Budget Responsibility Bill

Lord Liddle Excerpts

2nd reading & Committee negatived & 3rd reading
Monday 9th September 2024 Lords Chamber

[Lord Liddle (Lab)]

My Lords, I strongly support this Bill and congratulate the Financial Secretary on the very able speech with which he introduced it. I do not see how an attempt to prevent a repeat of Liz Truss can be regarded as performative. Surely everybody would want to see that consequence.

My worry is that this Bill does not go far enough. In the past two years, we have seen a real failure of fiscal responsibility in the way in which Rishi Sunak and Jeremy Hunt justified big cuts in national insurance on the basis of public spending forecasts that were, as the noble Lord, Lord Macpherson hinted, completely unrealistic. This has now landed us in a very difficult position. When they made their public spending forecasts, they did not take account of public sector pay, which is part of Chancellor Reeves’ black hole of £22 billion. They did not take account of the need for social care reform, without which, as Wes Streeting has said, there cannot be any wider reform of the NHS.

In an excellent report published just today by Unison, we learn that local councils are at risk of going bust. There is also a crisis in our courts and prison system. The Conservatives committed themselves to a defence target of 2.5%, which they seriously said could be achieved by “efficiency savings”. These were completely unrealistic public spending forecasts on which tax decisions were taken. Worst of all, in order to finance them, the Government pencilled in a cut in public investment from about 2.6% of GDP to 1.9%, which is actually the reverse of what the country needs: a big increase in investment.

So, we have a big structural deficit on our current account that we have to correct. We can try efficiency savings, benefit freezes or putting off change and reform in the hope that growth will naturally increase, but I argue that tax will have to be part of the solution to this, because the public were misled by the last Government. However, when I say “tax”, I do not believe some people from our own side, who seem to think that we can deal with this problem by simply taxing the top 1%. Yes, the broadest back should bear the heaviest burden, but it should be broader than that to work without economic damage.

We need tons of investment to launch a new nuclear energy programme, invest in our railway infrastructure, reconfigure the national grid, apply AI to public services, build new towns which have adequate social housing and fund the modern industrial strategy based on promoting a new wave of entrepreneurialism from our excellent science base. I believe that we need tough fiscal rules; we have to plan for current spending and revenue to be brought quickly into balance. But at the same time, I agree with my noble friend Lord Eatwell that the rules have to be sufficiently flexible to accommodate worthwhile, spend-to-save measures in public services and invest-to-grow measures for the wider economy. I believe that, although fiscal rules matter, a convincing growth strategy matters even more to the financial markets, and the bond markets will back our ambitions as long as our investment plans are well conceived.

Labour has a unique or huge opportunity ahead of it. We certainly need prudence and certainly need to be disciplined, but we also need radicalism—a radicalism from what I would describe as the politics of the centre ground.

Crown Estate Bill [HL]

Lord Liddle Excerpts

2nd reading
Monday 2nd September 2024 Lords Chamber

[Lord Liddle (Lab)]

My Lords, it is always a pleasure to follow the noble Lord, Lord Wigley. I share many of his values, but it is too dangerous and difficult for me to get into the questions of devolution that he raises. I wish him the best of luck.

When I first looked at this Bill, I thought that it was rather a minor and technical Bill, and was not really worth speaking on, if you see what I mean. What excited me to make me think that this was an important Bill was the announcement, in July, of the partnership between the Crown Estate and our newly established Great British Energy. I was a little disappointed that in my noble friend’s excellent introduction to the Bill he did not focus on that more. It seems to me that the change in borrowing powers and the requirement that the Crown Estate takes a more proactive role, particularly in our struggle to reach net-zero electricity generation, are the really interesting aspects of this legislation, along with what the extra borrowing power that the Crown Estate will have will mean in practice.

Given that this partnership with Great British Energy has been announced with such fanfare, it has to be said, with objectives to invest in ports and new technologies, and to take a more proactive, leading role in the development of the seabed and of wind and offshore wind, why is it that we are not proposing to borrow any more until the end of the decade? There seems to be a fundamental contradiction there: if we want to reach the 2030 goal then we are going to have to do something about it, not in five years’ time but now. I will be very interested in my noble friend’s response on that point.

If the Crown Estate is to take on these new responsibilities, there will have to be a change of culture. My father-in-law was a Crown Estate commissioner, and it is fair to say that it was a very conservative—with a small “c”—institution, extremely cautious in everything that it did. If it is going to do the things that were announced in the partnership with GBE in July, it will have to have a complete change of culture and become a more enterprising institution. Is that what is envisaged?

It is interesting that provision is made in the Bill for an additional four Crown Estate commissioners—presumably, this is to bring in the kind of expertise that the Crown Estate presently has. That is essential, particularly to bring people in from the private sector. In effect, if the ambitions of this partnership are right, we are talking about the Crown Estate becoming part of what will be a risk-taking investment business—and that requires expertise.

A lot of people think that investment in wind is a no-brainer, but tell that to the Siemens board, which at the moment is struggling with having to make billions of pounds of provision for the fact that its turbines have been shown to have major flaws. This job has to be extremely well done, by private sector people working with the Crown Estate and Great British Energy, and that means recruiting people who are able and not constrained by public sector salary constraints. Is this what is planned, or are we getting carried away with an excess of ambition about what might happen? I do not know; it is very difficult to tell.

Other noble Lords have mentioned that one of the constraints on the Crown Estate becoming a developer of offshore wind is the lack of grid connection. Something is actually being done about that. I was very interested that Ed Miliband, as the Secretary of State, has asked the National Energy System Operator—one of the good things that the Conservative Government did was to bring that into public ownership, so it is now a public body—what is needed to deal with the problems of grid constraints. Where does this Crown Estate partnership fit into that?

I also noted what the noble Lord, Lord Wigley, said about offshore developments in the Celtic Sea off the coasts of Wales and the south-west. When I was on the European Affairs Committee and we were looking at the role of co-operation between the UK and our continental friends, one of the great opportunities was in the North Sea—on the other side of our country. The concept of wind power linked to interconnectors that go across the North Sea is very attractive because if too much electricity is generated by wind on one side of the North Sea, it can be sold in markets on the other side and vice versa. Is this prospect being seriously examined? What would be the role of this partnership between the Crown Estate and Great British Energy?

I am an optimist about this. I want to think that we will be bold and get something done on our net-zero target by 2030. I hope that, in its minor way, this Bill might make a significant contribution.