Lord Livermore (Lab)

I am grateful to my noble friend for bringing this to the House’s attention. I absolutely agree with what he said and am happy to confirm the figure that he set out. As he knows and we all know, investment was a particular failure of the previous Government over the last 14 years. When we won the election, private sector investment was the lowest in the G7. Public sector investment was no better and was set to fall again, from 2.5% to 1.7% of GDP. We have increased capital investment by £120 billion over this Parliament, ruling out a return to the austerity of the past. As my noble friend said, that is incredibly important for increasing growth and productivity in the economy. The OBR has estimated that the eventual growth impact of this increase in capital investment will add 1.4% to GDP. Cutting this now and returning to austerity would be the worst thing that we could do for growth and the very definition of short-termism, yet that is precisely what previous Chancellors with previous fiscal rules have done. In the years following the financial crisis, austerity took demand out of the economy when it was most needed, undermining investment in critical infrastructure, weakening productivity and choking off growth. We will not repeat the mistakes of the past.