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RT HON BARONESS ROYALL OF BLAISDON LEADER OF THE OPPOSITION HOUSE OF LORDS

QUEENS SPEECH DEBATE: DAY 4 - OPENING

WEDNESDAY MAY 16, 2012

My Lords, I rise to move the Oppositions amendment to the motion on the Gracious Speech. We on these benches do not do so lightly. We acknowledge it is a serious step. To do so is not unprecedented. But we recognise it is unusual. In fact, the last time it was done was back in 1999, in an amendment against the overall thrust of the policy of the then-Labour government. The mover of that amendment, my Lords, was none other than the noble Lord, Lord Strathclyde. So we are completely confident, my Lords, that the Government benches will strongly support our ability to argue for this amendment today.

Our reason for putting this amendment down today, my Lords, is straightforward. We believe that the Governments is putting the wrong priorities first. Because the Government is putting the wrong people first. Tax cuts for the rich. But hard-working families being asked to pay more. Nurses being laid off. But an expensive and wasteful NHS reorganisation. Police numbers being cut back. But nothing being done to tackle crime. Rather than concentrating on Lords reform, the Government should be concentrating on jobs, on growth, on living standards, on youth unemployment. Consider, my Lords, the economic state of the nation. The economy is in a double-dip recession with no end in sight. Indeed, the latest dismal figures for the building industry suggesting that the estimate of national GDP growth of minus 0.2% in the first quarter was overly optimistic, an underestimate of the true scale of economic decline. The UK, as a direct result of this Governments policies, is set to endure a longer Depression than the country suffered in the 1930s.

Just today, the Bank of England has cut its growth forecast for this year from 1.2 per cent to 0.8 per cent, and warned that the UK would not be unscathed by the storm which is still convulsing the Eurozone which is why we should be part of, and influencing the debate, rather than standing in isolation. But it is still this government, my Lords, not events beyond our shores, which is still responsible for the double-dip recession in which we are mired. My Lords, what is there in the Queens Speech that will do anything to kick-start the economy back into growth? Nothing. Of course there will be Bills on competition policy and on banking, and on a green investment bank and I would be grateful if in his reply, the Minister would confirm that the banking bill is likely to be a carryover Bill. These may be worthwhile measures. We certainly hope they will be. We shall see. But, my Lords, any effect they have on economic performance will be medium to long term. They will make no discernible impact over the next few, crucial, years. There will also be a Bill to reduce burdens on business by repealing unnecessary legislation. Well, my Lords, were all against unnecessary legislation - though it seems to me we have encountered a lot of seriously unnecessary legislation recently: on the National Health Service for example, and on legal aid.

But I leave the verdict on these proposals to none other than the leader writer of that organ of radical thought, the Daily Mail: The promised bonfire of the quangos and red tape has been pathetic, with last weeks Queens Speech paying only lip service to deregulation.

This Government just doesnt get it. They simply dont seem to understand that it is their policies that have mired the economy in recession, and that without a change of course, without active intervention now, the prospects for a return even to the levels of output seen in 2008 are bleak.

My Lords, the coalition is in recession denial.

There is no hope and the [people of our country are desperate for vision, hope and opportunity. But the Government lacks any vision of Britain as to how Britain might return to prosperity.

Consider the oft-stated primary objectives of Government policy: to maintain sterling as a safe haven currency by protecting, at all costs, Britains Triple-A rating with the Ratings Agencies, and so keeping interest rates low to stimulate investment.

There are of course aspects of the recent rise in the pound which are welcome. But the strengthening of sterling does pose a threat to the recovery of industrial exports from Britain and, in the absence of any prospect of growing demand, low interest rates have been accompanied by a collapse in investment. Put simply, my Lords, the Governments economic policies are incoherent.

Combine the damage done by government policy with the fact that almost 90 per cent of the planned cuts in Government expenditure are still to come, creating a headwind loss of 6 per cent of GDP before growth can get going again, and the overall damage their policies are doing to our growth prospects are all to evident. Even the Ratings Agencies are now beginning to wonder whether the UKs rating should be downgraded because of the lack of growth.

Moreover, the human consequences of the Governments economic policies are all too evident. I welcome the fact that unemployment fell today but I note too that the number of people unemployed for more than a year, that is, under the definitions used, the long-term unemployed, rose by 27,000 to 887,00, the worst total since 1996, when the Conservative party was last in power. But it is the Governments policies which have led directly to higher unemployment, so that people lose their dignity and purpose, and may have to claim benefits rather than working, helping to contribute to economic growth, and deficit reduction. But the effect of the double-dip recession is that there are fewer jobs. The number of people working part-time because they cant find a fulltime job is the highest since records began. Where employers have been able to invest, technological investment can mean that even when or if an upturn comes, there may be fewer people needed.

Not that the Government cares. A Downing Street source was quoted yesterday as asking why people should only work part-time. More evidence of the Government being out of touch. They brief newspapers ahead of the Queens Speech about the family-friendly policies within it yet dont understand that people may need to work part-time because they have childcare or other caring responsibilities: let alone that sometimes part-time jobs are the only jobs available. And the effect of the Governments policies has been especially wounding for young people in particular. Even after todays figures, more than one in five young people are unemployed, over a million in all. Just when they should be starting out on their careers, perhaps thinking of settling down and building a family, they are left idle, untrained, demotivated, and devastated. As my noble friend, Baroness Hughes of Stretford, spelt out so well yesterday, this Coalitions policies are creating a wasted generation that should weigh on the consciences of every single member of this Government. But the Queens Speech contains nothing that addresses the problem of the unemployed young. The country as a whole will suffer from this neglect for years to come. And the assault on the poor continues. The Institute for Fiscal Studies has shown that Government measures introduced this April will have a disproportionate impact on the lower half of the income distribution, with the biggest hits being suffered by households with children.

And there is more to come. Only 12 per cent of the proposed cuts have so far been implemented. And we are told that on the advice of his strategy adviser, before he leaves the sinking ship and heads off to California today, that the Prime Minister is considering a further 25billion in welfare cuts. And the much vaunted Budget increase in the personal allowance, that the Coalition partners pretend help the worse off, is also systematically biased against the poor 70 per cent of the benefit will go to those in the top half of the income distribution. All this, and yet there is nothing concrete in the Queens Speech to address the pressing needs of so many in Britain today. And there is worse to come. In its Report to accompany the Budget Statement the Office for Budget Responsibility, the OBR, tells us that the Coalition recession is not just resulting in lost income, lost jobs and blighted lives today, but is blighting Britains future too. The OBR could not be clearer: "our estimates of potential growth do imply a significant and persistent loss of potential output relative to the pre-crisis trend ... Our ... estimates for 2011 imply a potential output loss of around 8 per cent ... This shortfall widens to around 11 per cent by 2016". This is because the sharp fall in investment since the Coalition took power bequeaths the country crumbling infrastructure and under-skilled workers. Yet theres nothing in the Gracious Speech that would stimulate infrastructure investment or enhance the skills base.

However, I must admit that since the Queens Speech the Government has launched a new economic policy to tackle Britains economic problems. Theres only one growth strategy, declared Mr. William Hague, the Foreign Secretary: Work hard! Then Mr. Eric Pickles, the Secretary of State for Communities, chimed in, saying: I think we all should work harder. So to the youngster desperately searching for a job, who has sent of dozens of applications without success, the message is work harder. To the thousands put on short time the message is work harder. To the family struggling in the face of cuts in working tax-credits, the message is work harder. To the small business owner, unable to renew his or her bank funding, and seeing the prospect of securing future orders vanish, the message is work harder. To the building contractors facing 5% falls in demand, and retailers facing a shrinking high street, the message is stop whingeing and work harder. As Mr. Hague put it so precisely, do more with less - thats the 21st century. Well, the Coalition is certainly guaranteeing that we will have less. That will be the legacy of this Government of recession deniers. It is not as if they are even willing to debate new measures to boost demand in the economy.

What is the Governments response to UK manufacturers who want more support, including the creation of an industrial bank ? Why was there nothing in the Queens Speech about infrastructure ? Why no HS2 Bill ? Why, for example is there no debate over creating a National Infrastructure Bank? If Britain can afford to lend 10 billion to the IMF, then it can afford to lend to 10 billion to a national infrastructure bank to attack directly the decline in productive potential that the austerity policies have produced. The Chancellor of the Exchequer said the IMF loan would come from the UK's reserves, that it was not money that would otherwise have been available for public spending, and that it would not add to the national debt. Okay, let us perform the trick again, but this time at home. The recession deniers dismiss the idea. Why is there no debate over the American idea that austerity policies cuts in spending or increases in taxes - should be contingent on the economy reaching predefined goals in terms of growth and/or employment ? Legislation would commit the Government to cutting the deficit when the growth target had been hit. But the recession deniers wont even consider the possibility. My Lords, the Government makes the claim that they inherited a difficult economic situation.

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Well, they entered office two years ago in the face of a major world financial crisis a crisis that had particularly damaging effect on the UK because of the disproportionate importance of the financial services industry in our economy. But they also inherited an economy on the path to recovery, growing at 2 per cent a year, with a deficit plan in place that would have halved the deficit in four years the target agreed by the G20 nations. Now, their policies have forced the economy back into recession. Two years on they have no excuses. Their austerity policies have failed, are failing, and must be abandoned. And they must abandon too, the assault on the poor, on the NHS, on Legal Aid, . that they disguise as necessary pain. And it is not just us, on these benches, or my party generally, that makes this criticism. Even the most measured and careful of professions, the accountants, are making the same points. The Association of Chartered Accountants was quoted yesterday as saying that the Governments child benefit tax is seriously badly engineered. Another accountant said: Nuking large-scale philanthropy at a time when the demands of charities are rising steeply doesnt make sense no doubt why, my Lords, the Queens Speech includes a panic provision to reverse the Budgets impact on charities.

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And a further accountant was quoted as saying: Looking at the Chancellors delivery of the Budget proposals regarding age-related personal allowances, it was painfully obvious to anybody watching that he didnt really know what he was saying. Had he taken the time and the trouble to acquire that understanding, the Granny Tax debacle would not have followed. My Lords, the day after Her Majesty delivered the Gracious Speech, the Daily Telegraph headline read: Queens Speech: why was there no plan for growth? Around the world we see policy makers struggling to develop new ideas to escape austerity and resuscitate growth, the growth that everyone other than the recession deniers knows is the only way to restore the public finances. The only Government not participating in this debate is this one. Their policies lack vision, they lack coherence, and they fail to address the pressing problems of the creating growth and jobs in this country. The Queens Speech illustrates that in just two years their policies are not working and they have no idea what to do next other than to deny the consequences of the recession that they have created. Thats why, my Lords, we have put down this amendment. To focus attention on what this Government is doing. Pursuing policies which arent working. Cuts which are going too far, and too fast. And to focus attention on what this Government should be doing.

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Pursuing policies to promote jobs and growth, to improve living standards, and to cut youth unemployment. My Lords, this is a Government which is incompetent. Unfair. And out of touch. Even elected Conservatives are coming to this conculsion. In Stroud, my Lords, in my glorious county of Gloucestershire, the Conservative chairman of Stroud District Council, Councillor John Hudson, has resigned from the Conservative Group and indeed the Conservative Party over the effect of the Governments policies. Councillor Hudson said: Im a family man with three very young children, just trying to keep a roof over their heads, food on the table. To be brutally honest, and it sounds a bit socialist and Im no socialist, the people who run the Government have no idea how the ordinary working man is coping. My Lords, he is right. Out of touch. Thats the hallmark of this Government. Out of touch. Incompetent. And unfair. The elections are showing that. The polls are showing that. I look forward to this House today showing that. My Lords, I support the amendment. I beg to move.

ENDS