Lord Bilimoria (CB)

The Statement on 3 March focused primarily on presenting the latest OBR forecasts, rather than announcing new policy measures. It forecast growth of about 1.1%, which is very low. It forecast inflation to fall from 3.4% to 2.3% this year. It forecast unemployment to rise to 5.3%, and net migration—which reached a peak of nearly 1 million just recently—to average just 235,000 between 2026 and 2030. But, as the noble Baroness, Lady Neville-Rolfe, brought to our notice, the forecast was prepared before the escalation of the conflict in the Middle East and is already completely out of date. The OBR warned that the wider fiscal context remains difficult. It noted that UK public sector debt as a share of GDP has nearly tripled over the past two decades—it is now close to double the advanced economy average on a comparable basis—and borrowing has remained very high. The Chancellor referred to the growing uncertainty generated by the events in the Middle East, arguing that, in times of international volatility, the Government should prioritise economic stability, infrastructure investment and resilience to external shocks. However, Reuters has reported that economists expect instability. Investors argue that global geopolitical tensions and surges in energy prices are going to have a dramatic effect on the state of the UK economy. Business groups have said that higher taxes and rising operating costs have discouraged firms from hiring. Financial markets have reacted cautiously: government bond yields have continued to rise and investors fear that sustained increases in gas prices could prevent the Bank of England cutting interest rates this year. In addition, motoring groups are calling on the Government to reverse their planned end to the freezing of the fuel duty in September, because of rising oil prices. Ten-year gilt yields have risen to over 4.5%. On top of this, we have nearly 1 million people—the NEETs—not in education, employment nor training. I chair the International Chamber of Commerce in the UK. The British Chambers of Commerce has called for more decisive policy action to stimulate investment and growth. I was president of the Confederation of British Industry. The CBI has said that the Government still need to do more to reduce the cost of doing business, including tackling delays in planning consents, skills approvals, grid connections and access to innovation. As my noble friend Lord St John mentioned, to shut down at this time oil and gas supplies that are sitting there and belong to us when we need them desperately—surely the Minister agrees that we need them more than ever. This is a transition, as my noble friend said, to net zero. We need to live that transition; it is not an on/off switch. The welfare bill is now well over £300 billion. The national health and social care bill is approaching £200 billion. Our debt to GDP ratio is 100% of GDP—almost. After the Second World War, it had gone up to 250%. It took from 1945 to 1963 to bring it down to 100%, which is where we are back up to now. Then we have a situation where 9 million people of working age are not working. We have a record number of people signed off sick, with doctors signing patients off without even doing assessments. Does the Minister agree that we need to do something to encourage people back to work? Then there is the sad impression of London, which really annoys me when I travel abroad, where people say, “Oh, the crime in London, people have their watches stolen, their mobile phones stolen; we do not feel safe in London any more”. That is wrong. This is the greatest of the world’s great cities and people should feel safe over here. We are splurging more on interest than on defence and policing combined. We pay a higher risk premium than Germany, Holland, Spain, Sweden, Ireland, Belgium and other countries. We had austerity after the financial crisis in 2010. That did not work. Rishi Sunak then spent over £400 billion when he was Chancellor during Covid. On top of that, we have this huge pensions commitment where public sector pensions alone are £1.4 trillion. We all agree that we have one of the most generous welfare states in the world, but that is meant to be a safety net. The Chancellor now seems to recognise that the increase in minimum wages has harmed prospects for young people. I am all for people being paid more, but can businesses afford it, including the hospitality sector? Employers are still burdened with additional costs through increased taxes and more regulation, including employers’ national insurance, and we need to bring spending under control. We need to focus on nuclear. We need to look at small modular reactors. We need to look at fusion on top of renewables. As the noble Lord, Lord St John, said, we need to look also at the threat and opportunity of AI and focus on skills, with industry and education working together. The reality is that lower net migration in economic terms will pose a medium-term risk to public finances, especially with the conflict going on around the world. We need an industrial strategy that will address what is going on. I conclude. We have really high borrowing costs. We have a war going on in Iran. Oil is hitting over $100 a barrel and is forecast to go even higher. We have inflation that is not going to go down but is going up. We have had many inflationary spikes in the past five years and there is also the threat of a wage-price spiral. We need an economy that grows, but sadly the last growth figures were flat—the last quarter was 0.01%. We have the highest tax burden, 37%, since the Second World War and a cost of living crisis. This really hurts me because this country has such phenomenal strengths, institutional strengths and entrepreneurship—we have the third-highest number of unicorns, billion-dollar companies, in the world. We have the best universities in the world. We deserve better. Please, I implore the Government. There have been 15 U-turns—I say that the Government are listening when they U-turn. Would it not be better if they listened first, then they would not have to U-turn?