My Lords, it is a privilege to lead today’s debate on the impact of the Government’s economic and taxation policies on jobs, growth and prosperity.
I begin by noting an absent friend. I am saddened that the coming Budget will be the first in 35 years that will take place without the thoughtful and perceptive comments of the late Lord Desai. Like the Minister, I studied at the London School of Economics in the 1990s and was taught by Lord Desai. I am sure he would have spoken in this debate, and I know the whole House will greatly miss his contribution.
At the heart of today’s debate is the quest for economic growth. Today’s growth figures are not encouraging, suggesting that the economy shrank by 0.1% in September and GDP per capita is flatlining—or possibly falling, since the figures are calculated using population estimates from three years ago, in 2022. In 2000, when the Minister was working as a special adviser in the Treasury and I was a humble researcher working for the noble Lord, Lord Kirkhope of Harrogate, economic growth was 3%, taxation was 33% of GDP, public spending was in surplus and we were paying down the national debt. Earlier this year, I asked Sir Tony Blair what he ascribed that economic miracle to. He was clear that it was down to the economic foundations laid down in the 1980s and his decision not to tinker with the fiscal plans laid out by the noble Lord, Lord Clarke of Nottingham.
The story since 2007 has not been so rosy. Our average real GDP growth has been 1.3% per annum, with average population growth of 0.7% a year. That equates to a measly rise in GDP per capita each year of just 0.6%, meaning that living standards have stagnated for many, with millions of personal recessions where people have become worse off year by year. In contrast, over the same period, the average American has gone from being 10% richer than the average Brit in 2007 to now being 40% richer.
Is there hope around the corner? I fear there is not. Recent world economic league table projections of GDP per capita by the Centre for Economics and Business Research paint a stark picture of where the UK is headed. In 2030 we will be poorer per capita than Lithuania, in 2034 we will be worse off than Poland, and in 2043 we will be poorer than Turkey. That is the path we are on, which is why today’s debate is so important.
Fundamentally, we agree on all sides of the House on the need for economic growth and boosting living standards and prosperity. Kick-starting economic growth is one of this Government’s five missions. The Prime Minister put wealth creation at the heart of his manifesto, and the Chancellor says that economic growth is the Government’s number one mission. However, it is clear that the Government lack a comprehensive plan. I agreed with what a senior Labour figure said in a podcast recently when they suggested that the Chancellor needs to use the Budget to present
My Lords, we are all grateful to the noble Lord, Lord Elliott, for having secured this debate. As noble Lords will know, the noble Lord is one of the most brilliant political campaigners of his generation, evidenced in the speech we have just heard and, most notably, in his leadership of Vote Leave, the successful Brexit campaign. Hence, according to estimates by the Institute for Fiscal Studies—confirmed recently by the United States’s National Bureau for Economic Research—he is, at least in part, personally responsible for a permanent reduction in UK GDP of between 4% and 6% per annum, with estimated tax revenue being lower by more than £50 billion per year. This makes his negative assessment of the Government’s economic policies seem rather small beer. The common conclusion of serious economic studies is that Brexit, unsurprisingly, has damaged trade. Even more seriously, it is having a long-term negative impact on investment in the UK. The American study I cited estimated that there was a reduction in investment of between 12% and 18%. That is where the long-term damage is being done. Investment is the foundation of productivity growth, embedding innovation in the production of goods and services.
In recent years, Britain has had a dreadful record, with the share of business investment in GDP consistently lower, year after year, than in other G7 economies. If we do not invest more in productive capacity, R&D and skills, the growth prospects for the UK are very poor indeed. We must look to investment for the enduring impact of the Government’s economic policies. At the core of these policies are Rachel Reeves’s fiscal rules, notably the commitment to balance the current budget: day-to-day spending must be funded by revenues. However, this does not apply to investment. Borrowing is allowed for investment: indeed, the rule is designed to protect long-term projects from short-term exigencies. Hence, in the 2024 Budget, the Chancellor funded public investment growth of 2.5% per year, year on year, to 2029, replacing the Conservative plan to cut investment growth to a miserable 1.7% per annum: a difference of £20 billion-worth of investment per year.
1:04 pm
Lord Skidelsky (CB)
My Lords, I would also like to thank the noble Lord, Lord Elliott, for giving us a chance to discuss this important question, and it is always a pleasure to follow the noble Lord, Lord Eatwell.
Economic commentary has been dominated by the fiscal hole—said to be £30 billion—facing the Chancellor. To stick to her fiscal rules, Rachel Reeves will have to raise taxes, or cut spending, or do both, but she has promised not to raise taxes and has promised to increase public spending. She is, therefore, in a bind. However, this fiscal straitjacket depends on two assumptions: first, that there will be little or no economic growth in the next four years; and secondly, that the British economy is already at or near full employment. These are reasonable forecasts based on recent trends. However, since 2008, average economic growth has been about 1.5% a year, a full percentage point lower than before, and much of that has been down to the increase in population. Living standards for the majority have hardly risen and productivity has been flat, and the OBR expects this to continue. The noble Lord, Lord Elliott, emphasised the need for abundant employment, but I would suggest a different path from the one he has outlined.
With headline unemployment at 1.8 million, we are tolerably close to what we think of as full employment, though it has gone up a little to 5% recently. Is this a true measure, though, of spare capacity? Apart from the headline count, we have four million, or 10% of, working-age people claiming either disability or incapacity benefits, plus 1 million NEETs: that is, those between 16 and 24 who are not in education or in employment. In addition, 7.7 million are employed part-time. Then there are those who have left the labour market altogether. Some of these categories overlap, but if one were to add up the full-time unemployed, part-time workers who want to work more, those on disability benefits who could do some work, and the discouraged, one could get a better measure of spare capacity than the headline count alone. Estimates suggest the figure would be about 10% to 15% of the labour force. This, if true, would justify greater fiscal loosening than the OBR considers prudent. That is the first point.
How do we get the underemployed back into work? It is not simply a question of increasing demand—the old Keynesian formula. One has to rebuild supply. To give one example, the Government have unveiled a youth job guarantee scheme covering ages 18 to 21. Every young person who has been on universal credit for 18 months without earning or learning will be offered a guaranteed work placement, with the aim of helping them to transition into full employment. I welcome that initiative; it is very important. I like to think that it was influenced by a paper entitled Job Creation is the New Game in Town, which I co-authored with Gordon Brown five years ago. We wrote:
My Lords, I draw attention to my entry in the register, and in particular to my chairmanship of Direct Special Metals, a company whose recent experience I shall refer to in my brief contribution. It is always a pleasure to follow the noble Lord, Lord Skidelsky, and I join others in thanking my noble friend Lord Elliott for securing this debate, and also for the work of the Jobs Foundation over which he presides.
Much of the debate—in fact all of it, so far—has understandably been taken up with macroeconomic policy, which is vitally important. I want to talk about the micro: about ways in which apparently small improvements can have a dramatic effect on the economy and on people’s lives. I will talk in particular about the recent experience of Direct Special Metals when we wanted to offer people jobs.
Direct Special Metals is a recycling company based in Sheffield. We were expanding and we wanted to recruit, so we went to the local jobcentre. The story of what happened is recounted by Ian Crewe, the company’s co-founder, in Ladders of Opportunity, a recent publication by the Jobs Foundation:
“First of all, they got the volume of people wrong … Then, they got the job description wrong”.
But DSM persisted, and eventually we were offered 25 people. Ten of them could not hold a conversation. Of the 15 who were offered an interview, only five turned up. Of the five who turned up, four were not a fit at all, so we ended up employing just one person from the jobcentre. Ian Crewe was stunned. He said they were
“local jobs … Well paid, and we do pay well. Solid hours. Not flexy hours. None of that. You thought they’d be queuing at the door. But we got just the one person. I just couldn’t believe it”.
Ian did not, as so many would have done, give up. He contacted Sheffield City Council, which got involved. Soon, he was dealing with a side of the jobcentre that had previously been invisible. Two people from the jobcentre visited the company. Ian told them what the company wanted, and after that conversation things improved dramatically. The quality of the candidates got better and soon we were getting most of our staff from the jobcentre. But how many people would have persisted as Ian did? How many employers would have got in touch with the council? Indeed, why was it necessary for Ian to get in touch with the council at all?
My Lords, it is a great privilege and pleasure to follow the noble Lord, Lord Howard. I thank the noble Lord, Lord Elliott of Mickle Fell, for bringing this Motion before the House and allowing us time to debate the various issues that have become clearer since the general election last July. The Government have told us that growth is their number one priority. However, the policies and taxes that have been introduced, or are about to be introduced, have made this aspiration harder and harder to achieve.
Many in this debate have spoken to the macroeconomic indicators and prospects, but I want to use the short time available to focus on the plight of rural dwellers. We rural dwellers are known for our laid-back ways, but being sanguine about the current economic prospects is not where we are at present. Sir Keir Starmer told farmers before the election in July that he would not raise taxes, then the Budget of last year revealed the biggest change for farming families for over half a century. The cap on agricultural property relief and business property relief for inheritance tax set at £1 million will have huge consequences for rural communities in terms of investment, succession planning and the continuity of family-owned enterprises. Indeed, the Taxing Futures research conducted by CBI Economics shows that these changes will, instead of growing the economy, put 208,500 jobs at risk, result in a GVA reduction of £14.8 billion and produce a net fiscal loss to the Government of £1.9 billion.
I received an email at the beginning of this week from someone who farms in the north-west of Northern Ireland. This woman, who lives with her family and her farmer husband, was in total despair. She told me that the proposed tax
“will have a devastating impact for each generation as it will stifle any future innovation and investment on farms. The reality for many farms is they will have to sell off fields each generation due to low profits and returns on farms as there will not be the money to pay it. This will result in ever smaller farms”—
My Lords, if you want a bigger slice of cake, the best thing to do is bake a bigger cake, then everyone gets a bigger slice. That, as my noble friend Lord Elliott knows very well, is how Mrs Thatcher tried to give a whole generation of young people, including me, the hope of a better life. Her famous bigger cake was economic growth—the only way you could have confidence in the country’s future and your own. Instead, we now have the exact opposite: a general feeling of disillusionment.
Recognising the national mood, the Prime Minister recently asked his officials for an uplifting plan to stimulate economic growth. It has yet to see the light of day. The reason for postponement is said to be “lack of content”. I went to the fount of economic wisdom, the London School of Economics, and very bravely asked a roomful of economics professors whether any of them had a brilliant idea for how to get economic growth in Britain. Their response? They laughed; it would take a complete change in the entire culture of the society—inconceivable, unimaginable, impossible.
Well, whisper it, but maybe the professors are wrong about what is possible and what is not, because there is one proven way to change the culture of a society; it is called the law. Smoking bans, seat belts, abortion, capital punishment, slavery, homosexuality, contraception—I can go on. We all remember, with warm approval, Lord Denning, Britain’s most senior judge, who said:
“Be you never so high, the law is above you”.
We all like that idea; it means a lot to us.
I will take a moment to describe, just for the sake of the argument, what it would be like if one was to file a lawsuit against the Government—the people v the UK Government. That has a good ring to it, does it not? The Government would be the defendant. We would of course be very humble about such a lawsuit and concentrate only on tax, because current tax law is an ungainly camel, designed by a committee that has been in standing session for 200 years.
Perhaps we need something similar to end our economic problem—someone to take away the stale pudding now on our plate and bring us a lovely, big, freshly baked cake.
My Lords, it is always a pleasure to follow my noble friend Lord Saatchi, who has considerable wisdom in these affairs. The Government’s multiple dilemmas over their economic and budgetary policies are well known; they have been widely aired in the press, and many media experts and economists have declared them to be completely insoluble. One way, they say, is blocked politically, and other ways are blocked by the simple facts of arithmetic and life. There are limits to the amount of tax you can squeeze out of an economy, especially one that is not growing much, and if you borrow more, bondholders will want to be paid more interest. Incidentally, that never happened in the distant past. More recently, monetary policy and fiscal policy have become inextricably intertwined, so there appears no way out.
However, looking at Germany, for example, which has been in roughly the same situation as us, I wonder whether this whole messy scene may not be based on some false assumptions. Germany faces the same sorts of dilemmas as we do, having inevitably planned too much spending at the Covid time and when the price of gas suddenly erupted four years ago, as well as on welfare, meeting the immigration wave and now defence. So what did Germany do? It arranged to borrow another €1 trillion—that is about £900 billion—to pay for the endless and extra spending demands upon the country. Germany is doing this without blowing up its fiscal rules, which are just as tight as ours—in fact, unlike ours, in Germany they are constitutionally embedded. How on earth is Germany doing what is causing us so much difficulty?
The answer is: by building on a reputation of past iron fiscal prudence and the lessons of the 20th century, which, of course, destroyed Germany; by having a reasonably clear forward strategy and national direction on how it is going to use the extra money, which is mostly for defence and infrastructure, although there is an argument going on in Berlin about exactly how it is to be allocated; by having a political system of machinery capable of driving Germany’s plans through, all with the right mix of private enterprise resources within a government framework of determination and initiatives to meet public needs and purposes with both public and private resources; and by methods that do not swell what we used to call the PSBR, which is now called the public sector net cash requirement.
I remind noble Lords of the advisory speaking limit of four minutes.
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“a growth plan for the long term, turning public services round and making them better … It’s got to be a plan which sticks, which lasts, which doesn’t unravel with the markets or in Parliament or with the public in 48 hours”.
Those are the words of a previous colleague of the Minister, Labour’s former shadow Chancellor, Ed Balls, speaking on his “Political Currency” podcast on 30 October. I agree with him, and I hope the Government address his challenge in the forthcoming Budget.
There is much I could say about a long-term plan for economic growth. Noble Lords interested in reading more about this might like to take a look at a new book I have written called Prosperity Through Growth, and I have placed a copy in the Library. The economic brains behind the book were my co-authors, Dr Arthur B Laffer and Doug McWilliams, and the geopolitical content came from my noble friend Lord Hintze, who sadly has a long-standing speaking engagement in Australia so has asked me to pass on his apologies.
For this debate, I will limit myself to three key elements of a growth plan where I believe there is mainstream agreement. These are abundant energy, abundant employment and abundant enterprise. I will take these in turn. Abundant energy is a prerequisite of economic growth, so we need the cost of energy to come down. The World Bank summarises the literature by saying:
“Affordable, accessible energy is at the heart of development, driving job creation, growth, and shared prosperity”.
Our energy is immensely expensive compared to our competitors. Wholesale energy costs in the UK are double costs in most European countries, and almost half of each bill is down to policy costs. The Government know that mainstream opinion is shifting on this issue. The Prime Minister acknowledged at the COP 30 summit that “consensus is gone” on climate change policy. Sir Tony Blair told us for Prosperity Through Growth that net zero should be delayed, as other countries are not following our lead. Even previous major advocates from outside politics seem to be responding to changed circumstances. Bill Gates remarked in October that for the “vast majority” of people, climate change
“will not be the only or even the biggest threat to their lives and welfare. The biggest problems are poverty and disease, just as they always have been”.
Other senior figures in the Labour movement have also expressed scepticism about pursuing net zero by 2050. The noble Lord, Lord Glasman, will be giving a lecture the week after next on “Why it’s good to be warm: energy as a common good”. Sharon Graham, general secretary of Unite, has suggested that the Energy Secretary has been “completely irresponsible” in his approach to energy security and jobs in the oil and gas sector. I agree with her, and believe the Prime Minister also agrees, as he tried to move Ed Miliband in September’s reshuffle. I wish him better luck next time, because it is essential for economic growth that we focus on lower energy bills rather than net zero alone.
A second essential element for accelerated growth is abundant employment. The importance of jobs and work is something I speak about regularly in your Lordships’ House. I continue to commend the Government for their ambition to bring the employment rate up from 75% to 80%. Since they have been elected, they have succeeded in increasing the employment rate by 0.3%, putting them on track to hit their target in 2048. At the same time, unemployment is up from 4.2% to 5%. The number of universal credit claimants who have no requirement to work is up from 2.9 million in October 2024 to 4 million in October 2025, a 39% rise in the space of a year. The number of job vacancies is down from 870,000 to 723,000. The number of new jobs which need to be created by the private sector to achieve 80% employment is now 1.4 million rather than 1.2 million. Crucially, the Employment Rights Bill reduces job creation, which is why the Treasury is rightly trying to water it down.
A Tony Blair Institute report last week said that day-one rights risk
“eroding business confidence to hire”.
The Resolution Foundation argues that day-one rights offer
“little obvious gain to workers”
and have
“the potential to inhibit hiring”.
Even the Prime Minister’s chief economic adviser, the noble Baroness, Lady Shafik, expressed significant concerns about the Bill, saying,
“if you’ve got a lot of people on benefits who you are hoping to get into the labour market … then you need to give employers some flexibility to take risks on those people”.
It is time to make employing people more flexible and affordable for businesses and bring about abundant employment. This is not solely about economic growth, it is about giving people their first step on the employment ladder; no jobs, no ladders of opportunity.
The final factor we need for economic growth is abundant enterprise, and taxation is a crucial driver of that. In 1998, Gordon Brown introduced taper relief for capital gains tax. This scheme incentivised long-term investment and had no lifetime limit on holding assets, with a long-term CGT rate of just 10%. Today the picture is very different. From next April, the rate will be 18% up to £1 million and 24% beyond that. We need to acknowledge the impact that these and other changes to incentives have on our economy. As we see the rise of remote working, the mobility of people must be a key consideration when making any tax changes. This is already happening, with 16,500 high net worth individuals, many of them entrepreneurs and investors, expected to leave the UK in this year alone. It includes former Members of your Lordships’ House: the Minister’s former colleague in Downing Street, Lord Carter of Barnes, recently left the UK to go to Dubai.
On another podcast recently, a senior Labour figure suggested that the Chancellor undid the damage done by the changes to the non-dom rules and moved to an Italian-style system for taxing wealthy individuals.
“What they should think about doing is a kind of flat tax deal, because that’s what the Italians have done. They’re basically saying, ‘Look, you come here, you pay €300,000 a year and you keep the rest of it because we want you to be here’. I think Labour could get away with that, saying half a million and that’s all you pay”.
I do not often agree with what I hear on “The Rest is Politics”, but on this issue I think Alastair Campbell is spot on. We need to change the incentives to attract more entrepreneurs to the UK rather than drive them away. We need to ensure that young entrepreneurs set up their businesses here rather than go overseas.
Many other people within the Labour Party also agree with this sentiment. Sir Tony Blair acknowledged when speaking to us for our book that taxes are immensely high by historic standards and even suggested that a 40% top rate of income tax was probably too high in today’s highly mobile world. The noble Lord, Lord Mendelsohn, expressed it perfectly in a recent report for Onward:
“A small group of wealthy individuals pay a significant proportion of the tax we rely upon. I do not agree with some colleagues that we should wave goodbye to the wealthy; we should be doing whatever we can to welcome them back, and new investors, entrepreneurs, and high spenders to our shores”.
He is right. If we are to have abundant enterprise, a key element of any serious growth plan, the Treasury needs to start attracting people back to the UK.
Last week we heard the Chancellor, Rachel Reeves, say that she is willing to take “tough but necessary” choices and do the right thing. This is welcome. But raising income tax, chasing limited liability partnerships away from the UK and letting the welfare bill continue to escalate are not the right tough choices. Instead, the Chancellor should look at the policy options I have highlighted today, which are supported by mainstream opinion, including respected voices in the Labour Party.
In his closing statement, will the Minister respond to Ed Balls and outline what the Government’s long-term economic plan is? On energy, does the Minister agree with Bill Gates, Unite and the noble Lord, Lord Glasman, that we should focus more on jobs and poverty and less on net zero by 2050? On employment, does the Minister agree with the Resolution Foundation, the Tony Blair Institute and the noble Baroness, Lady Shafik, that the Employment Rights Bill will make it less likely that businesses take on riskier hires? On enterprise, does the Minister agree with Alastair Campbell, Sir Tony Blair and the noble Lord, Lord Mendelsohn—and Lord Carter of Barnes, for that matter—that that we need to do more to attract entrepreneurs and investors to come to the UK, rather than chase them away?
This month’s Budget will have a critical impact on our economic standing in 20 years’ time. Will we maintain our position, will we perhaps even improve it, or will we fall behind Turkey? Britain’s decline is not inevitable. The path to prosperity is open to us. It is time to take it. It is time to make Britain rich again. I beg to move.
Government investment in transport, housing, research and development and energy is the much-needed long-term commitment to the British economy, protected by the fiscal rules. Given that the fiscal rules are central to government policy, it is odd that they were not mentioned by the noble Lord in his introduction. It is surely incumbent on the party opposite, particularly the Conservative Front Bench, to state clearly whether they support the fiscal rules or not. The rules protect long-term public investment, but what is their impact on business investment? The OBR estimates that a 1% increase in public investment leads to an up-to- 1% increase in business investment as well. The Bank of England noted recently that public investment in R&D and infrastructure tends to have a stronger, longer-lasting, “crowd-in” effect than short-term spending. Growing public investment causes growing private investment. The fiscal rules are not just supporting public investment, they are supporting business investment too. Surely that is an impact of the Government’s fiscal policy that all sides of this House should celebrate.
“Regional and local government job and training schemes”
for young people
“are essential to the task of reallocating work and skills into the labour market”.
We went quite a lot further, but I do not have the time to go into that. The basic idea was that there should be a public sector job guarantee, with a buffer stock of state-supported jobs and training schemes that expands and contracts with the business cycle. A job guarantee of this kind could take up a large part of the slack in the labour market. By raising the rate of economic growth, it would help reduce the deficit, and the guaranteed training and apprenticeship part of the scheme would directly address the productivity problem. So I urge the Government to fight the bond vigilantes and the tax cutters with a positive programme of economic renewal.
The moral of this little story is that jobcentres need to be proactive. They need to make more of an effort to understand the needs of local employers to match the vacancies with the people on their books. If they do, we might see just a little more progress in reducing the number of jobless people in our country—as we have heard this week, that number is now higher than at any time since the pandemic—and make a contribution to the growth and prosperity that we all want so very much.
farms in Northern Ireland are already small, as we know. She went on:
“There is no point in saying there will be 10 years or pay off the IHT tax—as with low returns from farming there will be nothing left for farm improvements/or future development”.
She continued to say that this proposed tax
“will ultimately change rural farms in NI—as many farms may become unviable and unsustainable—consequently many young families may leave and go to Canada, Australia. As it is at present—we have many part time farmers but their vital off farm income sustains their farms and multi-generations of their family—in addition to supporting many other off-farm employment throughout NI—all contribute to the NI economy”.
She also made a very important point about succession. I know that sometimes we have been told that this will help with farm succession. But she told me she believed that older farming parents are becoming increasingly vulnerable and are often pressurised by their younger family members to sign over their land to their sons and daughters. This can result in elder abuse, something I am very concerned about.
The reality is that the policy change on inheritance tax poses a direct threat to the continuity of family farming across the UK, and in particular in Northern Ireland. The Ulster Farmers Union has said that the absence of a credible evidence base and meaningful consultation or any impact assessment has led this Government, unfortunately, to implement this tax increase—which is effectively what it is—and has meant that many farm families are in a state of uncertainty and panic. I urge the Government to think again.
This is how such an indictment of the UK Government might look. There are five counts here. Count one is conspiracy to enslave United Kingdom citizens and make them unnecessarily dependent on the state. Count two is conspiracy to force United Kingdom nationals to claim benefits to pay higher taxes. Count three is solicitation of multiple tax revenues by stealth. Count four is the attempt to obstruct, interfere with, impair, impede and defeat the right of United Kingdom nationals to independence. Count five is conspiracy to provide material support and resources to mesmerise and anaesthetise United Kingdom citizens.
How would such a case end? I suggest, just for the sake of the story, that on the morning of the trial the Attorney-General of the United Kingdom would come out on to the top of the steps of the Royal Courts of Justice and say something like this: “Without any admission of liability or wrongdoing on the Government’s part, today the British Government have withdrawn their objection to this case. We have reached an out-of-court settlement with the claimant. This will avoid the expenditure of court time and taxpayer money in prolonged litigation”.
In front of the astonished crowd, the Attorney-General would then continue: “The Government agree to bring forward legislation at the earliest opportunity to ensure the following: millions of British people living below the official poverty line no longer pay income tax; a massive saving in the administrative cost of collecting tax or distributing benefits; a huge change in the attitude of millions of British citizens who thought it was pointless to go out to work because benefits produce more after-tax income than working; a dramatic fall in immigration as the army of young unemployed British people is motivated to get a job; total clarity about tax; the share of people’s income tax used only to pay interest on Government debt, now 30%, is to published every year; and the effect of a frozen tax threshold will be subject to full disclosure”. Finally, the Attorney-General would say, “Economics will become a compulsory subject in the national curriculum”.
Is such dramatic action necessary? Surely we can keep muddling through, can we not? Well, maybe not, because maybe this time democracy is not working. Yes, we can and do change the Government every few years from one political party to another. That is true, but nothing much seems to change, does it? It is same old story over and again. The King himself recently showed firm, decisive leadership—
Here at home, we know that considerably greater funds could be raised through smart new ways of public and private co-operation in building and financing capital projects in areas such as health and the NHS, military projects, new development aid through World Bank bonds, and building new nuclear power stations, which can be done without a huge burden on government finances. All these would deliver what is needed in a modern society. I have heard of NHS chiefs who are seeking permission to raise billions from combining with private finance but who are being blocked by Treasury rules. It is the old story.
All in all, a picture builds up of a potentially greatly reduced burden on the public purse, borrowing, interest rates and taxpayers. That is not ideology; it is a matter of proven experience all over the world, even in the giant autocracies. Here, the intention of fiscal balance is okay, but the root trouble is the absence of smart thinking about how to combine public needs with private co-operation and resources.
Indeed, the Government have relied on their own propaganda by blaming the consequences of everything—Covid, Russia’s illegal assault on Ukraine, the lot—on their predecessors. That is political fun, but it is based on a completely false proposition and the assumption that everything would come right when Labour was elected, which, of course, has not happened. When Labour swept in, we were promised stability, but since then we have had endless instability.
Now the Prime Minister has spoken to the Health Secretary, so I am sure that everything is going to be all right, and the bond market will no doubt be very pleased to hear the news. All we can do is wish for a more honest stance before a hurricane of wishful thinking and wrong-headed policy brings our non-growth economy to a complete halt.