Autumn Statement — Statement

Part of the debate – in the House of Lords at 3:30 pm on 5th December 2013.

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Photo of Lord Davies of Oldham Lord Davies of Oldham Shadow Spokesperson (Transport), Shadow Spokesperson (Treasury) 3:30 pm, 5th December 2013

My Lords, it is a pleasure to address the issues raised in the Autumn Statement in our usual atmosphere of calmness and courtesy—a rather sharp contrast with the wall of noise that greeted my counterpart, the shadow Chancellor, in the other place. This is an occasion for asking questions so I am sure that I am not going to be able to generate such excitement on the government Benches, but I hope that the Minister will answer my questions.

The Chancellor did not mention the concept of productivity, made no acknowledgment of the weakness of our balance of payments position in recent years despite the significant devaluation of the currency that we have experienced, and showed no real appreciation of the fact that real wages are still falling, among those who are employed. It is therefore proper to ask the Minister whether he is assured that the much vaunted growth figures quoted in the Statement are not based upon a somewhat insubstantial platform. Do these figures also not reflect a bounce back from a very low base indeed? The House will appreciate that even if growth reaches the figures that the Chancellor quoted, with his customary optimism, after three years of this economy flatlining, growth by 2015 will be only half the growth that in 2010 the Chancellor indicated to the nation that he hoped to achieve by the time that this Parliament had concluded.

The Minister who will respond to this Statement speaks and acts significantly on the issues of infrastructure in the economy. Will he comment on the fact that infrastructure output has fallen by 15% since 2010, and that so much which is promised remains unfulfilled? In 2010 the Chancellor also said that he was setting out to balance the books by 2015. It is clear that in 2015 we shall still have a deficit of £80 billion. That reflects the amount of borrowing that he had to do in the lean, flatlining years when no growth occurred. Will the Government persist in seeking to deny that we are in the middle of an acute cost of living crisis?

The Government are of course so wedded to the free market that they are quite unable to recognise the challenge presented by the Opposition on energy prices. After all, their belief in the market means that they cannot even recognise a standard textbook analysis of the creation of cartels, which is what the six main energy companies represent, and how that leads to excess profits. It is noticeable that the Government’s gesture in attempting to moderate the level of energy prices during this winter does not cost the cartel anything at all. It is the taxpayer who is going to meet the deficit that will occur due to the companies charging quite so much, and prices will still rise, going up by £70 in this period. For an awful lot of people in the country, £70 is a very significant sum for fuel. After all, we pay £100 to pensioners in the winter fuel allowance because we recognise the acute need that pensioners have to keep their homes warm. However, we expect all the rest of the population, whatever their incomes, to withstand an increased charge of £70.

The Government shy away from any interference with the market. However, I am a fair man and therefore the House would expect me to acknowledge those occasions when the Government do interfere—for example, the gesture with regard to payday loans, but that is a straight reflection of the pressure that had been generated from my party and in this House on the issue, and of course the Government’s response has been woefully inadequate.

The crucial thing I want the Minister to address is the constant failure of wages to match prices, which is making working people poorer. It may be that the Minister is not that familiar with those people who find themselves poor at present. He is likely to meet an awful lot of people—his friends certainly have many associates among the banks—in the banking fraternity, at the highest levels, who are of course not feeling the pinch at all. Hedge funds, too, are not noticeably short of returns. That is to say nothing of the growth of high salaries right throughout British commerce and industry, while wage levels stay stagnant. It is only accidental that some of those groups have a profound interest in sustaining and supporting the Conservative Party both between elections and at election time. We are not seeking to be too controversial today so the Government need not comment on that particular point, but I want the Minister to respond on the issue of falling wages.

It is quite clear that the Government are committed to a position. The Chancellor waxed with some strength over the fact that there will be a cap on welfare and very severe constraints on public expenditure, and gave the briefest outline of what that would mean. We all know what it means: five more long and hard years. We also know who is going to bear the costs of those five long and hard years—those who have done it since the coalition came into office in 2010.

The other obvious question is: if the Government are so wedded to free markets, do they consider that the free market worked well in the banking crisis of 2007-08? That was not a failure of anything except the free market. I notice some excitement on the government Bench, because they have worked out that in 2007-08 Labour was in power. That is certainly so, but we were not in power when the Big Bang freed up the City to create the successive market mechanism, and whenever there were suggestions of anything to do with regulation we know on which side the Conservative Opposition were. Of course, they have shown themselves to be exactly the same in the energy debate.

Will the Minister confirm that the Chancellor envisages—if, by some mischance, this Government, or a Conservative version of them, were retained in office—aiming for the size of the state in public expenditure to go back to the levels of 1948? To contemplate that in a modern society merely demonstrates that ideology dictates this Government’s economic policies, not the welfare of the nation.