Sheila Noakes – 2022 Speech on the Growth Plan (Baroness Noakes)
The speech made by Sheila Noakes, Baroness Noakes, in the House of Lords on 10 October 2022.
My Lords, we have heard many speeches today from the anti-growth coalition, and doubtless there will be more. Noble Lords do not say that they are against growth, but they support the kind of policies that have failed to produce growth and are unlikely to allow the UK to escape from the deadly combination of slow growth, high inflation and high taxation. The Prime Minister is absolutely right to prioritise getting the UK growing again. She is also right to focus on bold supply-side measures and tax reductions. Those who set their faces against this need to explain how else the UK can achieve a paradigm shift. It will not be found in a magical green economy, as some noble Lords advocate. Net zero is costing money; it is not making money.
The Government’s supply-side plans, such as investment zones, are exciting, and I look forward to significant regulatory reforms which will allow small businesses to concentrate on growth rather than on bureaucracy. Thank goodness we are not shackled by the EU any more.
We also need lower tax rates, and this is nothing to do with the fantasy about trickle-down economics. It is about incentives. The right tax rates are the ones that encourage people to work, which encourage and support entrepreneurs and which attract overseas investors. That is the route to growth. Low rates are not synonymous with low tax yields, as previous Conservative Governments have shown.
The Prime Minister is also right about refusing to look at economic policy through the lens of redistribution. That is an obsession based on the politics of envy, and it does nothing to encourage growth. It is not a coincidence that Labour Governments, with their focus on redistribution, make the kind of policy choices that leave an economic mess when they are pushed out of government.
There is no moral high ground in redistribution. Of course we have a moral duty to support those in need, but the best route to that is a successful economy. On the flip side, it is morally wrong to impoverish everyone by holding back people with potential for success.
I have made many speeches in your Lordships’ House regretting various debt-to-GDP percentages well below the ones now likely, and I stand by the need to get our debt down, but these are not ordinary times, and the key driver of the changes since the last Budget is the huge energy support package, which I am sure that all noble Lords support. We are not an international outlier, with our debt-to-GDP ratio among the bottom of the G7 range. I am, however, glad that my right honourable friend the Chancellor is bringing forward his medium-term fiscal plan to the end of this month. I am sure he will show the doubters that we remain the party of responsible public finances.
Before finishing, I should like to say a few words about the Bank of England, which has let the country down. The Monetary Policy Committee kept monetary conditions too loose for too long and failed correctly to identify recent inflationary trends. Its interest-rate policy created a housing market built on high house prices and unrealistically low interest rates. That policy also sheltered zombie businesses from economic reality. Its Financial Stability Committee, aided and abetted by the Pensions Regulator, failed to spot that pension funds have pursued liability-driven investment strategies which presented a risk to financial stability, and taxpayers have had to stand behind the Bank’s support actions. I fully support Bank of England independence from the Executive, but that independence has to be underpinned by strong and effective accountability, and that is something that Parliament, especially your Lordships’ House, must work on.
