The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Prior of Brampton) (Con)
My Lords, we have had more than 60 speakers this evening, and many insights from much experience. We have ranged from lobsters, through the libel laws to horticulture, and I am afraid I cannot address all the issues that have been raised this evening. But I will just begin by congratulating my noble friend Lord Callanan on introducing the debate so well earlier this evening. He set out a very comprehensive legislative programme over the next two years, and I do not intend to repeat what he has said already. I also congratulate the noble Lords, Lord Mountevans and Lord Colgrain, on their two excellent maiden speeches. They bring to this House much experience from the world of financial services, the maritime industry and the rural sector.
I intend to spend most of my time this evening discussing the economy—as the noble Lord, Lord Davies, would like me to do—and Brexit a bit. Before I do that, two issues have been raised by a number of noble Lords this evening in addition to those. The first, of course, is agriculture. I refer to my declaration of interests: I am a partner in a small family farm. I was talking to a farmer at the weekend who was ranting on about the uncertainty caused by Brexit for the outlook for farm prices and about the difficulty he had in attracting labour to pick his fruit. I asked him how he had voted in the referendum, and he said he had voted for Brexit, so my sympathy for that particular farmer was somewhat limited in the circumstances.
As the noble Lords, Lord Plumb and Lord Curry, two very distinguished former presidents of the National Farmers’ Union, have said in the debate this evening, British agriculture is facing probably about as much uncertainty, or as big a decision, as it faced in 1946 after the war. We will be returning to this country the powers to make our own decisions about the trade-offs and priorities in British farming. We will have to decide whether we will retain area payments, whether we wish to treat big farmers differently from small farmers and what the trade-offs are between low prices and the need for better animal welfare. Then there are the ethical concerns about GM foods and animal and plant breeding. Those are the kind of decisions that we will have to make.
Personally, I have never been a great fan of the common agricultural policy. I felt it was a policy designed, by and large, for French farmers and the French structure of agriculture rather than the structure of British agriculture, which is very different. I have always been very pro-European myself, and I voted to remain in the European Union, but I think the repatriation of the common agricultural policy will be a good thing in the long run for British consumers and British agriculture.
The other issue that I ought to address was raised by the noble Baroness, Lady Featherstone, and the noble Lord, Lord Oxburgh, and other noble Lords: climate change and what we are doing on that. I would just point out to the noble Baroness, who was very critical of our policy on climate change, that between 1990 and 2016, carbon emissions in this country went down by 42%, at a time when GDP grew by 67%. I do not take all the credit for that. In fact, I personally take none of the credit for it. The coalition Government, of whom she and her colleagues were a part, can take some credit for that, but we have made huge progress in that area. We are trebling renewable electricity capacity for the period from 2010 to date. We have spent £730 million on renewable support over that time. We are leading the world in the offshore wind industry. We are committing £1 million to support ultra-low-emission vehicles. I do not feel remotely embarrassed about what this country has done when it comes to meeting our obligations to reduce carbon emissions and supporting all our initiatives on climate change.
I turn to Brexit. I do not want to spend the rest of my time talking about Brexit, because virtually everything that could be said about it has been said before. It is undeniable that there is a high degree of uncertainty in the business world at the moment, a point made by my noble friend Lady Rock, and it is going to be some time before we reach the sunny uplands of the economy that may result from Brexit. However, there is a dream that most of us can share, whether we are pro-European or have always wanted to leave the EU, and that is that we can come out of the machinery of government of the EU, we can leave that structure, and remain a very strong and committed trading partner with Europe. Surely now that we have had the vote on the referendum, that is something that we all need to support and get around. One of the few clear messages that came out of the last general election is that the electorate want us to work together to deliver a satisfactory outcome to the Brexit negotiations. I hope there is no room on either side for any triumphalism in these matters. We need now to get together and work out a solution.
I turn to the more substantive issue of this debate: the UK economy. We have reduced the deficit by 75%. Of course we would have liked to have cleared it further than we have. It is only because we were not actually tied as tightly to the policies of austerity that we have not succeeded in doing so. Still, the employment rate is now the highest it has ever been in this country, and over the last three years we have been the second-fastest growing economy in the EU.
That is one part of the picture. I accept that there is another part, and I thought the noble Lord, Lord Low, put it very strongly in his speech, while the Lord, Lord Hain, talked about seven years of prosperity. The noble Lord, Lord Low, referred to the personal misery of many young people who were without hope. The right reverend Prelate the Bishop of Durham referred to the precariousness and uncertainty of business in the north-east where he is in Durham. It is true that pay growth and earnings have been stagnant for many people. It is hard to disagree with the analysis that too many people have been left behind and that, as the economy has grown, too few people have enjoyed the benefit of it. However, this is not a recent phenomenon; it has been a growing issue for most of my working life. We have to ask ourselves why it has happened, and I think the answer is twofold.
The first answer is globalisation. The great beneficiaries of globalisation have been the billions of people living in China, south Asia, India and the like who have been raised out of poverty in extraordinary fashion over the last 20 or 30 years. The other beneficiaries have been a very small minority of people living in the West, many of them like those in this Chamber today, who have seen extraordinary rises in their income over the same period. That is true of every country in Europe and the USA. It is somewhat less in some of the Scandinavian countries, but by and large there has been a small sliver of people who have done extremely well over the last 20 or 30 years. There have been a small number of winners and a great many people who, if I may use the expression used by our Prime Minister, are “just about managing”. The Prime Minister absolutely recognised that as a huge issue.
The noble Viscount, Lord Thurso, talked about wealth creation and social cohesion. If we are honest with ourselves, we have not done so well on social cohesion, and not just over the last two or three years. You cannot just put this at our doorstep; it has been happening at a fundamental level for many years.
If we ask ourselves why so many people have had to put up with stagnant earnings for so long, the only true answer, as several noble Lords have said, is that we have had very poor levels of productivity. Paul Krugman said:
“Productivity isn’t everything, but in the long run it is almost everything”.
The fact is that, since the 1980s, we have been trailing in productivity by 20% or 30% behind the Germans, the French and the Americans. I have to accept, because it is true, that that gap has widened, not narrowed, since 2007. I do not think anyone fully knows the reasons for that, but it is actually worse than that, because in the south-east of this country and in London our productivity is very high. Arithmetically, it must be true, therefore, that in other parts of the country the productivity gap is even greater.
I have to say to the House that I think that this trend is getting worse, not better. There is a risk that it will get worse very quickly, because the advent of what is called “Industry 4.0”—in lay man’s terms, machine learning, artificial intelligence, robotics and automation—is, if anything, going to make it more difficult. One of the great lessons that we need to learn from the 1980s is that we have to look at the consequence of these changes. The consequences of globalisation destroyed the livelihoods of many people during the 1980s and 1990s. We must make very sure that those people who lose their jobs as a result of these new technologies are looked after much better than we have looked after people in the past. The noble Lord, Lord Fox, said in his introduction that he thought that this was an existential challenge outside Brexit. In many ways, the impact of these new technologies could be greater than that of Brexit.
Interestingly, the speeches of the chief economist at the Bank of England, Andy Haldane, predict that between now and 2030 16 million to 17 million existing jobs will disappear. That is supported by work done by the McKinsey institute. That is a huge change in a very short period that we will have to address. We are addressing it through our industrial strategy, and I shall describe just a few parts of that.
First, as the noble Lord, Lord Kakkar, said, we must build our universities. Our universities are an absolute source of competitive advantage for this country. We have four universities—Imperial, UCL, Oxford and Cambridge—in the top 10 in the world, and building on the universities to develop our life science industry, as described by the noble Lord, is a priority for us.
Skill is, clearly, always a huge issue. The noble Lord, Lord Howarth, said that we have a 200-year cultural legacy of problems in this area. We have always favoured academic over technical education. That is something that we must address in our industrial strategy. We must address digital and technical skills. The noble Lord, Lord Bichard, was absolutely right to draw attention to the need to develop enterprise and entrepreneurship skills at the same time. The noble Lord, Lord Kirkham, referred to the need for parity of esteem between technical and academic education.
We must address our physical infrastructure. We have talked about HS2. I will not get into a discussion with my noble friend Lord Framlingham about HS2 this evening, but a strong, good, efficient physical infrastructure is very important. So is high-speed broadband. It is a disgrace that we still have 2,000 schools this country without access to broadband. We have a commitment that, by 2018, 95% of the country will be covered by high-speed broadband—that point was made strongly by the noble Earl, Lord Arran.
The noble Earl, Lord Selborne, said that we must be sure that our industrial strategy is based around the country. It is no good basing our industrial strategy on London; it has to be in some of our great northern cities, in the northern powerhouse, Birmingham, Newcastle and the like. Two other interesting observations were made about the strategy. One was by my noble friend Lord Lindsay: that our quality standards under UKQI were an important part of the British offering abroad. My noble friend Lord Leigh and others referred to Sir Damon Buffini’s report on patient equity capital being available to our start-up firms, which is very important.
We are not starting at ground zero. I pay tribute to the noble Lord, Lord Mandelson, who is not here this evening, and to Vince Cable in the other place, both of whom, as the noble Lord, Lord Fox, mentioned in his speech, had a big contribution to make to our industrial strategy, which is something that we in this Government are building on. We are investing £23 billion through the national productivity investment fund up to 2021-22 into key productivity-enhancing areas such as infrastructure, R&D and housing. We are putting an extra £4.7 billion into science, research and innovation, and we have formed UKRI.
We are not standing still. I hope that large parts of our industrial strategy will gain the support of all parts of the House. If we do not address this productivity problem, we cannot address the social cohesion issue. I can assure noble Lords that our industrial strategy will have twin aims. It is in part wealth creation, but it is also, and very importantly, about social cohesion. If we do not get both those parts of this strategy right, we will not be successful.
It is late, so I shall bring my speech to a conclusion. For me, it has been, as it always is in this House, a very enlightening debate. It is right that we should hold up a mirror, and sometimes we see different things in that mirror. The noble Lord, Lord Davies, sees different things from me in the mirror. The truth is that we are probably both right to some extent. We probably ought to be given more credit than has been given to us. We acknowledge many of the problems in the economy that others not on my side of the House have identified and we will be using our industrial strategy to address them.