My Lords, the noble Lord, Lord Hamilton, spoke about divisions, and divisions in the economy. To me, these divisions were illustrated when, immediately after the referendum, international investment banks drew our attention to inequality, not on moral grounds but on the grounds that they had discovered that it was bad for their business. On the same day, others profited from our problems through totally unproductive betting against the pound.
This is as much an indication of our divided society as British Home Stores because our real problem is how to pay our way outside the single market. For better or for worse, our trading rules will be based, after 2018, on the EEA or the WTO rules and MiFID II, rules that we have always respected. This probably means competing against tariff barriers or imposing some of our own. This fall in the value of the pound can help us deal with some of these tariff barriers, but it is the quality and excellence of our goods and services that will enable us to pay our way.
Betting on the pound’s going down implies supporting a race to the bottom, a race that we can never win, especially outside the European Union with the full impact of globalisation. We had better get on with raising our productivity instead of just talking about it. Low interest rates should encourage this necessary investment, which we have been requesting for years.
Surely it would be far more productive for the fall in the value of the pound to signal encouraging exports and an opportunity to bring manufactured goods back to Britain—reshoring, as it is called. This has to mean depending less on cheap labour and much more on making everybody more productive and more skilled, especially using new technology and promoting green industries.
Much of this cheap labour comes from overseas. We will never control our borders, but improving rights at work, increasing pay and raising productivity will reduce the demand for migrant labour. It will also help businesses win back the public trust, about which the noble Lord, Lord Hamilton, spoke. With his five-point plan, I think the Chancellor has given a nod in this direction, but at this stage his corporate tax cuts will do little. The concern is with profits, not with taxes.
Central to paying our way is keeping the people who have come from overseas, not only seasonal agricultural labourers but also the scientists who work in research and new technology—as many as a third in some of our laboratories. They are crucial to the Horizon 2020 funding, which I hope will continue.
This brings me to my concern about inward investment. Our balance of payments deficit is funded by money coming from abroad. If this falters, we will be in a real financial crisis. We are constantly told that this inward investment depends on our institutions, on our society, on our skills, on our stability as much as on our business management and on our trading rules. All these aspects were damaged during the referendum campaign. National institutions, such as the Bank of England, the Treasury, our business organisations, our research institutions—they were all rubbished during the referendum campaign. Their expertise and credibility were replaced by prejudice. Fortunately, the Governor of the Bank of England has—almost singlehandedly—put this right during the past few days, because he knows that this affects inward investment.
Hate crime has multiplied. We have heard all the dreadful details during this debate. For the sake of inward investment, this has to be stamped on to demonstrate that we will not tolerate intolerance. Many noble Lords have spoken about the status of overseas citizens. Their status has to be clearly defined, and quickly, because this too affects inward investment.
The uncertainties created by political divisions caused by the referendum need to be calmed. Many of them were caused by the abrupt departure of the Prime Minister and no contingency planning. This political uncertainty affects inward investment.
Business and trading relationships with the single market have to be defined so that supply chains, passporting, business co-operation can all adapt and be developed. Postponing this may suit an indecisive Government in disarray, but it will also postpone inward investment and throw it into disarray.
Ministers do not need to listen to me. This is what inward investors and the social media are telling us, media that are fast becoming a major influence in these decisions. Without inward investment we will not balance the books. Indeed, we need more inward investment as our own investment income from overseas is in decline. Now is the time to pay our way by borrowing to invest, raising our game, reshoring and exporting, rebalancing, rebuilding trust with those who have our best interests at heart and rethinking austerity, creating a sense of momentum to offset the impression that we are turning inwards on ourselves. I urge the Government to get on with it.