My Lords, the Government should be dealing with much else besides Brexit, but I fear that the Brexit legislation and negotiations, and their struggle to survive, will consume all the Government’s energies. Complex and politically fraught as Brexit will be, here we should be optimistic. As the two sides move beyond simplistic rhetoric, sensible negotiators, recognising their shared interests in the maintenance of trade and other relations, will converge on practical arrangements. Meanwhile, we are experiencing the predictable consequences of the correction in the value of sterling that followed the referendum. Living standards are being squeezed, but inflation is not expected to remain high. Manufacturing orders are at their best for 30 years, which points towards a healthy rebalancing of our economy.
More difficult than Brexit, and more fundamental, is to achieve for Britain what the Prime Minister has called an economy that works for everyone. Our mountainous public and private debt, the excesses and abuses of deregulation, our debilitated productivity, stagnant wages, insecurity of employment, threadbare public services, and the chasm between rich and poor are the legacy of 40 years of neoliberalism. The hierarchs of the European Union remain unrepentant neoliberals. In Britain, we contemplate as a monument to neoliberalism the charred remains of Grenfell Tower and of the poor people who lived there.
The gracious Speech promises that the appropriate lessons of Grenfell Tower will be learned. Among the lessons are that effective regulation is necessary to secure humane values and that wealth does not trickle down but must be redistributed. A Manichaean contest between private and public may gratify ideologues, but it wrecks the lives of ordinary people. Capitalism needs government to save it from its own excesses. Shareholder value has been a pernicious mantra when it has meant ever-rising dividends at the expense of investment and good jobs. Finance, gorging on itself, all but destroyed our economy a decade ago, caused lasting misery for millions and now threatens us again through reckless lending. Conservative Governments, manipulated by party donors and lobbyists, have allowed big money to call the policy shots. The rentiers have been flattered and pampered while the poor have been insulted and punished. The overdue prosecution of the Barclays bankers is a parable for our times.
There is no sign that the Conservative Party has new thoughts about how to run the economy. The Speech promises vaguely to strengthen the economy so that it generates the tax revenues needed to invest in public services. It also promises to keep taxes low. The balanced budget continues to recede. The promised land of renewed public services is not in sight, nor is a credible path to it marked out. The public will tolerate austerity that repairs the public finances, but not austerity that gets us nowhere.
Meanwhile the Home Secretary admits that the police are too stretched; Shelter warns that, with the housing benefit freeze, 1 million households will be made homeless; academics are joining the precariat on zero-hours contracts; mental health services have collapsed; and the prisons are simmering. Whatever the pledges in the Speech, the debt overhang and the weakness of the tax base mean that there are not the resources to rescue public services. The social care debacle in the election campaign exposed how people—characteristically in our political culture—demand good public services but refuse to pay more taxes.
If the Chancellor has few cards to play, neither does the governor. Desperate to stave off disaster, central bankers have inflated their balance sheets as recklessly as commercial bankers inflated theirs. If capital is to be allocated other than into asset bubbles, interest rates will need to be normalised, but one shudders to think of the effect on overindebted households and fragile businesses. We need the productive growth that loose monetary policy has failed to stimulate. The Speech promises a major reform of technical education as part of a new industrial strategy, but our weakness in technical skills is the legacy of 200 years of cultural disdain. Wishful thinking will not transform a culture.
We need a new economic model. In the near term we need a boost to growth, but we know that economies predicated on the infinite growth that capitalism requires will be unsustainable in a world of finite physical resources already imperilled by climate change. Nor will the digital economy come to our rescue. Ungovernable, it creates global monopolies, traumatically disruptive change and extreme polarisation of wealth.
Our situation requires us to consider anew what kind of economy and society we want and what government is for. The Prime Minister refused to debate any of that at the general election, and the country refused to give her its confidence. We now have a Government in office but not in power and a Queen’s Speech made up of banalities and evasions.