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My Lords, numerous noble Lords have indicated that it is difficult to treat the gracious Speech as a serious programme of legislation. There is no doubt that a general election will come soon, so Her Majesty will have to start again. It is only fair to treat the content of the gracious Speech as part of the Government’s election manifesto, together with Boris Johnson’s speech to the Tory conference and the Chancellor’s financial statement.
As a Liberal Democrat, I am obviously glad that the Prime Minister and the Chancellor are answering calls from all sides to loosen the purse strings. I welcome a number of the commitments made at the party conference and by the Chancellor, but his claim that the Tories are now the workers’ party cannot really be true until the damage done to the fabric of our services over the past 10 years is genuinely repaired.
I cannot agree with the Prime Minister that austerity is now over. Local councils have borne the brunt of austerity, with funding for local authorities cut back by 49% in real terms since 2010. These are the raw figures, but when we dig into the detail we can see where the impact has been. The impact on social care has been perhaps the most dramatic and, dare I say it, the most relevant to your Lordships’ House. Real-term spending started to fall in 2009 and has fallen by nearly 6% since. At the same time, demand is rising, with the number of people over the age of 65 in need of care increasing over 40% since 2010. We await with interest the Government’s proposals, but whatever they are, it is clear that they will not be enough to remedy the situation.
Other services have been hit as well. Libraries and youth centres have been decimated, and what about the unrepaired potholes? I will not intrude into the private grief of Tory colleagues over the effect of the benefits cap and the stuttering introduction of universal credit, other than to point out that food-bank use has increased by more than half in areas where universal credit has arrived. The Government are clearly aware of the impact of police cuts. Their commitment to increase police numbers will not restore us to where we were before austerity began.
We are where we are. The Prime Minister appears to promise jam today and jam tomorrow for everyone. He says that he will both cut taxes and spend more, which the Chancellor says that we can do by taking advantage of incredibly low interest rates. The Prime Minister is prepared to blow the Tory reputation for fiscal responsibility in order to tempt voters in the north to vote Tory. The effect on our borrowing will be dramatic. Last week the IFS predicted that government borrowing in 2020-21 would be £52.3 billion, over double the OBR forecast of £21 billion and higher than the Treasury limit of 2% of GDP, so he is competing with Jeremy Corbyn in financial profligacy.
However, whatever his financial profligacy, the Prime Minister cannot wish away two major problems. The first is productivity. Before the financial crisis of 2008, our productivity was growing by 2% per year. Since 2008, Britain has been outperformed by all other G7 countries except Italy. The most likely cause is lack of investment. It is no surprise that the Institute for Fiscal Studies says that business investment is 15% to 20% lower today than if Britain had voted to remain in the European Union.
The second issue is growth. Noble Lords will not be surprised to hear me repeat from these Benches that all independent forecasters predict that the UK growth rate will be significantly less outside the EU than if we stay in. Specifically, I highlight the report from the Institute of Fiscal Studies, suggesting that gross domestic product is between 2.5% and 3%—between £55 billion and £66 billion below where it would have been without the vote on Brexit.
If Brexit is to happen, it is vital that we learn the lesson of where our growth might come from in a post-Brexit world. Clearly, the future for manufacturing is poor. The whole just-in-time manufacturing process will be damaged by the artificial borders created by Brexit. Growth is more likely to come from the leisure industry, particularly the TV and film production sector, which came to Britain’s rescue, enabling the economy to expand by 0.3% during the last quarter. This was not a one-hit wonder. Between 2010 and 2017, Britain’s creative industries grew by 53.1%, nearly twice as fast as the broader economy.
The creative industries also help on productivity, because their companies tend to be more productive, requiring more investment and training than equivalent-sized manufacturing businesses. Therefore I would be grateful if the Minister would confirm that, whatever happens with Brexit and bearing in mind their importance, the creative industries will be protected, particularly regarding the free movement of people to provide the talent necessary for those industries to thrive. Better still, let us have a referendum on the PM’s deal and vote to remain.