House of Commons
Wednesday 13 January 2016
The House met at half-past Eleven o’clock
[Mr Speaker in the Chair]
Oral Answers to Questions
The Secretary of State was asked—
1. What discussions he has had with the Secretary of State for Culture, Media and Sport on future funding of S4C. 
4. What discussions he has had with the Secretary of State for Culture, Media and Sport on future funding of S4C. 
The Secretary of State and I have regular discussions with Cabinet colleagues which provide opportunities to discuss a range of issues, including matters related to the funding of services across Wales such as the future funding of S4C.
The Prime Minister said last week at the Dispatch Box that he wanted to
“meet…the wording and the spirit of our manifesto promise”,
on S4C, which stated:
“We would safeguard the funding and editorial independence of S4C.”
In the light of last week’s commitment, may I invite the Minister to make it clear that the Government will abandon the proposed cuts to the DCMS part of S4C’s budget and undertake a review of the future funding needs of S4C?
We will meet our manifesto commitment to
“safeguard the funding and editorial independence of S4C.”
The hon. Gentleman will have heard the Prime Minister say that we would
“meet…the wording and spirit of our manifesto commitment.”—[Official Report, 6 January 2016; Vol. 604, c. 281.]
He will also remember that on the evening before there was a debate proposed by my hon. Friend the Member for Carmarthen West and South Pembrokeshire (Simon Hart) to which the Minister for Culture and the Digital Economy responded by saying that he was looking at the arguments and keen to engage positively.
I am grateful to the Minister for mentioning last Tuesday’s debate because I too want to talk about the wonderful consensus that broke out in the Chamber regarding S4C’s funding. Given that consensus, will he remind his colleagues at DCMS that he has a statutory duty to protect S4C’s funding? Will he also join us in offering his personal support for an independent review of S4C?
The hon. Lady took part in that debate and she will recognise the way in which the Minister responded. He said that he was listening to the arguments and that he wanted to engage as positively as he could. I hope that she recognises the spirit in which that was intended.
Last July, the Culture Secretary and the Treasury informed the director-general of the BBC in a letter that S4C’s grant might be cut by the same percentage reduction as the BBC itself and that:
“It will be up to the Government to decide how to make up the shortfall.”
This is therefore not the only Government-driven cut facing S4C. What additional funds will the Government be providing over and above these DMCS cuts?
As the hon. Lady knows, charter renewal negotiations and discussions are under way at the moment, and I do not want to pre-empt any of the issues that will come out of that. Clearly, there will be a widespread consultation and I hope that she and other Members will engage positively in it.
I understand, of course, that we are facing the BBC charter consultation, but given the BBC’s response in the current situation there is surely now room for cross-party consensus on Silk II’s recommendation that the funding of the public expenditure element of S4C should be devolved to the National Assembly for Wales.
I do not accept the basis of the question. During my right hon. Friend the Secretary of State’s discussion that led to the St David’s day agreement, there was not agreement on this issue. We are keen to progress in consensus so that we can take everyone forward. We need to remember that it was a Conservative Government who established S4C, which has been a great success since 1982. I hope that the hon. Lady will share in and recognise that success.
What complete waffle from the Minister! The Tory party manifesto said only last spring that that party was committed in government to safeguarding
“the funding and editorial independence of S4C”,
yet now we are talking of a cut from the DCMS budget of a quarter of its funding. [Interruption.] The Secretary of State is asking for my question. It is simply this: why will the Government not safeguard the funding, and why is that quarter of the DCMS funding budget still under consideration? It is a disgrace. How can we trust them on any other commitment they make?
The hon. Lady will have heard my answers to the previous questions. I find it a bit rich that Labour Members are calling for extra funding for a Welsh language channel when this morning the First Minister in the Assembly is seeking to defend his position of cutting the budget to support the Welsh language by 5.5%. That is simply a disgrace.
2. What assessment he has made of the adequacy of Government support for small and medium-sized businesses in Wales. 
Our nation’s small businesses are the true heroes of this economic recovery, and I am proud to be part of a Government who are on their side. SMEs have created two thirds of all the new jobs in the private sector in Wales since 2010. As we continue to reduce regulation and lower taxes, support for small businesses right across the UK has never been stronger.
This year is the British Chambers of Commerce year of action on exports. Will my right hon. Friend update the House on how he is helping small businesses in Wales to punch above their weight this year?
My hon. Friend raises a very important point. We have set ourselves a really ambitious target of £1 trillion of exports from the UK by 2020. If we are going to have any hope of meeting that target, we need to engage with SMEs right across the UK, especially in Wales. That is why I will be in north Wales tomorrow, with my right hon. Friend the Minister for Trade and Investment, promoting everything that north Wales has to offer.
The Welsh steel industry plays a critical role in underpinning business right across the board, including SMEs, but global headwinds affecting the industry have been growing stronger. Will the Secretary of State join me and Welsh MPs from all parties in asking for a meeting with his right hon. Friend the Secretary of State for Business, Innovation and Skills to ensure that no stone remains unturned in the fight to save the Welsh steel industry?
I thank the hon. Gentleman for his question and for the spirit in which he asked it. He knows as well as we do that the steel industry right across the UK, not least in Wales, faces a global crisis. He is aware of all the different actions being taken by the Government to try to help the British and Welsh steel industry face the global nature of the crisis. I am very happy to pass on his request to the Business Secretary. We are obviously in very close contact, as is the hon. Gentleman, with Tata, and especially the plant in Port Talbot in his constituency.
My right hon. Friend will know that one of the small businesses emerging in Wales is Tidal Lagoon Power Ltd, which has exciting plans for the Swansea bay tidal lagoon. The roll-out programme also includes Cardiff, Newport and north Wales. When can we expect to hear what financial support will be forthcoming from the Government so that this exciting project can proceed without delay?
My right hon. Friend the former Secretary of State is right. The Swansea tidal lagoon proposition is very exciting and commands wide support across the business community in Wales, but we also need to recognise that the project is asking for a very significant level of public subsidy and intervention. It is absolutely right that my right hon. and hon. Friends in the Treasury and the Department of Energy and Climate Change should conduct very robust due diligence in making sure that such projects will deliver value for the taxpayer.
One of the issues that small businesses raise with me in my constituency is the lack of connectivity for superfast broadband and, indeed, mobile connections. Now that the Government and the Prime Minister agree with me on the universal obligation for broadband, will the Secretary of State help me by supporting a pilot scheme on Ynys Môn, the Isle of Anglesey?
The hon. Gentleman raises a very important point. We have discussed this many times in Wales questions and debates. Improvements are happening right across Wales, and we are seeing big improvements in internet connectivity and for mobile phones in his constituency and mine. There is much more that we can do. I am very interested to hear about a pilot project in Anglesey, which I am happy to discuss with ministerial colleagues.
In early December, the UK Government announced £50 million of additional funding to address flooding issues. That figure has Barnett consequentials for Wales of £2.276 million. Since then, a further £90 million has been announced by the UK Government, and we await to see what, if any, Barnett consequentials will arise from that. On the new money to be allocated to Wales, will the Secretary of State join me in calling on the Welsh Assembly Government to allocate it to St Asaph? Many SMEs, as well as local residents, were flooded there three years ago, and there is currently a £4 million shortfall for the necessary flood defence works.
I absolutely join my hon. Friend in making that suggestion and recommendation. It is worth putting it on the record that our sympathy and thoughts are with all the families and businesses in Wales, as well as with those right across the UK, that suffered damage due to flooding over the Christmas period. All the new money that the Government have announced to address flooding issues has delivered Barnett consequentials for Wales. It is up to the Welsh Government to decide how to use that money, but we certainly want them to use every single penny to help to address flooding issues. I am afraid that we will have to come back time and again to such issues and discuss them in this place.
Further to the question from the hon. Member for Aberavon (Stephen Kinnock), the Minister will undoubtedly share our concern about press reports over the weekend. What contingency plans do the UK Government have for a worse-case scenario? Would he support a Welsh public stake in the Welsh operations of Tata, as was afforded to the banks of London during the financial crash of 2008?
I will not engage in the speculation about job cuts that we saw in the press at the weekend. Members from all parts of the House need to be responsible in how we debate these issues. We are in very close contact with Tata internationally and with regard to its operations across the UK, including in south Wales. We are discussing closely what its needs are at this moment. There are big issues and questions that need to be addressed.
3. What steps the Government are taking to improve rail connectivity to south Wales. 
We are investing in the most ambitious rail upgrade programme since Victorian times. We are committed to electrifying the Great Western main line to Swansea and have agreed to contribute £125 million towards electrifying the Vale of Glamorgan and valleys lines. That will increase services and reduce journey times for passengers across south Wales.
Blaenau Gwent needs good rail links down to Cardiff and across to Bristol for jobs. The flourishing Ebbw Vale to Cardiff line must be part of the core metro system for that to happen. How will the Minister help make sure that south-east Wales gets the modern transport infrastructure it so badly needs?
The hon. Gentleman has been a strong champion of investment in the Ebbw Vale railway line, including in the new station at Ebbw Vale and the UK Government’s investment at Pye Corner, which has improved access to Newport. The scope of the valleys lines upgrade is a matter for the Welsh Government, but the Department for Transport has made £125 million available specifically for that purpose. To my mind, the valleys lines upgrade stretches from Ebbw Vale to Maesteg and down to the Vale of Glamorgan.
The Government’s investment in the rail network is crucial to businesses and people across Wales and, in particular, in my constituency of Gower. Despite the negativity surrounding electrification from Opposition Members, will the Minister take this opportunity to reaffirm the Government’s commitment to the electrification of the line to Swansea?
The Prime Minister, the Secretary of State for Transport and the Secretary of State for Wales have confirmed that. Only last week, the Chancellor was in Cardiff and restated our position once again. We will electrify the Great Western main line the whole way to Swansea.
Given that UK commuters spend up to six times as much on rail fares as European passengers, has the Secretary of State made any assessment of the impact of the recent rail fare increases on the Welsh economy?
The hon. Lady should know that there were limits to the recent increases. We need to contrast that with the £3 billion that is being spent on improving rail services to and within Wales, as well as our efforts to ensure that Wales benefits from the national project of HS2 by making Crewe a central hub so that north Wales benefits too.
Does the Minister accept that this investment will revolutionise connectivity in the valleys and on the main line to Swansea? Will he share with the House what assessments have been made of the impact it will have on job creation and passenger journeys?
My right hon. Friend makes a very important point about the economic prospects that will be brought by the significant capital investment that we are bringing forward. It is worth remembering that the last Labour Government left Wales as one of only three countries in Europe, along with Moldova and Albania, without a single mile of electrified track.
5. What discussions he has had with the Welsh Assembly on the contribution of the M4 to the economy in south Wales. 
We regularly have discussions on a range of issues, including transport infrastructure. The M4 is one of Wales’s vital arteries. The need for an upgrade was identified decades ago by business leaders as a No. 1 priority.
The Minister will surely be aware that the ongoing delays on the M4 are causing problems for the economy in south Wales. Will he outline what steps he is taking to enable the Welsh Assembly Government to make improvements to this vital piece of transport infrastructure?
It is hard to believe that the former right hon. Member for Richmond, Yorks was Secretary of State for Wales when the upgrade was first committed to, only for it to be cancelled by Labour Members. It was reconsidered later by a Plaid Cymru Welsh Government Minister, only to then be cancelled. My right hon. Friend the Chancellor of the Exchequer has made additional resources available, and we just want the Welsh Government to get on with it.
In the light of the serious flooding caused by climate change, will the Minister ensure that the newly proposed M4 relief road will double as a flood defence for the Severn estuary?
The route is a matter for the Welsh Government, and we encourage them to consider all options. We want the project to start as soon as possible. Even if it started to the earliest possible timescale outlined by the Welsh Government, it would still not be completed until the end of 2022, which is unacceptable.
Cardiff City Deal
6. What discussions he has had with his ministerial colleagues on proposals for a Cardiff city deal. 
Last week my right hon. Friend the Chancellor of the Exchequer visited Cardiff and announced his desire to deliver a city deal by Budget 2016. We are now working with the Cardiff capital region to deliver on ambitious proposals that will increase economic growth, not only in the city but across the entire south Wales region.
Last week the Chancellor brought a welcome sense of urgency to the Cardiff city deal process, with the deadline of March and a down payment of £50 million for a compound semiconductor catapult centre. Does the Secretary of State agree that with a semiconductor catapult at the heart of the city deal process, we stand a real chance of securing a long-term transformation of the south Wales economy?
My hon. Friend is right, and I put on record my thanks for his work in championing the city deal for Cardiff. The Chancellor’s announcement last week was a massive statement of this Government’s confidence in Welsh business and our ambition for Wales. The £50 million is a down payment on the Cardiff city deal, and it is now time for local partners, Welsh businesses and the Welsh Government to crack on and conclude this transformational project.
We do not want just warm words from the Chancellor about the Cardiff city deal; we want to know whether the UK Government will match the £580 million that has been pledged by the Welsh Government for the Cardiff city deal. Can the Minister answer that?
I am not sure whether the hon. Lady noticed, but during our visit to Cardiff last Thursday we were not just using warm words; we were investing £50 million of UK Government money in a new high-tech centre of innovation at Cardiff University. The Chancellor made it clear in his speech in Cardiff last Thursday that we will support in principle the infrastructure fund that will be at the heart of the Cardiff city deal project.
7. What recent assessment he has made of the economic effect on north Wales of the northern powerhouse; and if he will make a statement. 
10. What recent assessment he has made of the economic benefit to north Wales of the northern powerhouse. 
The northern powerhouse, which stretches from north Wales to Newcastle, is reviving the economic and civic strength of our great northern cities. It is central to our vision for rebalancing the economy, and north Wales is already benefiting from large-scale infrastructure investments.
Given the proximity of north Wales to the newly established Cheshire science corridor, the positive impact of infrastructure investment—including High Speed 2—and the 871 square miles of opportunity nearby in Cheshire and Warrington, does my hon. Friend agree that north Wales stands to benefit strongly from the northern powerhouse that is being taken forward by this Conservative Government?
My hon. Friend is absolutely right. North-east Wales and north-west England form one single economic entity, and businesses in north Wales see the opportunity that the northern powerhouse can bring. When the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Stockton South (James Wharton), and I met businesses last year in north Wales, they were keen to be a central part of that, and, as my hon. Friend said, HS2 offers great opportunities.
Does my hon. Friend agree that the £10.4 million investment in the reopening of the Halton curve will provide a significant economic boost for north Wales, as well as for Cheshire and my constituency of Weaver Vale, not least because there is a direct link to Liverpool John Lennon airport?
I pay tribute to my hon. Friend for his work in securing that investment. He championed this project from the outset, and later this year the direct link from north Wales through Cheshire to Liverpool will be operational. That is a tangible demonstration of the northern powerhouse in action.
12. I, too, welcome the Halton curve and the direct link to Liverpool airport, but does the hon. Gentleman recognise that HS2 coming to Crewe is also important, not just for electrification and the link to north Wales, but to speed up contacts to Manchester airport from north Wales? 
The right hon. Gentleman will be well aware of the rail transport summit that was held in north Wales last year. It talked about how we can best bring forward a bid to modernise the railway infrastructure across north Wales, and we look forward to that bid coming forward. Only last week I spoke to the chair of the north Wales economic ambition board to discuss the progress of that project.
When I have previously questioned my hon. Friend and his colleague about the potential benefits to north Wales of the northern powerhouse, I have been disappointed to be told of a total lack of engagement on the part of the Welsh Assembly Government. Will my hon. Friend say whether they have changed their stance and are now more plugged in to the process?
I am grateful to my right hon. Friend for championing the benefits of the northern powerhouse. What is clear is that business sees the benefits. Local authorities also see the benefits. We encourage the Welsh Government to engage positively, because business does not recognise the administrative boundaries between the two.
The Government’s so-called northern powerhouse will bring no benefit to north Wales unless we see the much-needed investment in infrastructure that the Government have so far failed to deliver. When the Chancellor visited Broughton in July, he promised he would look at rail electrification in north Wales. Six months later, has anything happened?
Yes, a considerable amount has happened in relation to investment in north Wales. I mentioned the summit that was held last year. We are keen to develop the signalling needed to improve the railway lines. The North Wales Economic Ambition Board is delighted with the support we are giving. We are keen to develop that even further.
Let us hope that the Government can get on a bit quicker with the electrification than they are on the Great Western main line. North Wales also needs better rail links to Manchester airport. Arriva Trains Wales has proposed a direct service from Llandudno to the airport. Will the Minister explain why, instead of investing in greater capacity on routes to Manchester airport, his colleagues at the Department for Transport have rejected Arriva’s plan, supposedly in favour of extra trans-Pennine services? If the Secretary of State’s place at the Cabinet table counts for anything, what is he going to do about that?
I do not recognise the premise of the hon. Lady’s question. Significant discussions are going on between the Department for Transport, the Welsh Government, rail operators and other partners about remapping and the franchises. We will happily take positive representations on that
8. What assessment he has made of trends in the number of workless households in Wales. 
In all parts of the United Kingdom our welfare reforms are working, transforming the lives of those from the most disadvantaged backgrounds. The number of workless households in Wales continues to fall, with 12,000 fewer in the last year alone.
Does the Secretary of State agree that the Government’s welfare reforms are improving the life chances of children in Wales?
I absolutely agree with my hon. Friend. We on the Government Benches understand that work is the best route out of poverty. I am very pleased that in Wales the number of children growing up in a home where no parent works has halved, falling by 62,000 since 2010. I am clear that if we are to transform life chances, we have to go much deeper and address the root causes of worklessness, as my right hon. Friend the Prime Minister pointed out in his speech on Monday.
Four years ago, my constituent Margaret Foster was sacked from Remploy by this Prime Minister. Yesterday, I raised her case in a debate. Today, I have been approached by local employers offering her work. Why are the Secretary of State and the Prime Minister presiding over a system to support disabled workers so useless that it takes a Member of Parliament raising the issue in Parliament for anything to happen?
The proportion of disabled people in Wales in work has increased under this Government. There was a time when Labour Members understood and talked the language of welfare reform. Maybe when they have stopped kicking lumps out of each other they will get back to addressing it.
Swansea Tidal Lagoon
9. What steps the Government are taking to establish a tidal lagoon in Swansea? 
I recognise that the proposed Swansea tidal lagoon project has the potential to establish Wales as a major hub for tidal power, creating thousands of jobs and attracting millions of pounds of investment. Robust due diligence is, of course, essential in the interest of taxpayers, who would incur the cost of any subsidy through their energy bills.
Dean Quarry in my constituency is likely to be the source of stone for the tidal lagoon. For over a year, local residents have been concerned about that because it is an important tourist area and marine conservation zone, and we believe there are cheaper areas from which to source the stone. Does the Minister agree that the impact on the environment and the economy is too great and that other sources of stone are available? Will the Government look for places other than Dean Quarry to get the stone?
I am aware of the issue raised by my hon. Friend, who is as ever a powerful and effective voice on behalf of his constituents. Planning applications in relation to Dean Quarry would be dealt with by the Marine Management Organisation and local authorities, which should absolutely take into account local concerns.
Local businesses across Wales are eagerly anticipating the investment that the tidal lagoon will bring. It would be a travesty if the UK Government were to pull the plug on the lagoon, so can the Minister confirm that they remain committed to the project and to agreeing a strike price for the tidal lagoon?
The hon. Lady is right: this is a big, potentially very exciting and significant project. It is also a project that is looking for a large amount of public subsidy and intervention, and it is absolutely right—not that we would expect Opposition Members to understand this—that when we are dealing with large sums of taxpayers’ money, there needs to be due diligence.
Last but not least, I call the Chair of the Environmental Audit Committee.
Swansea bay tidal lagoon and the other potential lagoons that may result from it provide amazing opportunities for exports of intellectual property, technology and supply chains across south Wales. Will the Secretary of State at least commit to making it happen and doing it as soon as possible?
I repeat the answer I gave to the hon. Gentleman’s colleague. We recognise that this is a potentially very exciting and significant project, in delivering low-carbon renewable energy over a long period. We need to look carefully at the finances to ensure that it delivers value for taxpayers, who will be asked to put a large amount of subsidy into the project.
The Prime Minister was asked—
Q1. If he will list his official engagements for Wednesday 13 January. 
This morning I had meetings with ministerial colleagues and others, and in addition to my duties in this House I shall have further such meetings later today.
The Royal College of Midwives has called the Government’s plans to cut nurses’ student grants “appalling” and the Royal College of Nursing says it is “deeply concerned”. Meanwhile, the hon. Member for Lewes (Maria Caulfield), who is a nurse, says she would have struggled to undertake her nurse training, given the proposed changes to the bursary scheme. So why does the Prime Minister still think he is right to scrap grants for student nurses?
For the simple reason that we want to see more nurses in training and more nurses in our NHS. We believe there will be an additional 10,000 nurses because of this change. The facts are that two out of three people who want to become nurses today cannot do so because they are constrained by the bursary scheme. Moving to the new system, those who want to become nurses will be able to become nurses.
Q2. The No. 1 responsibility of any Government is the protection of their people. Does the Prime Minister agree that Britain’s nuclear deterrent and our membership of NATO are key to our defences and that any moves that would put that at risk would jeopardise our national security? 
My hon. Friend is absolutely right. It has been common ground on both sides of this House that the cornerstone of our defence policy is our membership of NATO and our commitment to an independent nuclear deterrent, which must be replaced and updated. They are necessary to keep us safe, and at a time when we see North Korea testing nuclear weapons and with the instability in the world today we recommit ourselves to NATO and to our independent nuclear deterrent. I think the Labour party has some very serious questions to answer.
This week the Prime Minister rather belatedly acknowledged there is a housing crisis in Britain. He announced a £140 million fund to transform 100 housing estates around the country, which amounts to £1.4 million per housing estate to bulldoze and then rebuild them. [Interruption.] My maths is perfect. This money is a drop in the ocean. It is not even going to pay for the bulldozers, is it?
We have doubled the housing budget and we are going to invest over £8 billion in housing, and that comes after 700,000 homes having been built since I became Prime Minister. We have a quarter of a million more affordable homes. Here is a statistic that the right hon. Gentleman will like: in the last Parliament, we built more council houses than in 13 years of a Labour Government.
The Prime Minister has not thought this through very carefully. Every estate that he announces he wishes to bulldoze will include tenants and people who have bought their homes under right to buy. Will those people, the leaseholders, be guaranteed homes on the rebuilt estates he proposes?
I accept, of course, that this is not as carefully thought through as the right hon. Gentleman’s reshuffle, which I gather is still going on—it has not actually finished yet. We want to go to communities where there are sink estates and housing estates that have held people back and agree with the local councils and local people to make sure that tenants get good homes and that homeowners get rehoused in new houses. That is exactly what we want. Let us look at what we have done on housing. We reformed the planning rules, and Labour Members opposed them; we introduced Help to Buy, and they opposed it; we introduced help to save to help people get their deposit, and they opposed it. They have absolutely nothing to say about people trapped in housing estates who want a better start in their lives.
I notice that the Prime Minister did not give any guarantee to leaseholders on estates. I have a question to ask on behalf of a probably larger group on most estates. A tenant by the name of Darrell asks:
“Will the Prime Minister guarantee that all existing tenants of the council estates earmarked for redevelopment will be rehoused in new council housing, in their current communities, with the same tenancy conditions as they currently have?”
We are not going to be able to deal with these sink estates unless we get the agreement of tenants and unless we show how we are going to support homeowners and communities. Is it not interesting to reflect on who here is the small “c” conservative who is saying to people, “Stay stuck in your sink estate; have nothing better than what Labour gave you after the war.”? We are saying, “If you are a tenant, have the right to buy; if you want to buy a home, here is help to save; if you are in a sink estate, we will help you out.” That is the fact of politics today—a Conservative Government who want to give people life chances, and a Labour Opposition who say “Stay stuck in poverty”.
The Prime Minister does not seem to understand the very serious concerns that council tenants have when they feel they are going to be forced away from strong communities in which they live and their children go to school. Perhaps the Prime Minister will be able to help us with another issue. His party’s manifesto said:
“Everyone who works hard should be able to own a home of their own”.
Will families earning the Prime Minister’s so-called national living wage be able to afford one of his discount starter homes?
I very much hope they will. As well as starter homes, we have shared ownership homes. When I became Prime Minister, a young person trying to buy a home needed £30,000 for the deposit—
Order. I apologise for interrupting. [Interruption.] Order. I say to the hon. Member for Bishop Auckland (Helen Goodman) that her shrill shrieking from a sedentary position is not appropriate behaviour for a would-be stateswoman. I want to hear the Prime Minister’s answer.
When I became Prime Minister, people needed £30,000 for a deposit on a typical home. Because of the schemes we have introduced, that is now down to £10,000. I want people to own their homes, so let us consider this issue. We are saying to the 1.3 million tenants of housing associations, “We are on your side: you can buy your own home.” Why does the right hon. Gentleman still oppose that?
I hope that that word “hope” goes a long way, because research by Shelter has found that families on the Prime Minister’s living wage will be unable to afford the average starter home in 98% of local authority areas in England—only 2% may benefit. Rather than building more affordable homes, is the Prime Minister not simply branding more homes affordable, which is not a solution to the housing crisis? Will he confirm that home ownership has actually fallen since he became Prime Minister?
There is a challenge in helping people to buy their own homes. That is what Help to Buy was about, which Labour opposed. That is what help to save was about, which Labour opposed.
Is it not interesting that the right hon. Gentleman did not answer the question about the 1.3 million housing association tenants? I want what is best for everyone. Let us put it like this. The right hon. Gentleman owns his home; I own my home. Why should we not let those 1.3 million own their homes? Why not? What is the right hon. Gentleman frightened of?
The Prime Minister—[Interruption.] When the noise disappears—[Interruption.]
Order. The Leader of the Opposition will be heard.
I thank Conservative Back Benchers for their deep concern about the housing crisis in this country. It is noted.
The Prime Minister has given no assurances to tenants, no assurances to leaseholders, and no assurances to low-paid people who want to find somewhere decent to live. May I ask him one final question? It is a practical question that is faced by many people throughout the country who are deeply worried about their own housing situation and how they are going to live in the future, and it comes from Linda, who has been a council tenant for the last 25 years. She says:
“I will eventually look to downsize to a property suitable for our ageing circumstances. Due to the housing bill being debated at present, if we downsize we will have to sign a new tenancy agreement. If we stay, we face having to pay the bedroom tax and debt. If we downsize, we lose our secure home.”
Linda and many like her are facing a real problem. If she were in the Prime Minister’s advice bureau, what advice would he give her?
The first thing I would say to Linda is that we are cutting social rents in this Parliament, so she will be paying less in rent. The second thing I would say, if she is concerned about the spare room subsidy, is that of course it is not paid by pensioners, which is a point that the right hon. Gentleman failed to make. Another thing I would say to Linda, and to all those who are in council houses or housing association homes, is “We believe in giving you the chance to buy your own home, and are helping you to do that.”
Is it not interesting what this exchange has shown? We now have a Labour party whose housing policy does not support home ownership, just as its defence policy does not believe in defence, and just as we now have a Labour party that does not believe in work and a Labour leader who does not believe in Britain.
Q5. As someone who grew up in social housing, I welcome the Prime Minister’s commitment to tearing down poor-quality, soulless high-rise estates and replacing them with affordable homes. Will he seize this opportunity to make sure that those new homes are attractive, well-designed places in which people will want to live for generations to come? 
My hon. Friend is absolutely right. If Labour wanted to have a constructive opinion, they would come along and say, “How can we help knock down these sink estates, rebuild new houses, help people to own their own homes?” That is what we want to do, and that is what we are going to see in this Parliament: one side committed to opportunity, life chances, helping people get on, and another side wanting to keep people trapped in poverty.
The economic and intellectual contribution of college and university graduates to the UK is immense. The Smith commission said that the UK and Scottish Government should
“explore the possibility of introducing formal schemes to allow international higher education students graduating from Scottish further and higher education institutions to remain in Scotland and contribute to economic activity for a defined period of time.”
Why did the UK Government this week unilaterally rule out a return of a post-study work visa without stakeholder discussions and before key parliamentary reports?
We have an excellent scheme that covers, of course, Scotland, England, Wales and Northern Ireland, and it is this: to say to the world’s students that there is no limit on the number of people who can come and study in British universities as long as they have two things—an English language qualification and a place at a university. That is an incredibly generous and open offer. The second thing we offer is that there is actually no limit on the number of people who can stay after they have graduated, as long as they have a graduate-level job. Again, I think that is an incredibly clear message that all of us—whether we are involved in the Scottish Government, the Northern Ireland Administration, the Welsh Administration or the United Kingdom Administration—should get out and sell around the world. It is a world-beating offer; we want the world’s brightest graduates to come here, study here and then work here—what a great deal!
The return of post-study visas is supported by, among others, all of Scotland’s 25 publicly funded colleges, Colleges Scotland, Universities Scotland, the representative body for Scotland’s 19 higher education institutions, many other organisations and businesses, and all parties, including the Scottish Conservative party, so why does the Prime Minister think they are all wrong and he is right?
For the reason I have given, which is that the clarity of our offer is world beating. There is a disadvantage to inventing a new post-work study route, where we are effectively saying to people coming to our universities, “It’s okay to stay with a less-than-graduate job.” Frankly, there are lots of people in our own country desperate for those jobs and we should be training them up and skilling them up. We do not need the world’s brightest and best to come here to study and then to do menial labour jobs. That is not what our immigration system is for. What we want is a system where we can advertise to the world—“Come and study here. Come and work here”—and that is the system we have and should keep.
Q6. Will the Prime Minister join me in welcoming the fact that Aldi is in the process of building a distribution centre in my constituency, bringing the prospect of another 400 jobs to local people? That distribution centre is situated just off the A249, which is one of the busiest trunk roads in the south-east of England. Will my right hon. Friend encourage the Department for Transport to undertake a review of the A249 to ensure that it can cope with the increased traffic generated by the expanding business activity in my constituency? 
I certainly join my hon. Friend in welcoming the investment in his constituency, where the claimant count has fallen by 39% since 2010. That is obviously welcome news. I will take up the point he makes, because obviously we are only going to continue to attract investment if we make sure our road and rail networks are up to date.
Q3. The Prime Minister will be aware that last week this House discussed the equalisation of the state retirement age between men and women. Does he feel the outrage of a generation of women born in the 1950s who feel robbed and cheated out of their state pension, and will he give an undertaking to look at further improvements to transitional arrangements, given the unanimous decision of this House to ask him to do so? 
I know that many colleagues have been written to on this issue, and there are some important cases to look at, but what I would say is that we looked very carefully at this at the time and decided that no one should suffer more than an 18-month increase in the time before they were expecting to retire. What I would also say is that what we are putting in place—with the single-tier pension starting at over £150 a week, combined with the triple lock—is a very good settlement for pensioners. It is affordable for the taxpayer and it is generous into the future.
Q7. By 8 January—after just eight days—parts of London had exceeded the annual limit for nitrogen dioxide pollution. Given this medically serious news, will the Prime Minister ensure that the Department for Transport’s current consideration of airport expansion prioritises air pollution concerns, and will he pledge never to expand Heathrow airport while nitrogen dioxide levels are risking the health of millions of people? 
My hon. Friend is absolutely right to raise this point. There are problems of air quality and pollution not just in London but elsewhere in our country. That is one reason we decided to delay the decision about airport capacity expansion—because we need to answer the question about air quality before we do so. That is what the Environmental Audit Committee recommended to the Government. It said:
“On air quality, the Government will need to re-examine the Commission’s findings in the light of its finalised air quality strategy.”
So the point she makes is directly being taken on by the Government.
Q4. The Prime Minister’s answer to the hon. Member for Edinburgh East (Tommy Sheppard) about transitional arrangements for women born in the 1950s was nothing like good enough. I was going to say that his own Ministers seem to have no idea how to rectify the injustice they have caused, but I do not think he does either. As he is talking to other EU leaders, will he ask why some countries are not implementing the changes until 2044, and will he also look at what transitional arrangements the Netherlands, Italy and Germany put in place to protect the people affected? 
What other European countries do is a matter for them. We have the ability to make sovereign decisions on this issue, and that is entirely right. We have decided to put in place a pensions system that is affordable for our country in the long term and which sustains a very strong basic state pension right into the future. The single-tier pension is going to make such a difference to so many people in our country. We also have the triple lock, which was never put in place by Labour. We all remember that miserly increase to the pension under Gordon Brown. That can never happen again under our arrangements.
Q8. Since 2010, my constituency has seen the generation of more than 200 new businesses, while the claimant and youth unemployment rates have fallen to below 1%. With the £240 million investment in Bracknell town centre regeneration, full employment in the area is a genuine possibility. Does the Prime Minister agree that it is the Government’s sound stewardship of the economy that has led to this economic success in my constituency? 
I am delighted to hear the news from Bracknell. In Britain today, we have low interest rates; inflation right on the floor; real wages growing, meaning people are feeling better off; people investing inwardly in this country in huge numbers; and business investment going up, because people are confident about the future of our economy—and all that is based on a long-term economic plan of dealing with our debts, getting our deficit down and making this a country where people can start, run and expand a business and therefore create jobs and prosperity for all our people.
Q10. Over the past four years, according to excess winter death figures from the Office for National Statistics, a staggering 117,000 people have died unnecessarily as a result of the cold. Some 43,000 people tragically died last winter. Does the Prime Minister agree that that is not only appalling but avoidable? Why does he think so many people are dying needlessly in our country, and what will he do to stop it happening? 
The hon. Gentleman is absolutely right to raise this point. The figures on winter deaths, which are published every year, are a standing rebuke to all Governments about what more needs to be done. First, we have maintained the cold weather payments. They are vital and may kick in if the cold weather continues. There are also the winter fuel payments, which we have maintained, and the increase in the pension, which will go up by prices, earnings or 2.5%. We also now have falling energy prices, because of the falling oil price, but I agree they are not falling as fast as I would like, which is why it is right we have this Competition Commission inquiry into the energy industry to ensure that it is a fully competitive industry. But the industry has come a long way in the last few years. When I became Prime Minister, the independent energy companies comprised just 1% of the market, but they now comprise 15%, so the big six are being broken down through competition. All those changes, plus home improvements and making sure people have good insulation, can make a difference.
Q9. The implementation of the Iran nuclear deal, in which British diplomacy was crucial, is imminent. Will my right hon. Friend tell the House what steps are being taken to ensure that Iran abides by its side of the deal? 
My hon. Friend is absolutely right about this. Let me pay tribute to Secretary of State John Kerry for the incredible work that he did, and also to the Foreign Secretary, who was by his side all the way through the negotiations of what was a very tough and difficult deal. The adoption day for the deal was in October. Since then, Iraq—sorry, Iran—has started shipping 12.5 tonnes of enriched uranium to Russia. Now we are getting close to what is called the implementation day for the deal. The key point is that Iran has granted the International Atomic Energy Agency unprecedented access to ensure that it is doing all the things it said it would do in this deal. As I said at the time, it is a good deal, in that it takes Iran away from a nuclear weapon, but we should enter into it with a very heavy heart, a very clear eye and a very hard head in making sure that the country does everything it said it would.
Q11. When the Government pushed through their changes to undergraduate funding four years ago, they said that providing maintenance grants for the poorest students was key to those students’ participation in higher education. No mention was made in the Conservative manifesto of ending those grants. Is it not therefore completely unacceptable to make that fundamental change tomorrow in Committee by the back door without a vote in this House? 
This issue has been fully debated and discussed in this House, and it is absolutely right because our changes have shown, despite all the warnings from the Labour party, that more people are taking part in higher education and that more people from low income backgrounds are taking part in higher education. I am confident that that will continue to be the case.
Q12. Thanks to this Government’s long-term economic plan, unemployment in North West Leicestershire now stands at an all-time low of 522. This Saturday, East Midlands airport will host a jobs fair with 350 more positions available. Will my right hon. Friend join me in wishing all the businesses in North West Leicestershire more success with recruitment and retention than the Leader of the Opposition has had? 
I am delighted to hear that there are only 522 people unemployed in my hon. Friend’s constituency. Let me praise him and the other Members on both sides of the House who have run jobs fairs in their constituencies. These have made a huge difference in terms of people being able to find opportunities. The truth is that, since 2010, 64% of the rise in private sector employment has taken place outside London and the south-east. Indeed, Scotland, the east midlands, the east of England, the south-west and the south-east all have higher employment rates than London. In growing terms, this is a balanced recovery, and we need to keep working at it to make sure that it is.
Q14. Last year, the Energy Secretary scrapped support under the renewables obligation for new onshore wind projects. This will impact Nissan’s £3 million investment in its wind farm in my constituency. Does the Prime Minister realise that his attacks on clean energy are detrimental to pro-green businesses such as Nissan? Will he look at this immediately and rectify the matter in the Energy Bill next week? 
We had extensive exchanges about this in the Liaison Committee yesterday, and I can tell the hon. Lady that we are going to see another 50% increase in onshore wind investment during this Parliament. Also, Britain has the biggest offshore wind market anywhere in the world. The Leader of the Opposition raised the question of solar. Britain has the fourth largest solar installation of any country anywhere in the world. Indeed, my new favourite statistic is that 98% of those solar panels have been installed since I became Prime Minister. This is all good news, and it means that we have a genuine claim to be leading a renewables revolution. However, every single subsidy that is given to these technologies is extra money that we put on to people’s bills, making their energy more expensive. So it is right that we seek a balance between decarbonising our economy and making sure we do it at a low cost to our consumers and the people who pay the bills. That is what our policy is all about.
Q13. With the number of workless households in the United Kingdom at an all-time low and with 1.4 million more children being taught in schools ranked good or outstanding since 2010, does my right hon. Friend agree that the mark of a one nation Government is not the amount of money we spend on benefits, but what we do to tackle the root causes of poverty? 
My hon. Friend is absolutely right about that, and it is what the exchanges earlier on proved. As far as I can see, Labour’s only answer to every single problem is to spend more money, so it ends up with more borrowing, more spending and more debt—all the things that got us into this problem in the first place. Our approach is to look at all the causes of poverty—all the things that are holding people back. Let’s fix the sink estates, let’s reform the failing schools, let’s give people more childcare, and let’s deal with the addiction and mental health problems that people have. In that way, we will demonstrate that this is the Government and this is the party helping people with their life chances, while Labour just want to stick you where you are.
The draft Wales Bill contains provisions that reverse the 2011 settlement, which was overwhelmingly endorsed at the last Welsh referendum. Unless it is amended, the National Assembly will unanimously—this will include Tory AMs—oppose the Bill during the legislative consent motion process, sparking a constitutional crisis. The veto and consent clauses do not apply in the case of Scotland and Northern Ireland, so why are this Government treating Wales like a second-class nation?
What this Government have done is, first, hold a referendum so that the Welsh Assembly has those law-making powers, Secondly, we are the first Government in history to make sure there is a floor under the Welsh level of spending—this is something never done by a Labour Government. And now, in the Wales Bill, we want to make sure that we give Wales those extra powers. That is what the Bill is all about. We are still listening to the suggestions made by the hon. Gentleman and by the Welsh Assembly Government, but this Government have a proud record, not only of devolution for Wales, but in delivery for Wales.
Thirty dollar oil is great for petrol prices, but it is potentially catastrophic in other respects. If it goes on like this, we risk seeing regimes under pressure, dramatic corporate failures and financial default, enormous financial transfers out of our markets to pay for other countries’ deficits, a possible collapse in share prices and dividends for pensions, and a liquidity problem in our banking sector. May I invite the Prime Minister to initiate an urgent review across Whitehall to assess the effects of continuing low oil prices on our economy and beyond, and, in particular, to work out how we can avoid the destruction of our own oil industry in the North sea?
My right hon. Friend makes an important point about this very big move in the oil prices. It of course has a highly beneficial effect for all our constituents, who are able to fill up their cars for less than £1 a litre, which is a very big increase in people’s disposable income and wholly welcome. I think that a low oil price basically is good for the British economy as an economy that is a substantial manufacturing and production economy, but of course there are other consequences and he named many of them. We need to look very carefully at how we can help our own oil and gas industry. Of course, as we are coming to the end of Prime Minister’s questions, I should say that he did mention one other calamity that the low oil price brings about, which is that it has led to a complete and utter collapse of the Scottish National party’s policy.
Recent press reports suggest that although some—[Interruption.]
Order. The hon. Lady must be heard.
Recent press reports suggest that although some on the Government’s Back Benches would agree with me—despite the fact that my background would be what the Prime Minister would consider to be “menial”—in calling for a reduction in the stake from a maximum £100 a minute on fixed-odds betting terminals, the Cabinet Office seems reluctant to review this £1.6 million industry and refuses to bring it under scrutiny. Can the Prime Minister assure the public that his Government will undertake a review of this dangerous, addictive and ever-growing problem?
We have looked at the problem and at the industry, and we have made a series of changes, including planning changes, but we will keep that important situation under review.
Although the floods over Christmas were bad for many areas in the north of England and in Scotland, Calder Valley residents were hit the hardest, with 2,100 homes and 1,300 businesses flooded, three bridges lost, four schools either flooded or part-flooded, and an old tip with asbestos that slid, keeping a further 20 families out of their homes. Will my right hon. Friend agree to meet me to discuss how we can help with the £20 million infrastructure damage, the shortfall in future flood defence schemes and the rebuilding of Todmorden High School?
My hon. Friend and I have discussed Todmorden High School on many occasions, and I think that we should meet again and discuss it again and try to make some progress on the matter. First, let me say that my sympathies, and the sympathies of the whole House, go out to those people and those businesses that were flooded, many of which were in his constituency, at that particular time of year. We will do everything we can to help communities get back on their feet. The very large flood investment programme is in place, and the maintenance programme has been protected in real terms, but there is a number of other infrastructure pieces of work that need to be done. I commend the Highways Agency for being so quick to examine roads and, in some cases, to take over the repairs to local authority roads because it has the capacity to act quickly. That is what we need to do in these situations. As I said last week, this time the Army was in faster, the money was distributed faster, and the Environment Agency worked even harder and even more round the clock, but there are always lessons to learn to demonstrate that we want to get these communities back on their feet as quickly as possible.
Points of Order
On a point of order, Mr Speaker. I wondered whether, overnight, you have had an opportunity to reflect on the point of order that I raised at the end of last night’s debate. The certification process is a new procedure, so it is very, very important that we get it right, particularly as it has such negative and adverse effects for MPs from Northern Ireland and Scotland. I intend no criticism of you, Mr Speaker. However, I hope that you will accept that when the Government table a new clause, which mentions both England and Wales, and then a designation is made in a certificate that it applies exclusively to England, it is inherently ambiguous and contradictory. That is the point that I was making. I should like clarification on how we correct a certificate that is designated apparently incorrectly.
I thank the hon. Lady for her point of order. Moreover, I can of course confirm to her and to the House that I am aware of the point of order that she raised with the Chair yesterday evening—the First Deputy Chairman of Ways and Means was present at the time.
Let me say to the hon. Lady, who I know would never be guilty of any insult to, or display of discourtesy towards, the Chair, that she and the House can usefully benefit from an explanation, which, on this occasion—I will emphasise the relevance of this later—I am very happy to provide. It is understandable that she initially surmised that new clause 62 should have been certified as relating to Wales as well as to England, but the reality is, as close examination testifies, that the application to Wales falls into the category of minor or consequential as, crucially, it makes no change in the law applying in Wales. So, in the view of the Chair, which was informed by the combined advice of the Clerks and the Office of Speaker’s Counsel, it was rightly certified as relating exclusively to England.
I do not in general intend to explain my decisions in this way—that is why I emphasised that I was happy on this occasion to provide an explanation—but as this is the first occasion of a Legislative Grand Committee, and the suggestion, which I absolutely accept was honest and well intentioned, of error on the part of the Chair, is on the record, I have thought it best to put the matter straight.
That said, I should also like to take this opportunity to say to all Members that the whole point of my publishing provisional certificates is to give them ample opportunity to make representations, if they think that an error has been made or they wish simply to express a contrary view, before I am required to make a decision, which must then be regarded—for reasons with which the House will be well familiar—as final and not subject to further appeal. The appropriate channel for timely representations on the draft or provisional certificate is via the Clerk of Legislation in the Public Bill Office. I hope that that is helpful, both to the hon. Lady and, indeed, to the House.
Further to that point of order, Mr Speaker.
I am not sure there is anything further, but I hold the hon. Lady, who is a distinguished advocate, in the highest esteem, so we will hear from her.
It is related, Mr Speaker. I am enormously grateful to you for making that statement and I have noted that it was an exception on this particular occasion.
Bearing in mind what you have said, Mr Speaker, may I note for the record that there are four Sinn Féin Members who represent Northern Ireland constituencies but who do not take their seats? However, they do receive support for administrative and secretarial assistance. I sit as an independent Member representing North Down and am proud to do so. I receive no additional funding at all for secretarial or administrative assistance. In the light of the very complicated certification process that has now been introduced, which affects me and other representatives from Northern Ireland, could you give some consideration to the provision of additional support for Members such as me when we have to go through the provisional certification list? That would be very helpful.
The answer to the hon. Lady is twofold. First, it is not for me to consider the provision of additional support in the sense in which she implies it—that is to say, financially paid-for support. Secondly—I intend no discourtesy to the hon. Lady and I am not being pedantic; I am trying to be precise—there is a very real sense in which she does not go through the certification process. I do. That is the responsibility of the Chair, with which I have been invested by the House.
Thirdly—I am really trying to be helpful to the hon. Lady and to the House in the context of what is, let us face it, a new procedure—although it is not for me to pledge or to hint at any additional support of a kind that she might have had in mind, what she does have is the support of the Clerks and other procedural specialists in this House. The hon. Lady knows well the route to the Table Office and, if I may say so, I think she should take advantage of its expertise. Our bewigged friends have very considerable expertise in these matters. They are not only prepared to advise the hon. Lady and any other Member; they are positively excited by the prospect of doing so. [Interruption.] I say to the shadow Leader of the House that the fact that they are excited by the prospect rather suggests that they will have a smile on their face at the time.
They have now.
And they have now. I hope that will do for today. The hon. Member for North Down (Lady Hermon) and I know each other well, and if she has further difficulties in the future I am always pleased to hear from her and to try to assist her and any other Member in this or other matters.
English National Anthem
Motion for leave to bring in a Bill (Standing Order No. 23)
I beg to move,
That leave be given to bring in a Bill to provide for an English National Anthem for use at sporting events that involve individuals or teams representing England; and for connected purposes.
I am neither a republican nor an atheist, and nor am I am English nationalist. I shall say more about that theme shortly, but hon. Members should detect no hostility from me towards God, Her Majesty the Queen, “God Save the Queen” or the United Kingdom. Indeed, it is precisely out of respect for preserving many of those things that I believe that the time has come to consider the question of an English national anthem. I acknowledge the excellent work already done on the issue by the hon. Members for Leeds North West (Greg Mulholland), for Shrewsbury and Atcham (Daniel Kawczynski) and for Romford (Andrew Rosindell), which shows that this is a real cross-party campaign. The Prime Minister has also shown sympathy with the argument for an English national anthem.
The level of interest in the matter confirms that the movement for an anthem for England is one whose time has come. As is often the case, it is for us in Parliament to catch up with public opinion and allow the voice of England to be heard. I spoke to radio stations in all corners of England this morning, such was the interest in the debate about what our anthem should be. There were vox pops on the streets of towns far and wide, and each area reflected the specific differences of our multifaceted nation. I will not say which area thought that the most appropriate choice for an English national anthem would be “Heaven Knows I’m Miserable Now”—that will remain a secret between me and the listeners of BBC Radio Humberside—but that reflects the fact that each local area has its own sense of what Englishness means.
When England play against other home nations on the football or rugby field, I often find it incongruous that while the Welsh and Scots sing an anthem that reflects the identity of their nations, England sings about Britain. That reflects a sense that we see Britain and England as synonymous, and it not only denies us English an opportunity to celebrate the nation that is being represented, but is a cause of resentment among other countries within the British Isles, which feel that England has requisitioned the British song.
I deliberately have not referred so far to the Bill’s implications for Northern Ireland. While the measure is specifically about England and would have no jurisdiction over Northern Ireland whatsoever, I am aware of considerable interest from Northern Ireland, to which I shall respond shortly.
National anthems are a matter of convention. The British national anthem is accepted as being “God Save the Queen”, although that is not enshrined in law. The first team to sing a national anthem before a sporting contest was the Welsh rugby team in 1905, in response to the New Zealand haka. Since then, the Welsh tradition of singing “Land of my Fathers” has given an especially Welsh flavour to every sporting contest in which the team competes. The song “Flower of Scotland” has been used as the national anthem by the Scotland rugby team before each of their defeats—or should I say matches?
What about the world cup?
I remember that there was an exception.
I recognise that matters of the constitution are keenly felt in Northern Ireland, but the Bill refers to only an English consultation. The Northern Ireland football team sings “God Save the Queen”. I have had considerable contact with the media and citizens in Northern Ireland. Interestingly, the callers to BBC radio in Northern Ireland seem enthusiastic about giving people a choice, but that would be a matter for Northern Ireland. England should not be forced to take a decision on the basis that that might put pressure on Northern Ireland to make a different decision.
On constitutional matters, it is always best to allow the voice of the people to be heard, rather than to dictate, if at all possible. Important steps towards making the Scottish Parliament the most devolved Parliament in the world and other devolutionary measures mean that we need a fresh settlement for England and Britain as part of re-establishing the distinct identities of the four nations that make up the United Kingdom of Great Britain and Northern Ireland. That does not mean that we should fear recognising England as an entity, but we should welcome the opportunity to re-establish the idea that the United Kingdom is four separate nations with their own identities that are part of a wider Union for their own mutual good.
It is remarkable to me to watch footage of the 1966 World cup. I am sorry if people are unhappy at the mention of that, but it was a proud occasion. Looking at the crowd, one saw the Union Jack everywhere. Even in the 1990 World cup, England fans predominantly took the Union Jack. It was in 1996, at the European championships—possibly because England were drawn to play against Scotland—that the flag of St George came to be seen as the flag of England. The Union Jack has now virtually disappeared from Wembley when England are playing.
In 2010 the Commonwealth Games Council for England conducted a poll of members of the public which decided that the anthem for the 2010 Commonwealth games should be “Jerusalem”. The three options were “God Save the Queen”, “Jerusalem” and “Land of Hope and Glory”, and “Jerusalem” was the clear winner with 52% of the vote. “Land of Hope and Glory” received 32% and “God Save the Queen” just 12%. Just as “Jerusalem” was the favoured choice of those who voted in the Commonwealth games poll, so it seems to be an early favourite among members of the public who have engaged with me. The campaign group England in my Heart is specifically campaigning for “Jerusalem” to be played before England rugby matches.
With that level of support for “Jerusalem” the outcome may seem a foregone conclusion. I do not know whether there is a way of putting people off William Blake’s classic tune, but I suspect that driving round and round Parliament Square with a van blaring it out might be precisely the way to achieve that. One cannot always choose one’s friends in these matters, but I welcome the fact that hon. Members are enthusiastic.
Since I announced my intention to bring this Bill before Parliament there has been widespread coverage of it. Anecdotally, there has been a lot of support. A Daily Mirror poll found 71% in support of a separate English national anthem and phone-ins have shown a lot of support, but we need a more formal attempt to take the pulse of the nation. I want to underline the fact that my Bill will not specify what anthem should be chosen.
My Bill bestows a duty on the Secretary of State for Culture, Media and Sport to hold a consultation across England that will decide what the English national anthem should be, and will call on the Secretary of State at the end of that consultation to write to the Football Association, the Rugby Football Union, England Netball and any other sporting bodies that have athletes or teams of athletes representing England and inform them that the English national anthem should be used in the event that a piece of music is required prior to the contest or at the awarding of medals. Once the Bill has been passed it will be for the Secretary of State to decide what form the consultation should take and what the contenders should be.
Alongside the choices that were listed for the Commonwealth games poll, anthems such as “I vow to thee, my country” and “There’ll always be an England” have been suggested. Others believe that there could be an opportunity for some X Factor-style programme to combine traditional choices alongside some newly commissioned options. The opportunity for this to be a real moment of engagement with the English people about this specific aspect of our future direction is significant.
This idea has had many positive reviews, including supportive columns in the Daily Mirror and the Sunday Express. I was disappointed to read that a friend of Her Majesty the Queen has said that she considered the idea “rude”. Although I have the utmost respect for the intentions of the lady concerned, I fear that her response betrayed the extent to which the question of Englishness has passed her by. Now that two of the nations have chosen no longer to use the British anthem, it is too late for this to be a question of all the component parts of Britain acting in the same way, and it makes England the outlier.
I hope the House will support this important Bill. Although I accept that to some there should be more important issues for this House to consider, the issue of national identity is a powerful one, and my experience is that ignoring the issue only allows it to fester. I believe the consultation that my Bill proposes will lead to a national conversation across England, and ultimately the voice of England will be heard. Whatever choice the people make, it will be the majority view, and we in this House can do no better than make sure that the voice of England is heard.
I rise to oppose the Bill, though I congratulate the hon. Member for Chesterfield (Toby Perkins) on following in the footsteps of Flanders and Swann. Some years ago they proposed that England should have its own national anthem and they came up with “The English, the English, the English are best”. I will not go through all the lines because, although I am not a great advocate of political correctness, some elements of them may, in this modern age, cause some discombobulation to other hon. Members, particularly my friends in the Scottish National party, but there is an excellent line, “And the Greeks and Italians eat garlic in bed!”—something to be strongly advised against as an unpleasant and somewhat malodorous habit.
I oppose the proposal for deep and serious reasons. What greater pleasure can there be for a true-born English man or true-born English woman than to listen to our own national anthem—a national anthem for our whole country, for our whole United Kingdom, of which England is but a part, but an important part—and to listen to those words that link us to our Sovereign, who is part of that chain that takes us back to our immemorial history; to sing or, if one cannot sing, to listen to the tune that invokes our loyalty to our nation? That tune has been popular since 1745, when it is thought to have started in a response to the Jacobite rebellion. I am usually in favour of Jacobites for obvious reasons, but on that occasion they were traitors and not to be encouraged.
The words that developed then and have remained constant change only when we have a woman on the throne, rather than a man. It is a tune that encapsulates the patriotism that we wish to express when supporting a team. The hon. Member for Chesterfield said that now English crowds take St George’s flag rather than the Union Jack. To me that is a matter of pity, of shame, that we have given up viewing ourselves as one United Kingdom, whether we are supporting England, Scotland, Wales or Northern Ireland. These expressions of individual nationalism are a disuniting factor in our country, a country that we ought to want to make more united.
As the hon. Gentleman mentioned, English crowds have taken to singing “Jerusalem” at various sporting occasions. It is sung at the beginning of test matches in some grounds, though I am glad to say that this does not seem to happen at Lord’s, which is an indication of the proper ordering of things. I am not sure that singing a jolly tune at the beginning of a match is particularly dignified and represents the nation as the nation ought to want to be represented. The crowds have taken to “Jerusalem”, which has a good tone to it. It is a happy song for people to sing, and we should all be in favour of happiness, but does it really make that patriotic pride swell up in us in the way that we would like?
When we think of the words of “Jerusalem”, a highly speculative question is posed. In the words:
“And did those feet in ancient time”
a question is being asked, but I come from Somerset and I know the answer. It is well known that Christ was taken by Joseph of Arimathea to Glastonbury, so why in “Jerusalem” could anyone want to sing “did”, when we know that the truth is that Christ not only went to Glastonbury but, as in that old Somerset saying to assert the truth of anything, “As Christ was in Priddy”, Christ also went to Priddy, and as a young man Joseph of Arimathea probably did too. Could we possibly want to have an anthem that questioned this undeniable truth of God’s own county, the county particularly selected for visitation by our Lord when he was on Earth?
This proposed Bill seeks to regularise something that in our brilliant British way we have never previously needed to regularise. Our national anthem has come about over time without needing pettifogging regulation, bureaucracy or any of those things that we dislike, so that is a reason for opposing it. The proposal reduces the sense of devotion to our Sovereign that we ought to have, that it is proper to have and that we promise we will have when we swear in or affirm as Members of Parliament. That would be a sad thing to lose. It lacks the courage of Flanders and Swann to go the whole hog and be properly, eccentrically patriotic. It is a sort of second-tier level of national anthem, though when it was proposed that the anthem might be a song normally sung at the Labour party conference, I must confess I was relieved that the one chosen was not “The Red Flag”. Given the current trend in the leadership of the Labour party, though, it would not surprise me if in a year’s time we have a private Member’s Bill to make singing “The Red Flag” compulsory as well. [Interruption.] I am glad to get some support from Labour Members on the Front Bench below the aisle, who probably think that is a heartily good idea.
This would mean moving away to the wrong song—a song that offends Somerset sensibilities. It would be a bad thing to do. We should affirm our loyalty to our sovereign lady in the words of the British national anthem; and as for the hon. Member for Chesterfield, we should confound his politics and frustrate his knavish tricks.
Question put (Standing Order No. 23) and agreed to.
That Toby Perkins, Tristram Hunt, Greg Mulholland, Daniel Kawczynski, Ruth Smeeth, Sarah Champion, Mr Jamie Reed, Andrew Rosindell, Angela Smith, Bob Stewart, Michael Fabricant and Sir Gerald Howarth present the Bill.
Toby Perkins accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 4 March and to be printed (Bill 118).
[15th Allotted Day]
Trade, Exports, Innovation and Productivity
I beg to move,
That this House regrets the continuing lack of balance in the UK economy and the UK Government’s over-reliance on unsustainable consumer debt to support economic growth; notes in particular the UK’s poor export performance, which resulted in a trade deficit in goods of £123 billion in 2014; further notes the UK’s continuing poor productivity record and the lack of a credible long-term plan to improve it; and is deeply concerned by the UK Government’s change to Innovate UK funding of innovation from grants to loans, which this House believes will result in a deterioration of private sector research and development.
This is a serious debate, and it is appropriate that we have it today given the news published yesterday that UK industrial output has suffered its sharpest fall since 2013, and the further assessment that describes how real-terms earnings in the UK are still substantially lower than they were in 2009 and that even GDP growth over the past decade or so has been lower than that of Japan during its decade of stagflation. It is important that we recognise that the matters we are going to address are not short-term issues. This is not about a quick political hit; it is about trying to get to the root cause of a long-standing and systemic problem in the UK—the failure to address trade, exports, innovation and productivity, in total, over a prolonged period.
We have chosen to debate all these matters because they are linked. The debate is also, rightly, about the imbalance in the UK economy, because that is part of the equation. That imbalance, or, more accurately, those imbalances are recognised by this Government, but they cannot and will not be resolved, first, without the real political will to do so, and secondly, until the other areas that we are discussing are fully and properly addressed. The imbalances in the economy are not only between England and Scotland or London—a city previously described by a Minister as a black hole sucking resources and talents out of everywhere else in the UK—and the rest of the UK, but still, sadly, between manufacturing and services, businesses that export and those that do not, and companies that innovate and those that do not.
The impact of all this is most starkly seen in the balance of trade numbers. For the full year in 2014, the UK ran a balance of trade deficit of £93 billion. For the same year, the deficit in trade and goods was an extraordinary £123 billion—that is £123 billion in the red just in the trade in goods. The impact in GDP terms, as is well known and published by the Government, was negative, and unsurprisingly the summer Budget confirmed that it would remain negative in every single year of the forecast period in this Parliament through to 2020.
The hon. Gentleman has referred to Japan. He will not have missed the fact that Europe has been in recession for much of the period in which our economy has been growing, and that has had an inevitable impact on our balance of trade with our biggest partners.
If the trade deficit was simply a consequence of the deep recession, the hon. Gentleman would be right, but, as I will demonstrate, this has gone on not for five, 10, 20 or 30 years, but 50 years. We need to address that deep, underlying systemic issue.
As I said, the contribution to GDP is negative for the entire forecast period, as published in the summer Budget and again in the autumn statement. Worryingly, those figures were marked down—they were actually worse than the corresponding forecast published in the spring Budget before the election. We are not seeing a stabilisation, or a recovery that would allow us some sense of normality, but a continuing decline. That appears, as I hope to demonstrate later, in almost every metric that we look at.
Does the hon. Gentleman accept that the Office for Budget Responsibility expects productivity growth to return to its historical average by the end of 2017?
Yes, I have seen the OBR forecasts, and I will quote some of them later. However, I am taken by what the Chancellor said more recently than the latest OBR forecast, which is that it is no longer a case of “mission accomplished”, almost as if he is getting his excuses in first and preparing to blame other people. Despite the OBR forecasts, things are not all hunky-dory; everything in the garden is not rosy. As I pointed out, when we are looking at GDP growth over a decade worse than that of Japan’s lost decade, it would be wrong to be complacent like some of those in the hon. and learned Lady’s Government.
When the Chancellor said to the country at large, and to the Tory press in particular, that the economy was running into the buffers, was he not really demonstrating that the long-term economic plan was just a mirage?
The hon. Gentleman is absolutely right. The long-term economic plan is just a soundbite. It was predicated on the deficit being reduced, the debt being reduced, and borrowing falling to barely £20 billion last year. Every single one of the targets the Government set, they failed to meet. The Chancellor did not meet a single one of the key fiscal targets that he set for himself in the previous Parliament.
The key thing about the impact of trade and exports on GDP is that the figures are negative and have been marked down. I ask the House to consider how different that reality is from the promise made by the Chancellor when he stated that exports would be a significant contributor to GDP growth, primarily to shift the economy away from a reliance on household consumption. As we saw in yesterday’s reports, because industrial output is down and exports are likely to continue to fall, and certainly not to grow in the way that he has promised, we will continue to see a dependence on household consumption and a rise in household debt that is inconsistent with a properly rebalanced economy.
A great deal of private sector industrial investment over the past 30 years has been connected with the oil industry. I am thinking of the threat to jobs and working families in Scotland, in particular. Will my hon. Friend commend a system of exploration credits like those successfully introduced in Norway some years ago to kick-start exploration as a means of addressing this crisis? After 30 years of Governments raking in £300 billion of revenue, should it not be payback time for North sea workers?
It certainly should in the sense that the sector is important not simply for Aberdeen or for Scotland, but for a supply chain throughout the UK. Indeed, the right hon. Member for Rutland and Melton (Sir Alan Duncan) set out, in his question at Prime Minister’s questions, the potential damage should the sector continue to suffer. This Government—indeed, all Governments, but particularly these Ministers, because many of them are believers—should do several things: continue to protect people who want to enter the sector by making sure they are properly trained; continue to support the supply chain in the North sea basin; and, to internationalise, look again at supporting the industry as it cuts its own costs and of course at the overall fiscal framework, which is a substantial cost. Essentially, as my right hon. Friend the Member for Gordon (Alex Salmond) said, the Government should look again at all the credits available, whether for exploration or production and whether for geographic areas or specific oil types, to maximise absolutely the longevity, employment and contribution to the economy of a sector that, as he rightly reminds the Government, has raked in more than £300 billion since oil started coming ashore.
Does the hon. Gentleman see any inconsistency, in the answer he has just given to his colleague, between looking for ways to increase the output of North sea oil and the Scottish National party’s aim of totally decarbonising energy production in Scotland?
No. The decarbonisation of electricity production is sensible for many reasons, which may well include carbon capture and storage. On a number of occasions during the past five years, and very recently under this Government, we have seen the cancellation of a competition to develop an industrial-sized testbed to show the efficacy of a technology which would make us a world leader.
Will the hon. Gentleman give way?
I will not give way at the moment, because I have been quite generous. I will make a little progress, and then I will be happy to do so.
I was talking about exports. Let us remember what the Chancellor said in his Budget speech in 2012. He acknowledged the UK’s falling share of world exports, but still said that
“we want to double our nation’s exports to £1 trillion this decade.”—[Official Report, 21 March 2012; Vol. 542, c. 797.]
Total export sales in 2013 were £521 billion, which was a reasonable start, but that fell to £513 billion in 2014. The numbers are moving in the wrong direction; yet the Chancellor and this Government still expect us to believe that exports could in effect double over this Parliament. The OBR’s most recent forecast suggests that they will miss that target by about £350 billion, so the target set is simply unachievable.
That is not an abstract political or obscure economic point. The jobs of real people depend on a thriving and growing manufacturing export market. The hopes and aspirations of people in Scotland and throughout the UK for a real rebalanced economy depend on the rhetoric and pipedreams of an out-of-touch Chancellor. However, that was not the start and end of the Chancellor and the Government’s rhetoric on exports. They described how they wanted to
“make the UK the best place in Europe to start…and grow a business; encourage investment and exports as a route to a more balanced economy”.
The Chancellor said:
“So this is our plan for growth. We want the words ‘Made in Britain’, ‘Created in Britain’, ‘Designed in Britain’ and ‘Invented in Britain’ to drive our nation forward—a Britain carried aloft by the march of the makers.”—[Official Report, 23 March 2011; Vol. 525, c. 966.]
They were powerful words, but, given the reality, no more than rather empty rhetoric.
The SNP spokesman is right to point out the importance of exports, although the current account gap has been falling consistently during the past two years. Does he not agree, however, that the way to increase exports in the long run is through innovation, new technologies and investment? By being part of a larger United Kingdom, Scotland is likely to get greater quantities of all of those—through the Technology Strategy Board—than if it was on its own.
I agree with the hon. Gentleman’s assessment that we need more innovation, exports, technology and investment, all of which I will come on to. The Government and I can have a debate about precisely what they are doing, but his assertion that being part of the UK will allow such things in bigger quantities is tenuous at best and probably not confirmed by the reality.
To return to the Chancellor’s “march of the makers” speech, if those words appeared far-fetched when he first said them, they appear rather shallow and empty in the light of the reality of what is going on. In that regard, during the last Parliament—this is linked to the intervention about investment—another Tory-led Government, in a press release about business investment, a balanced and sustainable economy and all the matters we are discussing, boasted about investment in the UK Green Investment Bank. We supported that institution. We believed that it would deliver support for innovation and growth in a new industry, and indeed it has done so. Incredibly, however, it has been systematically undermined by this Government, while many of the changes they have announced since are undermining the commitment to the green economy generally.
One of the levers at the disposal of any Government to increase exports is to push aggressively for new free trade agreements. Does the hon. Gentleman agree that the SNP has been less than fulsome in its support for free trade agreements around the world, particularly the Transatlantic Trade and Investment Partnership, on which the SNP’s position is opaque at best?
It is not opaque, so let me make the position really clear to the hon. Gentleman. We welcome trade agreements. We think that they are a good thing in general. However, we will not countenance a trade agreement that opens the door to the systematic undermining of our essential public services. That is not opaque; that is crystal clear.
We need rather more than words from the Government: we need action to reverse declines, particularly in manufacturing, and to ensure that the last quarter’s fall in manufacturing output—which I mentioned earlier—does not become a pattern. At least in part, that will require—again, this is a response to the intervention—more innovation.
Will the hon. Gentleman give way?
No. I have already given way to the hon. and learned Lady.
Innovation is as much a part of building a larger, more productive and faster growing manufacturing base as it is important in its own right. We know about the positive impact of innovation from many sources, not least the recent PricewaterhouseCoopers global innovation survey. It confirmed what it describes as a “direct link” between companies that focus on innovation and those that successfully grow faster. As I am sure the Minister will know, the UK’s most innovative companies grew on average 50% faster than the least innovative.
We also know that substantial problems need to be overcome. While 32% of UK companies saw innovation as very important to their success, the global figure was 43%, and while 16% of UK companies saw product innovation as a priority in the coming year, that was barely half the global figure. Most worryingly, although the UK—Scotland and the rest of the UK—has in many ways a clear competitive advantage in the university sector, a significantly lower proportion of our businesses planned to collaborate with academics than did their international competitors.
I want to say a little about the approach we have taken in Scotland specifically to deal with that issue. Funding has been approved for five new innovation centres in industrial biotech, oil and gas, aquaculture, big data and construction. That funding has been put in place to build on the original three centres that were launched three years ago, which covered the growing areas of stratified medicine, sensors and imaging, and digital health. There is the provision, essentially, of £78 million to help the development of 1,000 new inventions, products or services. That cash will also—this addresses the international comparison—support 1,200 businesses to work directly with universities.
The UK has Innovate UK and we have looked closely at its delivery plan. The SNP welcomes aspects of it, not least the £1.5 billion global challenge fund. However, the overall policy of changing Innovate UK’s funding model so that, by 2020, £165 million of innovation grants will be delivered as loans sends out all the wrong signals. We are concerned that it may suppress essential innovation even further compared with our international competitors. That fear was confirmed by KPMG’s head of small business accounting, who said that the measure was
“a false economy that threatens to stall the growth of small businesses across the UK.”
Does the hon. Gentleman agree that that measure sends all the wrong signals to companies that are thinking of investing, because what it really says is that the future is uncertain with this Government?
Indeed it does. The quotes from businesses when it was announced were extremely clear. They are happy to seek bank funding and to use their own resources, but when they are undertaking what may be slightly risky innovation and R and D, they have an expectation of a little help from Government. If that is a grant, the work can proceed and the thinking can go ahead. If it is a loan that requires to be repaid, that might just tip the balance in favour of the risk being too great, which will drive down innovation even further.
The reason innovation is so vital, particularly in manufacturing—and why it is so important to encourage it—is that as it has fallen as a share of R and D investment over the past 20 years, manufacturing exports, jobs and output have also fallen. One can see the speed and length of that decline. Manufacturing has gone from making up 30% of the economy in the 1970s to less than 10% today; from accounting for more than 20% of all jobs in the 1980s to only 8% today; and from making up a quarter of all business investment in the 1990s to barely 15% today.
We see the reduction in global export market share in the OBR’s most recent fiscal forecast, in which it falls throughout the forecast period to the end of this Parliament. What is more worrying is that the figures in the November forecast were marked down in every single year from those in the July forecast. Everything is going in the wrong direction. The complacency from the Government and the limited plan they have are simply no longer enough. That is why we need an unrelenting focus on innovation in manufacturing in relation to trade and exports.
I welcome this debate and the hon. Gentleman’s focus on rebalancing the economy, which is undoubtedly a huge issue. However, when we talk about rebalancing the economy, we have to remember that because the recession in 2008 was a financial recession, it was inevitably followed by monetary policy hitting the floor, perpetuating higher house prices and all those other things we wanted to avoid, but which were an economic necessity. That being so, does he regret the role his party played in advising Royal Bank of Scotland to purchase ABN AMRO, which ushered in the huge financial crash and brought down our financial giant?
There is a historical disconnect here. The fight over ABN AMRO was between the board of RBS and the board of Barclays. One of them called it wrong and one of them got lucky. I suspect that my input and that of my right hon. and hon. Friends had precisely no bearing whatsoever on Mr Goodwin’s decision to persuade his board to buy ABN AMRO. The suggestion is quite extraordinary.
I have said that we need an unrelenting focus on innovation in manufacturing in relation to trade and exports. Although manufacturing has suffered the largest falls, it still accounts for 44% of all UK exports because the deficit in trading goods is so large. Any Government who are serious about rebalancing the economy and correcting the trade deficit in goods must have a laser-like focus on encouraging innovation in manufacturing, as well as on supporting existing exporting businesses.
This debate is about more than innovation, manufacturing and exports; it is about boosting productivity. That is vital because—this is undisputed—both Scotland and the UK sit only towards the top of the third quartile of advanced countries by GDP per hour worked. We are below many smaller European countries and, importantly, below major competitors such as the US, Germany, France and even Italy. I am pleased that Scottish output is now 4% higher than pre-crisis levels. That is a good thing, but clearly there is substantially more to be done, not least because UK productivity growth is at 1.3% a year, which is barely half the level of the 2% pre-crisis rate.
Scotland has an economic plan based on four principles to boost productivity: investment in education and infrastructure; internationalisation and encouraging exports; innovation, which, as we have discussed, is essential; and—in many ways the most important aspect—inclusive growth. The latter point is vital because we know from the numbers—we have all seen them—that the UK lost 9% of GDP growth between 1990 and 2010 because of rising inequality. We are concerned that that mistake is being repeated by this Government, with their arbitrary surplus fiscal rule, which is requiring them to cut far more than is necessary to run a balanced economy and denuding them of the resources that are needed to tackle inequality and maximise economic growth.
The hon. Gentleman referred with positivity to the figures in Scotland. Is he aware that, according to the BBC two hours ago,
“Scotland’s economy grew slightly over the summer but continued to lag behind the UK as a whole, according to official figures.”?
Absolutely. I was describing the growth since the pre-crisis level. The quarter-on-quarter and year-on-year figures are undeniable. That is why I said that we all have far more to do. I will make criticisms of the UK Government where they are valid, but I certainly will not deny the numbers. I hope that the hon. and learned Lady will welcome the fact that we are 4% ahead of pre-crisis levels, notwithstanding the difficulties we have seen in the North sea. That is a quite remarkable achievement, when the limited powers of the Scottish Government are considered. In terms of the deployment of those powers—[Interruption.] The Minister for Small Business, Industry and Enterprise is chuntering away on the Treasury Bench, as she is wont to do. She will be throwing her arms in the air and harrumphing soon. If she wants to intervene, I am happy to have the debate—maybe not.
Returning to the powers that have been deployed in Scotland, we have a Scottish business pledge, which requires firms, in return for the support of Scottish agencies, to seek to innovate, to seek and take export opportunities, and to pay the living wage. That is part of the solution to tackling inequality and delivering inclusive growth that will enable us to avoid the loss of GDP output that we saw in the 20 years to 2010. I urge the UK Government to take a similar approach.
I do that not least because our concerns about a lack of balance and the need for action to tackle the ongoing productivity challenge are shared by the International Monetary Fund, which is often prayed in aid by the Government. The IMF has spoken of the need to lessen wealth inequality and the need for increased spending on infrastructure. It has also called for an enhanced focus on decentralisation.
The hon. Gentleman is making important points about inequality, and if we are serious about addressing sustainable equality—the Government do not seem to be—it is important to invest more in people on low incomes, and to reduce the gap between them and people on high incomes. I am particularly interested in his point about productivity. Since 2006, what has the SNP been able to do to reduce the productivity gap in the OECD?
I do not have the figure for 2006 to date, but if I can get hold of that specific number I will happily provide it to the hon. Lady. The whole point of tackling the attainment gap, health, investment, supporting innovation, encouraging exports, and supporting, promoting and helping the delivery of the living wage, is so that everything that can be done is being done—as it must be. It is all part of a project of lessening inequality to deliver precisely the inclusive growth that avoids the shortfall in economic growth that we have seen from the UK Government.
I was making a point about some of the demands from the IMF, one of which was an enhanced focus on decentralisation. That is vital if we are effectively to use all tools at our disposal to tackle the economic challenges we face. To give one example, research and development tax credits to support innovation are a function of corporation tax. As corporation tax is not devolved to Scotland, one of the most important tools to help support that research is denied to the Scottish Government in their efforts to build on the work already being put in place. Given the challenges we all face, that is illogical.
The hon. Gentleman is right to highlight the role that devolved institutions can play in helping to boost productivity. May I commend to him the work of the Greater Manchester combined authority, which in its new devolved functions has awarded funding to English Fine Cottons so that it can open a £5.8 million new cotton mill in Dukinfield in my constituency—the first cotton mill to open in Greater Manchester, or “Cottonopolis”, for more than 40 years?
I welcome that intervention and the new cotton mill—I hope it is a huge success. The hon. Gentleman makes an important point: there is no point in devolving powers and responsibilities, whether to Northern Ireland, Scotland, Wales, parts of England, or anywhere else, unless the funding and ability and authority to raise the cash go with it. That is the weakness in some of the asymmetric devolution that the Government have put in place. We believe that the Government should look again at their decision to replace £165 million of innovation grants with loans, and that they should deliver real devolution—not least of corporation tax and its associated credits—so that those tools are available to all the devolved Administrations to maximise R and D support.
Northern Ireland now has record employment and higher levels of international investment than at any other time in our history. Does the hon. Gentleman agree that having a strong devolved aspect to trade, enterprise and investment helps to boost the competitiveness of the UK regions, particularly Northern Ireland?
Yes, absolutely. The more we can devolve, including authority and real power, the more that people on the ground can do—that is self-evident. The talk of record employment is good, and I think there is near record employment almost everywhere. The issue, however, is that real-term wages have fallen and remain five points lower than before the crisis. If we are to drag living standards up, we must do all those other things as well, but—in general terms—the devolution of real power is absolutely right.
On the transfer of power, the Government should recognise that a comprehensive solution to boost productivity is required, which covers investment and education infrastructure, internationalisation, innovation, and the policies to deliver inclusive growth. They should recognise that rebalancing the economy needs a focus, not just on London versus the rest of the UK, but on the growth benefits from those firms and the whole economy, and we should export, innovate, and support more of them to do so. That focus should be heavily weighted to manufacturing because the fall in R and D, jobs, exports and output from that sector cannot be allowed to continue.
Above all, although we believe and agree with setting ambitious targets, unrealistic and unachievable export targets that fly in the face of reality will simply weaken the Government’s credibility, in exactly the same way that failing to meet debt, deficit and borrowing targets did in the last Parliament. To set a target of doubling exports without the means being put in place to deliver that is bad economics and bad politics.
Let me turn briefly to what the Government have said in this Parliament. In July they published, “Fixing the foundations: Creating a more prosperous nation”, which was supposed to cover many of the areas that we are discussing today. It is very thin. Their approach to raising productivity is covered by two bullet points, a paragraph, and a little chart. The section on long-term investment merely confirms that long-term investment, going back as far as the 1960s, has bounced along the bottom of the OECD average—the 10th to 90th percentile range for those who care about these things. It hit that average in one year around 1990, but has fallen off the bottom of that for many years since.
Investment is primarily in transport. I welcome transport investment, as well as the increase in capital investment in the summer Budget. Let us be under no illusions, however, because that change came about only after the Government were discovered cutting capital spending for every year of the forecast period in the spring Budget. They have the audacity in the “Fixing the foundations” report to talk about:
“Reliable and low-carbon energy, at a price we can afford”,
while systematically undermining the sector and the Green Investment Bank. On innovation and industry, which is at the heart of the solution to a long-term problem, we have three small paragraphs.
The document was published only six months ago—[Interruption.] I am sorry if the Minister is slightly bored hearing about her Government’s failings. It mentions £1 trillion of exports by 2020. That shows a modest rise in exports to BRIC countries, a modest rise in exports to the rest of the world, and a catastrophic decline—the Minister is shaking his head—in exports to the richest OECD countries. That document was published by the Government in this Parliament. A sense of reality is probably a good starting point for a debate.
Each of the areas that we have started to discuss today could form a debate in its own right, but we believe that the motion is a starting point to begin properly to understand and address UK Government policy weakness in the areas of trade, exports, productivity, innovation, and a fundamental rebalancing of the economy. I commend the motion to the House.
I am grateful for the opportunity to debate a number of the Government’s key economic priorities. I will begin, however, by singing the praise of my Cabinet colleague the Secretary of State for Scotland. Not only is he outstanding as a Secretary of State, but today he made a very important announcement about what in many ways should be his private life, although it is not because it is in the public domain. It took great courage, and I am hugely proud to sit in the Cabinet with him. I can see nods all around the Chamber in support of our Secretary of State at what might be a difficult time for many, but I am sure for him is a very happy day. Finally, he can be the man he has always been, and can sing out and be proud of being that man. I pay tribute to him and I am pleased we all agree on that.
It is absolutely right and appropriate for the Secretary of State for Scotland’s Cabinet colleague to announce her support in the Chamber, and Scottish National party Members welcome what has been said. In terms of the debate, however, and notwithstanding that we hope he is happy, may we say that we fundamentally disagree with his politics?
I took that as read! I put it on the record that the First Minister for Scotland has tweeted her support. Frankly, I am not surprised. In this day and age, I think most people will just shrug their shoulders and say, “Yeah, whatever. Am I bothered?” Of course we are not. We celebrate what is, and should be, a happy day for my right hon. Friend.
Let us get on with the debate. The motion before us refers to the United Kingdom economy and economic growth. I wish to take a very quick trip down memory lane to put this debate into context, because that is important. The hon. Member for Dundee East (Stewart Hosie) talked about the Government’s record. I want to talk about the past six or seven months, but I also want to talk about the previous five years, notably to remind everybody of the situation we faced back in May 2010. It is important to remind everybody that at that time we were in the worst recession that our nation, the United Kingdom, had faced for 100 years: the biggest budget deficit in our peacetime history and over half a million more people on the dole. That was the situation that we on the Government Benches had to pick up: an economy brought to its knees and on the brink of bankruptcy from Land’s End to John O’Groats, and from London to Inverness and Bodmin. All across our nation, we saw a country on its knees.
To save us from that economic mire we had to take some very difficult decisions to control spending, reduce the deficit and rescue our economy. Those decisions, every single one of them, were opposed by the parties sitting on the Opposition Benches, notably Labour and the SNP. Each and every decision was opposed. How wrong they were. It is thanks to the hard work of the British people that our economic plan has worked and continues to work. The deficit is down by more than half, there are over 2.2 million more people in work, and there are over 900,000 more businesses. The United Kingdom has been the fastest-growing economy in the advanced world. That is a record of which Government Members are proud.
Scotland has been part of that success story. It is unfortunate that the hon. Member for Dundee East has just made us a long speech full of doom and gloom, trotting out this, that and the other and talking down the Scottish economy, because it is part of the United Kingdom economy. That is wrong and sad, because there is a success story.
Although the SNP spokesman spoke for over half an hour about trade, export, innovation and productivity, he did not once mention free markets, entrepreneurship or the power of deregulation. Is it not this Government’s priority to focus on those issues to ensure we can achieve the goals we are setting?
I absolutely agree with my hon. Friend; I could not agree more. There was lots of moaning and complaining, but no solutions, no ideas and no fresh ways of thinking—not one. It was all doom and gloom, and talking down our economy.
In the Minister’s history lesson on the long-term economic plan, to which plan is she referring? Is she referring to the plan from the first two years, when the Chancellor desperately tried to reduce public spending, or the one that followed the first two years when he listened to those on the Opposition Benches and loosened up on public spending, with the result that the economy then started to grow?
I am sorry the hon. Gentleman did not hear me, so I will repeat what I said. I am referring to the long-term economic plan that delivered a deficit down by more than half, 2.2 million more people in work and 900,000 more businesses, and the long-term economic plan that made this country the fastest-growing economy in the advanced world. That is what I am referring to, and I do so with pride.
Scotland has been a part of that success story. Since 2010, we have 178,000 more people in work and over 60,000 more businesses in Scotland—economic growth that has all occurred north of the border. This has been a recovery based on private sector growth, employment and living within our means. Both the SNP and the Labour party are wedded to abandoning fiscal responsibility and putting our economic security at risk. Government Members know the job is not done. We know we must oppose Opposition Members who would return to the bad old ways and days of spending beyond our means.
We know that to lock in our future economic security and prosperity, we need our businesses to increase their exports, boost productivity and continue to innovate to stay ahead. We believe in cutting red tape, as my hon. Friend the Member for Bedford (Richard Fuller) told us. We believe in all the good strong parts of a free economy, an economy that does not believe in over-regulating people but allows businesses to get on and do business—the thing that they know best. That does not mean to say I am an ideologue who is absolutely wedded to a free market without any constraint. Of course not. I am absolutely a caring, compassionate Conservative. I do not believe in monopolies. I do believe in responsibility among all who do business, which is why I am so proud that the Government are bringing forward the living wage. That is a true benefit to workers across our country, especially the lowest paid. I am very proud of all we have achieved on that.
I will give way to my hon. Friend and then to the hon. Lady.
Does the Minister agree that Government Members are equally committed to encouraging first-time entrepreneurs, first-time employers and first-time exporters to be able to do things that perhaps their parents have never done before, and that in that way we are also encouraging social mobility?
Absolutely. My hon. Friend makes a very good point. New small businesses and start-ups that scale up are absolutely at the heart of everything we seek to achieve, because we understand their value. It takes great courage for somebody to start their own business. We do what we can to assist them, for example through start-up loans. By devolving right down to a local level, through local enterprise partnerships, business growth hubs and the other measures we have put in place, we are ensuring that help, assistance and advice are available to them as they start up and begin to grow their business. In particular, we are doing the right thing by small businesses by reducing the regulatory burden. We achieved a lot in the past five years in government. We have more to achieve. It will be tough, but we are absolutely determined to do that.
My hon. Friend makes another important point. Starting up one’s own business is a great way for somebody to shake off their past—and the things in their background perhaps in danger of holding them back—and advance in the way that we want people to do. That is what brought people like me into politics: a desire to make the lives of everybody, especially those from less-advantaged families and backgrounds, better. I believe that our economic policy will continue to achieve exactly that.
I said I would give way to the hon. Lady.
I thank the Minister for giving way; I am glad she has not quite forgotten about me. Does she agree that there is actually no comfort in the new minimum wage for workers under the age of 25, as they will not qualify for it? They will still languish on about £3.87 an hour, which is not good enough.
What is very interesting is the number of companies introducing the new living wage, irrespective of the age of their employees. I absolutely welcome that. For every good thing we do, however, there is always somebody who knocks us and wants something more. There is nothing wrong with wanting more, but people should give credit where credit is due. This is a huge achievement, and I am proud the Conservative party has done it.
I have to say that I really struggle to take lessons on the economy from the Scottish National party. It is a party that built its whole idea of independence, which mercifully the good people of Scotland rejected, on the idea that oil was going to be the lubricant—the foundation—of their independent economy. Goodness me! Oil is now $35 a barrel, and it is accepted that if the SNP had been successful, the cost would have been somewhere in the region of £5,000 for every single household. Scotland would have been in the most atrocious economic place if it had voted for independence—thank goodness the good people of Scotland took the wise decision that we were undoubtedly better together. It is therefore really difficult for me to take lessons from this rag, tag and bobtail SNP, which encompasses everything from tartan Tories to tartan Trots. It is going to be very interesting, as the Smith report—
I will give way in a moment; I’m on a roll.
As the Smith report is implemented and the Scotland Bill comes into force, the SNP will finally have the powers it seeks—it will be the most devolved Government in the world—and it will be interesting to see—
In a moment.
Then the SNP will have responsibility, and we will see whether it will be able to deliver. I would bet good money that it will not be able to.
The Minister is making an interesting speech, but I must challenge her on this flailing economy. The Government were meant to have eradicated the debt by 2015 and they have only halved it. They are borrowing £73.5 billion this year, so the Minister is obviously putting a positive spin on this economic plan. Let us see how long it lasts—the Government have been giving warning signs that it might not. To pick up on what the hon. Member for Dundee East (Stewart Hosie) said, the IMF has said that if we invest more in the 20% on the lowest incomes, we will boost economic growth—something that the Government have singularly failed to do. Why have they not done that?
The IMF has been wholesome in its praise of our economic plan and the successes we have had. Much as I may like the hon. Lady on a personal level, I really struggle to take lessons from her. The last Labour Government doubled debt, whereas we have “only” halved the deficit. I am rather proud of “only” halving the deficit, while we see from her words that the poor old Labour party cannot learn from the mistakes of the past. Goodness knows the route it is now embarking on under its current leadership, but it looks set to be in opposition for a long time.
Will the Minister just answer one question: has debt gone up under this Government?
Our debt has gone up; I am not—[Interruption.] All right; it is not about scoring cheap political points, as the hon. Gentleman knows—obviously I would never engage in such a thing—but he cannot deny that 2 million more people are in work. That is part of our proud record. He should be praising that. The Labour party would do well to do that when we do the right thing. Over 2 million more people in work—why can the hon. Gentleman not give credit where credit is due?
It only took the Minister 12 minutes to revert to type. “Rag, tag and bobtail” if she likes, but that is as nothing compared with how the Scottish people describe her party. However, let me clear up just one little fact about the oil price, which I thought she might raise. Yes, we said it would be $110 a barrel. That is absolutely correct, but can we be absolutely clear that the UK Government’s Department of Energy and Climate Change had the barrel price at between $114 and $127, and at the very least admit that the UK Government got it wrong?
But the point is that the hon. Gentleman and his party were basing the whole of Scotland’s economic future on oil. How mad was that?
Several hon. Members rose—
I will give way in a moment; I just want to say something about trade and exports, because it is important. Otherwise, I will be speaking for far too long and Madam Deputy Speaker will admonish me, and rightly so.
In considering trade and exports, we should recall the importance of the United Kingdom’s large domestic market and the benefits it brings to all parts of the UK. The rest of the UK is by far and away Scotland’s biggest economic partner. Sixty-three per cent of all Scottish exports go to the rest of the UK. The biggest threat to Scottish exports is the SNP, which would put up barriers between Scotland and the rest of the UK. Trade and exports are a key element of continuing to grow the UK’s economy, which is why this Government are committed to making it easier for companies to export. We provide support to companies wanting to export, through UK Trade & Investment, and work with other Governments to reduce barriers to trade. Our trade deficit narrowed by £0.3 billion in the three months to November, and the number of companies exporting both in the UK and Scotland is up since 2010, but we know we have a lot further to go.
Delivering on all the EU’s trade negotiations could add £20 billion to the UK economy annually. We know that trade agreements work. In the four years since the EU-Korea free trade agreement came into force, the value of UK exports has more than doubled. We have seen a 1,000% increase in the value of jet engine sales. The UK sold just 2,315 cars to Korea in the final year before the FTA was agreed. Last year, that number reached 13,337, and it is not just the big companies that benefit. One Scottish business was able to sell 100,000 jars of jam in Korea last year, after the FTA slashed import duties. That is why this Government are committed to delivering freer global trade, concluding major trade deals with the United States, Japan and many other trading partners.
That, as hon. Members might imagine, brings me to the Transatlantic Trade and Investment Partnership. Last year I responded to the debate in the House about TTIP. I am not going to repeat all the things I said, but it really is disingenuous of those on the SNP Benches—and, indeed, on the Labour Benches—to oppose TTIP on the utterly false premise that it would threaten our public services, in particular the NHS. It is not true. There are so many letters, including—I think a number of hon. Members were in that debate, so they will remember—the letter from the EU, which was written in December 2014, to the Chair of the Select Committee on Health, who had asked specific questions about whether TTIP posed any threat to our national health service. Every time the answer was an overwhelming no. Everybody who could have said, “There is no threat from TTIP to any of our public services, especially the NHS”, has said it, over and over again. It is grossly unfortunate that Opposition Members and Opposition parties peddle these untruths about TTIP. It is simply not right or fair to mislead people as they are.
There does seem to be some ambiguity, because despite the letter to the Select Committee, we have evidence saying completely the opposite. In view of that ambiguity, why does the Minister not say that the NHS will be exempt from TTIP and rule it out completely?
I do not know how many times I have said it, but I am going to send all the information to the hon. Lady. It will say all these things and make it absolutely clear that TTIP is not a threat to our public services and our NHS. In fact, on the contrary, it will deliver billions of pounds of wealth to our economy, because it will free up trade between us and the USA. I think Opposition Members have got to be honest about it. I think the real problem is their prejudice against the USA. They should fess up and be honest about it, because they are creating bogeys that do not exist.
If I may return to the oil price and the sheer joy that Members in the Chamber expressed at the collapse in the oil price—I look at the hon. Member for Rugby (Mark Pawsey), who is sitting directly behind the Minister, and the joy and almost delight that were on his face. In the real world, in the constituency I represent, that means jobs are being lost. The Minister has expressed her delight at Scotland staying in the Union, so can she explain to me what the Union is doing to help Scotland at its moment of need?
It is not for me to speak on behalf of others, but I can assure the hon. Gentleman that there was no joy on the Government Benches at the fall in the oil price. The joy, I would like to think, was at the point I made, and made rather well. The hon. Gentleman is in a party that put all its faith in the oil price as the salvation of Scotland’s economy and it was absolutely wrong. I hope the hon. Gentleman will forgive me for not knowing the constituency he represents, but I suspect it is in the north-east of Scotland. He makes a good point, and this is the only good point, about the concerns we all have about the future of the oil and gas industry.
I am well aware of the importance of the oil industry to north-east Scotland. I am also well aware of the redundancies announced yesterday by BP, and I agree that there is much that we—the hon. Gentleman should note the “we” bit—can do. It would be so good for the UK Government to work with the Scottish Government to make sure that we do all we can. We have a fantastic oil industry, based largely in Aberdeen, that is one of the finest in the world. There is much that we can do, working together, to make sure that we do not see further job losses, especially on the scale we have seen.
I will give way to the hon. Gentleman, but then I want to make some progress.
I thank the Minister for what she has just said, which was helpful. However, she has twice made the incorrect and false assertion that we based any forecast only on oil, which was never true. The Minister has accused others of misleading the public over the approach to TTIP; I hope she does not want to mislead the public over her assertion that the economy is based solely on one industry.
I am afraid I do not agree.
It is a fair challenge to remind the Government how important the oil industry is to our country. That is why on Monday we will debate the Energy Bill, which enacts the findings of the Wood review. The review was much required and greatly sought by the industry, and I very much hope, as I am sure does the Minister, that Labour Members will support it.
I cannot add to my hon. Friend’s extremely good and well-made point.
Let me now move on to deal with the important issue of productivity. Delivering a return to productivity growth is one of the key economic challenges for this Parliament and the route to raising living standards for everyone in the UK. We have lagged behind other major economies—let us be honest about it—for decades, and productivity in Scotland is still 2.5% below the UK average. That is why we are determined to fix it, although I shall not pretend that there are any short-term measures. This is going to take some time and a lot of hard work.
In last year’s summer Budget, the Chancellor set out the Government’s ambitious plan, “Fixing the foundations: creating a more prosperous nation”. That ensures that we do everything possible to deliver higher productivity in the UK. Skills and education are, of course, key to improving productivity, and we have invested in skills, delivering 2 million apprenticeships in the last Parliament, with 3 million to be delivered in this Parliament.
Our education reforms are already raising standards. Unfortunately, under the SNP, standards of numeracy and literacy in Scotland have been falling, and fewer of Scotland’s most deprived children attend a university compared with any other part of the UK—just 10.3% of the poorest 20% of Scots attend university, compared with 18.1% in England, 16.3% in Wales and 16.3% in Northern Ireland. We have also protected science spending, with £4.7 billion per year in resource and £6.9 billion in infrastructure to 2021. We continue to invest in our catapult centres.
We are delivering one of the largest and most ambitious infrastructure programmes in recent memory, with projects such as HS2, which I have no doubt everybody should back because it will bring huge benefit to our country, especially to my constituency, as we hope to have the east midlands hub in Toton. In addition there is Crossrail, a huge project across the capital, and the largest investment in our roads since the 1970s. We are beginning to see signs of improvement. Output per hour grew by 0.5% in the third quarter of 2015 compared with the previous quarter, and was 1.3% higher than for the same period in 2014. UK productivity has exceeded its previous peak by 0.7%.
Alongside trade, innovation is another pillar on which our economy is built. Innovation is an important lever for increasing productivity. The excellent work of my colleague, the Minister for Universities and Science, has ensured that science spending is protected in real terms, with record investment across the UK—£4.7 billion per year in resource funding, rising with inflation, and record investment in our country’s scientific infrastructure, at £6.9 billion to 2021. The Government will protect all that in cash terms, with total spending on business-led innovation coming through Innovate UK.
We recognise that access to finance remains an important challenge for innovative enterprises, which is why we are committed to introducing new types of finance products to support companies to innovate. New products such as loans will replace some existing Innovate UK grants, and will reach £165 million by 2019-20. In 2014 alone, more than £2 billion was raised in venture capital in the UK—up 50% on the previous year. I see no reason why the UK cannot be Europe’s number one destination for innovation finance.
I understand why the Government might want to change the way in which some research and development is financed, but does the Minister accept that, given the long lead-in time for many R and D projects, loans are not appropriate and will lead to innovation and research either going outside the UK or stopping altogether?
We are taking time to bring them in. It is, of course, a mix. In some instances, providing loans is absolutely the right thing to do, whereas in others we might well provide a grant. Flexibility is the right approach, and this allows us to put in the necessary money, even in these difficult times. I think we are doing the right thing about that.
The Federation of Small Businesses report on productivity identifies late payments to small businesses as one of the key issues. Will the Minister commit to addressing cash retention in the construction industry—a key issue that is due to come before us again in the Enterprise Bill?
I realise that there is a good argument in favour, but we are conducting a consultation. As the hon. Lady knows, my door is open. I would be more than happy to discuss it with her because I know about the powerful arguments in favour, but there are also strong arguments against it. The consultation might allow us to make some progress.
I must make some more progress on my speech, but I will give way to the hon. Gentleman first.
I thank the Minister. Is she aware that yesterday the Medical Research Council issued a briefing paper about the move from grants to loans? It said that
“the Biomedical Catalyst may not continue”.
I have not seen that paper and I am not going to pretend that I have. I always view it as important not to comment on things that have not been read or on issues that might have been taken out of context. Perhaps I will drop the hon. Gentleman a letter, when I have had the opportunity to read the paper.
The Minister makes a good point about innovation. One change that the Treasury has made is to enable ISAs to be used to provide peer-to-peer lending. Will she therefore have some conversations with her colleagues in the Treasury about making it possible within ISAs to make equity investments to small private companies?
That is a very good point, and the straight answer is simply yes. If my hon. Friend would like to continue the conversation after this debate, I would be more than happy to do so.
This Government continue to encourage business investment in research and development through tax incentives. Take-up of this scheme continues to grow, with 18,200 companies claiming £1.75 billion of relief from £14.3 billion of innovative investment. In Scotland, there were 1,045 claims, giving a total relief of £55 million. That means more investment in R and D, more high-value jobs and greater productivity.
The Government continue to invest in our catapult network, and the first seven catapults are now operating from their established facilities with total public and private investment exceeding £1.6 billion over their first five years of operation. These include Offshore Renewable Energy in Glasgow and the Advanced Forming research centre in Strathclyde, which is part of the high-value manufacturing catapult. As we have taken the difficult decisions to fix Britain’s finances, we can afford to continue to invest in science and innovation, investing in Scotland’s future and helping to ensure Scotland punches above its weight.
That is the point. If we have a good, solid and sound economy that is growing, we will be able to do all this type of work. We will be able to spend taxpayers’ money to support our great British businesses and particularly the ones that are so innovative in their approach and in the work they do.
To conclude, Madam Deputy Speaker—
Oh, go on, then.
Before the Minister concludes, may I ask her to address the issues that are currently affecting the steel industry? During the steel summit back in October, UK Steel presented a strong case for the urgent action it needed the Government to take. Some recognised the Government good will in relation to energy prices and energy costs, but I must impress on the Minister that this is a very difficult time for steel, particularly in the south Wales area I represent. Yes, the Government have acted on energy costs, but what are they doing about the other issues that were raised at the summit?
We are absolutely delivering, and not just on energy costs. I am hugely proud of the way in which we have changed the procurement rules. The hon. Lady knows that we are determined to continue to do everything we can to keep what the Prime Minister has called a vital industry in production. We do not want to see the blast furnaces close at Port Talbot any more than we want to see them close at Scunthorpe. I note that the hon. Member for Redcar (Anna Turley), as ever, is present. No doubt she will want to intervene at this point, but I must move quickly on; perhaps she will join in the debate later. Let me say to her that if we could have done anything to secure SSI, we would have, because we recognise the importance of the steel industry to the British economy. She can have that assurance. Indeed, the same is true at Dalzell and at Clydebridge. I pay tribute to the Scottish Government: I have been pleased to work with the Deputy First Minister in trying to ensure that we do all we can to keep those two plants open in Scotland.
Trade, exports, innovation and productivity are vital components of the Government’s strategy. That is why we have developed a clear plan of action, and why Scotland, and indeed all parts of the United Kingdom, benefit from our continued commitment to those key priorities. Scotland has been a part of the economic and jobs success story of the last six years as our economic plan for the whole United Kingdom continues to deliver economic security and prosperity for all our people. The biggest threat to businesses, growth and jobs would be a Scotland isolated and cut off from the United Kingdom, led by a party that wants to return to the failed policies of more spending and more borrowing that led us to economic oblivion last time.
Let us stick to the plan that has rescued our economy from the brink and turned it into the fastest-growing economy in the advanced world, and is now tackling the long-term structural issues head-on to ensure that there is a more secure future not just for our children but, notably, for our grandchildren. I will not support the motion, and I urge other Members not to support it either.
Let me begin by conveying apologies from the shadow Business Secretary, my hon. Friend the Member for Wallasey (Ms Eagle), who is in Brussels today meeting members of the European Commission and the European Parliament to discuss, in fact, many of the issues that we are discussing here today.
In her speech, the Minister indulged in something of a history lesson about what happened in 2010. I fought that election as a candidate for the first time, and I well remember making the case that in 2010 we faced half the levels of unemployment, repossessions and business failures that we had faced during the comparable Tory recessions of the 1980s and 1990s. The Labour Government had a record of protecting jobs, businesses and people’s homes. The economy was recovering in May 2010, when the coalition took office, but that recovery was choked off by the Chancellor’s emergency Budget in June. I am afraid that ever since then, as other Members have pointed out and as we know from the figures that were discussed earlier, the recovery has been the slowest on record. That is the true record of this Government when it comes to the economy. The Conservatives blew the growth that was steadily happening when they came to power as part of a coalition.
The hon. Gentleman is making some quite bold statements, but how do those statements tally with the fact that Britain is now the fastest-growing country in the OECD?
Of course, after the slowest recovery on record, growth is going to be the fastest in the world at some point, is it not? That comes as no surprise.
Will the hon. Gentleman give way?
I am not going to give way too many times, because mine is the second Opposition party in this debate.
As was pointed out by my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams), the Government have failed in their own terms to eradicate the deficit. The Chancellor promised that it would be gone by last year, but the Government have borrowed more in five and a bit years, and had borrowed more before the election, than Labour did in its 13 years in office. So, in their own terms, they have failed.
If the Minister wants Opposition Members—from whichever party—and members of the public to be reassured that she is not just producing warm words on TTIP, she can exempt it from public services and we will then be sorted.
I thank the hon. Gentleman for giving way. He is very generous. Will he acknowledge that the United Kingdom has signed 110 other bilateral investment treaties with other countries around the world, none of which excludes public services, and all of which include the investor-state dispute settlement mechanism? I do not believe that it is the policy of either the Labour party or the SNP for Britain to withdraw from any of those important bilateral investment treaties.
And, as I have said, the Minister and the Government could relieve the concerns of many people in the country, not just in the Chamber, by undertaking to exempt TTIP from public services.
When it comes to boosting productivity and growing our economy, the interests of workers and the ambitions of businesses are not at odds with one other. Workers do well when there are successful businesses to give them secure employment; businesses do well when they can draw on a skilled workforce, and when they are selling products and services in a high-wage economy. We have many fine businesses which are making some of the best products in the world, delivering some of the best services, and developing many of the best new ideas. Those successful businesses have highly committed and skilled workers who are competing with the very best, but too many of our 5.2 million businesses face headwinds that make business more difficult than it should be, and too often lead to closures and job losses that are entirely avoidable.
We can learn from the success that exists in this country, in science, in digital, in engineering and in our universities, and we can learn from other countries as well. Success leaves clues. As for the countries that are outperforming us, one striking reason for that is the relationship between Government, business and workforce. What often works in successful countries, and in successful companies, is a three-way partnership for growth and productivity. That means secure, skilled, well-paid workers, businesses working with the infrastructure and the workforce that they need in order to expand, and a Government who build the stable foundations on which the partnership between business and workers can grow.
The Business Secretary is unwilling even to utter the words “industrial strategy”, but that is what is needed. An industrial strategy is nothing more than a Government's willingness to enter into a partnership with business and workers, matching their ambitions by looking beyond election cycles and investing in the infrastructure and training that they need in order to flourish. Businesses are clear about what they need from the Government. They want the Government to take a long-term approach to capitalising on new technology, and to nurture sectors that will boost exports, create jobs, and generate sustainable growth.
From green and renewable energy to high-end manufacturing and digital technology, the United Kingdom is not short of opportunities. It is not short of innovative entrepreneurs who want to put it at the global forefront of those emerging sectors. Under this Government, however, the UK spends less on research as a share of GDP than France, Germany, the United States and China. It has embarked on real-terms cuts to Innovate UK; it has axed the Business Growth Service, including the Manufacturing Advisory Service and the growth accelerator programme; and it is stifling game-changing innovation by converting grants for bold start-up companies to loans.
Those are not the actions of a Government who are committed to playing their part in the creation of opportunities for the next generation of entrepreneurs. The growth accelerator programme alone assisted more than 18,000 businesses. A great deal of the £100 million in finance that the programme helped SMEs to raise went into the development of innovative new products and services: products and services that create jobs and boost productivity. If the Government had wanted a partnership with business, they would not have completely shut down the long-term dividends to the economy that those schemes were already beginning to deliver, for the sake of scraping together short-term cuts for the Chancellor. The decision to axe these schemes is not just a knee-jerk reaction to departmental cuts; it speaks volumes about the Government’s real lack of long-term vision and commitment to businesses. Productivity cannot improve and sustainable growth cannot be secured as long as this Government’s message to entrepreneurs and innovators is “You’re on your own.”
Businesses want a trained workforce and a steady supply of skills to expand their operations. In a recent survey by the EEF, the manufacturers’ organisation, half of manufacturers pointed to a skilled workforce as the single most important factor in boosting growth and productivity. ManpowerGroup UK says that more than 30% of the largest construction companies have had to turn down work due to a shortage of skilled labour. For all the Chancellor’s talk of skills, more than two thirds of businesses say they are badly in need of more high-skilled staff. The engines of growth in the UK—construction, manufacturing, science, engineering and technology—all face chronic and growing skills shortages. Once again, there is a gulf between the Government’s rhetoric and action; their £360 million in cuts from the adult skills budget would dampen the ambitions of people hoping to learn the skills they need to enter the workforce and take skilled jobs.
While we on the Opposition Benches agree with the principle of an apprenticeship levy to increase funding to tackle the skills shortage, we will be carefully examining the details. It is vital that the policy is used to drive up the quality, as well the quantity, of apprenticeships. It is important that it meets the ambitions of learners, as well as the needs of employers. It is also important that it does not become, as Seamus Nevin of the Institute of Directors, puts it, a “payroll tax” that hits medium-sized businesses. The payroll threshold laid out by the Government could mean that the cost spills over from larger companies, so the details need to be watched carefully as they emerge, to ensure smaller companies are exempted.
Businesses want decent infrastructure, strategic road networks, improved broadband and cheaper energy supplies. These businesses will create jobs, boost productivity and generate growth, but Government’s role in that partnership is to build the physical infrastructure they need to operate in. A recent CBI survey of businesses showed that nearly two thirds are worried about the slow progress of infrastructure projects, and they are right to be concerned. The gulf between the Government’s rhetoric and the projects they have actually delivered is widening. The quality of our infrastructure is now the second worst in the G7. Capital spending has more than halved as a proportion of GDP since 2010.
The Government seem to be missing two simple facts. We have world-beating innovators and businesses that want to expand and create jobs. They cannot do that without roads, broadband and good rail and air links. That is the Government’s responsibility, and they are failing to deliver. If the Chancellor still claims to be leading a “march of the makers,” I am afraid the evidence over the last five and a half years shows he is leading in the wrong direction entirely.
Goods exported last July reached their lowest levels since September 2010. In the three months to November 2015 the trade deficit stood at £7.7 billion. The truth is the trade deficit is a problem that this Government and the previous coalition Government have said a number of times they would address.
Will my hon. Friend join me in welcoming the fact that in the north-east the balance of trade is positive, and a large contributory factor in that was the steel industry on Teesside? Does he share my disappointment—in fact, my anger and frustration—that the Government failed to do anything to step in to save steelmaking on Teesside? Looking forward, will he also help to put pressure on the Government to ensure that China does not get market economy status, which could put the final nail in the coffin of the national steel industry in this country?
This is the first opportunity I have had to congratulate my hon. Friend and her colleagues from the steelmaking areas on the fine work they have done in representing, and attempting to save, the steel industry. I will talk about the steel industry in more detail later, but I completely agree with the point that she makes.
The Chancellor said he wants to double exports to £1 trillion by 2020. Office for National Statistics forecasts show that he is set to miss this by more than £350 billion—in other words, he will be 70% short of his target. In 2011 the Prime Minister said that he intended to increase the number of UK exporters by 100,000 by 2020, and in its annual business survey the ONS found that the number of UK exporters actually fell by 8,600 last year.
The risk to long-term growth and productivity of failing to increase exports is stark. Failure to boost exports means slower long-term growth, depressed wage growth and an even more depressed rise in living standards. As David Kern, chief economist at the British Chambers of Commerce, said last year,
“unless radical measures are taken to strengthen our export performance, our trade deficit will continue to be a threat to the country’s long-term economic performance”.
But just as serious is the threat posed by a Government divided over whether or not to pull the plug on UK businesses’ main trading partner. Trade with the EU was worth £227 billion to the UK economy last year. It is a lifeline for many businesses, and for many workers. The risk we face is from a Government that fail to unite in wanting to honour a partnership with those businesses and workers who rely on EU trade for their livelihood. Instead they are divided over whether to kick the legs out from under UK business, not least in respect of relationships that account for almost half of UK trade and which are especially important for many SMEs.
The problem of UK exports is compounded by our lagging productivity. ONS statistics show that, as of 2014, productivity as output per hour worked in the UK was 21% lower than the average for the rest of the G7 countries. According to the ONS last year,
“the absence of productivity growth in the seven years since 2007 is unprecedented in the post-war period.”
Productivity has been revised down next year, the year after and the year after that, and the gap between UK productivity and that of the rest of the G7 is now the widest since 1991.
A long-term strategy to boost productivity, trade and innovation is a partnership. That partnership cannot ignore the workforce; on the contrary, they can be one of our most powerful assets. A partnership between workers, businesses and Government to boost productivity is a long-term vision that requires a commitment to long-term investment from Government—one that stretches over many Parliaments and one that requires a large degree of political, as well as industrial, consensus.
If we truly want to boost the UK’s productivity, manufacturing is a good place to focus our attention for a number of reasons, not least because the productivity benefits of industry reach far beyond itself, to benefit growth, skills and productivity in the UK as a whole. Manufacturers improve efficiency at a pace and intensity that outstrip almost any other sector. In fact, they currently inject three times the amount of their output share of the economy into improving machinery. An EEF survey conducted in 2015 showed that 80% of its members intend to invest in machinery with the aim of increasing productivity. That technology, again, filters out. The investment and innovation of one manufacturer becomes a tool to boost productivity across a host of sectors and in the wider economy as a whole. Investment in processes and systems improves efficiency and accelerates the diffusion of technology.
Generating sustainable growth, raising skill levels, and dispersing opportunity to every corner of the country: prioritising manufacturing should be the cornerstone of a strategy for increasing productivity. But this Government’s track record shows that they either do not understand this or else they are simply not willing to do what is necessary to support the industry. As my hon. Friend the Member for Redcar (Anna Turley) said, the tragic situation that unfolded in the steel industry is a case in point. The UK steel industry ran a trade surplus in all but three of the last 17 years. Steel exports were worth £6 billion to the UK in 2014, not to mention the 20,000 families the industry supported. Serious challenges coalesced: a glut of global supply, energy costs, a strong pound. These were difficult challenges, but surmountable for a Government.
Does the hon. Gentleman accept that the fundamental problem was that the price of steel has almost halved and no Government can change that?
Of course the Minister is right that the price has halved, but other countries in the EU chose to intervene while we said we would not. I am afraid the Government’s record on this has been woeful.
Will the hon. Gentleman send me details of other EU Governments who have intervened to save their steel industries? If so, I will pass them on, because they must be in breach of the state aid rules.
We have debated this so many times. The Minister knows that some countries choose to operate the state aid rules far more beneficially than we do. It is about time the Government chose to do the same.
The industry needed the Government to play their role in what should have been a partnership. The situation demanded that the Government see the long-term strategic value of steel production and do what other EU Governments did: move swiftly to protect their industries. Instead, they have lacked a strategy and shown themselves unwilling to make strategic interventions to support the industry with practical steps well within their capabilities, such as tackling business rates through the supply chain, dealing with electricity costs and ensuring better procurement practice to favour British steel. They failed to step up to the plate as a partner of industry, and in doing so turned a temporary, toxic mix of challenges into a permanent gap in our industrial make-up.
We have to take that lesson seriously. UK productivity will continue to lag as long as Governments sit on the sidelines and wash their hands of responsibility for safeguarding key industries. The aspiration is one that everyone in the House will agree with: an economy with high-skilled, well-paid jobs in which businesses can grow, export and invest to boost productivity. Agreeing on the aim is one thing, but how we go about it is another. It requires a long-term partnership championing the workforce and business; investment, not cuts; an industrial strategy, not laissez-faire dogma; and an economy that creates wealth, instead of relying on consumer borrowing. We need a strategy in which workers, business and the Government work together for Britain. The Government’s role is not that of an observer but to make sure our exporters get the help they need; to take action to boost productivity; to tackle the skills emergency; to safeguard key industries; and to build the infrastructure that growing businesses need.
The Minister and the Government have failed on each point. They cannot deliver and they will not be an active part of that partnership because they do not believe in intervening. Their empty rhetoric will get our economy nowhere. Only a long-term industrial strategy will deliver the high-value economy we all want. We need a strategy of partnership that is both pro-business and pro-worker.
I am delighted to be called so early in this important debate. I was particularly keen to catch your eye, Madam Deputy Speaker, because we have so few debates on exports, but I believe that if we are to grow our economy sustainably, we must increase our exports.
Given the importance of this debate, it is a great pity that our politics produces such negativity from all the Opposition parties. That is in total contrast to the Minister for Small Business, Industry and Enterprise, my right hon. Friend the Member for Broxtowe (Anna Soubry), who is positive and outward looking and produces good policies that the Government have been pursuing, both in the last Parliament and this one. I am passionate about exports. With my hon. Friend the Member for Newark (Robert Jenrick), I have the honour to chair the all-party trade and investment group dealing with exports. I want to see this country exporting more.
I just want to champion some of the Government’s achievements, which, unlike the Opposition parties, help exporters considerably. They have committed to cutting £10 billion of red tape in order to back British business and put resources into more productive use—and that is on top of the £10 billion we cut in the last Parliament. We have cut corporation tax to 20%—one of the lowest rates in the G7—and have an aspiration to cut it further. We are boosting skills and productivity by improving the quality of apprenticeships in England and increasing their number by 3 million in this Parliament, on top of the 3 million in the last Parliament. As my right hon. Friend the Minister has said, we are investing, up to 2021, £6.9 billion in UK research infrastructure and, in particular, protecting the science budget of £4.9 billion per annum. All that will help innovative companies in this country, as will building stronger links with emerging markets, especially China and India. I was therefore delighted to see the leaders of those countries—the most populous nations in the world—visit this country in the last year. And what successful visits they were.
My right hon. Friend the Business Secretary, launching the Government’s productivity plan, “Fixing the foundations: Creating a more prosperous nation”, said:
“Britain is home to some of the world’s most innovative and dynamic businesses, staffed by incredibly talented, hardworking individuals…And higher productivity means higher incomes. When productivity rises, standards of living rise too. So today I’m proud to publish ‘Fixing the foundations’. It’s our plan for productivity, and our blueprint for creating a more prosperous nation.”
Hon. Members on both sides of the House have commented on productivity, and it is true that we lag behind some of our major competitors. Many economists have puzzled over this, but I think the reason is simple. In the list of achievements I gave just now, I omitted the fact, which must be hugely welcome to all Members, that a record number of people are in work thanks to our flexible labour laws. In this country, 32 million people are in work—more than ever before—and that number is rising. I believe that, because more people are employed, some companies might not have invested as much as they might have done in labour-saving capital equipment, as has happened on the continent, where their labour laws are much more difficult and therefore they have higher unemployment. Greece, for example, has 50% youth unemployment. It is no wonder those countries have such problems, yet here, I am grateful to say, youth unemployment is dropping. It is a terrific achievement for this country.
Let us look at where trade is going around the world. In 2014, the UK’s exports of goods and services totalled £513 billion and its imports totalled £548 billion. The EU accounted for 45% of exports and 53% of imports, meaning the balance of trade with the EU is against us. In other words, we are importing more than we are exporting. There is no reason, therefore, not to look elsewhere in the world to see where we can export more. I commend that approach to the Minister. It is against a background of UKTI’s policy of increasing trade by 2020 to £1 trillion and the number of companies exporting by 100,000. There is no reason why we could not do much more.
UKTI has been transformed in the last few years. I was delighted to take one of my successful medium-sized companies to see the trade Minister, the right hon. Lord Maude, the other day to examine how we might get UKTI to do even more to encourage medium-sized businesses. The one in my constituency employs 45 people, exports to 40 countries around the world, makes it products in China and exports them directly to Australia, without their ever touching this country, and yet it remits its profits to this country and pays UK corporation tax. That is precisely the sort of medium-sized company we ought to encourage to export more.
That company told me there was too much emphasis on people in UKTI and not enough on the tradeshow access programme. Trade shows are a particularly important part of manufacturing businesses’ exporting programme. We need to encourage, via greater incentives from UKTI, such companies to go to these tradeshows, particularly where they have a record of success. At the end of my speech, I will make five or six suggestions to the Minister on how to encourage exporting, but one of them is to extend TAP from three to four years. As this company pointed out, the first year is about exploration and the second is about getting to know the customers, and only in the third year, if it is lucky, does a company begin to make a profit. It therefore needs an extension from three to four years. It is in its third year and about to be cut off just as it is becoming profitable, so it would be useful if we could give it a bit of extra help.
I am delighted that my hon. Friend saw my constituency predecessor, Lord Maude, recently. We have a number of manufacturing firms in Horsham. Does my hon. Friend agree that such firms are now getting a better service from the Foreign Office and from our ambassadors abroad to help British exports? That should be put on record and welcomed.
I am sorry to say that I only partially agree with my hon. Friend. I am not going to name the embassy in question, but a representative of the company I have been describing went to one of the nearer embassies to this country and was distinctly unimpressed by the trade representatives there. He described them as spotty youths who were just out of university. He felt that we needed people in our embassies and in UKTI who have a good track record in the private sector, and that we should incentivise such people. If they have had a good record in the private sector, it is likely that they would be successful in UKTI in helping companies to export.
There are approximately 1 million small and medium-sized companies in this country. UKTI helped 48,000 companies to export last year, but I suggest to the Minister that there is still much to be done. Far too many companies still do not understand what it means to export and do not understand the advantages of exporting. The figures are well known. Once a company has exported for the first time, its productivity goes up by 7%. So not only will its profits go up—one hopes that it will do profitable export business—but its productivity will go up as well because that activity sharpens the whole operation through dealing with an extra dimension. We could do much more, in collaboration with UKTI, with UK Export Finance and with the local enterprise partnerships. We should make them all come together much more closely.
Another suggestion I have for the Minister is that Innovation UK and UKTI could get much closer together so that some of our best seed-generated companies, including high-tech companies, could be encouraged to export right at the beginning of their existence rather than waiting until they are established. They should be encouraged to think about exporting as one of the first things they do.
I concur with the hon. Gentleman about the importance of UKTI. Unfortunately, in the autumn statement, the Chancellor slashed UKTI’s budget. So outraged was the organisation that its chief executive resigned. Clearly, this Government are not helping UKTI to help exports.
I think we all have to encourage UKTI to operate within the financial climate that exists. I have to say that I would put the money into UKTI in order to expand exports, but I would make sure that it was operating as well as it possibly could. Another suggestion that I have for the Minister is that UKTI should be benchmarked against the best export agencies in the world to see how it is doing. We should never be complacent in this life, and benchmarking is one way of getting that information.
Despite what the company in my constituency said when we went to see Lord Maude, I think that what my hon. Friend the Member for Horsham (Jeremy Quin) has just said is right. Our ambassadors are some of the best trained in the world, and we have one of the most comprehensive networks of embassies. After all, it was the Conservatives, in this Parliament and the last one, who started opening embassies where the previous Government had closed them. We have the network, but in some places we need to sharpen up the expertise. However, we have a good foundation on which to build.
We have the British brand and the British language and we exercise our soft power through the BBC World Service and the British Council. We are very well established in many of the major markets in Brazil, Russia, India and China—the BRIC markets—and in other smaller markets where we need to concentrate our efforts. We need to concentrate on the high-growth markets, as opposed to on Europe, which has lower growth. I am delighted that our exports to China are growing in such big quantities, albeit from a very low base. UKTI is putting significant resources into China, and it is paying dividends. The visit by China’s Premier, Xi Jinping, last year will only help to cement those efforts.
I do not want to make too long a speech, but I want to outline some things that we could do to help companies to export. I have some specific ideas for fiscal incentives to give to small and medium-sized businesses. We could give them fiscal help with export-related activity. That could be a better way of alerting many companies to the possibilities. Companies are very astute about ways of saving tax, and we need to find the best ways of encouraging all small and medium-sized businesses to export. It would also be helpful to inform them that finding out more about their potential export markets need not involve huge costs.
A further suggestion, which I have already mentioned, is that we should extend the TAP programme from three to four years where success has already been demonstrated. If a company cannot achieve success within three years, it is unlikely to do so, but if it has already demonstrated success, as that company in my constituency has done—[Interruption.] I wish that my right hon. Friend the Minister on the Front Bench would listen. Please! If the Government extended the TAP programme from three to four years where success had been demonstrated, it would be helpful.
My third suggestion is that we should buddy a successful exporting SME with one that is exporting for the first time. That would be really helpful, because there is a real fear of the unknown for a small company with only a few employees. It has to deal with the VAT, the national insurance, the marketing and the manufacturing, and that can be quite frightening for a small company. It can be quite off-putting. Buddying such a company with one that is in the same market—although not one that is directly competing—would be helpful.
In regard to the plea that the hon. Gentleman made a few moments ago, if he cannot get his own Minister to listen to him, what hope do we have of doing so?
I think I will ignore that intervention. I could have come up with something a little better myself.
My fourth suggestion is to give local enterprise partnerships a stronger exporting role. I believe that we in Gloucestershire run one of the better LEPs, but it is still not sufficiently focused on exporting. It has nine divisions, and every one of them should be utterly focused on exporting. I would also propose a much stronger connection between UKTI and Innovate UK, as I have mentioned. Innovate UK is developing the technology forward strategy and helping companies to expand their ideas. It often helps them to incubate ideas from the best universities. This is an area in which the greatest companies can grow from little acorns, and we should encourage export activity there.
I would also reinvigorate UKTI by encouraging it to employ more people from the private sector, particularly those with a record of exporting in their own company. Those people should be properly paid and incentivised; otherwise, the private sector will always continue to employ the very best people. We have made good progress in the last Parliament and in this one, but there is much more to be done. Our all-party parliamentary group on trade and investment will help the Government whenever possible by putting people in touch with UKTI and with their LEPs. As we go round the world, every Member of Parliament should be alert to the possibilities of export markets and to which companies in their constituency might be able to export to those markets. We should then put the companies in touch with those possibilities. In that way, we could all become trade and export ambassadors, which would help the exporting effort of this country considerably.
It is a pleasure to take part in the debate, and to follow the hon. Member for The Cotswolds (Geoffrey Clifton-Brown), who has made some sensible suggestions. His proposal for buddying businesses is one that all the agencies involved should take on board. I was not expecting to speak quite so early in the debate. This topic is clearly of interest to some Members, but the memo about it does not seem to have been passed to the official Opposition. Some Labour Members are here, providing an honourable exception, but it is surprising to see so few here, given the importance of these fundamental tenets of the economy not only to the economy itself but to the services that they provide the money to pay for. If we do not get the economy right, we do not have the services.
I am really pleased to take part in this debate, and I am going to focus on one area where the UK, and in particular Scotland, has strong natural and competitive advantages: energy. I thank the Minister for a positive response to my question about oil and gas. It would be more helpful if we focused on what could be done to help the situation, rather than getting into some of the politics around it. I accept fully that we are in a political environment here, but we need to reflect on what message this place is sending to the folk in Aberdeen who are being laid off when we are having knockabout about the oil price—it is not helpful. Having said that, I respect, accept and am thankful for the positive comments made.
It would seem that the Government have turned over a new leaf in 2016 in their approach to oil and gas. Today, I have had positive conversations with the Energy Minister, who also gave a positive response to the questions from my hon. Friend the Member for Livingston (Hannah Bardell) about incentives for oil and gas at Energy and Climate Change questions last week. We are in an incredibly difficult position with the oil price, and jobs are being lost, but there is still a bright future. The industry is doing what it can to reduce costs—unfortunately, in many cases that will require job losses—but it is also innovating, and I will come on to discuss that. Help from the Government is, however, required in order to bridge over what we hope will be a temporary downturn. Most people expect the oil price to rise at some stage, but it is not clear when or by how much.
Aberdeen is a city of innovators—there is no doubt about that. Some of my SNP colleagues may be surprised to learn that the city in Scotland that filed most patents in 2014 was Aberdeen. It filed more than Edinburgh, whose population is twice the size of Aberdeen’s, and more than Glasgow, whose population is almost three times as large. These patents were primarily in oil and gas, but they were also in life sciences, biosciences and food and drink, and so the city is thriving. It is, however, unquestionably an oil and gas and energy hub, and the job losses announced by BP yesterday, coming on the back of 150 announced by Petrofac the day before, are genuinely heartbreaking for those involved. As I have said, the industry is taking the steps it can to innovate. Innovation is one of the hallmarks of the oil and gas industry, and it was heartening to see the level of innovation and of renewed collaboration that is taking place in the industry, as it works to deal with the lower oil price.
Some of the issues the oil and gas industry faces pre-existed the oil price fall but they have been exacerbated by it. There are three sides to the coin in terms of the costs and changes in income that oil and gas companies face. The first is the oil price, and none of us can do anything about that. The second is the costs that the industry is exposed to, and it is doing what it can there. The third is taxation, and I am pleased that it would seem Ministers have an open mind on that. I plead with them to look at oil and gas taxation in the round to see what can be done to help.
The important issue of the apprenticeship levy has been raised. We wholeheartedly support the levy, provided it has the investment coming to Scotland. There have been questions asked, again by my hon. Friend the Member for Livingston, about the potential double imposition of an apprenticeship levy-type scheme on oil and gas companies, which already pay significantly into training schemes through a number of industry levies.
As part of maintaining and progressing Aberdeen’s position as an innovative hub, our local authorities—Aberdeen City Council and the Aberdeenshire councils—are exploring a city deal. They are looking at significant investment in infrastructure, which is obviously an important part of this debate and a key way of securing economic growth, and very much at how they can continue to make the best of the expertise in innovation that the city of Aberdeen is proud to host. There are proposals within the city deal to create an innovation hub around the two universities, bringing together industry and universities in a way that has already been discussed today. Measures are required to protect the north-east of Scotland and provide the bridging for the oil industry that I mentioned, and the Aberdeen city region deal is a very important part of that toolkit. I commend it again to the Government, hoping that they will look upon it favourably and act quickly.
Even in these times of difficulty, there are many ways in which innovation in the oil industry can provide a massive support to the UK economy. Enhanced oil recovery is one such way, as is looking at being one of the first movers on decommissioning. We would not want to see that happening prematurely, but if it is inevitably going to happen, we have the ability, as we have one of the more mature oil and gas basins in the world, to take our expertise and export it globally. We cannot afford to miss that opportunity.
Let me move on to exports, the north-east of Scotland and the oil and gas supply chain, which is about much more than Aberdeen, as it goes the length and breadth of the UK. That situation is good and it is getting better; Aberdeen relies much less on the North sea, in terms of supply companies based there, for its income. I wish, however, to draw the House’s attention to something announced at the tail-end of last year. In principle, I support this, and I am not criticising it, but it needs to be taken in the round, with a more supportive approach being taken to oil and gas. I refer to the announcement that there would be an export credit agreement of $500 million for a couple of UK-based companies for exports to Petrobras, the Brazilian state-owned oil major. That is good in and of itself. It helps support exports from the UK—from Aberdeen—but when we are looking at these things, we need to be careful. If we are providing exports to something like the oil and gas industry elsewhere without providing the same at home, we may inadvertently end up requiring greater imports of oil and gas in the future. We do need to get the incentives for exploration right. Again, I do not mean to criticise, but we have to have both sides there; we have to have support not only for exports, but for the domestic industry.
Aberdeen, and Scotland more widely, have huge natural advantages on green energy, and the Paris deal cements the opportunity we have in that regard. There is a sad irony here, in that the deal comes at the same time as the UK Government have taken the hatchet to a number of green energy policies, undermining the opportunity to truly embrace what will be one of the biggest global growing markets of this century. In her much-heralded “reset” speech, the Secretary of State for Energy and Climate Change said:
“At the same time, we are building new interconnectors to make it easier to import cheaper electricity from Europe.”
I support the building of interconnectors, as does my party, because an integrated European market for electricity will be a good thing, but the ambition shown there and the logic for making this move is the wrong way round. We should not be doing this to import electricity; we should be doing it to export the green electricity that can be produced from the wind and the waves—the sea and the tides—in Scotland. That is what we should be doing. That is the opportunity interconnectors provide; the opportunity is not about importing cheap electricity, but about building an industry that we can be proud of, in order to develop the skills that we need.
The renewables sector is an important part of rebalancing the economy, in geographical terms as much as anything else. The criticism often made of renewables, particularly of onshore wind, is that they do not provide that many jobs. The reality is that onshore wind does provide a lot of jobs, doing so in places where without the wind industry it is likely that there would be no jobs at all. We cannot overstate the importance of a small number of highly paid jobs in an area where they did not exist.
Does the hon. Gentleman also accept that many of the studies in Scotland have shown that the onshore wind industry and the way that it despoils the landscape have taken away many tourist jobs?
I have heard that asserted year in, year out, but, as far as I understand it, the tourist sector in Scotland is doing very well. It continues to do well and it is a major sector of growth in the Scottish economy, so I do not quite understand those assertions. I have read that there is anecdotal evidence—it is no more than that—of somebody saying, “I came to Scotland. I drove up the A9 and didn’t like the wind turbines, so I am never coming back.” Well, somebody else is there to take their place, and there always will be, as Scotland offers world-class tourism that is not in any way “despoiled”—in the words of the hon. Gentleman—by wind turbines.
It is not overly negative to say that genuine critiques can be made. On green energy policy, for example, various things have been done, but the most damaging to the United Kingdom’s reputation and to the financial and investor confidence that is required to secure investment in the UK was the decision at the 11th hour—actually it was even later than that—to pull the plug on carbon capture and storage. Two projects—Peterhead and White Rose in Yorkshire—took part in a CCS competition. Big companies invested significant time and resources on the basis of the supposed good word of the United Kingdom Government. Before they had even had the opportunity to submit their bids, the plug was pulled and the damage was done. We cannot underestimate the impact that that and all the other incremental attacks on green energy policy have had. We are missing a major trick here. As I have said, this is a huge opportunity to grow our economy and our skill base and to do it in differing parts of the United Kingdom. To send out such damaging messages really brings into question the commitment of the UK Government not just to green energy, all the talk at Paris and the global climate change deal, but to the economy and investment more widely.
Finally, let me touch on the Green Investment Bank, which was mentioned by my hon. Friend the Member for Dundee East (Stewart Hosie). It was supported by this party and also by the entire Chamber when it was debated—clearly, that was before I was elected to this place. The bank is a shining example of how we should address market failure. It is how we can ensure that investment is directed to the right areas, and that support is given to nascent industries to help them get off the ground. We have repeatedly criticised what is proposed. Again I say that we will oppose the privatisation of the Green Investment Bank if we do not get cast-iron assurances that its green remit will be protected.
After Paris, the rules of the game have changed, and the UK and Scotland have a chance to seize the benefits. Scotland is ready, but I fear that, as part of Tory Britain, we are being left behind.
I am grateful for the opportunity to speak in this afternoon’s debate.
I agree with the Minister for Small Business, Industry and Enterprise and my hon. Friend the Member for The Cotswolds (Geoffrey Clifton-Brown): Opposition Members have painted a pretty gloomy picture this afternoon.
The UK economy has improved significantly since Labour’s great recession, and is now, thanks to rising employment, growing faster than that of any other G7 nation. I hope that all Members welcome that rise in employment. Economic growth is not, however, the result of improved productivity. As my right hon. Friend the Minister said, we are looking at addressing productivity not only because it has been a long-term problem affecting our economy and one that successive Governments have failed to tackle, but because our productivity has consistently lagged behind that of other major economies.
I challenge the motion before us today, as I believe that the Government have rightly recognised the productivity gap, publishing the productivity plan last summer. There is recognition that addressing that gap will be key to ensuring a sustainable recovery and a long-term successful economy, delivering our long-term economic plan for Britain. We must recognise though that that will not happen overnight.
The productivity plan outlines 15 key areas that need to be addressed and are based on two pillars—encouraging long-term investment and promoting a dynamic economy. It includes measures to promote and encourage trade and exports, on which I wish to focus my remarks this afternoon.
The “Exporting is GREAT” campaign will, I hope, inspire and support thousands of new businesses to export. Firms that export are more productive, more innovative and less likely to go out of business. It is for that reason that I shall jointly host an export event in Cannock next week with UK Trade & Investment and Chase chamber of commerce. This will be an opportunity for local small and medium-sized businesses to understand what global opportunities exist; the benefits of exporting; and what practical help is available.
The export experiences of ATP Group are an excellent example of the power and opportunities available in the export market. I invite my right hon. Friend the Minister of State to visit ATP with me. Based in Cannock Wood, it is Europe’s largest independent re-manufacturer of automatic transmissions and vehicle electronics. Essentially, it rebuilds car parts—for instance, gearboxes—to the specifications of the original product, using re-claimed, re-engineered and new parts. Its clients include Ford, Land Rover, and Volvo, to name but a few. Exports make up two thirds of its business, and it is exporting to around 35 countries. During the past year alone its international trade has increased by more than 57%.
ATP has shown that one of the best ways to address productivity and increase exports is by investing in skills development, new technology, and research and development to support specific customer requirements.
I would be absolutely delighted to visit ATP. It sounds like an excellent success story, with many lessons to teach other companies, so, yes, I gladly accept the invitation.
I am thrilled that my right hon. Friend will join me in visiting ATP. I know that the company will be incredibly pleased. I shall send it a message this afternoon.
The Government have set out an ambition plan to narrow the trade deficit, and are taking the issue of exports very seriously, with an ambitious £1 trillion export target to be met by 2020, and the aim of seeing 100,000 more companies exporting their goods and services.
I take what the hon. Lady says about ATP in her constituency, but the UK is clearly a net importer of automotive products. Our largest engineering industry is a net importer from Europe. The plan has not worked.
The point I was trying to make is that we want to increase exports. I will highlight a few points relating to that.
The productivity plan outlines several measures that will help to meet that target, including building stronger links with emerging markets, especially China, India and Brazil. The plan also sets out a range of funds and initiatives designed to promote and encourage exporting. Let me echo the point that my hon. Friend the Member for The Cotswolds made about extending the tradeshow access programme.
Based on ATP’s experience of exporting, I want to raise a number of other issues and challenges faced by exporters that I would like the Minister to consider. They fall into three key categories—uncertainty, red tape and competitiveness—each of which presents real obstacles and barriers to exporting.
Uncertainty comes about partly because of currency markets, but the particular issue I want to focus on is that of Her Majesty’s Revenue and Customs impounding shipments for random checks. That can make it really difficult, both from an importing and exporting perspective, when a “just in time” ordering mentality is commonplace. Are there ways in which we can balance the understandable need to monitor shipments and at the same time provide more certainty to firms that are importing and exporting?
Businesses, both in the UK and abroad, regularly refer to the issue of red tape. I welcome the Government’s commitment to cut £10 billion of red tape, to back British business and put resources to more productive use. Customs warehousing is a facility for importers to delay duty and import VAT payments until the goods leave the customs warehousing facility or enter another customs procedure. According to ATP, it is an excellent service for importing parts, but the red tape associated with it is cumbersome. As such, ATP no longer uses the facility, as the amount of paperwork outweighs the benefits. That means that an excellent facility is underutilised. Will the Minister therefore review the facility and consider ways in which the paperwork could be reduced and simplified so that it can be used by SMEs, which have less capacity to deal with red tape than larger organisations?
My hon. Friend makes an important point about bureaucracy at our borders and the role of border control. I reassure her that the Government are reviewing that with their one government at the border programme. At present, 92% of consignments at customs are cleared within five seconds, but her constituents are clearly encountering difficulties. I will talk on her behalf to the Minister for Trade and Investment and look into the specific problems she faces.
I am grateful for the Minister’s update on the review and look forward to receiving more information over time. I will also feed back his comments to ATP, which is not using the facility at the moment but might want to start using it again.
On competitiveness, the costs and risks of exporting can be off-putting. If we are really serious about encouraging exports, surely we should be considering ways to incentivise businesses to do so, potentially through tax breaks. One tax that can be a burden to exporters is air passenger duty, which, in reality, is a tax on exports. ATP, for instance, spends thousands of pounds a year on air taxes alone. Every time it signs deals, it has to travel abroad and the costs over a year are significant.
We have to realise that ATP, like many businesses, is competing in a global market. Therefore, onerous air passenger duty makes it less competitive on contract delivery compared with other companies bidding for the same contract. With some companies actively trying to avoid the tax by booking tickets abroad, the Treasury is already missing out.
Given that APD is going to be a devolved matter and the Scottish Government have announced that they will cut it by 50%, with a view to abolishing it altogether, the need for us to consider our position is probably more urgent than ever. Will the Minister consider ways in which we could provide tax breaks on air passenger duty for those who are exporting? I appreciate that, at face value, that will cut tax revenues, but I believe that that will be overcome by the economic gains of more of our businesses exporting their goods and services.
In conclusion, given the need to address the productivity gap, and given the role that exporters play in closing it, it is important that we do everything we can to encourage businesses to consider exporting. That is why I would like the Government to consider ways in which we can address the three overriding obstacles of uncertainty, red tape and competitiveness.
I do not support the motion, because it does not reflect the current picture and the Government’s commitment to productivity and exporting.
It is an honour and a privilege to follow the hon. Member for Cannock Chase (Amanda Milling), who is a valued fellow member of the Business, Innovation and Skills Committee and provides real insight and personal wisdom to our inquiries.
Unlike the hon. Lady, though, I do support the motion, because, to be frank, I agree with every single word of it. It gets to the heart of the worrying structural imbalances in our economy, including our reliance on consumer spending based on debt, at the expense of investment; our reliance on domestic consumption, at the expense of potential and growing international markets; the priority given to short-term value extraction, at the expense of long-term value creation; and our reliance on the service economy, at the expense of manufacturing, which can inject real innovation and productivity gains across the country, thereby raising living standards for all of us and all of our constituents.
In addition to the points raised by the Opposition motion, I would also like to mention the geographical imbalance in our economy. As a north-eastern MP, I am here in London for half the week and back in God’s own country for the remainder of it. The economies of London and the south-east are overheating, which is in turn putting pressure on infrastructure and housing supply in the capital, at the expense of sustainable economic growth elsewhere in the United Kingdom.
I welcome the motion’s focus on productivity. The BIS Committee’s first inquiry of this Parliament was on the Government’s productivity plan and we shall produce our report, I hope, shortly. I also welcome the motion’s reference to the change of research funding from grants to loans. As has been said, that is of deep concern because it could undermine our country’s competitiveness. Capital is global, and firms will see where they will get the best return. They could leverage in public sector investment as a result of their own private sector investment. This country could lose out on foreign direct investment. It is incredibly important that when we attract foreign direct investment into this country—to be frank, this and previous Governments have been very successful at that—we make sure that we remain at the cutting edge of doing so. The measure puts that at considerable risk.
The hon. Gentleman will recognise that that is all part of a package, as is 20% corporation tax, which will be reduced further. I am sure he welcomes that.
A good, competitive tax rate is vital. Global firms consider a dashboard of different metrics—including tax rates, regulation, flexibility in labour laws and capital allowances—in a holistic manner in order to decide where they are going to put their capital investment, the returns on which they might not get back for 10, 20 or 30 years. It is important not only that we have stability, but that we make sure that, if a particular firm is putting in investment, we address what the Government are doing. Other countries recognise that and ensure that there is a partnership, but I am worried that we do not have that.
I will give way to a fellow Select Committee Chairman.
It is an honour to participate in this debate. The hon. Gentleman’s Select Committee and mine are doing a joint inquiry on productivity and it will focus on skills. Does he agree that, given the fact that more than 50% of foreign direct investment comes via the European Union, there is a really strong case to remain in the EU to encourage even more FDI in the future?
That is incredibly important. Firms make investment decisions not just because of the UK domestic market, but because they see the UK as a springboard into the largest consumer marketplace—500 million consumers—on earth. Japanese firms such as Nissan and Hitachi are not just here for the domestic market; they are here because we are a springboard into the whole European market. We risk that at our peril.
Trade performance is a good barometer of economic health at both the macro and micro levels. At a macro level, a buoyant trade performance contributes to economic growth and helps to provide a surplus on the country’s current account. As the hon. Member for Dundee East (Stewart Hosie) mentioned, the motion cites a
“trade deficit in goods of £123 billion in 2014”.
However, in that year, the current account deficit widened to 5.1% of national income, which was its largest in post-war history. For much of the past 30 or 40 years, the trade deficit has been offset by investment income from overseas. However, and most ominously, net primary income derived from assets abroad has fallen from 3.3% of GDP to 0.1% in 2014. The Minister should outline the Government’s view about that because they have been quiet about this crucial economic issue.
At a micro level, exporting is positive, especially for firms, and it is good for the wider economy and society, too. Evidence suggests that an exporting business tends to be successful, sustainable and socially aware. Such a company tends to employ more workers and to offer better wages than an equivalent non-exporting company. Companies that export have been shown to be more productive and to invest more in research and development. There is a strong link between exporting and innovation. More often than not, a business with a desire to export overseas has the discipline, ambition and entrepreneurial flourish to develop new products and services that will better serve new export markets. Such companies will be sensitive and responsive to customer wishes, which is always the hallmark of a successful business. There can be a virtuous circle for exporting businesses whereby they become exposed to new demands, fresh ideas and increased competition, which in turn makes them more productive and outward looking, and better disposed towards thinking about new products and improved profitability.
On average, according to the British Chambers of Commerce, businesses that export grow 20% more than those that do not. We need to encourage such activity much more because far too few excellent British firms providing great goods and services that could be offered throughout the world export. Only one in five British firms do so, whereas the average figure for the EU is one in four.
The motion refers to the UK’s “poor export performance”, but with the greatest respect to the Scottish National party, I would go further. I think that our trade performance over the past 30 years or so has been dire and woeful. It has declined markedly over that period with no genuine prospect of improvement. The UK accounted for one in 10 of the world’s exports in 1950, but now the figure is less than 3%. Of course, with the development of emerging economies, it was inevitable that there would be a relative decline in the market share of UK goods and services, but not at the rate that we have unfortunately experienced. Given the forecast that world trade will expand by $250 trillion by 2050, there should be a co-ordinated effort—in the House, across the country and in government—to ensure that we capture as much as possible of the growth in the world economy for British firms.
The hon. Gentleman is making important points in his impassioned speech. He is right that there is a challenge for more business to step up to the plate and move into exporting, but does he agree that the situation shows that we need a real cultural change involving not only the Government, but businesses examining what they have done in previous years and moving further forward?
The hon. Gentleman has a fantastic track record of talking about trade and investment, and how we ensure that we boost our sales of exports throughout the world. I will deal with his important point about what we can do in a moment.
In November 2015, the UK’s trade gap was £3.2 billion, while the trade deficit in goods was £10.6 billion. In 2014, UK goods exports fell by 4.1%, which represented the lowest growth rate since the recession in 2009. We were the only G7 economy to experience a negative growth in exports, although it is not all doom and gloom because the north-east still has the only consistent trade surplus in goods. However, as the hon. Member for Dundee East said, there is precious little evidence of a “march of the makers” with modern manufacturing at the heart of a rebalanced economy and providing export-led growth. That is reinforced by yesterday’s Office for National Statistics publication showing that the UK manufacturing sector is now back in recession. I fear that we are sleepwalking back to the long-standing British model, which has been prevalent over the past 40 years or so, of debt-fuelled customer consumption based on an assumption of ever-rising house prices. That did not work in the past—it never has—and it cannot be a model for sustainable and competitive economic growth.
As we have heard several times during the debate, the Government have set a target of £1 trillion of exports by 2020. I genuinely want them to achieve that because it would be good for firms and the country, and would bring about economic growth and broadening prosperity for everyone. However, it is now more or less a given that the Government will fall spectacularly short of their target. Few expect it to be achieved, including the Secretary of State when he gave evidence to the Select Committee. The Office for Budget Responsibility’s “Economic and fiscal outlook” that was published at the same time as the autumn statement forecast the cash value of exports in 2020 to be £647 billion, which is 23% lower than its March 2012 forecast and 35% lower than the Government’s ambition. It is not acceptable for the House, the Government or the country simply to shrug our shoulders and say, “Do you know what? It was a tough target and it’s unachievable, but at least we had a go.” We must be more ambitious than that, but the evidence suggests that the Government have not even had a go. A strong export performance matters, which was why the BIS Committee launched an inquiry into exports and the role of UK Trade & Investment.
I think that I speak for all members of the Committee, several of whom are in the Chamber, when I say that we all want the £1 trillion target to be achieved, but given the enormous shortfall that is forecast, we need a vigorous focus on changing course and embarking on policies that will bring about an improved performance, yet I have not seen the Government demonstrating that there will be such a step change. Will the Minister outline what is being done differently to ensure that we get as close to the £1 trillion target as possible? What active steps are the Government taking to ensure that 100,000 more companies are exporting by 2020?
To respond to the intervention made by the hon. Member for Macclesfield (David Rutley), while the Government do not control this, they can put in place a framework and facilitate the environment. We need to think about what firms are doing. They might have a good domestic market in which they feel comfortable, but how do we ensure that they can put their toe in the water of exports? Businesses will be concerned about whether they know the regulations and laws of a particular country and if they will get paid, so they might think that exporting is too much hassle and that they will stick to the domestic market. However, we need to encourage them to export, and that brings me on to the role of UKTI.
The hon. Gentleman accepts that the target is challenging, but if the Government know, given the OBR forecast, that it might well be missed by 35%, we have early-warning signs four years in advance showing that something needs to be done, so action should be taken.
The hon. Gentleman is right. Given that we will fall spectacularly short of the target, how will the Government revise their policy on trade and exports to ensure that we do not miss it by 35%, but get as close to £1 trillion as possible? Is UKTI sufficiently proactive about working with British firms to identify and navigate foreign markets? It has been affected by turbulence, with cuts in funding and disruption at the top of its management. Do the Government think that it is fit for purpose?
To answer that directly, I think there is much reform that can be achieved. Does the hon. Gentleman agree that the hon. Member for East Lothian (George Kerevan) was wrong when he said that the former CEO of UKTI had resigned because of the budget cuts, and that Mr Jermey moved to the Foreign and Commonwealth Office to take up a new appointment as the international counter-extremism co-ordinator? Does the hon. Gentleman agree that the new head of UKTI was appointed before there was any change in the funding? Will he confirm that the amount that UKTI received from BIS in 2014-15 was £264.1 million and for 2015-16 is £338 million?
It is important that the right hon. Lady clarifies the reasons for the personnel changes.
The hon. Member for The Cotswolds (Geoffrey Clifton-Brown), who is no longer in the Chamber, spoke about benchmarking UKTI against other comparable trade organisations around the world to see whether we are getting value for money for the taxpayer and whether sufficient money is being provided. The Select Committee’s inquiry can look at that.
This is not an academic exercise. In the past a trade deficit was so significant that it could bring down a Government. I am far too young to remember the 1970 election. I was not born then, but I have read about it in history. Some of those present may have been in the Chamber talking about it. That is an example of how important trade performance used to be. In the modern age, and in news reporting for the 21st century, it seems to have lost that impact. We should return to highlighting the importance of trade deficits for the general prosperity of this country. Poor performance in overseas markets acts as a drag on competitiveness, productivity and rising living standards for all. The Government should focus more attention on that and demonstrate how they will change track to achieve their targets. The whole House would be behind the Government if the Minister could demonstrate that tonight.
It is always a great pleasure to follow the Chair of the Select Committee on which I am proud to serve, the hon. Member for Hartlepool (Mr Wright), who gave an interesting speech with a fair balance of criticism and positive views. It was in contrast to the speech from the Opposition Front-Bench spokesman, the hon. Member for Sefton Central (Bill Esterson), which in both content and delivery reminded me of the Brezhnev era with its catalogue of unremitting misery. I shall spare the blushes of the Chair of the Business, Innovation and Skills Committee and just say that unremitting misery is clearly what one gets with socialism, which is why this country has decisively and continuously rejected it.
I shall add to the positive views we have heard by making some comments of my own. I do this with some humility. We are debating some extremely important matters. The Chair of the Select Committee must be embarrassed that he has only two Labour colleagues in the Chamber, including the Whip, who is supposed to get people into the Chamber to take part in debates. Let us hope that as the debate progresses, we see a little more commitment from the Labour party to the entrepreneurs, the small businesses and the wealth creators in our country.
As the hon. Member for Dundee East (Stewart Hosie) rightly pointed out when opening the debate, we have to understand Government policy and the matters we are debating today in the context of long-standing issues. We should recognise that in the global economy we are going through a period of substantial overcapacity in production and the transition of some major economies from a production to a consumption sector. That will have an impact on the ability of companies everywhere in the world to export. We have reached a point where—we may disagree on this—the British Government and the British economy have to start living within our means, which has been summed up by the Chancellor as seeking stability and security.
On trade, innovation and productivity, entrepreneurs and business people think about that every day. Low down their list of possible solutions to the issues facing them will be the words, “I had better go and ask my Member of Parliament.” The innovations that we make and the trade and exports that we do will be done by those individuals. I am a strong believer in free market capitalism and in entrepreneurship, and I want a Government and a Business Secretary who believe in that. One of the benefits of the election was a change in the leadership of the Department for Business, Innovation and Skills to someone who understands the motivations of the person who does not talk in billions and perhaps does not talk in millions, but is taking the first step and the first risk by investing their own money to start their business. Whether they are in Scotland, Bedford or other parts of the world, that is extremely important.
A number of hon. Members have talked about the persistent current account imbalance in the UK. We should bear in mind two things about that. First, if the issue has been there for so long and we have not all fallen apart, something about it must be hidden or going okay. Secondly—lies, damned lies and statistics—we must remember that trade statistics do not include value added. One of the important changes in global trade over the past 30 years has been a shift in the value added in various sectors. The statistics on that may paint a different picture.
The hon. Gentleman is making a thoughtful speech, as ever, and much of what he says is interesting and potentially accurate. However, I am sure that even he would agree that it is worrying when the contribution to GDP growth from exports is continually marked down in forecast after forecast. While there may well be good, hidden things, the general trend is working against growth in the economy.
I was just about to agree entirely with what the hon. Gentleman was saying because I thought he was talking about forecasting accuracy—a topic on which, of course, the SNP has a very good track record. The issue of marking down does point to the frailty of setting targets. It is a fair criticism of all Governments that they find it very easy to set targets and then very difficult to meet some of them.
Let me talk about what the Government are doing. First, a number of hon. Members have referred to the very broad nature of the Government’s productivity plan. I see that plan as being more about how we implement things than the variety of outcomes they will have in terms of the overall impact on productivity.
Secondly, the Government’s policy on the living wage will provide a substantial increase in productivity, specifically labour productivity. The living wage is, in essence, a 38% pay increase for the lowest-paid workers in our country. I am sure that the Government and the OBR have factored into their statistics the implications for comparability with other pay rates within the economy. A Conservative Government pushing to increase the wages of some of our hardest-working but lowest-paid workers will have, in a market economy, a positive impact on improving labour productivity.
It is important to clarify that, as has been discussed previously in this House, the increase in the national minimum wage by the UK Government is not the same as the living wage that has been set by a number of independent bodies. Conservative Members must recognise that.
The hon. Lady is of course factually correct, but unfortunately that is like having a beautiful sunny day where someone consistently wants to put a cloud on the chart. This is a major and very significant change in the British economy. We should all be looking to the businesses that now have to pay the increase in wages to ensure that they are able to do so without it leading to unemployment. If we could co-ordinate our efforts around that, then, as she rightly says, we can think about the other level that we should move to. Let us join together, support what the Government have done, make sure that our businesses can deal with it, and then look to the next stage. I think there is common agreement across this House that the disparities have gone too far and now we are doing something about it.
The squeeze in the public sector is identifying new ways to improve productivity. We do not talk enough about that positive impact on the economy. Personally, I would be happy if the Secretary of State had accepted a larger reduction in the Department’s budget in doing his bit to get the deficit down, but I do understand that perhaps he is holding something back for later. Another positive on productivity is that the Government are focusing on the sharing economy, which our Committee is also considering.
On innovation, I am very pleased that the Minister said she would talk to the Treasury about looking at new ways in which tax policy can support equity investment in private companies, particularly involving individual savings accounts, as proposed in the excellent “High Growth Small Business” report launched by the hon. Member for Hartlepool.
May I tell the Department that I took to the previous Secretary of State the idea of a Bedford business fund? The idea is that people who care about a community—in this case, my constituency of Bedford—could put money into a fund to support the growth of businesses there. We do not have the advantages of Milton Keynes, Cambridge or Northampton, which have large businesses or science parks; we have to grow our own small businesses to create prosperity in our community. The idea of having a business fund in which people can invest tax-efficiently to grow businesses in their community could not just be followed in Bedford, but replicated across the country. I ask the Business Secretary to look at that again.
Building on the success of the Bedford business fund and having, happily, been re-elected in May, I am taking forward the idea of a Bedford community business school. In conjunction with Bedford College, there will be a series of courses over four weeks. Anyone in the community who is interested in starting a business can learn about public relations and marketing, and about accountancy and getting finance from business. Again, community business schools are a good idea that could be replicated across the country.
I want to make some points about the Department. I have already spoken about the potential for further reductions in its budget. I know that the Minister is a little more fond than I am of spending taxpayers’ money, but she is a true Tory and will look for efficiencies wherever she can. One thing we hear constantly from business is: “The Government do a lot of stuff, but where do I start.” Decluttering and providing some focus for what the Department does would be helpful.
May I make one specific suggestion? I understand that with the Treasury, through Her Majesty’s Revenue and Customs, people will be able to log on and see their own tax accounts. Why is it not possible with the Department for Business, Innovation and Skills for a company, with a company tax identification number, to be able to log on to a website and see in one place all possible ideas that are suitable for the business, tailored to the specific interests of the company? Through the tax identification number, the Department will know whether it is a large or a small company and what sector it works in. With today’s technology, the Department should therefore be able to provide, up front and quickly, the Government measures that are available to support them. On deregulation, the issue for many companies is not how much money is saved, but how much time is saved.
I find it amusing that my hon. Friend is now encouraging me to spend taxpayers’ money on such a service. It sounds like a great idea, but does he agree that the private sector could do it even better, particularly for small businesses? In effect, the website would be a one-stop shop where they could access all the various forms of support available to them. We do not need to use taxpayers’ money to achieve that.
The Minister is somewhat ingenious in suggesting that I want taxpayers’ money to be spent on such a website. The issue is not about the money, but about the access to the Department’s information, which is of course privileged information within the Government. If the Minister is today committing herself to force the Department to deal with private sector companies wishing to create such an access portal and giving them free rein to do so, I am sure private capital will flood in. However, that will require a commitment and it will require access, which is her decision, not mine.
I will think about the idea, because it has many attractions, although there may be data protection considerations. Why do we not agree to meet to have such a discussion and see what we can achieve?
I am looking forward to the Minister coming back to the House with a recommendation, and I will of course be happy to meet her when she has that recommendation. [Interruption.] People may say that is unfair, but the truth is that this is a very positive initiative. The one thing we know about the Minister is that when she sees a problem to be tackled, she goes for it, and heaven help anyone who stands in her way. I am highlighting the fact that this is an opportunity for her. She is the right person to go for it, and I will of course encourage and support her all the way.
The most important thing highlighted by the motion—unfortunately, I do not support it—is that SNP Members are bringing forward ideas on some of the most important issues affecting the wellbeing of our country. Even though Members of Parliament may be low on the list of people entrepreneurs want to call to get answers, SNP Members, as well as others who have spoken, have done a service to the House and I commend them for it.
The last six years have seen an amazing deterioration in Britain’s external trading position. The purpose of this debate is simply to get on the record how bad it is and to encourage the Government to do something about it.
The Government’s default position is to say, “Well, there’s been a global recession” and, “Our biggest trading partner is in the EU so we were bound to lose some traction in the markets.” The point is that in the six years since the Government came to power, world exports have increased by 30%. The world market for sales has grown extensively. If we have lost market traction in that situation, what will we do if the global economy starts to contract overall?
Normally, when there is a recession in domestic demand, a country’s industry is forced to export. Strangely enough, therefore, the core eurozone countries that suffered the worst from the euro crisis have done well in exporting. They had nowhere else to go, so they had to export. Spain and Italy have doubled their exports since 2010. Ireland, which had a catastrophic fiscal implosion, is selling more in exports than ever before in its history.
The point that we are trying to make to the Government is that their insouciance and their pretence that everything is all right in the international sector belies the fact that in the six-year period when they should have been concentrating on turning around British exports, increasing them and grabbing a bigger market share, they have failed totally. They keep putting it off. They keep thinking, “Well, we’ll have another paper plan and it will get better.”
If we look at the numbers, which have been repeated in a number of speeches, in 2014—the last year for which we have the full figures—the UK current account deficit came to 5.1% of GDP. The hon. Member for Bedford (Richard Fuller) asked whether that mattered, but if a country runs a current account deficit, it has to fill it somehow. It has to either borrow foreign currency from other countries or sell its assets into the ownership of other countries. It is no surprise, therefore, that large chunks of British industry and the British property market are owned abroad. The Government’s obsession with trying to cure their own fiscal deficit has only resulted in the deficit being transferred to somebody else.
Everybody knows that when a country’s current account deficit hits something like 5% or more of its GDP, the warning signs flash up in marketplaces all over the world. It is unsustainable. If a country runs that for two, three or four years, a quarter of its GDP will be in hock. We cannot continue to do that. In normal circumstances, the UK has typically run a current account deficit, but at a tiny fraction of its GDP. In 2014, the UK’s current account deficit had the worst performance in peacetime. That is the problem that the Government simply refuse to recognise.
Far from our economy being rebalanced towards manufacturing in order to export more, the numbers on that are just as bad. Let us take the total production data for the UK and strip out the most important components. UK manufacturing output is now less in value than it was in 2000. During the last 16 years, Germany has managed to increase its manufacturing output by that definition by 22%. It would be reasonable to say that we are almost back to a second wave of deindustrialisation. A lot of that has happened since 2010, although it goes back a little further. In fact, UK manufacturing output is barely ahead of where it was in 1990, so we have had a generation of marking time.
Over the last six years there was no national emergency and something could have been done, but the Chancellor did not focus on rebalancing the economy as he said he would. In 2012, he belatedly came up with a target—he is good at making targets—to double exports by the end of the decade. That was a ridiculous promise then, as it is now. If Government Members would just say, “Okay, let’s lay that target aside and concentrate on the practical nuts and bolts of expanding our exports”, we might move forward, but as long as the Chancellor comes up with these fancy proposals and does not deliver, Opposition Members can reasonably say, “You are not serious.”
What nuts and bolts does the hon. Gentleman think are missing from the Government’s package at the moment? He is long on rhetoric about the shape of our export performance—I can understand that—but the Government have done a huge amount to support those exporters, and we have been languishing in the depths of a European-wide recession.
I take the hon. Gentleman’s general point. I do not gainsay a number of the micro-decisions that the Government have taken, but we are not seeing the wood for the trees. Let us understand why we cannot get more investment into the manufacturing industry, and why the whole tenor of the economy is anti-export. It goes to the heart of how the Chancellor has conceived his job. He tells us that we have growth, but where has that growth come from in the past six years? It has come from pumping up domestic consumption, not from investment or selling abroad. Where does that extra consumption come from? Does it come from wages? There has been some wage growth in the past few years, but in the most recent statistics, pay growth has slumped to its lowest rate in two years. The growth is coming not from pay but from borrowing.
Let us consider the latest consumer borrowing figures. We do not have to go back a long way—let’s look at what is happening now. Consumer borrowing on credit cards and overdrafts is expanding at its fastest rate since the financial crisis. Unsecured consumer credit was up by 8.3% in November—consumers borrowed an extra £1.5 billion of unsecured credit in November alone in the run-up to Christmas. While we are facing a potential rise in interest rates, we have merely returned to unsustainable consumer debt in order to carry growth forward into 2016. Yes, there has been growth, but it has come from borrowing. All that the Government have done is to transfer a fiscal deficit from the public sector to private individuals who are even less able to bear it.
I understand the point that the hon. Gentleman is trying to make, but it is too strong to say that Government policy is anti-export. That is not the case. The Government have been trying to navigate their way through a difficult economic situation, as I am sure the hon. Member for Dundee East (Stewart Hosie) would agree. Being anti-export is not the intention, and the hon. Gentleman is overstating his case.
I am glad that we have moved on from me being wrong to me merely overstating the case—we are making progress. I repeat: in the depth of a crisis such as this, we will move on from unsustainable debt by moving towards export-led growth. That is what some of the countries that suffered worst in the recession and from the crisis with the euro have done. We have not even begun to do that, and if we do only one thing today and persuade Government Members that that is the case, we might have made progress.
The hon. Gentleman makes some interesting points. Does he recognise that those countries have had far more severe fiscal consolidations that we have had in Britain?
I do—that was my point. However, Italy, Spain and Ireland have still managed to double their exports, which is the one thing that the Chancellor said he wanted to do but has not yet even begun.
Why has the Chancellor not been able to rebalance the economy? What has gone wrong? In truth, although previous Chancellors began this, under this Chancellor Britain has a taxation system that favours investment in physical property, rather than long-term investment in manufacturing. It has continued to have a banking and financial system that prioritises gambling—to use an extreme word—money, and foreign exchange markets, rather than supporting manufacturing and innovation.
Let me give Members an example that goes to the heart of the matter. Britain’s premier engineering company is Rolls-Royce, a company we would need to rely on as our flagship if we were to rebalance the economy towards manufacturing and exports. Let us look at the tragic history of Rolls-Royce in the past two years. Just over a year ago, Rolls-Royce sold off its gas turbine business to Siemens for £1 billion. Gas turbines, by the way, are the third largest export sector in UK manufacturing. What did Rolls-Royce do with the £1 billion? Did it invest it in a new wave of innovation? Did it invest it in new technology? Did it do more research? No. The nature of the fiscal taxation system, reinforced by cuts to corporation tax, meant it was easier for Rolls-Royce management to use that £1 billion to buy back its shares.
I am not in favour of raising corporation tax—I think fiscal incentives are good for industry—but the Chancellor continued to cut corporation tax when he knew that most of the money from many companies would actually go on share buy-backs. Rolls-Royce, by dint of buying back its own shares, pushed its share price to something like £10 in the early part of last year. Where is the share price now? It is half that. Our premier engineering company is now in a disastrous commercial state. In fact, the halving of the share price means that the shareholder value of the £1 billion it received from selling off its key turbine business to Siemens has been wiped out.
Meanwhile, the market has caught up with Rolls-Royce. Its key sales of engines for large, wide-bodied jets have started to dry up. The market has moved on to new jet engines for narrower-bodied jets. The Americans are cleaning up because they had the product ready to go into that market. Rolls-Royce is now in serious trouble. In fact, there is now talk in the City of it being taken over.
Does the hon. Gentleman agree it is very important that in this House we do not talk down one of the most outstanding British success stories? Given that he has already given the House incorrect information about the moving on of the head of UK Trade & Investment, will he please agree that it is very important that the information he continues to put on the record is accurate? It has not been so far. Will he agree to withdraw his comments about Dominic Jermey and his moving on to the Foreign and Commonwealth Office?
I will continue with what I was saying. I am not talking down anyone. I am trying to get the Government to admit there is something seriously wrong.
Will the hon. Gentleman give way?
No, I will continue.
On a point of order, Madam Deputy Speaker. Is it not important for all Members, when they make a mistake, to correct that mistake so the record can show when they have given an inaccurate account to this House, especially about someone who does not have the ability to speak in this place? If somebody else gives a contrary view based on sound information, is it not beholden on the Member to accept it? We all make mistakes. An hon. Member who has made a mistake should just accept it.
I think the right hon. Lady knows it is entirely up to the hon. Member who made the statement whether he wishes to withdraw it or correct the record. She has herself now twice corrected the record, so we shall move on.
Thank you, Madam Deputy Speaker. I am always willing to bow to the Chair. If ever I am found to have made erroneous remarks in this Chamber, I will always withdraw them. We can come back to that.
The Minister intervened because she wishes to continue to say that those of us who raise serious points about our poor economic performance are talking down British industry. Far from it. I am passionate about British industry. I want industry to grow. It is the fact that the Government are not doing their job that is the problem. I have a profound respect for Rolls-Royce, its history and what it has contributed to this country. During world war two, Rolls-Royce’s main aero engineering factory was in Glasgow. The engines that powered the Spitfires that saved western Europe and democracy in 1940 were produced in Glasgow by Rolls-Royce. I am second to none in my admiration for the company and its engineering history, but I am worried that we are now talking about it being taken over by American aerospace companies because of the situation it is in. I am now worried that the Government may have to consider taking over parts of Rolls-Royce—this has been a matter of press comment in recent weeks—in particular its nuclear engineering division. If anything went wrong and, God forbid, Rolls-Royce were taken over by a foreign company, the Government would be talking about nationalising bits of the company. That is quite a serious pass to have come to.
The hon. Gentleman is making an interesting and important point about foreign takeovers, particularly hostile takeovers. One of the important ones recently was Pfizer’s attempt to take over AstraZeneca. I am sure he agrees that that case concluded in absolutely the right way, by protecting one of the great British assets and enabling it to continue its long-term strategies of investment in innovation and technology. Does he agree that this issue should perhaps be seen as a case for reform of the Companies Act 2006, so that we see far more long-termism built into the UK’s corporate culture and a move towards investing in innovation, R and D, and skills? If we do not do that, we will never change to a more sustainable business model.
I could not agree with the hon. Gentleman more. One of the things that has led to the short-termism over the last 20 to 30 years is precisely the fact that companies are not in a position to think long term themselves, because the way that the City of London and the casino economy work means that their shares are always in play. We need company reform to allow investment to take place without it being subject to shares being shorted and without share buyback activity by Rolls-Royce or other companies when the money should be going into real investment.
This is an interesting issue, and the hon. Gentleman is making an important point about long-term investment. Of course, it is already on the agenda, not least in the Bank of England, where Andy Haldane, the chief economist, has raised the issue of long-term investment, contract law and the need to effectively encourage firms to think not just about shareholding, but about long-term investment. Does the hon. Gentleman agree that that is the kind of thing we need to encourage smaller firms to become bigger firms, especially given the nature of the Mittelstand-type firms that we need to see in the manufacturing sector?
I could not agree more that what is clearly missing from the UK industrial structure is those medium-sized Mittelstand companies that export and create a value chain, and instead we have a dumbbell shape, with a small number of very large companies and a large number of small companies. One of the reasons we have been unable to do that is because as companies grow to a certain level, they have consistently needed to sell out, usually to foreign ownership, in order to raise capital.
That brings me to another issue—I shall not be long, Madam Deputy Speaker—which the hon. Member for Bedford raised when he referred to the current account deficit. We have normally been able to fill the current account deficit, even though on a smaller basis, thanks to the financial remits coming in from assets owned by British companies or British citizens abroad outweighing the money from assets owned by foreign concerns leaving the UK. What has changed dramatically since 2010 under the auspices of the Government is the balance between the ownership of assets in the UK and the remit of funds abroad, and UK assets owned abroad and money coming back here. The total value of British-owned overseas assets since 2010 has slipped down to about £1.2 trillion. In that period, the value of UK assets held by foreigners has soared, from £1 trillion to £1.4 trillion. In other words, we are now a net debtor nation. What we own abroad is less than what is owned here, so the net outflow of money will mean in the balance that we cannot cover our current account deficit.
In the last year for which we have figures—2014—there was a bare surplus of £2 billion of positive foreign direct investment coming in versus money going out. That could go like snow off a dyke. That has led the Chancellor into what I think are dangerous grounds. Here we need to link up another aspect of financial wheeling and dealing in the UK with the need for manufacturing investment.
The fundamental way in which we have recently covered our current account deficit is via a huge inflow of money for buying up property in the UK and particularly in the City. Wealth investors have acquired about £100 billion-worth of property in London, using blind overseas companies in just the last six years. Since 2008, something like 28,000 individual purchases of homes, buildings and lands in the capital have been made by corporate structures registered in external tax havens. One in 10 properties in Westminster is owned by an offshore firm. We are funding our current trade deficit by allowing a vast influx of cash from offshore companies coming in to buy property here, yet in many cases we do not know the ownership or where the money has come from. The Chancellor has now developed into an art form the attempt to find ways to get money in to cover the current account deficit, and it is partly connected with his new cunning plan for China.