Baroness Alexander of Cleveden (Lab)

My Lords, I also welcome this debate. I thank the noble Lord, Lord Bridges, for bringing it and welcome the noble Lord, Lord Pitt-Watson, to his place. As for the tone of the debate, it is inevitable that the conference season, immediately before the Budget, is a time when all parties lay out their stall, although I have been particularly encouraged by the contribution of the noble Lord, Lord Burns, and the contribution that we have just heard from the noble Lord, Lord Hill, about some of the thoughtful longer-term structural issues with which we are contending as a nation. The nation’s fiscal challenges are self-evident, and my party in government faces understandable public anxiety. As the noble Lord, Lord Hill, just noted, the party opposite is also contending with some public scepticism about their record in government. As for what that does to our politics, it brings to the forefront the populists: those who peddle easy solutions to these structural challenges and who are determined to convince the country that the answer to our fiscal challenges is to blow up the system. It is not made any easier by the markets being spooked by a US President who, on social media last week, was telling the Federal Reserve in capital letters to lower the rate and who today promised a “cash bung” to those who voted the right way. That creates a challenge for all of us, but, as the noble Lord, Lord Bridges, recognised, the real rocket fuel for populism and difficult politics is low growth. Low growth is the root of our fiscal pressures. It is a result of the financial crisis, as we have heard, which was exacerbated in Britain by Brexit and then a series of global shocks: the pandemic, the war on our continent, the rising energy prices and the Iran conflict. There is common ground here that on top of those pressures come spending pressures of an ageing population and the need to raise defence spending. All that requires a Government willing to face up to those headwinds, and I believe that is what we are seeing. Our times demand serious responses. We have heard from the noble Viscount, Lord Chandos, about Gordon Brown and I am going to come to that, but I took inspiration this week from the noble Lord, Lord Hague, who wrote: “The old Conservative philosophy … is no longer a convincing governing programme. That is because circumstances have changed. We now face ageing populations, housing scarcity, energy insecurity, technological competition with the US and China, Russian aggression, weak productivity, strained public services and increasingly expensive welfare states”. Those are wise words indeed, and they echo what we have heard in this Chamber today. However, there was also an honest acknowledgement of the new fiscal challenges and an invocation to us all to not be tempted by easy populist solutions. His remedy was growth, particularly innovation and entrepreneurship. Gordon Brown, who wrote 24 hours later in the Financial Times, also urged a focus on growth and innovation, both men arguing for a Budget as an economic event as much as a fiscal one. Encouragingly, the new Chancellor’s inaugural speech on Monday focused on growth and innovation and scaling start-ups in the north. I will put the case for the Government. Despite the headwinds, the Starmer Government delivered the economic stability that we promised. Growth is the best in the G7. I stress that we are cutting the deficit faster than others in any other G7 economy, although I accept that a sustainable long-term path is something we have to find. Productivity is up, wages are up, business investment is rising, with planning delays, judicial reviews and the Green Book all being tackled and young people put back to work. Meanwhile, the Chancellor has reaffirmed the Government’s commitment to fiscal discipline and respect for manifesto commitments, and wisely has made no false promises on tax. I say to the party opposite, we await what the new shadow Chancellor’s prospectus is. The last shadow Chancellor told us that his strategy was not to focus on innovation—indeed, he was proposing cuts to the British Business Bank—but for a rather implausible £23 billion to come from welfare. Welfare spending outside of pensions has hovered around 5% of our national wealth for the last 40 years, so there is scant evidence of where the axe would fall. We have been told that half a million children would be pushed back into poverty by restoring the child benefit cap. That, along with raising VAT on disabled drivers and cutting housing benefits, is not the totality of the solution. Nor is cutting overseas aid. That ship has sailed. We are told asylum hotels will be cut—another ship that has sailed. Legal and illegal immigration are both decisively down. Cutting back on some of the extra 150,000 civil servants employed in the last decade and a half is perhaps wise. My point is that the luxury of opposition should not involve aping the populists, because that is not a governing strategy. We have heard from the noble Lord, Lord Burns, that the way forward may be to look at tax. We have heard from others, including the noble Lord, Lord Hill, that we should perhaps look at the triple lock. There are legitimate differences around where and how spending might be addressed and where the axe should fall, but I simply say in conclusion that we know from the Chancellor that this Budget will be one that sticks to the fiscal rules, restores the fiscal headroom, as it must, and reinforces the Government’s commitment to growth with a 10-year plan to follow which signals where change is coming on devolution, social care and defence. I believe these are the priorities that resonate with the country.