as we move out of the pandemic. Certainly anecdotally, looking around as we gradually unlock, the ability of hospitality businesses, for example, to start catering for people has been very welcome indeed.

I have to say that the Government deserve a lot of credit for the position we are in today. I was one of the people who was quite happy to jump on the bandwagon a year ago and highlight some of the mistakes the Government might have been making, and certainly I have a great deal of sympathy with what my noble friend Lady Noakes said earlier about there being far too much emphasis on lockdown and not enough on the impact on mental and physical health and on our economy. Having said that, I certainly think that the road map out of lockdown that the Government set out a few months ago and have adhered to, and the enormously successful vaccine rollout programme, are two things for which they deserve a great deal of praise.

My noble friend Lady Penn laid out in great detail some of the financial and direct support that the Government have provided to the economy over the past year, and, as other noble Lords have pointed out, the figures are pretty staggering: some £352 billion of support; 1.3 million employers taking advantage of the furlough schemes, supporting 11.5 million jobs, at a cost of £58 billion; 1.63 million loans to businesses, at a value of £75 billion; 2.7 million people benefiting from the self-employed scheme; £5 billion in restart grants for hospitality; the recovery loan scheme; and taxes forgone, such as the business rates holiday and the reduced VAT rate for tourism and hospitality. There are also some innovations which may stick: for example, the Future Fund where the Government have invested, alongside private investors, to support innovative new tech companies. Obviously, something close to my heart is the £1.57 billion that the Government have provided to support the arts during this very difficult time. Those are all measures which I think have been welcomed.

I would say partly as an aside, having said earlier that I am quick to jump on the odd bandwagon if the Government make a mistake, that it is worth pointing out the dogs which have not barked. A lot of the work done over the years by the Government Digital Service really came to fruition during this time. I certainly found, again anecdotally, from people I know who applied for bounce-back loans and so on that they found the technology process of applying online—this is not an insignificant point, and it also applies to universal credit, which my noble friend Lord Horam talked about earlier—to be very smooth and easy. That is no mean achievement.

However, I want to use my brief remarks to look forward. This is perhaps a chance for me to play fantasy politics: what I would do if I were in charge and able to wave a magic wand to help transform the British economy? I feel this yearning for Britain to really lean into the fact that we are a modern, digital economy. We have enormous opportunities to lead the world in various economic sectors. Perhaps I may pick up on what my noble friend Lord Horam said earlier—I am sorry that I did not begin my remarks by praising his excellent speech—when he rightly focused on the importance of technical education and further education. No one wanted our children to be educated from home on Zoom calls but we are certainly long overdue a revolution in our school system. It is a common and very boring refrain of mine that any of our Victorian ancestors could wander into almost any school and feel quite at home. We really need to focus on digital skills and to carry on a revolution, which the previous Government started, so that apprenticeships and technical education can begin to take on the same status as academic education and education becomes flexible, with the opportunity for people to dip in and out, and to upgrade their skills when necessary.

The skills of the future that we need are for the economic growth sectors of the future. We will be hosting COP 26 at the end of this year. We already see that cities such as Hull, for example, are booming thanks to the investment in renewable energy. Britain has a great opportunity to take advantage of renewable technology, yet we seem still not be leaning into this. It is a win-win, providing us with not only measures to combat climate change but energy security and technology leadership. The same goes for the space sector, which is linked quite closely to climate change given the ability to make an impact on climate change by using satellite technology. In the week when NASA has flown its helicopter in the first flight outside our atmosphere, we in the UK also have a massive opportunity to take the lead in space technology. As the former MP for the Satellite Applications Catapult, this too is a sector close to my heart.

I mentioned earlier the Future Fund which the Government have created. We are the technology capital of Europe; we have more start-ups than France and Germany combined but do not yet have a strategy to ensure that those start-ups become scale-ups. In fact the most successful scale-up company created recently was probably the European super league, which the Government are now busily trying to stop.

I take note of the fintech review by Ron Kalifa, which shone a light on a sector where Britain, again, has natural leadership. I would like to see the Government lean in on that and to implement the Hill review to ensure that great British companies can float in this country. I am looking forward as well to the ARPA legislation, which again shows the Government’s intent to lean into modern and future technology.

Finally, I would point to the boring, old but very important issue of infrastructure: broadband and 5G, but also roads and HS2. There has to be an opportunity to renew our infrastructure in this country, as President Biden is doing across the pond.

Coming out of the pandemic feels like coming out of a war. When we came out of the last war, we came out with the Beveridge report, which shaped British politics for 30 or 40 years. I hope that the Government can put together all the wonderful initiatives that they are overseeing into a really compelling narrative of what the modern British digital economy could look like in the future.

I will conclude simply by referring to the industries that I am really passionate about: the creative industries and the cultural industries. I noted before the pandemic how the film industry had contributed to our economic growth and helped us to avoid going into recession. I hope that the Government will support the creative industries and our cultural industries as much as possible.

I noted what my noble friend Lady Wheatcroft said earlier about the tax rise imposed on duty-free shopping, which is going to hit our tourism and luxury goods industries in the solar plexus. The Government need, where possible, to join up their thinking, identify the fantastic strengths that we have in this economy, bounce back from the incredibly successful way they have managed the pandemic over the past few months and take Britain forward.