My Lords, back to the economy.
We have been fortunate to date that the UK economy has outperformed expectations. Employment remains at a record high and unemployment, at 3.8%, is at a record low. Perhaps unsurprisingly, though, economic growth has been steady rather than spectacular, albeit better than many other countries in the EU and beyond. Given the Brexit backdrop, steady was okay but now we must raise our expectations and ambitions. While it is now right to borrow to invest in infrastructure, the debt-to-GDP target has been dropped and we are told that fiscal policy will be reviewed if debt interest exceeds 6% of national income. I would welcome the Minister’s comments on whether reducing net debt is still the Government’s target.
It is perhaps worth taking a moment to consider what might have been if people had not wisely returned a Conservative Government last month. Labour planned to meet economic uncertainty with policies that would have led to decline, recession, unemployment and capital flight. I am talking of course about the plans to nationalise swathes of private industry and pass the costs straight back to the taxpayer. Its plans to appropriate 10% of the equity of all public companies would have led to a complete and probably irreversible decline in our culture of enterprise. I heard this on the doorstep in the many constituencies in which I canvassed, so we have a responsibility to produce competent economic plans for the country.
I wish to draw your Lordships’ attention to my disclosed interests in the register at this point, as I would like to talk about the need to support more equity investment, rather than debt.
The market has once again been tempted by so-called “cov-lite” loans, almost to epidemic levels, and banks continue to support excessive levels of corporate debt which will surely yield higher levels of insolvency, non-performing loans and, once again, bad debts on the banks’ balance sheets. I have seen transactions with debt at 10 times profit levels completed by private equity houses. This is dangerous territory. Instead, we should look to do more to support equity investment. At the smaller end of the market, I very much hope that once we are outside the EU we will be able to lift restrictions on the enterprise investment scheme and venture capital trusts to support properly priced equity for growing businesses.
For listed companies, we need to look again at barriers to investing in terms of onerous corporate government requirements, disclosure and regulation. This is particularly true in the area I know, AIM. Among AIM-listed businesses, one finds some of the highest-growth-potential companies in the world. The market is unrivalled anywhere in the world, but it will not stay that way unless we continue to review and reduce regulation to make sure it is attractive for both investors and would-be listed businesses. Sadly, the number of companies on AIM is falling and it is all for the wrong reasons. The cash is out there, and the need exists. The Government must facilitate a market which functions more efficiently.
On a separate matter, I understand the manifesto pledge to “review” entrepreneurs’ relief to make sure it is not abused. However, let us recognise that this has become a foundation of our tax system that sends the clearest message to entrepreneurs who set up their business here that they can keep more of the wealth they create. Entrepreneurs I know have gone through their £10 million limit—good luck to them. Does reducing it send the right encouragement to start another business? I hope this will not be put at risk.
Finally, few issues concern business and citizens alike as much as skills and migration, and Brexit has brought this to the fore. The announcement of the national skills fund is welcome, but let us briefly consider the supply of doctors to the NHS. Can my noble friend the Health Minister confirm that, in 2019, 61% of doctors who took up jobs in the NHS had been trained abroad? These 12,000 people will not be easily replaced by the mere l,500 extra graduates to qualify in the five new medical schools, which will not come into play until 2025. In this country, there are large numbers of willing, able and suitable domestic A-level candidates who are desperate to study medicine in the UK. What urgent steps are planned to train more doctors here?
The circumstances we find ourselves in call for a legislative agenda that projects confidence and certainty, as well as a vision for the future of our economy and our country. This exciting and promising Queen’s Speech delivers a mixture of both, but it is only the beginning. We must make clear that, yes, we will deal with Brexit, but we will also ensure that this country realises the tremendous potential we have for a future outside the EU.
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