I beg to move,
That this House has considered the matter of emerging economies.
I am delighted to have this first opportunity to speak from the Government Benches, and even more delighted to serve for the first time under your chairmanship, Madam Deputy Speaker. I trust that the high-preference vote that I gave you in the ballot will mean that you will look favourably on me if I go astray.
I did not doubt that for one moment.
I welcome this opportunity to debate the new Government’s policy on the emerging economies. Strengthening the UK’s relations with the fastest-growing areas of the world economy is one of the key foreign policy objectives of the coalition programme for the next five years. That was explicitly stated by my right hon. Friend the Foreign Secretary when he opened the foreign affairs debate on the Queen’s Speech and observed that
“we live in a world where economic might is shifting to the emerging economies”—[Official Report, 26 May 2010; Vol. 510, c. 174.]
In the House, we all recognise the ongoing importance of Europe and north America to our foreign policy goals, but we must also be clear about where new opportunities increasingly lie. That means elevating our links with the emerging economies and expanding powers in other parts of the world as part of a distinctive British foreign policy. That is why, only a few days after the Government were formed, the Foreign Secretary and I were meeting counterparts from Mexico, Chile and several other emerging powers at the EU-Latin America-Caribbean summit in Madrid. The following week I also held talks with Foreign Ministers from Vietnam and Singapore, among others, at the EU-south-east Asia summit, which was also held in Madrid. I give an undertaking that I will be making our relations with emerging economies my biggest priority, with visits to several key partners, in the coming months.
Why is the issue so important? We live in a time of fundamental change, both economic and political. The last decade of the previous century saw a shift from the bipolar, cold war world that we had all become familiar with. The first decade of this century has seen another shift, just as dramatic, from a G8 world to a G20 world. Global economic decisions were once made by a grouping of European and north American nations in conjunction with Japan, but today such decisions are increasingly taking place within the G20—not only a much bigger group, but one that represents a much broader range of countries from every continent of the world. The UK strongly supports the G20, which reflects the economic realities of the 21st century and recognises the rise in the strength of powers such as China, India and Brazil. The next meeting of the G20, in Toronto a few days from now, will be an important opportunity to take this work forward.
It is impossible to get through one of these discussions without a barrage of fascinating statistics that people can take home, and I have a few to run past colleagues on both sides of the House. It is important to remind ourselves of how dramatic the change that we have lived through in recent years has been. In the past decade, China’s economic growth has averaged 9.9% a year, while the UK’s has averaged just 1.7% over the same period. India’s growth over the same period has averaged 7%. In 1980, China’s proportion of world GDP was just 2.6%; by last year, that had risen to 8.5%. According to some predictions, China’s economy may well equal that of the US as early as 2027, and by 2050 the Indian economy may well be bigger than the five largest European economies added together.
My hon. Friend talks about the statistics for China. It is important to realise how much of that growth is needed just for its economy to stand still. If growth falls below about 8%, then unemployment starts to rise. When we look at the Chinese economy from outside, we have to understand what a challenge it faces.
My hon. Friend makes a very good point. Huge levels of growth, by European standards, are necessary to take the Chinese economy forward and to realise the aspirations of an enormous population, hundreds of millions of whom still live in absolute, as well as relative, poverty.
It is easy to characterise these debates as being about China, India, Brazil and other countries with large populations, but there are also regions, particularly in Asia, that are developing at a fast rate. The Association of Southeast Asian Nations countries—the south-east Asian bloc—have, between them, a larger population than that of the European Union. Over the past decade, they have had an annual growth rate of 5.7%— not as high that of as China, but still very high by European standards, albeit having started from a much lower base. If we think of groups of countries that are increasingly willing and enthusiastic about the prospect of working together as single blocs in that way, their relevance will be obviously apparent to everyone in this House.
My hon. Friend mentions China and the huge steps forward that it has taken in its growing economy. Its gross domestic product now stands at about 9.5% or 9.6%—growth that compares quite favourably with ours. Is it therefore right that we continue to provide that country with Department for International Development funds to the tune of—I may stand corrected—about £30 million a year?
An interesting evolution in the power balance in the world is taking place, with these huge emerging countries. Although China’s GDP is slightly greater than ours, it is worth reminding ourselves that their population is 25 times higher, so their GDP per capita is very much smaller than ours. Hundreds of millions of people in China have yet to benefit from the huge advances that that country has made over the past decade or two. At the moment, we have this slightly strange situation whereby many of the emerging economies are the new powerhouses and yet still have millions of people living in absolute poverty. I think that there will be an evolutionary period in which they are apparently two slightly contradictory things simultaneously: they will require aid and assistance while becoming increasingly significant economic and political players. Over time, that balance needs to be reflected in the contributions that we make in aid.
I welcome the hon. Gentleman to his post; I think that he will make a very fine Minister.
Developing the argument somewhat, in the next 20 years or so we will see growth in the middle classes across the emerging economies the like of which we have never seen before, with huge untapped potential that British companies can access in selling goods and services to them. What steps will the Government take to ensure that British companies can access those future market opportunities?
What attitude does the hon. Gentleman take to emerging economies in what the European Union calls its near abroad? It seems to be keen to devote a portion of its aid—to which, of course, we donate royally—to those countries, whereas Britain’s philosophy, through DFID, has been that our aid should go to countries that are impoverished.
I do not want this debate to be just about aid, because the emerging economies are important in many different ways, not only as recipients of our largesse. Let me proceed with some of the points I was going to make, not least those relevant to the comments of the hon. Member for Hartlepool (Mr Wright). If I do not cover them to the satisfaction of the hon. Member for South West Wiltshire (Dr Murrison) and others, perhaps we can return to them later.
There has been a truly transformational shift in economic and political power. That is a change that will have enormous consequences for Britain and about which we cannot be complacent. Although it is a challenge that may, in some ways, pose difficulties for us, it is also a great opportunity. It is worth saying—this is relevant to the point about aid—that about half a billion more people have been taken out of poverty as a result of these changes taking place around the globe: a figure that could not possibly ever have been achieved through international aid and generous donations from our country. It is a phenomenon that has transformed the life chances and opportunities of millions of people who previously lived in a state of destitution.
The World Bank has estimated that the global middle class is likely to grow from 430 million people in 1999 to more than 1 billion people in 2030, and most of that growth will be in the emerging market countries. That increase in middle class consumers is equal to the total population of the European Union, in the course of just three decades. If we are to see Britain’s economy growing strongly again, which must happen if we are to tackle the UK’s deficit and raise the prosperity of our own citizens, we must tap into these vast new markets.
We have huge economic advantages in this country. Britain is home to many of the leading global companies in the energy, retail, financial and communications spheres. We are an outward-looking and open country ranked by The Economist as the best place in Europe to do business. London is a global city and Britain is increasingly a global hub. Ours is a multicultural nation with connections across the world. We will use those connections to build and intensify our commercial, cultural and educational links. The English language is the most widely spoken in the world. It is the common language not only of international business but of science, academic research and the digital world. There are today more English language students in China than there are people in the United Kingdom, and English is the common tongue for business in India. This can only be good news for British businesses wanting to tap into these giant markets.
Following the intervention by the hon. Member for Hartlepool (Mr Wright), will the Minister join me in paying tribute to people from these countries—not only those from India, who have historically been very proactive, but those from the Chinese public and private sector, and from Brazil and elsewhere—who are working hard in this country to ensure that we understand not only the opportunities for them, but the opportunities for us in their countries, in a way that they were not even beginning to do 10 years ago?
I strongly agree with my hon. Friend. It is notable that, in many international companies and other organisations in which the management and the work force are drawn from right around the world, talent has become a global phenomenon. Many talented Chinese, Indian, Brazilian and other people work in London and throughout the United Kingdom and contribute to companies with British leadership and to the prosperity of our country.
My hon. Friend mentions the importance of the movement of people with regard to China. Does he know that France and Germany attract around 500,000 visitors every year? I am afraid that we compare badly, attracting only 100,000. That is because it is far simpler for the Chinese to apply for the Schengen visa, which gives them much greater access to Europe. They are deterred from coming here because of the complexities and the distance that they must travel to get a visa. Would my hon. Friend consider Schengen plus, which would allow a bolt-on to the Schengen visa system to allow Chinese visitors to come to the UK?
That is a matter that I may wish to bring to the attention of Home Office colleagues. I am sure that they will take my hon. Friend’s wider point seriously, and I want to deal with it in the remainder of my speech. It relates to the importance of not just Government-to-Government or even business-to-business relations, but of engaging on a person-to-person basis with many countries.
The economic shifts that we are witnessing are no less significant politically. I have already said that after the second world war we had a political settlement, which was essentially the cold war settlement based on Europe and north America. That is emphatically no longer the case. Of course, we must be careful about getting ahead of ourselves. The United States is still the dominant power in the world and likely to remain so for a considerable time. Gross domestic product per capita in the EU is still vastly higher than in China or India. However, the direction of travel is obvious.
Britain can and should be confident in our ability to succeed in the new order. We remain a respected global player. We are at the core of international decision making: we are a major player in the EU, the Commonwealth, the United Nations and NATO. We have a network of diplomatic and other missions that reaches into every corner of the globe, while maintaining the ability to exercise hard power when necessary.
Along with Britain's economic and political assets, our so-called soft power can also play an important role in ensuring that we retain our influence and prosperity in future. We are globally influential in subjects ranging from architecture to science and popular culture. We have global sporting connections, including the world’s most followed football league. The UK will be at the centre of world sport when the Olympics come to London in 2012 and the Commonwealth games to Glasgow in 2014. We have a unique asset in the BBC World Service, while the British Council connects millions across the globe to Britain’s culture and education.
The changing world order should not be seen just in terms of a GDP league table. As important, if we are to win the debate on important matters such as climate change and human rights, is our ability to lead on ideas. Just as we must lead in that competition of ideas, we must likewise provide leadership in the debate on fundamental values.
I have spoken in meetings with Foreign Ministers from around the world about not only our economic interests but the balance between the role of the state and the individual, and argued that economic growth was not the only measure of human well-being, but that civil rights were central, too.
I thank the Minister for giving way; he is being most generous. Before he moves from economic power to soft power, let me say that resource constraints are an inherent risk in the movement eastwards of the world’s economy. I am concerned that the 21st-century equivalent of the scramble for Africa, in which emerging economies lock in trade deals with African nations to get commodities such as iron ore and oil, will compromise our ability to compete as a nation. What steps will the British Government take to ensure that British companies have access to hard-pressed resources and commodities in future?
The hon. Gentleman makes another excellent point, about how we ensure that there is a global architecture of decision making and responsibility, which means that resource allocation and other political decisions are made in a framework of law and consensus. That is our foreign policy objective and why our foreign policy has to evolve to match reality. We cannot sit, King Canute-like, and try to cling on to the G8 and European-north American-centric architecture. We need a decision-making framework, which reflects the change in the status of different countries and allows us to make decisions in concert with them as we proceed with economic growth and political decision making in the decades ahead.
Much of the analysis that I have shared with the House is widely accepted if under-appreciated by some in our national discussion. We must now ask how we respond to that and what the consequences are for our policy making. Let me suggest three overlapping subjects as a framework for our debate in the next hour and a half or so. First and perhaps most important, we must make the case—and win the argument—for keeping global markets open to foreign trade and investment. A resurgence of protectionism in any of the markets about which I have spoken would be a far greater risk to the UK economy than the rise of those markets. We must also have a dynamic, outward-looking economy—this point was made by my hon. Friend the Member for Bermondsey and Old Southward (Simon Hughes)—that is not burdened by unsustainable levels of Government debt.
Secondly, we will significantly increase our cross-Whitehall effort to engage not only with the obvious, big emerging economies, but with the medium-sized emerging economies. We must also build on our solid co-operation with Japan, which remains the second-largest economy in the world. All of that will mean working with business to reap the opportunities in countries and regions whose cultures and languages may be less familiar to many of us, and getting the official dialogue right, including through more structured relationships at Government level with many such countries.
Thirdly, we must continue to invest in our political as well as our economic effort. The rise of emerging economies will make the world a more prosperous place, but it will also make it more complicated. A more multilateral world will require us to engage on key security issues with a wider cast of global actors, which will put an even higher premium on ensuring that we are all bound by the same international rules-based system. Upholding that will be the key task of our diplomacy in its widest sense in the years ahead.
That places a heavy burden of responsibility on the Foreign and Commonwealth Office. One FCO priority will therefore be to look at how we can best use our diplomatic network and shape our resources to ensure that we have the capability to make the most of the new world that is being brought about by the emerging economies. We are already being innovative in our representation overseas. I do not claim that such innovation started magically a month ago—it has been undertaken for a period of time—but I hope that we will accelerate it and give it extra momentum. We are using regional networks of experts and so-called laptop diplomats, among other innovative measures. In a difficult resource climate, we must ensure that our language training, including in Mandarin, Spanish and Arabic, is focused where we need it most. We will look at how to resource stronger UK engagement with the Governments, peoples and societies of emerging economies in the forthcoming spending round.
If we are to retain our influence in the new global, economic and political world, we will need to change and adapt. Our diplomatic effort will be focused where it is needed and adapted to the new realities, but our efforts must go beyond discussions between diplomats in capital cities. We must inspire business and community leaders throughout Britain to build relationships with their counterparts in the emerging powers. That task is not only for the FCO and the Government: I am emphatic in my view that that task is for our country as a whole and all the people who live in it. Everybody in our country needs to step back for a moment and ask themselves, “Are we able to think and act globally in a way that reflects the new realities of the world? Are we seeking better to understand and engage with the emerging global players? How does the UK media cover the rest of the world? How does our educational curriculum meet our global needs? How well can our major businesses reach out beyond our borders to the markets of the future?” The Government should and will provide leadership, but our national outlook needs to adjust to the rapidly changing global landscape.
That is all very well, but what do the Government plan to do to combine Government offices abroad? In particular, does the Minister agree that it makes absolutely no sense to have Department for International Development offices and FCO offices in the same capital? Surely to goodness if we are to have the joint working to which he refers, we need co-location.
My hon. Friend makes an excellent point that echoes one made by my right hon. Friend the Foreign Secretary and others. How can we best concentrate our resource in countries and avoid duplicating Government functions or Departments in the same location? There is a wider point: although it is important for the FCO to give intellectual leadership and momentum to our policy making overseas, our policy is not simply about relationships between the FCO and other Foreign Ministries. Rather, it is about Britain as a whole visiting China, India or Brazil, which includes the Department for Business, Innovation and Skills, the Department of Energy and Climate Change and right across the board. We should not see emerging markets policy as a bolt-on, extra function of the Government that is divorced from our other deliberations in the House. Rather, it is a key function of the Government. It is led by the FCO, but it involves many Departments.
To take up the point that my hon. Friend has just made, in some countries our engagement is a development relationship, but we have both a high commissioner and a head of DFID. Are the Government prepared to consider whether those roles could usefully be combined? In some cases high commissioners or ambassadors have told me that they are only there to wave the flag because the only people that the host nation wants to talk to are those from DFID. Would it not be sensible to combine the two?
I am grateful for my right hon. Friend’s expertise as the Chairman of the Select Committee. It is important that when we engage with countries, especially those that are substantial recipients of British aid, we have a joined-up approach in which the aid is not divorced from the wider discussions that we have with them. I do not mean that the aid should come with strings attached, but it is bizarre—when resources are stretched—for us to have competing Government offices in one capital, potentially with competing agendas, when there is scope for the money to be spent more efficiently and effectively.
It is possible to overstate the existing scale of the change. Britain’s GDP per capita remains high, our absolute prosperity—rather than our relative prosperity—remains high, and our economic, political and cultural leadership in the world remains very strong. But as a country and even as a continent—not just as a Government or Parliament—we cannot afford to be complacent. The world is changing rapidly. We need to engage constructively and energetically in that process of change so that we can shape it to ensure that Britain benefits as much as the new emerging economies from the opportunities that their rise undoubtedly offers. This task will be central to our future prosperity in the decades to come. We are already embarking on turning that goal into action.
Thank you, Madam Deputy Speaker. It is a great delight to see you in the Chair. I shall not reveal how I voted, but I did nominate you. This is the dawn of a new parliamentary era. [Hon. Members: “Oh!”] I apologise to the House for the quality of that remark.
I also welcome the Minister to his new responsibilities. He will be backed by a fine team of people, some of whom used to work to me. The quality of the advice provided in the Foreign Office is second to none, not only in relation to other Departments in this country but in relation to other foreign departments in other countries. I hope that the Minister lives up to them.
I have been looking at the Minister’s campaign website, which includes an interesting list of endorsements. Indeed, they have something of a theme. There is one from Janet, who lives in Taunton. She says:
“Jeremy is clearly the best candidate. He will be supported by former Conservative voters.”
Jez, also from Taunton, says:
“I’m afraid the idea of Mark Formosa”,
who sounds more like a plant than an animal—I mean, candidate—
“as an MP terrifies me! He is worryingly extreme.”
And Lavinia, from Wiveliscombe, says:
“Why is Mark Formosa so negative and nasty? I’m a natural Tory but I’m not supporting him!”
It is clear that throughout the election campaign the Minister had his eye on a Conservative-Liberal Democrat coalition. It was seated in his mind. It is little wonder that, with him in his new job, the Tory Back Benches have as many noses out of joint as the England rugby team—
No, we tend to specialise in ears.
The Minister is the first Liberal in the Foreign Office for some 60 years, so I did a little research into previous Liberal Ministers there. Captain Neil Primrose, who was one of the last four, lasted less than five months—
Captain Neil Primrose, who took a strong interest in emerging economies at the time, and particularly Turkey, which we shall come to, unfortunately lasted only five months in government, because the Government collapsed, and his daughter ended up marrying a Tory. Cecil Harmsworth, who also took a strong interest in emerging economies, is someone whose family gave us the Daily Mail—we often forget that it was the Liberals who did that. The Marquis of Reading had to resign for insider dealing after just three months in the job, while John Simon ended up virtually a Tory, so I look forward to observing the Minister’s career.
There can be little doubt that the shape of the world’s economy is changing, as the Minister said, and it is changing at a pace that few would have anticipated just a decade ago. Over the past 10 years, the BRIC countries, as they are often referred to—Brazil, Russia, India and China—have alone contributed more than a third of world GDP growth, growing from one sixth of the world economy to almost a quarter. There is also a growing confidence in many of those countries about their economic and cultural future, and they want a far greater impact on the world stage. Indeed, they are often impatient with progress at the United Nations and elsewhere. Thus, in April, Brazil saw its lowest unemployment figures since 2001, and it confidently expects growth to reach 6% this year, and this from a country that in 2002 had to secure an IMF loan—the largest IMF loan ever at the time—of $30.4 billion. India’s growth rate is expected to be 8.6%, while China has been averaging at 10% not just for the 10 years to which the Minister referred, but for the past 30 years.
Nothing, however, is certain—we only have to look at a little bit of history to see that. In 1913, Argentina was the 10th largest economy in the world and enjoyed significant advantages over many others: great natural resources, a well educated population and strong international ties to the United States of America, Spain, Italy and the United Kingdom. Today, however, Argentina languishes. Why? In part, I believe, because of the self-inflicted political turbulence that it has experienced; in part, because of—[Interruption.] I do not think that it was socialism—if anything, it was national socialism, which was rather closer to Tory philosophy in those days. In part, the reason was that Argentina failed to deal with inequality, but it was also—and primarily—an economic nationalism that created unnecessary barriers to trade. I would say to Argentina today that economic nationalism will do it no favours at all in the years to come either.
Does the hon. Gentleman agree that one of the reasons why Argentina had all those problems was that when it defaulted on its debt a few years ago, it had both the largest budget deficit and the largest debt per capita on its continent? Does he see any parallels between that situation and the one that his Government left behind after 13 years of power?
Nice try, but we will come a little later to the problems that I see with the Conservative-Lib Dem Government’s approach to growth and why I think this debate points to some of the problems that we will see over the coming years. But no, I think that the problems in Argentina stretch back across 100 years. The Argentines failed to take advantage of their many strengths and they played their politics extremely badly. My fear is that they are doing exactly the same thing today.
The task for all those countries is to ensure their growth, while the task for us is to ensure that we match their performance pound for pound, real for real. It is worth bearing in mind how significant those economies are to the UK. To all intents and purposes, we are Russia’s banker, while we are Brazil’s seventh trading partner in terms of exports and India’s fourth. The emerging economies have become increasingly dependent on each other in recent years; thus China has now overtaken the USA as Brazil’s major partner. Our position in relation to the emerging economies should be to seek to do three things: first, build UK growth; secondly, fight bilaterally and on an international level for free and fair trade, rather than protectionist measures, which is something to which the Minister referred; and thirdly, constantly underline the importance of the rule of law and human rights.
Let me start with growth. I simply do not believe that it is possible for the UK to achieve a greater share of the markets, or a stronger role in the world, without a strategy for UK economic growth. The Foreign Secretary can huff and puff as much as he wants, but if the Chancellor is focusing only on cutting the deficit—whether through cutting expenditure or increasing taxes—and has no strategy for growth, we will have nothing to sell abroad, we shall lose out economically, and the Foreign Secretary will simply be left to manage the decline of our reputation abroad.
Does the hon. Gentleman agree that, over the past 13 years—and probably even over the past 25—the products that we sell abroad have diminished because of Government policy? We now have very little to sell, apart from in the financial markets, because most of our manufacturing has moved to the emerging economies.
Strictly speaking, that is not statistically right. Yes, when Burberry tried to close its factory in my constituency, I fought hard to ensure that the business would not be taken to India or China. I do not think that most people would want to buy a high-quality Burberry product that purported to be British if it had not been made in the UK. Unfortunately, we lost that battle. However, we export a lot more than just financial services. For example, a lot of our exports relate to extractive mineral industries, which I shall come to in a moment—[Interruption.] I sense that Hartlepool is springing to its feet.
I welcome my hon. Friend to the Opposition Benches, and I hope that he will apologise for the appalling nature of the gags. May I first take up the point made by the hon. Member for Burnley (Gordon Birtwistle)? I disagree with him, because the UK is still the sixth largest manufacturing nation on earth. We have moved along the value chain, in that we now provide high value-added manufacturing, such as that produced in Hartlepool by Heerema and by JDR Cable Systems. May I also press my hon. Friend on a point that he was starting to make? A UK growth strategy is sadly lacking in the new Government. The prospects for growth in relation to supporting and nurturing higher education and to higher value-added manufacturing are lacking. What does he think the Government could do to remedy that?
I am a bit distressed that my hon. Friend has just welcomed me to the Opposition Benches, but there it is. We came into the House at roughly the same time, and I will take that matter up with him later. He also made a good point about a growth strategy, which I will come to in a moment. First, I will give way to the slightly older Member.
Just refer to me as the old lag. On a detailed point, the Crombie overcoat company in my constituency went out of business—or at least contracted its business—because it had a major contract with the KGB, not because it had been successful in the free market. The point that the hon. Gentleman is making about a growth strategy is all very well—yes, we should have one—but can he divorce that from spending even more Government money and getting ourselves further into debt? Can he explain how we can have a growth strategy that does not involve spending more taxpayers’ money that we cannot afford?
Sorry—the honourable old lag. He is probably extremely right honourable, learned and gallant as well, for all I know.
We need to focus on three elements of a growth strategy in relation to the emerging economies. First, we need active investment in the industries of the future. We have only to take a cursory look at our exports to many of those countries to see that a large part of our engagement relates to old, extremely well established industries, notwithstanding the significant advances that have taken place in some others. For example, it is a simple fact that petrocarbons form the backbone of our world trade with many of the emerging economies. In India, pearls and rough diamonds are key exports, and, in many places, extractive industries dominate our balance of trade. In recent years, we have added telecoms to the list, as well as the pharmaceutical and IT industries, but the UK’s future has to spread further, especially into the low-carbon, green industries. I do not believe that that will happen without some degree of Government investment, however, and if we are too slow, others will gain first player advantage.
I presume that a Minister will be winding up the debate?
I am grateful for that. The Minister who does so may not be able to answer all my questions, but I hope that he will write to me about any that he cannot.
What support will the Government give to British industry to compete in these green markets? The budget for UK Trade & Investment in 2008-09 was £316 million, with which it assisted 21,800 businesses that recorded an additional £3.6 billion of profit, which is equivalent to a £16 benefit for every £1 spent by UKTI. Will that budget rise or fall next year, and by how much?
The hon. Gentleman talks about the importance of green technology, but I am reminded of a fantastic company on the Isle of Wight—not far from my Bournemouth constituency—that made blades for wind turbines. For some reason, they could not be used in the UK, but they were manufactured to be used in the United States. That company closed down because it did not receive the support it needed from the previous Government. Does he now regret that decision?
Yes, of course I do—and I am looking forward to welcoming the hon. Gentleman to the Opposition Benches as well. Whether he will have to transfer his allegiance or we will have to change the Government in order to achieve that is another matter, but he makes a very fair point. I would, however, gently say to him that of course I accept that there will have to be cuts in the coming months and years, but I also believe that we must prioritise those industries where we can make the most dramatic difference and where we can maximise our chances of succeeding in the emerging economies.
The second thing we need to do is to learn some lessons about modern foreign languages. The Minister of State was rather complacent about the facts that India now uses English as its business language and many people in China learn English, rather than French as in the past. Unless we have a cadre of young people, and not only those working in the Foreign Office—[Interruption.] I think “cadre” is now a sufficiently anglicised word to be allowed in a debate and not to be out of order. Unless we have a sufficient number of people who speak modern foreign languages, and not just the useless modern foreign languages such as French, but the—[Interruption.] I have said that to the French; I think they realise there are problems.
Is the hon. Gentleman aware that not only has he just insulted the French, but he has also insulted a large swathe of the Maghreb, which has not been mentioned at all in the debate so far? That is a bit of a pity, in particular because one of our major trading partners in north Africa is, of course, Morocco, where the diplomatic language is French.
Yes, but I think that one of the things that has changed over the past 30 or 40 years is that whereas French used to be the most useful language because it was, for the most part, the diplomatic language around the world, that is certainly no longer the case. The most useful languages to speak at present are Mandarin, and Spanish and Portuguese because of Latin America, and we need to focus on Arabic as well.
My biggest concern is that the effortless British superiority with which we stride around the economic world means that all too often we are the only country that presents business people in other countries who do not speak even the rudiments of a foreign language. That is a big problem. [Interruption.] The Minister of State refers to the Deputy Prime Minister, and it is a delight that he speaks so many foreign languages, but I just gently say that it is important that the Government focus on this.
We did not get it right, and ever fewer people in the UK are learning foreign languages. My experience in the Foreign Office was that the number of people who spoke foreign languages has diminished, and the number who can confidently speak them is pretty low.
I am grateful to the hon. Gentleman for giving way as I wish to find a point of consensus with him. It is important not only that the Foreign Office trains to a high standard a sufficient number of diplomats who can engage with the emerging economies in the language spoken in each of those countries, but that we appreciate the wider challenge to our country, which I posed, of the educational curriculum and how well suited we are, not only within the Foreign Office or the Government, but as a nation, to deal with the emerging changes in the world.
The third thing that we need to do to enhance UK growth relates to students from emerging economies. In all, some 48,000 overseas students study in the UK and they are vital to the UK’s universities, as they bring in fees, ideas and an international perspective. Ever since Wong Fun graduated as a doctor from Edinburgh in 1855 there has been a large number of Chinese students in the UK. Their number has grown significantly in recent years, with nearly 5,000 starting new courses in 2008, along with 1,581 students from India.
The Conservatives were direct about this issue during the general election campaign, saying that
“our student visa system has become the biggest weakness in our border controls.”
They said that they would
“insist foreign students…pay a bond in order to study in this country, to be repaid after the student has left the country at the end of their studies”
“ensure foreign students can prove that they have the financial means to support themselves in the UK”.
By contrast, I note that the coalition agreement simply says that the Government will introduce new measures
“to minimise abuse of the immigration system, for example via student routes”.
I hope that the Minister will be able to tell us precisely what the Government’s intentions are. Will a bond be payable? Does he expect that this will cut or increase the number of students coming to the UK from emerging economies? Has the Foreign Office been consulted on this process? In particular, what plans does he have for the Chevening scholarships? The Chevening website already says that this year’s places cannot yet be confirmed, which means that people who have been offered places do not know whether they will be coming. When will the review be completed? How many students will be studying this year and for the next three years, and from which countries will they come?
The point about visas is important. Bournemouth has a number of English language schools, which attract people from places such as China. The Labour Government introduced new guidelines so that people had to have a certain standard of English before they could even come to this country, thus defeating the purpose of their coming here to learn English in the first place.
I am only asking what the Government’s policy is—that is the job of the Opposition. The Labour Government did some things to ensure that significant loopholes that were being used to circumvent the proper immigration process were tackled. In particular, we decided to restrict the number of places available in northern India because there had been a sudden spike in the number of applications. Of course one has to be rational about this. I just want to know what conciliation has taken place between the Conservative and Liberal Democrat positions on this issue since the election.
In each of the countries that we are talking about there remain significant barriers to free and fair trade. In some instances we need to be sensitive to the political and cultural realities of those nations. For example, Mexico’s constitution forbids the ownership of that which lies under the earth by anyone other than Mexico. I hope that the Minister will press the Mexican Government for further reform of the energy law, so that British companies can help Mexico to realise its resources—I hope that he will write to me on that point. Likewise, we need to restart the Doha round with an enhanced offer from the European Union on the common agricultural policy, especially now that the EU-Latin America banana war is over.
In that regard, an additional issue needs to be tackled: the casual approach in several countries towards intellectual property. Every report on intellectual property has suggested that those countries that most carefully delineate and protect the fruits of human intelligence are those that stand the best chance of prosperity. That becomes a virtuous circle, because people invest in ideas, commercialise them and then reinvest the profits in education and research. I hope that the Government will use the international institutions to push through a stronger global understanding of intellectual property issues—particularly in relation to China—be it in respect of the work of a musician or a playwright, an engineer or a scientist.
One other barrier to free and fair trade is corruption. Many of these emerging economies still languish a long way down the list of openness and transparency, with South Africa 55th, Turkey 61st, Brazil 75th, China 79th, India 84th, Mexico 89th and Russia a shocking 146th on Transparency International’s corruption perceptions index, which I think is much respected by all.
As I have said, we need to use bilateral and multilateral levers to try to change all that. The most important of those is the European Union. For too long, Europe has allowed itself to be run ragged by the likes of Russia, China and India. If European countries are to flourish economically, we have to realise that we need greater unity based on self-discipline in our approach to those growing economies. Likewise, we need a common approach to Turkey—a country that is all too often left off the list of emerging economies, despite already being the 16th-largest economy in the world, and on the up. It must be in the UK’s interest for the Bosphorus tiger eventually to join the European Union.
On human rights and the rule of law, it is always tempting for a British company or Government to sideline human rights abuses when trying to secure an important new contract. However, that is always a mistake, as tacit acceptance of the status quo in terms of unscrupulous business practices all too often rebounds on the careless investor. In many of the countries that we are talking about, the human rights record is truly appalling. Russia, for example, is, economically, virtually a monogorod, or a town built on a single industry—petrocarbons. As the petrocarbons industry involves massive investment projects with potentially high returns and equally high risks, the Russian Government take a very direct interest in every aspect of it, but anxiety about excessive state intervention, about state appropriation of private assets and about corruption at the highest level has made it difficult for British companies to make the long-term investment needed to keep pipes running. When one adds to that the scandalous oppression of the media, the murder of journalists, the imprisonment of dissidents and the regular use of torture by the police and in prisons, it is a pretty heavy indictment of the Russian leadership. I am delighted that President Medvedev has made some excellent comments about tackling corruption, but so far that is just rhetoric, and very similar rhetoric to that used by Mr Putin when he was President.
I could make similar comments about China, which executes more people than the whole of the rest of the world and where there is the ongoing disgrace that is the treatment of the people of Tibet. In Brazil and Mexico, notwithstanding the efforts of Presidents Lula and Calderon, drug-related violence is endemic, especially in Mexico, torture is commonplace, and the rights of indigenous people are not fully recognised. In India, too, there have been unprovoked attacks on minorities—in Orissa state against Christians, and in Assam and Andhra Pradesh against Muslims. In that context, I ask the Minister which human rights projects in each of the emerging economies he proposes to continue and which he will cut. Will the project on the rights of children in the legal system in Brazil survive? Will the training of judges aimed at reducing the use of the death penalty in China survive? Will the civil society project in Chechnya continue? Or will all the human rights work in India, Russia, China and Brazil that is sponsored by the Foreign and Commonwealth Office be cut?
There is a tendency for Foreign Office Ministers—I confess that I did this myself—to declare whenever they arrive anywhere that they want to improve relations with that country. After all, it is only polite, and that is normally the aim of the visit. I am sure that we all want to improve trade with the emerging economies, but that requires a consistent approach to free and fair trade, a determination to assist British businesses abroad and a commitment to the British values of the rule of law and human rights. Above all, it requires a strategy for UK growth, but through all the hype, spin and glorious guff that we have heard from the new Government, the one thing we have not yet had is any sign of a strategy for growth.
Thank you, Madam Deputy Speaker, for allowing me to contribute to this debate and to make my maiden speech.
I have worked in many parts of the world, including in many emerging economies, and I have seen the growing asymmetry in how business is done in parts of the world that are growing at a faster rate than ours and with whom we will need to do business if we are to maintain our global economic position. That is a real challenge for us all and I will be keen to contribute to further debates on the need for stronger relationships between the United Kingdom and those emerging economies, particularly those in the area of central Asia that I think is not well understood and with which our relationships are not as deep as they should be. However, my priority in the House, for as long as the people of South Thanet so choose, is to serve them and to ensure that the House and this Government support their needs and address their concerns.
I pay tribute to my predecessor, Dr Ladyman. He was an exceptionally committed Member of Parliament for South Thanet for 13 years, and held two distinguished posts in Transport and Health. On a personal note, he was extremely courteous and generous throughout our four-year campaigning trail together. I wish him great good luck in his new job as chief executive of a retirement home company. I know that in that role he will show the same commitment with which he served the people of South Thanet.
I live in and represent one of the best-kept secrets in the country—a series of towns and villages that demonstrate what is best about this country. I know how beautiful, how surprising and how unique each of the towns is that I represent, but over the last four years it has been particularly rewarding to see the number of supporters who came to South Thanet—some of them are here tonight—and who gasped with excitement when they saw the beauty of Ramsgate harbour, who saw that Broadstairs is one of the most perfect seaside towns, and who were staggered by Sandwich, which is considered nationally the most perfect medieval town. Even in Cliftonville, the poorest ward in the south-east, people recognised its architecture and its potential.
South Thanet has a particular relationship with the House. I live about a quarter of a mile from where Pugin built a church and his house. Ramsgate has many of the same architectural icons as the House, so there is a part of this place in South Thanet and a part of South Thanet here.
It is not just the place itself. The people of east Kent and South Thanet have attitude. We are independent. We have stood up against many wars and we have been on the front line against many invasions. I was privileged to be at the 70th anniversary of the Dunkirk little ships. Many people from my area, whether fishermen or small boat owners, went in their boats to save 300,000 of our soldiers who were on the beaches of Dunkirk. I am proud to represent such courageous and independent people in the House.
We have come into government at one of the most difficult times for many generations and what we achieve in the next five years will define our future for the next generation. I am sure that none of us on the Government Benches are under the illusion that we will not have to do things that will make us unpopular. What we must be judged on is whether we are being fair and whether we are rewarding those who take responsibility.
It is on fairness and responsibility that I want to contribute to the debate. This week is the start of carers week. In South Thanet, we have one of the largest numbers of carers in the country. Coastal towns have a high percentage of carers. Young, old, frail, healthy—carers are selfless family members whose lives become dominated by the responsibilities they voluntarily take on. Being a carer is not subject to any working time directive; carers are full-time, on call 24 hours. Their lives are dominated by the needs of others. When helping those with chronic illnesses, they often forfeit their own life, and certainly their livelihood. Having watched my mother look after my father for five years before he died, I have seen at first hand the toll that can be taken on the carer.
We need to ensure that we put carers at the heart of our review of care for the elderly. It is crucial that we look at the role they play. In many ways, they will be one of the front lines in public services in the future. I urge the Government to ensure that we support those who support their loved ones. We need to look again at providing respite for carers. We need to review the cut-off of carer’s allowance when people reach pensionable age—just when they need it most—and we need to place the carer’s role at the heart of our review of care for the elderly.
When we leave the House—not for many years, we hope—we might all need carers, or we might all need to care for others. I would prefer that to be done by a loving relative—someone who will be there for me in my time of need—and I am certain that many other Members would, too. As the Prime Minister says, we need to reward those who take responsibility, and never can that be better said than about 6 million carers who give up their lives and selflessly give their time to their loved ones.
Thank you, Madam Deputy Speaker, for the opportunity to make my maiden speech. I start by congratulating my hon. Friends the Members for Sleaford and North Hykeham (Stephen Phillips) and for South Thanet (Laura Sandys) on their excellent and moving maiden speeches.
My constituency of Reading West was created in 1983 and was served from then until 1997 by a Conservative Member, Sir Anthony Durant, who previously represented the Reading North seat between 1974 and 1983. Sir Anthony was an excellent constituency MP, who served the people of Reading with great distinction. In recent months, Sir Anthony has not been in the best of health, and I am sure that hon. Members on both sides of the House will join me in wishing him a speedy recovery. [Hon. Members: “Hear, hear.”]
My immediate predecessor was the Labour Member, Martin Salter, who represented Reading West for 13 years. No one who knows him could ever describe Martin as a shy and retiring individual. He always had and continues to have firm opinions on every political subject. Indeed, during his time as an MP, he sometimes held two opposing firm opinions on the same subject, both delivered with great conviction. A constituent of mine once compared Martin Salter to Marmite by saying, “You either loved him, or you wished that you had never opened the jar to let him out.” Despite our many political rows and differences during the four years that I was a candidate and he was the Member of Parliament, I grew to rather like Martin, but then I must also confess to liking Marmite.
Martin Salter announced last year that he would not be seeking re-election because he wanted to
“move on and do something else with my life while I’ve still got some energy left.”
Martin Salter certainly brought energy to his work on behalf of the people of Reading during his 25 years of public service—first, as a local councillor and then as the Member of Parliament for Reading West. Like Sir Anthony before him, he was a champion of local causes, a dedicated constituency MP, and he stood up for all the people of Reading West. I very much hope to continue in that fine tradition and serve each and every one my constituents to the best of my abilities.
I turn now to my wonderful constituency of Reading West, which stretches from the villages of Theale, Tidmarsh and Pangbourne in the west, to the more urban areas of Coley and Whitley towards the east. I grew up and went to school in Reading, and for me Reading is, quite simply, home. It is a confident and vibrant town full of aspirational and hard-working people. As a settlement, Reading was founded in the 8th century and was listed in the Domesday Book as a growing population centre—much as it is today. Reading abbey was built by Henry I in 1121, where he is also buried.
Although Reading has a long and honourable history, it is now very much a modern place. Originally famous for producing beer, biscuits and bulbs, Reading is now a high-tech and service industry hub and is home to many locally grown businesses, as well as international companies, such as Microsoft, Oracle and Cisco.
Reading also offers culture, with the internationally renowned Reading music festival being held every August. Hon. Members with a liking for contemporary music should know that a few tickets are still available for this year’s festival. The very fine Madejski football stadium is located in my constituency, and I am sure that, before too long, we will see Reading football club return to its rightful place in the premiership.
In their maiden speeches many Members have mentioned great historical figures who are connected with their constituency, but, as I said, Reading is a modern place, so I would like to mention just two of the recent renowned sons and daughters of our great town. Kate Winslet was born and grew up in Reading. Her parents are constituents of mine. We are very proud of Miss Winslet’s Oscar-winning achievements. Locally, Miss Winslet’s mother is also a winner. Last year she was awarded first prize in a local pub’s pickled onion-making competition. Who says Reading cannot match Hollywood’s glamour?
The comedian and actor Mr Ricky Gervais grew up in Whitley, not far from where my parents lived when they first moved to Reading. I do not know Mr Gervais personally, but it is entirely possible that we loitered in the same shopping precinct when we were youngsters. Of course, one of us has now gone on to great things—and the other has become a Member of Parliament.
I am very pleased to be making my maiden speech during this debate on emerging economies, one of the largest of which is India. I know a little of the country. My family hails from India originally; I have advised European companies on doing business there; and some months ago I visited India on a research project and interviewed a range of corporate leaders, civil servants and opinion formers to hear their views on India’s development and economic ambitions. What is absolutely clear is that over the past decade the relationship between emerging economies such as India and China on the one hand, and the industrialised nations in the west on the other, has developed from one of the emerging economies being junior partners to a relationship of equals, with real potential for the likes of China and India to emerge as first among economic equals.
The emerging economies present challenges for us. We have seen some British jobs offshored to low-cost locations. With increasing globalisation and cost pressures on corporates, a certain level of offshoring is here to stay, whether we like it or not. But emerging economies also present a huge opportunity for British companies and jobs in this country. The Minister of State, Foreign and Commonwealth Office, my hon. Friend the Member for Taunton Deane (Mr Browne), talked about statistics. Let me give the House a few on India. We have heard about annual growth rates of 7 to 9%. There is a middle class of around 400 million people and growing. Well over 60% of the population is aged below 35. India is looking to make significant investments in its infrastructure, in pharmaceuticals and health care, IT, green technologies, and food and agriculture, to name just a few sectors ripe for investment and growth. We in Britain have leading companies with significant expertise and know-how in many of these and other sectors.
In Reading, I have met home-grown technology companies that are exporting value-added products across the world. As a Government, we should be doing everything we can to help and encourage our companies to take advantage of the growth markets in the emerging economies. That will in turn help to create value-added and long-term jobs in the United Kingdom.
I was very pleased that the Gracious Speech made mention of developing an enhanced partnership with India. Because of our shared history and the mutual good will and affection between Britain and India, we already have a special relationship on an emotional level. We now need to make sure that we translate that good will and understanding into a special relationship based on trade and commerce to our mutual benefit. If we can do that in a timely manner, it will be to the advantage of British companies and will help safeguard and create jobs in our country which will be vital as we aim to grow and expand the British economy.
Thank you, Madam Deputy Speaker, for letting me catch your eye, and welcome to the Chair. I also welcome Ministers to the Dispatch Box and congratulate the hon. Member for Rhondda (Chris Bryant) on his position on the Opposition Front Bench.
I have a huge personal interest in the emerging economies, and it is a great joy to be able to speak here tonight. Many years ago, I ran an educational charity giving away new medical textbooks throughout eastern Europe during and after the communist period, and it has been a particular delight to hear the expertise displayed by my hon. Friends the Members for South Thanet (Laura Sandys) and for Reading West (Alok Sharma) in their excellent maiden speeches.
I was in eastern Europe at a time when civil society was the subject of constant political oppression. Economic activity was shackled by commissars and petty regulation, and industry was funded by an open chequebook from Government. The result was colossal debt and economic stagnation. How very different from the situation that faces the UK today.
I know that every Member of this House will join me in saying that it is the greatest honour of all to be chosen to sit in this august Chamber; to have a share, however small, in the supreme sovereign authority in this country; and to walk in these hallowed halls and corridors, as so many extraordinary men and women have done before us. First impressions are not always so favourable; one thinks of Mark Twain, who said—I hope that the House will forgive my accent—“When I first came to Memphis, I found men drinking and gambling, and open prostitution in the streets. It was no place for a Presbyterian—and I did not long remain one.” As for me, I enter this House as I hope I will remain—filled with a sense of due reverence and due responsibility.
I feel doubly privileged, in that I stand here as one of two tribunes for the people of Herefordshire. Truly, Herefordshire is a glorious county, known throughout the world for the quality of its cider, its beef and its soldiers. Such is its beauty that it has been only slightly disfigured by a recent association with the noble Lord Mandelson, who has added “of Foy in the county of Herefordshire” to an already rather extensive title. I alert the Member for Hartlepool (Mr Wright) to that unfortunate precedent. Alas, we still look in vain for the tidal wave of public subsidy that usually accompanies Lord Mandelson wherever he goes.
My constituency stretches from the Black mountains in the west to the Forest of Dean. It encompasses the aptly named Golden valley; the gorgeous Monnow and Wye valleys; and Hereford itself, with its magnificent cathedral and Mappa Mundi. It has apple orchards, lovely churchyards, fine, rolling arable land, wildlife and pasture, stretching all the way down to Ross-on-Wye and the spectacular rock of Symonds Yat.
I am not, in fact, the first Norman to be returned to Parliament from Herefordshire; that honour goes to its very earliest representatives, Rogerus le Rus and Ricardus le Brut, who were summoned to meet at Westminster on 15 July 1290, in the reign of Edward I, barely 200 years after the Norman conquest—the first Norman conquest, that is. At the time, Herefordshire was regarded as the farthest outpost of western civilisation—a status which, some Herefordians would argue, it retains to this day.
South Herefordshire has always been well served by its MPs, and I would like to pay particular tribute to my predecessor Paul Keetch, a Herefordian born and bred, who built up a reputation over 13 years as a fine constituency MP. Hereford city reputedly has the largest container of alcoholic beverage in the world—I should say, outside the Palace of Westminster—at Bulmers, and Paul has worked very hard over many years to protect and support the cider industry, most recently against the ill-advised depredations of the cider duty. I should also like to pay tribute to Sir Colin Shepherd before him, whom many hon. Members will recall for his 23 years of dedicated service to this House. He and his wife, Lady Lou, have been tireless in their support of the county and of its newest MP.
But Herefordshire is not, or not yet, a garden of Eden. On the contrary, it has many social and economic problems that demand vigorous public action. Like other rural areas, it has not been at the top of the Government’s agenda in recent years, to say the least. On the contrary, our schools are the third worst-funded in the UK. Local wages are very low. Farmers struggle with the many inadequacies of the Department for Environment, Food and Rural Affairs. Young people lack decent leisure facilities. The very idea of a functional broadband connection, or even of a decent mobile telephone signal, has yet to be entertained in many parts of my county, and Hereford, a lovely medieval city that received its royal charter in 1189, is being strangled by traffic. Those, and greater support for higher education in the county, will be among my personal priorities as the new MP.
However, we are not sent to this House only to represent our constituents; we are also sent here to play a role in the wider governance of this country. The new Government have made a superb early start in opening up sources of data about spending across the public sector. But what matters is not merely what we think about, but how we think about it. Our task is to remedy not just a colossal failure of governance over the past 13 years, but a colossal failure of thought. Politicians are generally nervous about talking about abstract ideas. In the words of the late great Ernie Bevin—here I will not attempt an accent—“Open up that there Pandora’s Box, and who knows what Trojan ’orses won’t jump out of it.” But of course to dismiss ideas is itself to be ruled by an idea. Ideas are always in charge. So it is important—nay, vital—to choose the right ones.
Now, the idea of revolution is never dear to a conservative, but even Edmund Burke would agree that we need a revolution in how we think about economics in Government. Over the past two decades the British Government have become steeped in a 1970s textbook caricature—a view in which markets are always efficient, prices reflect perfect information, and institutions are nowhere to be found. One would be tempted to call such a view neo-liberal, were we not in a time of coalition government.
Worse than that, the deep assumption remains that human beings are purely economic, rather than social, animals. This dismal gospel regards the human world as static, not dynamic—as a world of fixed social engineering, not one of creation, discovery and competition. In policy terms, this textbook economics takes power away from local people. It encourages centralisation and top-down meddling. It pushes us towards an inefficient, inhumane and factory-style view of public services. It is absurdly risk averse. In its apparent inevitability, it stifles public debate about other, more thoughtful approaches. Above all, it actively undermines the ideas of public service, public vocation and public duty—ideas which, I know, lie close to the heart of every Member of this House.
Now is the moment to re-examine these assumptions. Politics is not a subset of economics, and economics is not a subset of the financial sector. GDP growth is important—goodness knows that is true now—but so are flexibility, resilience and, above all, entrepreneurship in our economy. We need a new economics in our Government, not the desiccated economic atomism of the old textbooks, and we need to see people for what they really are, as bundles of human capability, creative, dynamic and fizzing with imagination and potential.
If we do this, and only if we do this, we can revive our economy on a huge billow of human energy, one that is barely conceivable within our current conventional economic models, and we can help to restore the trust and the mutual respect that our society so badly requires. It was that great—and rather conservative—economist, John Maynard Keynes, who once warned politicians not to be the slaves of some defunct economist. So let us all cry freedom and move on.
Let me start by thanking all the hon. Members who made maiden speeches tonight. I suspect that when I came into the House after a by-election colleagues breathed a sigh of relief at the fact that they had only one maiden speech to concentrate on. Tonight we have had three, but they have been three excellent speeches. I particularly welcome a fellow central and east European cold warrior to the Conservative Benches, particularly in the context of this debate.
It is nice, too, to return to a subject that I left professionally almost a decade ago, when I was the author of the Ernst and Young emerging markets reports. It was a monthly attempt to score key markets for attractiveness, principally from the point of view of foreign direct investment. The big emerging markets of the day were in eastern Europe, which seem still to be the big emerging markets of today, as if nothing had happened. Many are still on the list, despite being members of the European Union. Then, as now, the big enigma was the role of Russia.
In the intervening decade there seems to have been in the field a long march of taxonomists, who have sought to subdivide emerging markets almost ad infinitum. The Financial Times divides them into advanced and secondary emerging markets, based on national income. Morgan Stanley divides them into developed, emerging and what it calls frontier markets. There is a core group of markets on which everyone agrees, with a few others, such as Saudi Arabia, around the edges.
I am not sure that such taxonomy is of any use. What we are still dealing with are industrialising countries with large growth and large potential, accompanied by equally large risk and insecurity. Most of that taxonomy, anyway, is capital markets-driven, but a very different picture often emerges if one looks at those economies not as capital markets, but as markets for foreign direct investment or for export. Indeed, when for a brief while I presented business programmes for BBC World Service television, I visited more emerging countries’ stock exchanges than I care to remember. Undoubtedly the smallest but one of the most enthusiastic was that in Mongolia, but we should remember that the Mongolian stock exchange is not there to generate capital for its companies; it is there as a social device for the equitable distribution of newly privatised assets, most of those by means of mass or voucher privatisation, which the UK has sponsored. Inevitably, those are high-risk procedures, but experienced capital-market players can largely cope with such risks.
A good question is how we define the difference between emerging economies and emerging markets. We are talking about the attractiveness of such economies in business terms, with their export-led focus, use of agents, joint ventures and, indeed, direct investments. In my time as a partner at Ernst and Young, I helped many small and medium-sized enterprises into emerging markets, but we have to be realistic, because one of the biggest constraints on them is the amount of time involved in entering such markets.
Sadly, the majority of SMEs that came to me for advice came when they were on their last legs in the UK—their markets having disappeared for one reason or another—and they wanted an emerging market and an emerging economy as a means of getting them out of their problems. I am not saying that that cannot be done; it can. The company that I set up with a business partner did so, but it meant that one of us was always on the road, particularly as our first major project was to produce what I can only describe as a pop video of Manmohan Singh, to be shown at an international conference. It was incredibly difficult, because the essential humility of the man meant that his character did not fit into the pop video class. The business meant having to be away for quite a long time and, in a business with two principals, one can imagine the difficulties that arose.
We need to take a balanced view of individual countries, and to make an assessment that some will need more help than others and more encouragement from Government if they are to export. There is a lot of talk about the emerging economies that are in fashion today and out of fashion tomorrow, but not all of that is based on the objective, analytical criteria of companies such as Morgan Stanley; much of it is based on gut feeling.
We spoke earlier about one barrier being the difficulty of language, but one that is frequently overlooked is the difficulty of culture. I remember how, at an INSEAD seminar, the most distinguished cultural scientist on the matter, Fons Trompenaars, put forward his view on cultures and how that can help people assess them and do business. His view is based on a number of individual dilemmas that he put to about 15,000 people throughout the world.
The most famous is known as the dilemma of the car and the pedestrian. Essentially, we are in a car driven by a friend who exceeds the speed limit and knocks down a pedestrian. On the question of the driver’s expectation that we will lie for him, the worst place in the world, according to Fons Trompenaars, is Canada, where 96% of people would shop their friends to the police. Emerging markets, however, are some of the best places to have friends: in South Korea, 26% would shop their friends; in Russia, 42% would; and in China, the figure is 48%.
Those responses should not be taken literally, but they are indicative of how much obligations to the state outweigh obligations to individuals. [Interruption.] The Minister of State, Foreign and Commonwealth Office, the hon. Member for Taunton Deane (Mr Browne) laughs, but Britons figure at 90% on that scale, so the UK is not too good for friendship. Interestingly, however, those questioned in the UK asked how seriously the pedestrian was hurt. If they were more seriously hurt, there was more of an obligation to the state than to the individual. One has only to cross the channel to obtain completely the opposite result, where the more the pedestrian is hurt, the more the driver obtains our assistance in lying, because their punishment would be more severe. That may seem academic, but I recommend the work of Fons Trompenaars to hon. Members; it provides a useful, pragmatic framework for considering emerging markets. For example, it draws out the frequency with which developed countries depend on legal agreements and big contracts.
My concern, which the hon. Gentleman may well be able to answer, is about the fact that the emerging markets have now taken away our heavy industry—shipbuilding, steel and things of that nature. How do you see this country fighting back against the emerging markets, with jobs of the future? I accept that we have advanced engineering in aerospace and other such sectors, but many residents of the country do not have the skills to be involved in that type of industry. How do you see the UK fighting back against the emerging markets in respect of less skilled jobs?
I thank the hon. Gentleman for his comments. Clearly, British industry still has a big role to play in emerging markets, but we need to be realistic about in which markets it can play that role, what assistance is needed and what size companies can play in which markets.
The dilemma that I was discussing draws out the frequency with which developed countries depend on legal agreements, big contracts and lawyers, and how relationships tend to get ignored. Emerging markets, however, depend more on the relationships that are built up; the handshake comes first, rather than the contract—hence the amount of time required to develop business in them. That is important not only for foreign direct investment or the export trade but for capital markets and understanding the role of supervisory regimes—the structure of those market institutions and how the regimes are approached. The point is also a crucial piece of understanding about how such countries will perform in international forums. One thinks immediately of the expectation of honouring OECD template agreements, which are the lowest common denominator but often do not fit within the cultures of the countries that we are talking about.
I respectfully suggest to Ministers that the issue also appears in diplomacy. When I was leading a delegation of British business to a G7 meeting, I remember being able, because I had the benefit of such an understanding of cultures, to get the Hungarians and French on side with us Brits to overturn an American proposal for Russia to simplify bureaucracy by introducing a new ministry. The proposal was quickly defeated; the Hungarians got on board and the French commented that they had never previously recognised that a Brit could understand la psychologie.
That provides a link to another issue as well. Part of the reason why some emerging markets never fully emerge is their lack of understanding of the fact that economics and politics cannot be separated. It is difficult to find an emerging economy that is not also an emerging or problematic political system. Russia is the principal example of that—bedevilled by an incomplete set of reforms that left politics behind economics.
The know-how fund was one of the institutions set up by the previous Conservative Government, who appreciated that market economics needed to go hand in hand with democracy. Their well placed £100 million or so laid the ground for much of eastern Europe to come into the European Union. The know-how fund was aimed not at Governments but at providing assistance to NGOs to build capacity on the ground. That is still a good approach. Sadly, however, the know-how fund was not allowed to finish its work in Russia.
The shadow Minister, the hon. Member for Rhondda (Chris Bryant), took the biscuit when he complained about the position in which Russia was left, given that it was his Government who abandoned the know-how fund, turning it over to the European Union as part of a multilateral package. They also abandoned the east European trade council and the British Association for Central and Eastern Europe. In a debate in 2008, the hon. Member for Birmingham, Edgbaston (Ms Stuart) pointed out that since 1991 BACEE, a small organisation with a minuscule grant in aid from the Foreign Office, had had more than 5,000 politicians, civil servants, judges, journalists and business people from countries of central and eastern Europe participating in its programmes as alumni. That is the way to build up understanding of the politics in emerging market countries.
Unfortunately, when the know-how fund was delivered to the European Union, chaos resulted, with companies turning up in countries to be told that the same contract had been let twice. We also had the ridiculous situation of trying to bring into emerging markets in central and eastern Europe an Italian system of accounting, a French system of law, and an English system of stock exchange. It is no wonder that some of these emerging markets failed to emerge fully during the course of their transition.
Over the years, the role of UK Trade & Investment in this field has swung between a focus on geography and a focus on sectors. During that time, I have had a role in swinging it towards sectors, but I appreciate that it swings back again. An emphasis on sectors is fine provided that one recognises that some markets require more hand-holding than others. I praise UKTI for its services, which have been excellent.
As regards the transition in future, we will need to see markets as separate countries. The acronym, BRIC—Brazil, Russia, India and China—makes no sense in terms of relationships, just as a massive grouping. The transition should be acknowledged both in business and in aid. As regards aid, we must recognise that while there is a move away from providing aid to countries such as India, China and Russia, which I welcome, there is a difference between providing aid and technical assistance. Even after one has moved beyond the trade part, there is still a need to recognise that many of those countries still do not have fully developed local democratic institutions, civil society groups, media or, indeed, enterprise that is fully reflective of a market economy and democracy. I urge Ministers to look carefully at that to ensure that we do not throw the baby out with the bathwater but continue the process, looking back at the mistake that was made in relation to Russia, where, if we had continued our focus, we could have done a lot more to ensure that there was the continuity needed to bring that economy fully out of its emerging status to play its full role in the world.
I have been privileged to hear maiden speeches by my hon. Friends the Member for South Thanet (Laura Sandys) and for Hereford and South Herefordshire (Jesse Norman), who illustrated very well the nature of the threats that we face. My hon. Friend the Member for South Thanet talked about carers, and about the particular character and fortitude of the people of her constituency.
The House could have a no more important debate than this, and it is disappointing to see it so poorly attended by Labour Members. The nature of this country’s relationship with the wider world and how we can hold our own position in it, not only in terms of economics and culture, is the fundamental issue that will determine the next 10 or 20 years—a long time in which I hope that many Members present will sit in this House, obviously provided that their constituencies return them. It was revealing to hear the shadow Minister speaking on the subject. He said that Argentina was the 10th richest country in the world in 1913, but seemed to suggest that it had then fallen back because of its politics. He failed to analyse the political position and consider what sort of political regime operated in Argentina. He will remember that Juan Perón ruled for a long time after the second world war and was perhaps that country’s most disastrous ruler. He openly espoused a socialist programme. There was vast confiscation of wealth and manipulation of the unions. As my hon. Friend the Member for Bromsgrove (Sajid Javid) pointed out, Argentina defaulted in 1999 because of its huge debt. Yet the hon. Member for Rhondda (Chris Bryant) elided all those facts.
May I retort that Mussolini was originally a socialist? He was a left-wing journalist. It is no accident that those people had many shared ideas. However, whether Perón was a socialist or a syndicalist is neither here nor there.
The hon. Member for Rhondda alluded to our problem as a country. He suggested that we had problems with education. He rightly mentioned that many people in this country are not learning foreign languages. Indeed, the number has declined since 2001. However, who was in government at the time when, as he pointed out, the figures were declining?
We must also confront a decline in educational standards. It is an open secret that we have had grade inflation. In China or other parts of the world, the education systems are highly competitive and rigorous. If we are seriously to compete with the emerging nations, we must sort out our education system and return some rigour to the process.
The hon. Gentleman is right about ensuring that more people take foreign languages such as Mandarin and Spanish. However, does he not think it is counter-productive to end the fourth phase of the diploma programme, particularly for languages, which would encourage enthusiasm for modern languages in emerging markets?
I was making a broad point about 13 years of Labour failure, which is central to the debate. If we are serious about competing with China and India, we must have much more rigour and a little more discipline and focus in our education system. Those are obvious facts, but Labour Members seem to ignore them completely.
With respect, I am talking about the emerging economies, and the point about education is central to the debate. If the country is to improve and compete with other countries, we need much more rigour and discipline. That was palpably lacking in the Labour Government’s actions in the past 13 years.
We must approach the problem much more broadly. Britain was so successful in the past because we had a thriving economy. The industrial revolution powered Britain’s ascent to world dominance in many ways. Leaving a country economically crippled is the worst thing that we can do to our standing abroad. We must tackle our domestic economic situation before we can even begin to try to compete with emerging economies. I just wanted to put those broad points on the record, and to say that Labour failure has once again damaged—
I thank all hon. Members for their contributions to this excellent, albeit very short, debate. As the Foreign Office Minister responsible not only for Africa but for relations with business, I am keen to meet as many parliamentarians as possible who have an interest in emerging markets, and the debate has revealed a lot expertise.
We have heard a number of superb maiden speeches, and I turn first of all to my hon. Friend the Member for South Thanet (Laura Sandys), who made a charming, eloquent and very personal speech. She comes from a line of distinguished parliamentarians. Her father, to whom she referred in her moving remarks on carers, would have been incredibly proud of her this evening. I wish her well for the future and I am sure she will go a very long way indeed.
My hon. Friend the Member for Reading West (Alok Sharma) gave us another splendid tour de force. He spoke with passion about his constituency and made a number of good points about emerging markets, saying that we should treat them as equals and not be afraid of offshoring. He talked about the great opportunities that such markets present to us, and I agree with him 100%. The business world’s loss is the House’s gain, and I wish him well for the future.
My hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman) produced one of the best Mark Twain quotes I have ever heard. One of the great treats of listening to maiden speeches is that one learns a lot about our beautiful and interesting kingdom. He spoke with a great deal of passion about his constituency, but his speech was also erudite and intellectual. He spoke of flexibility, resilience and entrepreneurship, which need to be applied to our drive to create and generate export-led growth. I congratulate him on his excellent speech.
The Foreign Secretary made it clear that he will pursue a dynamic foreign policy that will be ingenious and energetic. As my hon. Friend the Minister—my coalition partner—made clear, the Foreign Secretary’s plan is to intensify bilateral relations, particularly with many of the emerging economies. With our economy in crisis, we are facing a mammoth challenge to reduce the deficit. I congratulate the former Minister, the hon. Member for Rhondda (Chris Bryant), on his work at the Foreign Office—he obviously relied heavily this evening on the expert knowledge he gained in his time there—but it is complete nonsense to say that the Government have no strategy for growth. My hon. Friend the Minister talked about an export-led growth strategy. Furthermore, not tackling the deficit would be the biggest barrier of all to growth, because that would drive inflation and interest rates. I can tell the hon. Gentleman that he was talking total and complete nonsense. If we do not improve our economy and reduce the deficit, our standing in the world will be diminished, as my hon. Friend the Member for Spelthorne (Kwasi Kwarteng) pointed out so eloquently, and we will not be able to improve those bilateral relations or drive that export-led growth.
UK Trade & Investment operates in 17 key, high-growth markets. Of course, the Foreign Office must consider efficiencies in all its operations, but the Foreign Secretary has made it clear that our national interest and our international role in the world will not be undermined or put at risk in any way. The Foreign Office places a lot of emphasis on low-carbon, green technologies. Its low-carbon, high-growth strategic programme fund—£17 million in total—will not, as I understand it, come under any financial pressure.
We treasure students who come to this country from around the world and rely on them to a very great extent when it comes to building our influence in the world. Obviously, we will look at a number of aspects of the budget, but Chevening scholarships, which the former Minister mentioned, are currently frozen as part of the Government’s review of all programme spending. We expect to make decisions in July, but of course there is uncertainty. The coalition Government have taken over an appalling economic crisis. It is a little rich for the shadow Minister to complain about various matters that were entirely the fault of the Government of whom he was a member.
The hon. Gentleman also raised the issue of human rights, among others. If I have not answered his questions, I will write to him. This has been an important debate—
Motion lapsed (Standing Order No. 9(3)).