Budget Statement - Motion to Take Note

Part of the debate – in the House of Lords at 7:00 pm on 14th March 2017.

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Photo of Lord Haskel Lord Haskel Deputy Chairman of Committees, Deputy Speaker (Lords) 7:00 pm, 14th March 2017

My Lords, it is a pleasure to follow the noble Lord, Lord Lupton. We are alumni of the same school, but we obviously took away different ideas.

To me, this Budget continues with austerity, which tells us that the strains on the National Health Service, education and public services are increasing. With food and fuel inflation expected to reach 2.4%, we must be approaching the limits of austerity and the ability of JAMs to cope. The Minister told us that the Government’s ambition is to relieve these pressures through growth in productivity. The Budget seeks to achieve this largely through skills, training and education as part of the Government’s industrial strategy, which I welcome, but this has not worked in the past.

To illustrate this, I will quote from the Explanatory Memorandum of the Immigration Skills Charge Regulations, which are due to come into force on 6 April. Under section 7, entitled “What is being done and why?”, the memorandum says:

“The Government is seeking to increase investment in skills to increase UK productivity. The data show that, on average, employers in the UK under-invest in training compared to other countries. There are many examples of good practice but at an economy-wide level, employer investment in training has been declining for 20 years; the UK is now 22nd out of 28 in the EU for the proportion of employees taking part in continuing vocational training courses”.

These regulations impose a charge on firms for bringing in skilled workers from outside the EU and are designed to encourage British companies to train UK residents instead. But also on the horizon is the apprenticeship levy, which is designed to do exactly the same. In addition, several industries, such as the construction industry, still maintain their old industry training boards. It is conceivable that there will be firms paying all three of these charges. Is it not time to get all of this together? The Government’s own Explanatory Memorandum tells us that it has not worked in the past. What is it about these new schemes that the Government think will make them work now?

Yes, the Budget provides £500 million to expand spending on technical training, which I welcome. So to be constructive, I appeal to the Government to learn the lessons of the past, make a special effort and use this provision to invest not just in buildings and equipment but in people—mapping their progress, celebrating good initiatives, identifying best practice and providing work experience for the teachers, too. Perhaps they could appoint envoys to spread the word, acknowledge that apprentices can also be adults changing careers and put staff on management apprenticeships, as suggested by the noble Baroness, Lady Wheatcroft. The noble Lord, Lord Gadhia, made other suggestions.

There is another reason why I urge the Government to emphasize and demonstrate their commitment: it will help firms to stay here. Many firms are considering a move because here they will be outside the single market. Demonstrating a commitment to skills training also demonstrates one to the industrial strategy. A strong commitment to the industrial strategy will help them decide to stay here.

The Minister explained the tangle over national insurance payments for the self-employed. To me, this was just another example of the Government’s failure to adjust to the so-called digital economy. They have allowed companies to differentiate between people who work off a digital platform and people who work off a bricks-and-mortar platform. As other noble Lords have said, of course all these people should receive the same health and welfare services and pay the same contributions. This anomaly has been created by digitalisation, so if we are to have an industrial strategy and an economy which thrives, we have to understand what is going on in this digital economy.

We think that our future trading relationship with the EU 27 will be influenced by their having a surplus in manufactured goods traded with us and our having a surplus in trading services with them. But according to Eurostat, it is the EU 27 which have a surplus of €31 billion in trading services with us. Could this be explained by our trade in intangibles and the digital economy? The biggest discrepancy lies in our trade with Ireland and Luxembourg. The Minister and I have debated this before and I know that she is concerned about it. Her Government appointed Sir Charles Bean to look into it and have acted on his advice as far as identifying intangible investment is concerned, but there is a lot more to do as this part of our economy grows. This must have implications in our search for productivity, which concerns so many noble Lords. To raise productivity, together with skills training, I urge the Government to undertake work to understand exactly what is going on in the so-called digital economy.