The UK continues to perform well on a wide variety of measures of competitiveness, including the best measure, which is productivity. The comprehensive spending review set out a number of measures to raise long-term productivity further.
In an increasingly competitive world, with an explosion in globalisation and fierce competition from India and China, was the Minister as dismayed as I was to read the report by the institute of management and performance showing that the UK had slipped from ninth to 20th place in the competitiveness league? He is an intelligent Minister, so what assessment has he made of the Government policies that have contributed most to that downfall?
The hon. Gentleman is certainly right about the ferocity of the worldwide competition that UK companies face. There are a number of different indices, but some are rather volatile, partly because the methodology that is used changes from one year to the next. However, I refer him to the World Bank, which last year and the year before assessed the UK as sixth in the world for ease of doing business, and to the Organisation for Economic Co-operation and Development, which says that we have the lowest barriers to entrepreneurship of all the OECD countries. However, the best measure is productivity, on which we have closed the gap with Germany, as well as having been the only G7 country to keep pace with US productivity growth since 1995. We have done well on competitiveness, and the new stability in the economy over the past 10 years has been the key.
One sector that is competing well in the north-east is the biotechnology sector. Indeed, it is flourishing, with 50 start-ups being established in the past five years. I recently met members of the sector, who told me that they are facing difficulties, in that they need another 1,000 biotechnicians in the next few years. We need to address that issue as far as competitiveness is concerned. What are the Government going to do about it?
I am pleased that my hon. Friend has raised that important subject, because we are establishing a new innovation and growth team to focus on the biotech sector. He is absolutely right about the importance of the sector for the UK economy, particularly as addressing climate change is an increasingly important priority. The Sainsbury review last year made the point that the UK is well placed to do well globally in industries such as biotechnology. That is why we have committed extra resources to science, to train exactly the kind of people that that sector and others need. Given the ferocity of international competition in the biotech and other sectors, we will continue to ensure that the UK does well. Indeed, my right hon. Friend the Secretary of State is leaving immediately after questions to board a plane for India, and we will continue to battle for UK business.
Competitiveness lies at the heart of many of our problems in Dundee over the past 12 months, with 1,600 job losses, including 1,000 in manufacturing, and the work directly transferred almost exclusively to more competitive economies in China and Hungary. I know that the Minister and the Secretary of State are aware of the difficulties in Dundee, so will they meet me and others who are concerned about the Dundee and wider Tayside economy with specific regard to the loss of manufacturing jobs? Will they also meet the local business community, if a request comes from the chamber of commerce to explore what the Government might be able to do in conjunction with the Scottish Executive?
The hon. Gentleman is absolutely right that the fierce international competition that we have been discussing applies nowhere more than in manufacturing. I would urge him to look at how the manufacturing sector as a whole has been performing over recent months. It has been doing well; I draw his attention to the fact that, for example, we made almost twice as many cars in Britain last year than we did 25 years ago. We want to take a fresh look at our manufacturing strategy. We introduced a strategy in 2002 that made a big contribution, not least through the manufacturing advisory service. However, as my right hon. Friend the Secretary of State announced in November, we will review our strategy between now and the summer. I would welcome the opportunity to meet the hon. Gentleman and representatives of the business community in his area to discuss such issues.
My right hon. Friend will be aware that one of the main elements in competition is the price of energy. He will also be aware that, last week, The Sunday Times reported that six energy companies were meeting to conspire to ensure high energy prices. What action will he take to ensure that British competitiveness is protected from the profiteering of the energy companies?
My hon. Friend is absolutely right about the importance of energy prices for competitiveness in the UK. He will be aware of the initiative taken by my right hon. Friend the Chancellor, and he will also know that Ofgem is looking closely at this issue. It is the case that the competitive market framework for energy in the UK has delivered energy prices that are among the lowest in Europe.
The Minister talks about the importance of improving competitiveness, not least among small companies. While he has been talking, however, the Chancellor has raised those companies’ corporation tax rates and increased their business rates, and he is now planning a £900 million tax hike on their capital gains. How can small firms remain competitive when the Chancellor is taxing them to death? Is the Minister’s Department going to stand up for those firms or simply let the Chancellor walk all over them?
I simply draw the hon. Gentleman’s attention to the fact that we have more small businesses in the UK today than we have ever had before. There are now 4.5 million of them, and there has been a 20 per cent. increase in the number of companies registered for VAT. I believe that the Chancellor is absolutely right to seek the simplification of capital gains tax. The combination of indexation and tapered relief had created a complex system, and he has proposed changes to address that. He is also listening to representations from small business organisations and he plans to make additional announcements.