My Lords, I am pleased to follow the noble Lord, Lord Livermore, largely because I agree with virtually everything that he said. In a few years’ time this spring Budget will be seen as a watershed because it is the last spring Budget and because serious structural problems in taxation and spending policy have been revealed by the debate about the self-employed, who now represent one in seven of our workforce.
Employment is at an all-time high—that has to be conceded—at 31.8 million. But a lot of that growth in recent years has been in low-paid jobs and jobs that have low productivity rates. I found the Budget surprising in the sense that it was overshadowed by the massive Brexit black hole at the heart of the Treasury’s forecasts. You cannot have a strong economy and a hard Brexit. It was surprising that in his hour-long Budget speech the Chancellor failed not only to talk about housing and its contribution to growth and social inclusion, but crucially to discuss the implications to the economy of leaving the EU single market and the customs union. The Chancellor is supposed to assess our economic prospects in the Budget, but with only two short references in his speech to EU matters, he signally failed to do so.
The Minister has talked about getting the deficit down. The Government have been trying for seven years to get the annual deficit down. In fact, in the last seven years the total debt has risen to £1.7 trillion, which, according to the Government’s own press release, amounts to £62,000 on average per household. This year the deficit will be £52 billion. Of course, it was forecast a year ago to be £38 billion between 2017 and 2020, with the final two financial years producing a surplus. What has actually happened a year later is that the projected increase in the deficit over that period has risen by £100 billion.
When she replies to the debate, will the Minister be in a position to tell the House what modelling the Treasury has undertaken on the impact of higher interest rates over the next few years on the level of debt? She mentioned the annual interest payments of just over £50 billion, but that is at historically low interest rates. It would be helpful to know what modelling has been done by the Treasury for what happens if a range of scenarios might occur.
The Minister referred in her speech to higher growth. There has been some higher growth, but most of that has been fuelled by credit. There is now a case for changes in the tax system. We have seen problems in a whole range of spheres beyond national insurance for the self-employed—business rates is another. There are now issues around the extent to which we tax income rather than wealth. Quite recently we had the issue of whether council tax, which is a local property tax, should be required to fund the increased demands for adult social care. We will have to have a debate about wealth and income, business rates, the role of council tax and the declining level of corporation tax, which is now at 17%. Given the global economy it is of course increasingly difficult for Governments to track what international companies do. That debate will have to be had.
I draw the attention of the Minister to real income growth. The Institute for Fiscal Studies has said that, by 2022, incomes will be no higher than in 2007. Outside London and the south-east, no part of the United Kingdom has recovered from pre-crash levels. As this debate is about the economy, I remind the Minister that there are different levels of the economy. Neighbourhood economies face great difficulty caused by the freezes and cuts taking place in the benefits system. In the Government’s drive to get the deficit down, the impact on some neighbourhood areas is sometimes forgotten. I hope that the Minister might look at that.
This is not all negative. I welcome the £500 million investment in technical education, which is hugely beneficial. The extra PhD places and loans for part-time and doctoral students are welcome; the industrial strategy fund is welcome, as are new approaches to lifelong learning. However, there is an issue about employers investing. UK employers invest half as much as other employers in the EU in workplace training for employees. We should adopt the model that many other countries have of a single body to co-ordinate state-led business support and provide a forum for shared learning across the public, private and third sectors.
Perhaps I may ask the Minister about the British Business Bank. It seems to be doing good work; it is collaborating with local enterprise partnerships and certainly to my knowledge, across the north of England, is seeking to increase regional economic development. I understand that it will operate with a slightly wider risk appetite than high street banks, which is welcome, but I seek the Minister’s assurance that the British Business Bank is Britain-wide and will not just go for the easy wins.
I welcome the apprenticeship levy. While it is not directly part of this Budget, it is very important. There have, however, been problems behind the need to increase apprenticeships. The report, Apprenticeships for Northern Growth, launched three weeks ago at the northern powerhouse conference, makes it clear that the north of England,
“faces a shortfall in productivity compared to other areas, with a skills gap emerging before individuals leave school”.
That is very important. I want also to refer to a press release issued by the Baker Dearing Educational Trust approximately 10 days ago. It states that the trust undertook a survey of 1,000 young STEM workers and found that,
“three out of five (60%) of those surveyed didn’t believe teachers had a sufficient understanding of the labour market and a similar number … felt that schools didn’t understand the skills employers needed”.
To what extent is the Minister confident that Ofsted is inspecting adequately what is happening in careers advice in schools?
The Chancellor made great play of the fact that the proportion of young people not in work or education is now the lowest since records began. It sounds a great achievement. Actually, we still have 850,000 16 to 24 year-olds who are not in education, employment or training. I am looking for measures that demonstrate that the Government understand that and will do something concrete about it.