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Economy: Growth

Volume 735: debated on Wednesday 15 February 2012


Asked by

To ask Her Majesty’s Government what steps they are taking to maintain and promote economic growth across the United Kingdom as a whole.

The Plan for Growth, published alongside the Budget in 2011, set out the Government’s plan to put the United Kingdom on a path to sustainable long-term economic growth. We are creating the right conditions to enable growth, driven by investment and exports and more evenly balanced across the United Kingdom and sectors.

My Lords, I am grateful for that very helpful reply. Are the Government fully aware of the growing economic disparities between the regions of the United Kingdom, accentuated by devolution in the national regions, and do the Government agree that, if we are to maintain the constitutional unity of the United Kingdom, we must present a united front in the regions on investment and economic development, otherwise we shall be in grave danger of drifting apart?

Yes, I agree with my noble friend. That is certainly not something that we want. The Government’s primary objective is balanced growth across the United Kingdom. It is worth remembering that the United Kingdom is still one of the biggest economies in the world and that our combined strength has helped us to weather the recent economic turmoil.

Since the Welsh Government launched their £15 million economic growth plan in December, they have been inundated with requests for help, so much so that they now plan a £40 million fund to encourage SMEs. But Governments can only do so much: the real job belongs with the private sector. However, as we have seen from the figures released this week, the banks are not lending to their targets to SMEs. Will the Minister tell us what the Government are doing to ensure that companies in Wales can access the finance they need in order to invest and grow?

Wales is certainly receiving all the attention that we can give it. Wales has its own way of behaving and of running itself, and that is how we think it should be. I would of course mention that we are to have the Silk commission on further devolution for Wales soon, and we shall be interested to see that next year.

My Lords, does the noble Baroness accept that there is no balanced growth in Wales and that, at the moment, income per head in Wales is about 76 per cent of the United Kingdom average? That clearly shows massive need in both real and relative terms. Does she accept that there must be an altogether new approach to initiatives to stimulate growth in Wales?

I agree that Wales needs attention; that is why we are having this new piece of work done to find the very best way forward. I hope that by next year, the Silk commission will have come back with good suggestions for Wales.

My Lords, I understand the budgetary framework, but does my noble friend agree that staying within that envelope but moving faster towards the target of raising the starting rate of tax to £10,000 would provide a boost to consumer confidence and demand that would stimulate business and growth more rapidly?

My noble friend is very brave. As she will remember, the Government's plan for growth is to create the most competitive tax system in the G20, and that is the path we are on.

My Lords, the Minister will be aware that the north-east is a wonderful place to live, to work and to establish businesses, but under this Government unemployment has risen there more than anywhere else in the kingdom. People in the north-east are beginning to feel that the Government simply do not care about the region. What can she say this afternoon that can help us to begin to rebuild and give young people, in particular, a feeling that there is a future for them in the north-east?

I am sorry that the noble Baroness thinks that we are doing absolutely nothing in the north-east, because we are very aware of areas such as the north-east which have had industries that have closed and all sorts of difficulties to contend with. That is why the national insurance holiday until 5 September 2013 has been announced; it is why the European regional development funds were allocated to the north of England in the current EU finance round of nearly £1 billion; it is why the £1.4 billion of the regional growth fund to support projects and programmes that promote jobs and growth in particular supports areas currently dependent on the public sector, as the north-east has been, to make the transition to private sector-led growth. We are very aware of the difficulties there; we would be a foolish Government if we did not look to see which are the most difficult areas of the country and which need our best help. We are doing our best, and I hope that she will encourage us.

My Lords, my noble friend will remember that in the 18th century, Edinburgh was referred to in cultural and intellectual terms as the Athens of the north. Would it not be a tragedy if in the 21st century, Edinburgh came to be referred to as the Athens of the north for economic reasons?

It will not be. They are a wily lot up there in Scotland, and it is for the people of Scotland to decide their constitutional future. The Government strongly believe that Scotland is better off as part of the United Kingdom, and I do not think that I can do better than quote an English visitor in 1750, Mr Amyat, the King’s chemist, who famously remarked:

“Here I stand at what is called the Cross of Edinburgh, and can, in a few minutes, take 50 men of genius and learning by the hand”.

We do not want to lose them.

My Lords, with record levels of unemployment, is the noble Baroness concerned about the performance of the Government’s flagship growth policy? The regional growth fund was hugely oversubscribed because of the Government’s cuts, meaning that it has created more losers than winners. Will she explain why, of the winners, more than a year after the bidding process began and more than 10 months after the successful bidders in the fund's first round were announced, more than 40 per cent of successful bidders are still waiting to receive their money?

The regional growth fund has been enormously successful. We are very proud of it, as we are about the number of people who have applied for it. I am sure that it is quite obvious to the noble Lord, as it is to me, that the reason for hesitation from some people is that there has to be due diligence on every bid put forward to make sure that we are not taking taxpayers’ money and investing it unwisely.