My Lords, it is a privilege to open this debate on behalf of the Government and set out how we will move our economy on to a path of long-term sustainable growth. I start by welcoming my noble friend Lady Moyo to the House. I look forward to hearing her maiden speech. Given her distinguished career to date, I expect she will hold the Government’s feet firmly to the fire, especially when it comes to economic policy, and help us get our policies right.
In the autumn, we took difficult decisions to deliver stability and sound money. Since then, 10-year gilt rates have fallen, debt servicing costs are down, mortgage rates are lower and inflation has peaked. The Office for Budget Responsibility says that because of lower gas prices and the measures we are taking, together with our measures in the Autumn Statement, the UK will now not enter recession this year. The OBR forecasts that we will meet the Prime Minister's three economic priorities. Inflation is coming down and is on track to be more than halved by the end of the year: it is action that we are taking to help bring it down.
In this Budget, we confirmed that the energy price guarantee will remain at £2,500 for the next three months, saving the typical family a further £160 on top of the support we have already announced. We have ended the premium that 4 million households, often among the poorest, have to pay on their energy bills for having a prepayment meter. We have extended the alcohol duty freeze until August and will increase the generosity of draught relief, introducing a Brexit pubs guarantee. Because inflation remains high, we will maintain the 5p cut on fuel duty and keep it frozen for a further year, saving the average driver £100 next year and £200 since the policy was introduced. Finally, with communities strained by energy prices, we are providing £63 million to keep 275 local authority swimming pools afloat.
I turn to the Prime Minister’s second priority: reducing debt. Again, we are on track. We are meeting our fiscal rules to have debt falling as a percentage of GDP by the fifth year of the forecast, and to have public sector borrowing below 3% of GDP over the same period. In fact, our deficit falls in every single year of the forecast. In the final two years of the forecast, our current budget is in surplus, meaning we borrow only for investment and not day-to-day spending. Day-to-day departmental spending will grow at 1% a year on average in real terms after 2024-25, until the end of the forecast period, and capital plans are maintained at the same level set at the Autumn Statement. At the same time, taken together, today’s measures lead to an overall lower tax burden for the rest of the Parliament, compared to the OBR’s autumn forecast.
I turn to the Prime Minister's third priority and the focus of yesterday’s Budget: growth. Thirteen years ago, we had an economy that had crashed. Since 2010, we have grown more than major countries such as France, Italy and Japan. We have halved unemployment, cut inequality and reduced the number of workless households by 1 million. The World Bank says that, out of all the big European countries, we are the best place to do business. When it comes to the industries of the future, we are world leaders. Over the last 13 years, we have become the third trillion-dollar tech economy, after the US and China. We have the largest life sciences sector in Europe and the creative industries has grown at twice the rate of the rest of the economy. We are a world leader in offshore wind and our advanced manufacturing industries produce around half of the world’s large civil aircraft wings. These strengths make me optimistic for our future growth.
We should note what the OBR forecasts say. The OBR says that, after this year, the UK economy will grow in every single year of the forecast period: by 1.8% in 2024; 2.5% in 2025; 2.1% in 2026; and 1.9% in 2027. The OBR also expects unemployment to rise by less than 1%, to 4.4%, meaning 130,000 fewer people will be out of work compared to their autumn forecast.
On employment, to achieve the dynamic economy we all want, we cannot afford to waste the potential of anyone. That is why we will remove the barriers that stop people who want to work from getting into work. To help those who are sick or disabled back into work, we have published a White Paper on disability benefits reform, the biggest change to our welfare system in a decade. It will abolish the work capability assessment in Great Britain and separate benefit entitlement from an individual’s ability to work. As a result, disabled benefit claimants will always be able to seek work without fear of losing financial support. In England and Wales, we will fund a new programme called universal support. This is a new voluntary employment scheme for disabled people, where the Government will spend up to £4,000 per person to help them find appropriate jobs and put in place the support they need, funding 50,000 places every year. That comes on top of a £400 million plan to increase the availability of mental health and musculoskeletal resources and expand the individual placement and support scheme.
To help children in care enter the workforce when they reach adulthood, we are doubling the qualifying care relief to £18,140, which will increase the take-home pay of a qualifying carer by £450 a year. We will also double the funding we provide to the Staying Close programme, to help more care leavers into employment and support young people with special educational needs and disabilities to transition from education into the workplace, with a £3 million pilot expansion of the Department for Education’s supported internship programme. To encourage the 2 million people on universal credit without a health condition who are looking for work or only working a small number of hours, we will apply sanctions more rigorously to those who fail to meet strict work search requirements or choose not to take up a reasonable job offer. For those working low hours, we will increase the administrative earnings threshold from the equivalent of 15 hours to 18 hours at the national living wage for an individual claimant, meaning anyone who works below this level will receive more work coach support alongside a more intensive conditionality regime.
For those aged 50 to 64, with a wealth of experience we need in our workplaces, we will increase the number of people who will get the best possible financial, health and career guidance, well ahead of retirement, by increasing access to mid-life MoTs. The Department for Work and Pensions will increase fivefold the number of 50-plus universal credit claimants who receive mid-life MoTs, from 8,000 to 40,000. For experienced workers, we will also introduce a new apprenticeship targeted at over-50s, called “returnships”. These will bring together our existing skills programmes to make them more appealing for older workers, focusing on flexibility and previous experience to reduce training length.
We are also fully alive to the fact that many senior NHS clinicians say they are being advised to leave the workforce, just when the NHS needs them most, because of unexpected tax charges on their pensions. The NHS is our biggest employer and we will shortly publish the long-term workforce plan, but to make sure that they and other professions are not deterred from working, we will increase the pensions annual allowance to £60,000. We are abolishing the lifetime allowance altogether, to incentivise our most experienced and productive workers to stay in work across our economy for longer.
These measures will help turn us into a high-skilled, high-wage economy, but we know that one thing that holds people back is the insurmountable obstacle of high childcare costs, especially when their children are young. In 2010 there was barely any free childcare for under-fives. The Government changed that with free childcare for three and four year-olds in England, but we need to complete the job. That is why, in households where all adults are working at least 16 hours, we will introduce 30 hours of free childcare, not just for three and four year-olds but for every single child over the age of nine months. It is a package worth, on average, £6,500 every year for a family with a two year-old using 35 hours of childcare every week.
Because it is such a large reform, we will introduce it in stages to ensure that there is enough supply in the market. Working parents of two year-olds will be able to access 15 hours of free care from April 2024, helping around half a million families. From September 2024, that 15 hours will be extended to all children from nine months up, meaning a total of nearly 1 million families will be eligible. From September 2025, every single working parent of under-fives will have access to 30 hours of free childcare per week where they are eligible.
Ahead of that, we will help the 700,000 parents on universal credit who, until the reforms announced yesterday, had limited requirements to look for work. Many remain out of work because they cannot afford the upfront payment necessary to access subsidised childcare. We will increase the maximum they can claim to £951 for one child and £1,630 for two children—an increase of almost 50%. For any parent who is moving into work and wants to increase their hours, we will also pay their childcare costs up front.
That is the demand side. On the supply side, we will increase the funding paid to nurseries providing free childcare under the 30 hours offer by £204 million from this September, rising to £288 million next year. This is in addition to the funding provided to extend the offer to parents with children from nine months to two years old. To increase flexibility, we will change minimum staff-to-child ratios from 1:4 to 1:5 for two year-olds in England, as happens in Scotland.
To further increase the potential supply of childminders, au pairs and nannies, we will reopen the youth visa scheme unilaterally to anyone under the age of 35 from the United States, France, Spain, Germany, Italy and Holland. This will allow an additional 27,500 young people to come to work in the UK annually for up to two years.
For parents of school-age children, we will fund schools and local authorities to increase supply of wraparound care so that all parents of school-age children can drop their children off between 8 am and 6 pm. Our ambition is that all schools will start to offer wraparound childcare, either on their own or in partnership with other schools, by September 2026.
My right honourable friend the Chancellor also set out the Government’s commitment to continue to level up growth everywhere across the United Kingdom. Yesterday’s Budget announced 12 potential new investment zones, eligible for £80 million of investment, bringing together our leading research institutions with local government to remove barriers to growth in areas that need levelling up.
There is also over £200 million to fund high-quality local regeneration projects and £420 million for new levelling-up partnerships. A second round of the city region sustainable transport settlements, allocating £8.8 billion over the next five-year funding period, has been announced, and a further £200 million next year—bringing the total to £700 million—will be allocated to fix potholes.
For Scotland, Wales and Northern Ireland, this Budget delivers not only a new investment zone in each nation but an additional £320 million for the Scottish Government, £180 million for the Welsh Government and £130 million for the Northern Ireland Executive as a result of Barnett consequentials.
The Government will also consult on transferring responsibilities to support local economic development, currently delivered by local enterprise partnerships, to local authorities from April 2024.
Mayors will be given more financial autonomy with multiyear single settlements for the West Midlands and the Greater Manchester Combined Authority at the next spending review—something we envisage being rolled out to all mayoral areas over time. So that local leaders can continue to grow their own revenues by growing their local economy we have made a long-term commitment, in the next Parliament, that they can retain 100% of their business rates—again something we hope to roll out to other areas over time.
These steps will help us not just to grow but to share the benefits of growth across our country, but we must never forget that it is the private sector that helps drive this growth, so we are lowering business taxes to incentivise investment and tackle the productivity gap. Building on the increase of the annual investment allowance to £1 million, which covers the entire investment made by 99% of businesses, and following the end of the super-deduction, we will introduce a new policy of “full expensing” for the next three years. We will make this permanent as soon as we can responsibly do so. It will mean that, over that period, every single pound a company invests in new buildings, new IT or new machinery can be deducted from their taxable profits. It will mean a corporation tax cut worth £9 billion for every year that it is in place.
To encourage research and development, we are introducing an enhanced credit for small and medium-sized businesses that spend 40% or more of their total expenditure on research and development.
One of the reasons why we have succeeded in the past is our inclination toward innovation—our propensity not just to adapt but to drive change. Having left the EU, there is an opportunity to do so again.
With financial services reforms under way, we are now looking at regulations around life sciences, and we are lucky to have one of the most respected drugs regulators in the world in the MHRA. It will now move to a different model that will allow rapid and often nearly automatic sign-off for medicines already approved by trusted regulators in other countries such as the United States, Europe or Japan. At the same time, from next year it will set up a swift new approval process for the most cutting-edge medicines and devices to ensure the UK becomes a global centre for their development. An extra £10 million of funding over the next two years will put in place a plan to provide the quickest and simplest regulatory approval in the world for companies seeking rapid market access.
To strengthen our position in digital technology, we have accepted all nine of the digital tech recommendations made by Sir Patrick Vallance.
We are also making good on our pledge to direct our innovation toward a green economy by allocating up to £20 billion of support for the early development of carbon capture and storage projects across the UK as we work towards our goals in 2050. This will attract private investment, support up to 50,000 jobs and help capture 20 million to 30 million tonnes of CO2 per year by 2030.
Alongside more public investment in nuclear, we are going to class it as “environmentally sustainable” in our green taxonomy, giving it access to the same investment incentives as renewable energy. This will not only deliver against our climate change goals but afford us energy security too. To support our wider security in a more dangerous world, having announced £5 billion of funding for the Ministry of Defence, the Budget confirmed an additional £11 billion over the next five years. By 2025, we will spend 2.25% of GDP on defence and endeavour to raise it to 2.5% as soon as the fiscal and economic conditions allow.
It has not been possible to condense the entirety of the Budget and its ambition into my opening remarks, but what should be clear is that we are bringing inflation down, debt down, and growth up. We have a plan that says to people: work will pay and pay well. We have a plan that is revolutionising childcare, reforming pensions and supporting disabled people. We have a plan to tear down barriers to growth, unlocking investment, incentivising innovation. It is a credible plan that will deliver economic success, growth and prosperity. I beg to move.
My Lords, I am sure the whole House is grateful to the noble Baroness, Lady Penn, for introducing this important debate. We all look forward with interest and, as a professional economist myself, some excitement to the maiden speech of the noble Baroness, Lady Moyo.
The Minister who delivered this Spring Budget in another place bears the title of the Chancellor of the Exchequer, but this title does not adequately reflect Mr Hunt’s role. His real title should be the Minister for mitigating disastrous Tory economic policies. He is “The Mitigator”, a role that becomes ever more important as every parliamentary Session brings forth yet a further Conservative economic blunder.
We all recall Mr Hunt’s noble labours in reversing the appalling damage done to Britain by the Truss/Kwarteng economic regime—damage that still resonates in every mortgage holder’s higher current and/or future monthly interest payments. Now, in this Budget, he is reversing the damaging decision taken by Conservative Chancellor George Osborne in 2012 when he first cut the pension lifetime allowance and then cut it again in 2014—and it was cut again in 2016. The result, as Mr Hunt made clear, has been damaging not just for the NHS but for the availability of skilled, experienced professional expertise throughout the British economy. But, being a good Tory, even The Mitigator could not resist doing his own little bit of wasteful spending. Instead of a balanced increase in the LTA, he abolished it altogether, thus handing up to £1 billion to the wealthiest. The champagne corks were popping in the City. When she sums up, will the Minister tell us the Treasury’s full estimate of the cost of this excessive giveaway, including the cost of consequential losses in inheritance tax revenues?
These blunders are perhaps not the most serious that Mr Hunt has had to contend with. Contrary to the Minister’s rosy scenario, in the first half of 2010 the policies of Chancellor Alistair Darling had resulted in the economy growing at an annual rate of 3%, and the economy was set on the path of sustained recovery from the global financial crisis. In June, the newly elected Conservative Chancellor killed that recovery stone dead. Austerity cut demand, inflicted damage on social services, education and the health service and, by generating an aura of all-pervading economic pessimism, led to cuts in investment and growth in the private sector too. The next time a school or hospital is closed because the roof is unsafe or necessary equipment is lacking, remember Austerity George. It is no wonder that Mr Hunt is so keen to project his personal optimism.
Mr Hunt is also struggling with the consequences of the next huge Tory economic disaster: Brexit. I am well aware that Brexit was not just about the economy, and we can argue about the role of sovereignty in all aspects of our national life and whether there was a price worth paying. But, as an economic policy, Brexit has seriously damaged the country’s economic health. Noble Lords will recall that, after three years of austerity and with a general election on the horizon, economic conditions were eased by Mr Osborne and in 2013 business investment began a significant recovery. Then Brexit dealt business investment to blow from which it has not recovered to this very day. Having grown steadily as a share of GDP from 2013 to 2016, following the Brexit vote business investment fell year on year. Even with the incentive of the superdeduction in place, it is back to the austerity-induced levels of the end of 2012. As the Office for National Statistics has pointed out, the UK has the lowest average private sector investment as a percentage of GDP of any G7 nation. How ironic to hear Mr Sunak congratulating the people of Northern Ireland so enthusiastically on the extraordinary and unique economic advantages they will enjoy as members of the UK market and the EU single market. Perhaps the Minister will tell us when she sums up why what Mr Sunak declares to be so good for Northern Ireland is not good for England, Wales or Scotland.
The Mitigator, Mr Hunt, has correctly identified his task as reversing this sad tale of Tory low investment and consequential low productivity. With the end of the superdeduction cutting business support by £10 billion a year, he has introduced full expensing, which will increase business support by £9 billion. So, while incentives are not up, they are down by only £1 billion a year. Unfortunately, the new incentives are scheduled to last for only three years. As the IFS commented,
“the fact that this change is temporary and only announced now is most definitely not welcome. Today’s announcement is just the latest in a long line of changes and temporary tweaks. There’s no stability, no certainty, and no sense of a wider plan”.
Contrary to what the Minister said about the burden on companies falling, this April sees an increase in corporation tax of around £14 billion a year. When she sums up, will the Minister confirm that, as a result of this Budget, British business is now worse off by a total of around £15 billion a year? There will be no champagne corks in the boardrooms of British industry.
The other flagship scheme, the 12 new investment zones, will be good news for the successful zones but bad news for everywhere else. Long experience demonstrates that such schemes shift investment around the country without any significant impact on the overall figures. They simply shift the deckchairs. Against the new £15 billion burden on industry, the extra £1.8 billion help to
“cutting-edge companies who … are turning Britain into a science superpower”,—[
Creative superpowers are built on a firm foundation of high-quality education and skills, yet where are the measures in this Budget to foster the high-wage, high-skills economy Mr Hunt seeks? What has he done to mitigate the disaster of Tory education policies? School spending per pupil in England fell an average of 9% in real terms between 2009 and 2019. According again to the Institute for Fiscal Studies, the Tory squeeze on educational resource is
“without precedent in post-war UK history”.
The result is that England is today one of the very few OECD countries where the young have worse literacy and numeracy skills than 55 to 65 year-olds. The Government have also cut adult education by half. Against this, the impact of the announced midlife MOTs and returnerships are drops in the ocean. Is it any wonder that this country has such a skills shortage?
However, instead of focusing on skills, The Mitigator focuses on numbers by providing a package of measures aimed at increasing labour market participation. The OBR costs this package at £7.1 billion. It estimates the increase in labour force participation as a result to be 110,000 people: that is, £65,000 for each extra person joining the labour force. At the same time, the OBR forecasts that trend unemployment will rise by more than 130,000. All this is in a labour force of 35 million. There is not much mitigation there. Of course, the investment in childcare is to be heartily welcomed. However, when she sums up, I would be grateful if the Minister would comment on the Sutton Trust’s estimate that, given the way in which the scheme is designed, 80% of the poorest families will be unable to access the childcare they need. Is the Sutton Trust right? In the medium term, once some of the restrictions built into Mr Hunt’s scheme have been removed, the provision of high-quality childcare will indeed herald a welcome advance in British society, extending opportunity, particularly to women, and providing greater security for poor families that need both partners in work in order to get by.
Falling real incomes define today’s economy and falling living standards blight today’s society. As the OBR notes, the 5.7% fall in real household disposable income over the next two financial years will be the largest two-year fall since records began. Even five years hence, in fiscal 2027-28, the OBR states that living standards will still be lower than pre-pandemic levels. This dismal outcome is of course due primarily to the increase in the price of energy and other tradeable goods, but is made even worse by the freezing of tax thresholds by Chancellor Sunak. The Sunak freeze ensures an extra £500 in tax for basic rate taxpayers in 2023-24 and an extra £1,000 in tax for higher-rate taxpayers—and yet more in subsequent years. Once again, matters would be worse if Mr Hunt had not mitigated the costs with the extension of the energy support measures and the commitment to increase social security benefits in April by the rate of inflation.
The problem is that mitigation is not enough when, as the Resolution Foundation pointed out this morning, the Budget leaves many government departments facing 10% real-terms cuts; it is not enough when living standards decline; and it is not enough for the Chancellor to be focused solely on mitigating the mess left by all his Conservative predecessors—with the notable exception of Nadhim Zahawi, who, perhaps fortunately, did nothing.
The chairman of Legal & General commented last week that Britain is a
“low-productivity, low-growth, low-wage economy fraught by political infighting and that has to change”.
“We need a massive step-up in investment in the UK”.
He was right. He could have added that low growth equals high taxes, even as public services deteriorate.
What was totally absent from the Budget was a medium-term strategy to turn Britain around that did not focus just on tax and spend but embodied fundamental institutional reform to link invention to innovation to investment in the skills and technology of the future. Without that institutional commitment, we will not see the investment in growth that Britain desperately needs. That is what is happening in the United States, but it is not happening here. As the clean technology race between the US, the EU and China hots up, the lack of any substantive UK response is chilling.
The result of 12 years of economic mismanagement has been stagnating productivity, the worst post-pandemic growth in the G7, higher taxes drained from a population suffering record falls in living standards and a shrinking labour force squeezed by the high cost of going to work and by long-term sickness unmitigated by an increasingly desperate NHS. However, accessing his inner Monty Python, Mr Hunt claimed this morning that he is setting out a long-term plan to make us
“one of the most prosperous countries in Europe”.
Always look on the bright side of life.
As a long-serving Conservative Health Secretary, Mr Hunt is accustomed to managing decline with an optimistic smile, always looking out for opportunities to mitigate the pain wherever he can. But mere mitigation is not what Britain needs. Britain is in a hole, and Mr Hunt can claim credit only for having slowed down the digging.
My Lords, I declare my interest as a vice-president of the Local Government Association and a vice-chair of the All-Party Parliamentary Group on Adult Social Care. It is a pleasure to follow the noble Lord, Lord Eatwell, and I also look forward to hearing the maiden speech of the noble Baroness, Lady Moyo.
The Chancellor says the OBR projection is now that Britain will avoid a “technical recession”, but ONS data shows that the UK is the only major economy in the G7 that is still smaller than it was pre pandemic. The OBR has confirmed that, after yesterday’s Budget, living standards will fall faster than any time since the 1950s, and it is evident that living standards in 2028 will be worse than in pre-pandemic years. This Conservative Government have made the British people poorer.
So, frankly, it was embarrassing yesterday to see the Conservative Government celebrate an economy that has shrunk in size on their watch and is lagging way behind our international competitors. The cost of living crisis is hitting millions of Britain’s families and pensioners, but this Budget has failed them miserably. People are desperate for real help, especially a cut in their energy bills, but all the Chancellor could offer was empty words and more unfair tax hikes—unless you are in the top 1%.
The abolition of the lifetime pension tax allowance may help a number of medical consultants, but the real problem here is that the Conservative Government have failed to act on this for years, and by now the NHS has lost far too many senior staff as a result. While it is welcome that this may encourage NHS consultants to work longer, it does nothing for our heroic nurses and other healthcare staff on low pay, who have been working to exhaustion in crumbling hospitals. That many nurses have had to access food banks should be shameful to this Government.
The Chancellor announced the four pillars of his industrial strategy—economy, enterprise, employment and education—but, within 24 hours, commentators and many people and organisations are raising serious concerns about the proposals. Why, yet again, is there no impact assessment for the Budget, as required under the Equality Act 2010? It is particularly egregious because the Government rightly ask for impact assessments in many other areas that they fund—for example, international development or even their own departments—but will not do it for their own Budget proposals. We note that the Chancellor has spent two-thirds of the windfall from the economic dip not being quite as bad as had been feared on a series of headlines, but he has failed to reduce the cost of living crisis that is hitting millions of Britain’s families and pensioners. This is why we need an impact assessment.
The Chancellor announced a harsher regime on benefits that will affect some of the most vulnerable in our society: those too unwell to work but not classified as disabled; black and ethnic-minority people; young people not in education, employment or training—the NEETs—who are often from a low socioeconomic background; and those in work but on very low pay, who are really struggling at the moment.
From these Benches, we wanted to see household energy bills cut by £500 by taking the energy price guarantee down from £2,500 to below £2,000. We wanted to extend energy support for businesses, especially local businesses, including farmers and rural communities, to keep food prices from rising and to help shops and pubs on our high streets to stay open. We also wanted to put in place a proper windfall tax so that oil and gas giants pay their fair share.
This is because the OBR says we are only half way through this period of severe cost and inflation increases and resulting pressures on the economy. It has confirmed that living standards will fall by 6% over the next two years, and we know from the last year that vulnerable communities will be worst affected. For example, Black Voice notes that 40% of black people have no access to a car, compared with 17% of white people.
Data also shows that bus and rail costs have risen disproportionately compared with fuel duty and vehicle fuel costs over the last five years. We know that bus users in rural areas are paying much higher prices, just as they watch their local bus services disappear because councils cannot afford to support them. Once again, the most vulnerable are affected.
We on these Benches believe that R&D tax credits for business are effective. However, yesterday’s announcement about the 40% intensity threshold for innovation, at a time when all types of businesses are focusing on surviving and coming out of this economic downturn, raises concern. High tech and innovation are vital for business, as I know better than most, but all businesses need to grow.
Four decades ago, I managed the new Cambridge research fund, which was the first UK seed corn investment fund for high-tech companies coming out of universities. In those early days, we learned one key fact: tech businesses are not understood well by mainstream banks and their investors. The lead time to market, and profit, is often slower than for less innovative businesses and far too many do not make it. Those elements still hold true. Can the Minister say how long the Government believe it will take before UK business sees a rate of return on these new, highly strategic R&D tax credits and why they made the decision not to fund those businesses just outside that innovation threshold, because now is also a crucial time for them to invest?
We also know that many businesses across the country are really struggling with their energy costs. Some have already had to close because their costs have gone up by such a large amount. This includes social care providers; as an aside, why was there absolutely no mention of social care in the Budget yesterday? The Government have delayed the reforms they proposed last year. They are vital but there was no news.
Methodist Homes, which has 88 care homes and 69 retirement living schemes, has found that its energy costs have risen from £5 million to £18.6 million in less than two years. Yet the support it received from the Government has reduced this burden only by less than £1 million. Social care settings were not included in the energy and trade-intensive industry support scheme, despite the fact that they run many medical appliances and cannot simply turn the thermostat down. Methodist Homes says:
“We were hoping for support in this Budget and are disappointed that our sector has been overlooked. The scale of the impact of the energy bill hikes should not be underestimated: without significant support on energy bills to the sector, we believe there is a risk of market failure and subsequent reduced provision for older and vulnerable people, with a devastating knock-on effect on peoples’ lives and patient flow in the NHS.”
What advice would the Treasury give to the many social care providers today, and what help can they receive to prevent this possible market failure and the crisis for our elderly in having nowhere to go that closures would create?
The Government’s priority of getting people back into work to really start the economy going again seems logical, at face value, but the details of how this will work are key. With 6.7 million people economically inactive, the Chancellor proposes a number of remedies.
On the childcare and nursery announcement about providing £4 billion to fund an extra 30 hours a week free for one and two year-olds, the Chancellor is also going to relax the ratio of staff to children in nurseries to help address staffing issues. In coalition, the Liberal Democrats pushed the Conservatives to start the investment for three to four year-olds, but we wanted it to go further and cover one to two year-olds too; the Conservatives disagreed. Let us be clear that, despite the Government claiming today the entire credit for the current system, the push inside the coalition for this was from Jo Swinson MP and we always said that it needed to be expanded. Our 2019 manifesto set this out and was derided at the time by the current Government.
There are holes in yesterday’s announcement regarding the proper funding of a scheme that is free to parents and does not penalise nurseries. First, the Government announced some funding, but it is not the full funding that is necessary. Since 2015, this Government have not increased the grant to nurseries in line with their actual costs. That is also why some nurseries are going out of business now.
Secondly, we have always wanted a workforce plan to professionalise and retain nursery staff and to increase the number of staff with a positive recruitment campaign. We know that effective early years free childcare and nursery support pays dividends in later education and employment. If these two issues are not fully supported now, it risks making the problems facing parents and childcare providers even worse, and many parents will find they cannot get access to the nursery places they need. Relaxing staff-to-child ratios simply is not the answer. Children’s safety should be our number one priority, rather than being reduced to a cost-cutting measure. All these key practical issues could be solved if the Government reversed the tax cuts of £4 billion a year that they have given to the big banks, on top of what they are offering now.
The proposal to abolish the work capability assessment and create enhanced universal credit for disabled people sounds attractive in theory. The WCA was—is—a flawed process and disabled people found themselves in the hands of assessors who did not understand, I am afraid sometimes deliberately, the barriers their disability presents to entering the workplace. However, the new system relies entirely on personal independence payments assessments working; they do not.
Assessors often underplay the impact of a person’s disability when they write up their recommendation. Worse, there is considerable evidence that some lie in the face of the evidence. How do we know this? An extraordinarily high percentage of disabled people whose PIP applications are rejected win on appeal, so the system is already failing. The mandatory review stage, internally in DWP, overturns only 12% of PIP cases but at the next stage, external tribunal, applicants have an astonishing 70% success rate. Are the Government planning to reform the PIP assessment process to ensure that these appalling practices cease and that people who generally need PIP support and who will get this new help will win, right at the start? By the way, there is a substantial bill to the state in fighting these appeals, and therefore to the taxpayer. Fighting appeals costs the DWP a shocking £50 million per year and if the PIP process is not sorted out, the new process will not work either.
The Government’s proposal to help those who are ill but not disabled back into work is interesting. But what happens to someone in a village who has a bad back, confirmed by their GP, and is offered a job in a town with no bus service from that village? They cannot get to that job on a bicycle. Can the Minister say if they will be sanctioned, or the doctor’s advice will take priority? DWP’s history on this is not good. We know that sanctions often do not work. There are far too many stories of despair at the draconian rules, and suicide.
Public services and their staff appear to have been almost ignored in the Budget—but then, they do not begin with an E. The Budget plans for an increase of around 1% per annum for public services over the next three years, but with promises already made for the NHS and social care—which, by the way, include the breaking news in the last half-hour of a deal for the nurses and ambulance workers—that is nowhere near what is needed for the NHS, given where inflation is.
It is not the NHS alone. All our councils, as well as police, fire and water, will struggle to deliver their statutory duties, let alone retain staff, if there is virtually no new money to pay for increases. The workforces are all struggling. There are record vacancies, particularly in the NHS and social care. We also saw a total failure to invest in fixing crumbling hospitals and supporting local health services, as well as public health. This shows that the Conservatives do not understand that you cannot get Britain back to work without fixing the real crisis in our NHS and social care.
Some good news over the last couple of months has given the Chancellor a bit of headroom, although economists are arguing that his is a high-risk strategy, given the volatility of the economy and global politics at the moment. Instead of supporting the most vulnerable—including ensuring that our public services can survive on more than 1%—and helping to kickstart the recovery that Britain so badly needs, the Chancellor chose to use the debt and deficit ratios for a number of temporary spending commitments now. The Government believe those will look good on election leaflets. The reality is that the Chancellor has built in a number of future policy liabilities, not just for next year but for the next Parliament. This will ensure that local government, the NHS and government departments all struggle even more to deliver core statutory services. It is not just a shame; it is shameful.
My Lords, I declare an interest as an adviser to and shareholder in Banco Santander. I start by saying that I very much look forward to my noble friend Lady Moyo’s maiden speech. I know that she will make a very great contribution to this House, given her enormous experience in business and many other fields—so I extend a very warm welcome to her.
The Chancellor has obviously been dealt a tough hand. Some of the challenges he faces are thanks to decisions made by his predecessors. Some of them flow from Brexit, others from the war in Ukraine and from Covid. Whatever the cause, we are in a new era of higher rates, higher inflation and, above all, higher uncertainty. So let me give credit where credit is certainly due. The Prime Minister and Chancellor have stabilised not just the ship of state but the economy. We have avoided recession.
In the Budget, the Chancellor was absolutely right to highlight the strengths of our economy: for example, our tech sector, life sciences and renewables. I support a number of the measures he outlined to help them, for example, nurturing nuclear power and the AI sandbox. In particular, I am glad that the Government have acknowledged the need to address the growth in inactivity that your Lordships’ Economic Affairs Committee reported on back in December. We highlighted, among a number of other points, the rise in the number of 50 year-olds retiring early.
On this, I do question the approach of increasing tax relief on pensions. The OBR states that this will result in employment increasing by just 15,000—maybe my noble friend could correct me if I am wrong. So this measure could cost £80,000 per worker incited back. That is a figure to focus on, but we need also to put the 15,000 figure in context. Some 37,000 50 to 64 year-olds were inactive in March 2020. The figure now—my noble friend can correct me if I am wrong—is 319,000. That is the backdrop to the 15,000. Moreover, as others have been remarking on overnight, this policy could actually encourage people to retire earlier. So I would be very grateful if my noble friend could talk us through the logic behind this policy. If it is aimed purely at stemming the exodus from the NHS, which I think a number of us are worried about, the words “sledgehammer” and “nut” come to mind.
However, let me take a step back and ask whether we are now on the path to the growth that Mr Hunt and all of us want. Will we see productivity rise from its torpor, as the noble Lord, Lord Eatwell, pointed to? Are the measures we heard about yesterday going to help make people better off, which is vital given that we are now experiencing the largest two-year fall in real disposable income in almost 70 years? I very much hope that the Budget will be one for growth; indeed, I have my fingers, my legs and my toes crossed. But it is worth noting that the OBR forecast is wildly more optimistic than that of the Bank of England, and I would be grateful if my noble friend could explain why she thinks there is this divergence. Obviously, these forecasts are bedevilled by uncertainties and risks. Those are clear in the caveats the OBR makes in numerous places in its outlook.
When we read the Budget and the OBR outlook, we can be sure of the parts of our nation that will grow. Here I fear that, while my noble friend in her opening remarks was Tigger, brimming with optimism, I am more Eeyore. Let me start with the state. It will grow, and this is the case in many other nations. It seems that we are in a new era of a bigger state. As a percentage of GDP, spending, which back in 2020 was set to decline, will reach its highest level since the 1970s.
I fully understand that the Government have had to contend with challenges that, for once, actually merit the adjective “unprecedented”. But let us look at some of the areas, other than support for energy bills, which are driving the increase. For example, we are seeing a growth in welfare spending, which will rise by £9 billion over the forecast period. Health and disability spending alone in 2026-27 will be £8 billion more than was forecast only last March. Another reason for the growth in spending is our debt and the cost of servicing it. Our stock of debt has been pushed to a 60-year high and this year we will spend £114 billion on debt interest. That is the amount we spend on education, the Home Office and defence combined. Then there is borrowing, which is £50 billion a year higher on average in the forecast this year, compared with last year’s forecast.
It is hardly surprising that, given these areas of growth, taxes are another area of growth. The tax burden is set to reach an all-time post-war high. We are growing the number of new taxpayers by 3.2 million and the number of higher rate taxpayers by 2.1 million. There is also the impact of IR35—that insidious policy that the Finance Bill Sub-Committee of this House has focused on. The yield on that has grown to £1.5 billion per year, which is double previous estimates.
As to the tax on business, the capital allowances will help compensate for the damage done by the rise in corporation tax. Again, the noble Lord, Lord Eatwell, pointed this out. But I note that, at the end of the forecast period when those new allowances are due to expire, business investment is set to fall. So it is critical that they are kept in place, not least because, as the OBR states, productivity growth settles at a measly 0.25 percentage points in the final two years of the forecast.
This brings me to another area of growth and something that has not been mentioned so far: immigration. Net migration was forecast to be 129,000 in the March 2022 forecast. Now it is forecast to be 245,000 a year and—this is the point—will contribute to 0.5% in output in 2027. Could my noble friend confirm that it is actually immigration, not the other measures announced yesterday, that will be the main driver behind the increase in our workforce?
There are two final areas of growth we can also be sure of. The first is our ageing population; that is set to grow. The population aged over 65 will rise by 1.2 million between now and 2027. That accounts for the bulk of the rise in labour inactivity. Secondly, by the end of the forecast, more than one in 10 of the working-age population will be in receipt of at least one health-related benefit.
I put all this together and, while I applaud the stability the Government have brought and welcome some of the measures in the Budget, I am afraid I do not share the optimism. I question whether we are doing anything like enough to put us on the stable path to growth we need. To do that obviously means more than just chanting “Growth, growth, growth”. Nor can it be done by irresponsible, unfunded tax cuts. From where I stand, I fear we are in danger of slipping into the groupthink that higher spending, higher taxes and a bigger state are the path to prosperity. They are not. They will snuff out the enterprise, innovation and investment we need to power growth.
More fundamentally, they conflict with the basic belief that I thought—or maybe should not think any more—most Conservatives held, that people, not Government, are best placed to spend their money as they see fit, to the benefit of all. Worst of all, far from taking the highway to prosperity, we risk going down a cul-de-sac to weak growth and flatlining productivity where we become submerged by debt. If we are to address this—again, I agree with the noble Lord, Lord Eatwell, but from a very different perspective—we need to have an honest conversation about what we want the state to do.
“growing fiscal pressures associated with ageing populations, higher stocks of debt … energy insecurity and climate change, and growing geopolitical threats. Meeting these pressures while also respecting their own fiscal objectives may require further
Some might say that a bigger state is inevitable if we are to pay for the challenges we face. To me, that is the question that overshadows this Budget. It is a very simple one: is it inevitable that the state is set to grow more and more, given the challenges we face? I think not. Others may disagree, but this is the debate that we must have urgently if we are to have the growth we need.
My Lords, I think we can all agree that the Chancellor had to maintain a disinflationary stance and a drive towards a sustainable configuration of the public finances, while improving the operation of the labour market and encouraging productivity and investment in a green economy, though we can argue about how appropriate his measures may be in achieving those ends. My noble friend Lord Eatwell pinpointed inadequacies in them.
I suggest that the Chancellor’s analysis of the malaise of our economy fails to identify some crucial features. He is emphatic about the need to improve growth—an objective of my party as well. We should start by asking what sort of growth we want. The noble Lord, Lord Bridges of Headley, just now reflected on various forms of growth, not all of them welcome. The Chancellor said “long-term sustainable and healthy growth”, but what does that mean? He seems, in the conventional view of the Treasury, to envisage economic success in terms of increases in GDP. Should not the primary objective of economic policy be rather to grow the well-being of every member of our society, especially those who are worst off?
GDP, as a measure of the economy, takes no account of inequality and ignores the basic human needs of security, dignity and respect. The Chancellor alluded vaguely to the need to fund good public services. I am glad that he wants to help children in care and households with pre-payment meters, but he offered nothing in the Budget to give confidence to the great majority that they and their families will be cared for, that they will be helped to adapt their skills and make a good life, that their elderly parents will be supported in their frailty, and that their children will be well educated and in due course decently housed at an affordable cost. The Budget was not devised within a vision of a society that is equitable, humane and in harmony with nature.
The Chancellor preened himself, a little desperately, on achieving a
“slightly lower overall tax burden” than previously forecast
“for the rest of the Parliament”,—[
There is no evidence that low personal taxes inspire people who have advantages to work harder or lead to improvements in efficiency. Low rates of tax on high incomes make it rational to provide grotesquely large remuneration and prioritise shareholder value over investment. They have caused talent to gravitate excessively to finance, narrowing the capacity of the economy and contributing to the dereliction of post-industrial areas. Natural justice requires that the winners from globalisation are taxed so as to compensate its losers. Instead, the proceeds of growth have been almost entirely extracted by the rich.
Mr Hunt’s claim that since 2010 the Government have cut inequality can be based only on the most selective statistics. The Chancellor’s policy on personal taxes is for the rich to be able to accumulate bigger pensions and thereby pay less inheritance tax while many more people on lower incomes are to be dragged into the income tax net and see their disposable income fall. He could at least have introduced tax relief on pension contributions at a flat rate, but he chose not to do so. The Budget will exacerbate inequality and national demoralisation.
Communities blighted by the forces of economic change—new technology and globalisation—need not only generous social security for individuals and their families but substantial resources for place-based regeneration, funded by taxpayers who have benefited from globalisation and administered as far as possible by local communities themselves. I am pleased, therefore, that the Chancellor has seen the need to empower elected local leaders to
“fund and deliver solutions to their own challenges.”—[
I hope he will move faster than he seems minded to do to extend this freedom beyond the West Midlands and Greater Manchester mayoralties. However, I suspect that his vision of 12 investment zones as “potential Canary Wharfs” will be depressing rather than inspiring for the people who live in those places. Are they to be subjected to the abandonment of properly considered urban planning and the destruction of biodiversity? Growth should not be at the expense of quality of life and life itself.
It is good that the Chancellor will bring forward measures to tackle the promoters of tax avoidance schemes, but his concern seems only to stanch the haemorrhage of tax revenue. He gave no hint that he understands the importance of cleaning up the nexus between the very wealthy and government. When people read reports of the elaborate arrangements, devised by accountants and lawyers, for rich people to avoid even such taxes as they are expected to pay, and when they read about the lobbying of government by big business and the funding of politics by the rich, they conclude that government and politics are corrupt and, to coin a phrase, a conspiracy against the public.
Resentment is intensified when political rhetoric stigmatises the poor as failures and morally defective. This Chancellor is more delicate in his language than his predecessor, George Osborne, but in the Budget yesterday he said the sanctions regime for social security claimants will be applied “more rigorously”. A society in which feelings of injustice are thus incubated will, to say the least, not be optimally productive. This is dangerous for our democracy as well as our economy. Anger, unhappily, will issue in scapegoating of politicians certainly but also of immigrants, who are perceived wrongly to depress wages, steal jobs and have a free ride on public services. If the Chancellor wants more construction workers and childminders to come here from abroad, he had better educate the Home Secretary as to why this is in the interests of our economy and try to persuade her to tone down her language about migrants.
We have no option but to embrace technological change, but we should be aware that it is not certain that we will grow faster or be happier if we become a science superpower—the Prime Minister’s dream. Historically, the technological innovations of electricity and the internal combustion engine indeed engendered high growth in an era when the size of the state and its commitment to public services was also growing hugely. The technological innovations of the digital era, also the era of the cult of the small state and globalisation, have been accompanied by weak growth of productivity, stagnation of wages and widening inequality, as well as the pathologies associated with social media. If to be a science and technology superpower means to accelerate the application of artificial intelligence, as the Chancellor proposes, then we shall need more than ever a protective state. We have to see past the circumstances of today’s tight labour market to recognise that very many livelihoods are at risk from artificial intelligence.
Following technological innovations in the 18th century that heralded the Industrial Revolution in Britain, real wages halved and then stagnated for 50 years. Great technological disruptions may benefit capital but they immiserate labour that is displaced and rejected. In this context, it is perverse for the Chancellor to continue to tax labour at a high rate through national insurance while favouring capital through generous investment allowances. Destruction takes a very long time to become creative and there is no certainty that it will do so. In such an era we need government that willingly embraces responsibility for the well-being of the vulnerable.
I now look forward very much indeed to hearing the maiden speech of the noble Baroness, Lady Moyo.
My Lords, I am deeply privileged to speak for the first time in your Lordships’ House. It is an honour to take my place on these distinguished Benches. I thank everyone in this august House for the warm welcome that I have received from all sides. I thank the officers and staff I have met for their support on all matters great and small. This includes Black Rod and her staff, the Clerk of the Parliaments’ Office, doorkeepers, police officers and attendants in the Library and dining areas. I also sincerely thank my supporters, the noble Baroness, Lady Baroness Manningham-Buller, and my noble friend Lord Reay.
In preparing for this occasion, I visited the archives of Hansard and read the maiden speeches of several noble Lords past and present with whom I share an interest in the economy: former Chancellors of the Exchequer my noble friends Lord Clarke of Nottingham and Lord Lawson, and the noble Lord, Lord Darling; former Bank of England Governor the noble Lord, Lord King of Lothbury; business leaders and economists my noble friend Lady Lea and the noble Baroness, Lady Fairhead, and the noble Lords, Lord O’Neill and Lord Skidelsky. Their words on the centrality of economic growth underline how much of what I wish to say today has echoed in this Chamber through the decades. Yet the theme of economic growth and its impact on all our lives is as important today as at any other point in living memory—perhaps more so.
I have been fortunate in my career to have worked through the vagaries of the world economy, including the challenges of the global financial crisis, Brexit and navigating the Covid pandemic. The perspective that I bring to this House is born of both public and private sector experiences over the past 30 years: in public policy, at the World Bank and as a non-executive director in His Majesty’s Department for Business and Trade; in finance, in the City of London, having spent nearly a decade at Goldman Sachs; and in business, on the boards of many large, global and complex organisations, including Barclays Bank and the investment committee of the Oxford University endowment.
In my career as an economist, I have long believed that the ability to create and sustain economic growth is the defining challenge of our time. I do not mean growth for growth’s sake or merely for the sake of record-keeping—for example, an economy increasing growth from 3% to 5%—but rather because economic growth is a prerequisite for vital public goods such as the quality of education, reliable healthcare, a clean environment and dependable infrastructure. Economic growth is also a precursor for innovation, improving how we communicate, travel, produce food at scale and solve seemingly intractable challenges such as the energy transition. Importantly, growth is necessary to maintain a healthy democracy. It ensures a wider share of prosperity and supports a stable, plural society. Taken together, with economic growth, we are able to put a dent in poverty and sustain human progress. Without it, lives become smaller and society atrophies.
Such is the mandate of your Lordships’ House, we must and do scrutinise the legislation of the land. Beyond this, the ultimate measure of how well we do our duty rests on how well we incorporate long-term growth consequences into the judgments that we make in our work here. In particular, in debates such as today’s on the Government’s Spring Budget, we are minded to consider the costs and consequences of our decisions on society’s long-term growth trajectory.
According to the OBR, growth projections for the UK peak at 2.5% before falling back below 2% over the next five years. Yet theory tells us that an economy needs to grow by at least 3% per year in order to double per-capita incomes in a generation, which is about 25 years, and, in so doing, make meaningful progress in living standards. From my reading of the Budget, we can see the beginnings of a credible growth plan, although it seems concerning that corporation tax in 2023-24 has been reaffirmed to rise from 19% to 25%. Surely, there is more work to be done to unburden companies from excessive regulation—after all, there is no credible path to strong, sustainable economic growth if the economy is subjected to both high tax and high regulation.
This House has an important role in reinvigorating the British economy and, relatedly, Britain’s standing in the world. Jump starting economic growth must mean multi-decade commitments and investments today in key areas, such as technology, the environment and the energy transition. To accomplish this, we need both public and private investment. In this Spring Budget, I am encouraged to see government pledges to drive investment, including corporation tax relief worth £25 billion to businesses over the next three years and investment in technology R&D worth £1.8 billion. In energy, I am pleased to see a commitment of up to £20 billion in carbon capture projects. Notably, I share the belief that investment in nuclear energy must be part of a green taxonomy; it is crucial to Britain’s energy security.
If the United Kingdom is to remain competitive in the intensifying contest for global private investment, the Government must also continue to telegraph time-consistent policies. These policies reduce economic uncertainty and offer investors confidence that, when they invest in Britain, they can reasonably expect to generate returns above the cost of capital. Crucially, policy-framing must not merely be obsessed with risk mitigation and setting rules for what we cannot and must not do; it must also point towards innovation and investments that catalyse economic growth, as we have seen in this Budget.
The world’s population has now surpassed 8 billion people, with estimates that nearly 90% of the world’s population lives in the developing world. Having been born in Zambia and having spent my formative years in Africa, I am acutely aware of how the rapid shifts and trends emerging from these developing regions—demographics, resource scarcity and geopolitics—are shaping the prospects for growth in Britain and the global economy in its entirety. The fact that I stand here today is a testament that, here too in this Chamber, there is a recognition that the perspectives from these emerging regions must continue to be represented in the important work that we do.
My Lords, it is quite a remarkable pleasure and an honour to welcome the noble Baroness, Lady Moyo, to this House, and to speak immediately after her excellent maiden speech. I am not sure whether the noble Baroness remembers this, but we once shared a nice dinner in Knightsbridge. I would never have imagined that I would be stood here welcoming that particular colleague, or any colleague, to this House, but here we both are—me and the noble Baroness, Lady Moyo of Knightsbridge—and it is a huge delight to do so. As she has beautifully demonstrated, I can assure the House that the noble Baroness will bring some fresh insights into aspects of how the world works, or does not work, to add to the already rich vein that is so present in this place. Because I reached out to inform a couple of our ex-colleagues, I know that many of them will be extremely proud of Dambisa, and, again, I welcome her to this place.
Before I make a few comments about the Budget, which I will return to at the end, I thought I might point out that, yet again, a fiscal event is taking place against the background of quite a bit of chaos in global financial markets. In that sense, much of what I shall reflect on and much of what has been said already, or may follow, might not be as immediately relevant if some of these events are not stabilised by the sharp minds of our global policymakers who are increasingly experienced at these far too frequently reoccurring events.
As to the Budget, first, as was very clearly pointed out by the noble Lord, Lord Eatwell, but also recognised in some ways, to their credit, by the Chancellor and by his immediate predecessor, the now Prime Minister, our weak growth performance is primarily due to a very poor investment performance, as well as, I might add, net trade. Unfortunately, I still do not see much ambition in the Government’s own direct investment plans, as the noble Lord, Lord Eatwell, suggested, to match this important recognition. There is still a persistent belief that the primary way to boost investment is to have the right investments for the private sector, and that this is all that is needed.
As I shall come on to, and as has been touched on by some prominent commentators in today’s media, the Government are still significantly constrained by their own narrow vision of credible fiscal rules. While on the one hand this is not entirely surprising, given the utter fiasco of last autumn, we do need to break out of the same old somewhat tired thinking. I call on this or any future Government to be more imaginative, while retaining credibility with financial markets, in creating a much more sophisticated modern framework to approach government investment spending and fiscal rules. Asking the OBR itself, as well as other independent bodies, as to the most credible path to achieve both of these seems to me to be as inevitable as it is necessary. Perhaps it will require another Government in the future to take these steps.
In this regard, I shall touch on the really important challenges that the noble Lord, Lord Bridges, just suggested for more debate about the kind of growth that we might want to see, and the role of the state. I agree with this challenge, but what I think his excellent idea suggests, and perhaps misses, is the crucial distinction between government investment spending—which, if aimed correctly, would boost future growth—and the Government’s persistent focus on current or maintenance spending. This self-imposed constraint aside, I find myself, a bit surprisingly given how easy I have found it to criticise Budgets of the past few years, welcoming much of the broad flavour of the policies announced yesterday to boost the supply side of the economy.
In particular, although it is with a caveat, I welcome the measures to try to boost investment spending by specifically claiming allowances for genuine investment spending, as opposed to the never-ending, nonsensical obsession with the level of corporation tax that too many retain. This is a sign, in my view, that at least some policymakers are finally living in the real world. Sadly, as the noble Lord, Lord Eatwell, pointed out, the limited duration of this policy, itself constrained by the arbitrary fiscal debt rule, will, along with the fact that there may be a change of Government within two years, limit its otherwise potentially huge positive potential.
Thirdly, noble Lords will not be surprised that I highly welcome the significantly tweaked investment zones. While the analogy to Canary Wharf is in some ways slightly unfortunate, the zones have the potential to be so much more, in my view. The reconcentration on large metropolitan areas is hugely welcome, as is using the strength of our excellent universities as the focal point for this initiative. This is consistent with the broad goals of Northern Gritstone, which I am proud to chair. It also links to the whole journey of devolution, which is a sign of a Government who finally get it—perhaps for the first time in a number of years.
Also in this regard, the detailed framework for a so-called trail-blazer devolution deal, announced for both Greater Manchester and the West Midlands, is a huge step up in the art of the possible for devolution. I truly hope that the Government will genuinely follow through on this, that other electoral mayoral areas around the country develop the same ambition as GM and the West Midlands and that future Governments take this further.
Fourthly, while these initiatives and others, such as those on skills and education, are aimed at boosting productivity, the measures aimed at boosting labour force participation, especially childcare support, are also to be welcomed. It is probably far too early to judge whether the precise numbers chosen are likely to succeed in changing the incentives of those currently outside the labour force, but they are obvious and critical areas that needed attention and I congratulate the Ministers involved for that intent.
Given that, since the financial crisis of 2008, we have experienced extremely weak productivity growth and, since 2019 and Covid, a worrying decline in labour force participation—as others have already pointed out—this is the first Budget in some time that is aimed at genuine supply-side measures, and I hope it has some seriousness attached to it. If we could adopt more ambition, as I touched on at the start, on the fiscal rules framework and the Government’s own long-term investment spending, as well as a more serious plan for the post-Brexit global trade environment—including, as the noble Baroness, Lady Moyo, so beautifully said in her maiden speech, with the big emerging nations—then perhaps the future might not be quite as bleak as it otherwise seemed it would.
In closing, I thank the Government, and the Treasury in particular, and the Bank of England for their speed and awareness in reacting to the sudden chaos that erupted late last week around Silicon Valley Bank. If they had not been so speedy, the discussion that we are having today would have been very different. That needs to be recognised.
My Lords, I suggest that we adjourn the debate on the Motion in the name of my noble friend Lady Penn in order to take the Urgent Question repeat to the Foreign, Commonwealth and Development Office.
The Urgent Question repeat may run up to 10 minutes and then my noble friend the Deputy Chief Whip will adjourn the House for 30 minutes on the conclusion of the Urgent Question, so it will be roughly 40 minutes.