Intellectual Property (Hargreaves Report)

Baroness Burt of Solihull Excerpts

Thursday 7th July 2011 Westminster Hall

[Lorely Burt (Solihull) (LD)]

It is a pleasure to speak under your chairmanship, Mr Chope. I congratulate the hon. Member for Perth and North Perthshire (Pete Wishart) and all those who were successful in securing this important debate.

I would like to address my remarks on the Hargreaves report to its effect on small businesses and patents. We have had plenty of discussion on copyright, but I would argue that Hargreaves does not concentrate adequately on the effect of copyright, particularly as it applies to small businesses. Does that matter? Well, it matters to businesses, for many of which patents are far more of an issue than copyright, according to the Hargreaves report in figure 2.1. Figure 8.2 also shows that patent enforcement is more of an issue to small businesses than copyright enforcement.

Taking small businesses first, I would contend that their interests and views, I am sorry to say, have been systematically and consistently ignored in the report. For example, the panel was composed solely of academics and corporate representatives who, in turn, supported a team of 10 intellectual property officers—the same people who are immersed in the day-to-day operation of the system. So how, one might ask, can a department independently review itself? I would not go so far as to say that it is like asking Rebekah Wade to review the activities of News International, but I think hon. Members will get my point. In particular, in response to Hargreaves, large and small companies have frequently criticised poor patent quality. The panel did not include a single representative of small business, although the report acknowledges, in paragraph 1.5, that

“Over the last decade the majority of productivity growth and job creation has come from innovation…primarily by small and young firms.”

It seemed strange, therefore, that the panel did not think the views of those firms important enough to be represented. Indeed, IBM—an American corporation, which you might have heard of, Mr Chope—was the sole member of the panel with direct knowledge of the patent system.

When small businesses submitted evidence, including solutions to their day-to-day problems with the patent system, some of that evidence was not only ignored but not even acknowledged as a submission to the report. I refer to the SME Innovation Alliance’s paper, “The Economic Failure of the Patent System”, which Hargreaves received. Hargreaves stated that a survey of small and medium-sized enterprises had been done, but that survey is not published, so we do not know the findings.

One of the recommendations of the report is that patents should not be issued for non-technical computer programs. One can have some sympathy with that view, and indeed a constituent of mine who designs software maintains that it is nigh-on impossible to get one. However, Hargreaves does not define “technical”, although he does suggest that “general application programs” should not obtain patents, and he includes word processing under that umbrella definition. But what if a general application program has a technical effect? For example, as of last night, 17,436 word processing patents had been granted in the USA, and they can also be obtained in the EU. By saying that we should continue not to issue similar software patents, we are preventing UK competition in the software industry.

Hargreaves also talks about thickets, which are blockages in the IP system caused by a boom in applications in a specific area. He maintains that, to reduce the thickets, it would be necessary to increase the “renewal costs” of the patent. Who, though, would be disproportionately disadvantaged by that? Would it be the IBMs of this world, or the little guys with less money, less support and fewer clever lawyers? However, we could increase the application fee to get a proper service from the Intellectual Property Office in the first place. The fee currently stands at £200, whatever the size of the company. America has separate fees for large and small companies. Why not, for example, have a £10,000 fee for a small company and a £100,000 fee for a large company?

[Mr Binley]

I have listened to my hon. Friend’s comments, which are always immensely constructive and helpful, but I was concerned when I heard mention of the £10,000 fee for a small company. Many of the small companies operating in software creation are one-man bands, for whom that would be a large amount, even if that one-man band was immensely successful. Would she temper that cost a little?

[Lorely Burt]

My hon. Friend makes an important point. I merely used the figure as one that would allow a patent to be properly researched before it was granted. A two-tier system, with a larger fee for larger companies, would stop some abuses. For example, IBM—I am sorry to use it as an example again; I promise I do not have anything against it—took out a patent for the optimal way to queue for the toilets on an aircraft, which is hardly earth-shattering.

On patent submissions, the review failed to deal head-on with poor patent quality and patent backlogs. As I said earlier, patents can be challenged as soon as they are issued, but once they have been issued, there is no mechanism for enforcement except through recourse to the courts. By taking out a patent, a company could be doing itself a disservice by drawing attention to its innovation and attracting the predatory attention of large companies with big lawyers, which can steal the idea and line up the fancy lawyers and see what the small company is prepared to do about it.

That brings me to costs and damages. Let us look at what happens when a patent holder finally takes an alleged infringer to court. Costs awarded to the loser used to be open-ended but, since 14 June, they have been limited to £50,000, which is a step in the right direction. That was not the result of Hargreaves, and he did not mention it in his report. However, that £50,000 is £50,000 more than in America, and the limit forms a substantial deterrent to a small company taking on a large corporate with resources and lawyers. Also, the award for damages is limited to £500,000, so if someone has a multi-million-pound idea and a big company comes in and steals it, the big company can infringe the patent, knowing that the maximum it will have to shell out is £500,000—a bargain. Compare that with America, where Dyson won damages of £6 million after the expiry of its patent because other companies were too quick off the mark in marketing bagless vacuum cleaners. Hargreaves seems to think that the UK garden is rosy, because fewer UK companies went to court than EU companies, but the reason is not because they are happier, but because too many barriers are in the way.

Hargreaves also ignored the SME Innovation Alliance’s request for a UK penalty for infringing a patent. Is that believable? We are the only country in the G8 that has no penalty. The worst that can happen to infringers is that they might end up paying a hypothetical royalty, as if nothing untoward had happened. By the time an SME has spent years, and money, pursuing infringement, it ends up losing substantial resources—and that is if it wins. As Sir James Dyson put it, it is a bit like having the family silver stolen, with the best result being getting some of it back. Why was the fundamental need for the introduction of a penalty for infringing a patent totally ignored?

The SME Innovation Alliance also complained about difficulties enforcing patent rights abroad, an area on which most SME growth and job creation is dependent. Hargreaves and the IPO have been made fully aware of that, and the IPO acknowledged the difficulties, but Hargreaves did not tackle the subject. All in all, I am sorry to say that SMEs—the main source of UK innovation—believe that Hargreaves has failed them. The Government have to take note of the real needs of UK SMEs, instead of setting up a review that has had the perhaps unintended consequence of pandering to the needs of foreign corporates. In Hargreaves’s favour, he recommends adopting the European patent system, but the total maximum damages of £500,000, covering the whole of Europe, hardly make the game worth the candle for many companies.

I welcome the patent box, an idea that SME Innovation Alliance officers are discussing with the Treasury at the moment. The patent box provides a £1.1 billion tax break for innovative industries. That has been extended to existing industries, and there are proposals to simplify research and development tax credits, but we need that now, not in 2013, if we are serious about job creation.

[Philip Davies in the Chair]

If the patent system does not protect British companies, we are making it harder to innovate in the UK than perhaps anywhere else in the G20, and far easier for others to steal our UK innovations. The SME Innovation Alliance has a number of ideas to improve the system greatly, and I would very much like our Government to take them seriously. Otherwise, all they can do is criticise Ministers for not providing a workable patent system for SMEs, the main source of UK innovation. I therefore conclude by asking the Minister to meet me and the SME Innovation Alliance to sort out the current mess in the patents system.

--- Later in debate ---

[The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes)]

I am delighted to be able to respond to this important debate, and I congratulate the hon. Member for Perth and North Perthshire (Pete Wishart) on securing it. He spoke with knowledge and commitment on a subject that I know is dear to his heart. I have, in fact, spoken on the subject on two consecutive days; I was in this Chamber debating with him just yesterday. As I shall explain later, the Minister in my Department with responsibility for intellectual property is Baroness Wilcox, so I am not here as the Minister with responsibility for the subject but am pleased to speak on it. I pray in aid my professional background in the IT industry. I had a small business, which I subsequently made bigger, and was heavily involved with many but not all of the topics that have been debated today.

The Government are acutely aware that there have been previous reviews and consultations on intellectual property, and I understand the point the hon. Gentleman made at the outset: this is a challenging area, not least because of the changing character of the industry and the technology, and consequent events. He is probably right that we will return to the matter time and again, because of that dynamic quality. The Government are equally acutely aware of the need to facilitate growth. That theme has punctuated this debate, and there is a close relationship between how far we intervene in some of these matters and how we catalyse or, conversely, inhibit growth. That has been the perhaps unspoken dynamic at the heart of today’s considerations.

I am mindful of the words of the late Sir Hugh Laddie, a distinguished commentator on such matters and a judge who presided over many intellectual property cases. He said:

“If patents had been applied from the start we would still be on very early operating systems”—

in the IT industry. He continued:

“To give a business method example, if Ford had patented the concept of the assembly line, the US’s industrial development would have been held up”

altogether. So there are, of course, tensions between how we protect intellectual property and how we facilitate the growth that we need to deliver prosperity.

The economic importance of intellectual property is clearly profound and growing, and it has been said this afternoon that the creative industries are critical in delivering the growth that we seek. I have regular interface with those industries in my role as the Minister for Further Education, Skills and Lifelong Learning and am anxious that we tie the development of skills policy to growth, by identifying the sectors, including the creative industries, high-end manufacturing and the information systems industries, in which skills gaps and shortages might limit what we can achieve. Through that dialogue, I have gained some understanding of how we protect innovation. Innovation and growth are intimately linked by nature—a point made by successive speakers—and we need to make critical decisions about how we facilitate innovation and take advantage of its effect on business activity and employment.

This is a complex environment, and it will continue to change, perhaps even more quickly than at the moment. When people think about macro-economics and economic change, they often say, as has been said today, that as economies advance they become more high tech. I do not dismiss that by saying that it is often said—perhaps it cannot be said too often. What is less frequently cited, however, is the increasingly dynamic need of economies as they advance. Increasing dynamism requires public policy makers to be ever more responsive, and nowhere is that more true than in our handling of licensing, patents and copyrights. That is particularly significant in industries that are at the cutting edge, many of which have been cited. They are not all the same of course, and part of the problem with this debate is that we are dealing with an extremely diverse range of sectors and all kinds of innovation, with different pressures and opportunities.

To support growth, we certainly need an intellectual property system that helps business and consumers realise the opportunities that technology and change create. That is why, as the hon. Member for Wrexham (Ian Lucas) said, the Prime Minister commissioned the Hargreaves review in November. Professor Hargreaves was asked to develop proposals on how the UK’s intellectual property framework can further promote entrepreneurial activity, economic growth and social and commercial innovation.

The Prime Minister asked the review to identify barriers to growth in the IP system, how to overcome them and how the IP framework could better enable new business models appropriate to the digital age. The review considered intellectual property and barriers to the growth of new internet-based business models, including information access, the cost of obtaining permissions from existing rights holders and fair use exceptions to copyright and how they might be achieved in the UK. It also considered the cost and complexity of enforcing IP rights within the UK and internationally, the interaction of the IP and competition frameworks and the cost and complexity to SMEs of accessing IP services to help them protect and exploit IP.

The review issued a call for evidence and undertook a programme of stakeholder meetings and events, to engage with a broad range of organisations. The review team also travelled internationally, visiting the USA to share experiences on managing patent systems and discuss the role of fair use in the US copyright system. There were more than 300 responses to the call for evidence, from a wide variety of sources. More than half came from representative organisations such as the Creative Coalition Campaign and the Open Rights Group that represent hundreds of firms and thousands of individual members.

My hon. Friend the Member for Northampton South (Mr Binley) will be pleased to know that 20% of responses came from small and medium-sized enterprises. He was right to point out that some of our most innovative companies are SMEs, perhaps because innovation often springs from the mindset of an individual or small group of people, as I experienced in my own career. I emphasise, as did he, that the interaction between small businesses and larger corporations can be immensely positive in protecting small businesses’ interests.

I do not want to disagree with the hon. Member for Solihull (Lorely Burt), but having worked with IBM for many years, I think that the partner networks established in that industry by organisations such as Microsoft, Oracle and IBM can be positive for SMEs, although I am not complacent about that. I think that my hon. Friend the Member for Northampton South was right to say that those interactions can be a useful means of protecting the interests of small firms, rather than limiting or damaging them. It is not the time to debate that issue, as it is tangential to the thrust of what I want to say, but it is an important matter that perhaps we can debate on another occasion, when I will be more than happy to avail the House of my insight into such matters.

As I said, 20% of the responses came from SMEs. They are usually hard to reach, which is why it is so important that we proceeded on a consultative basis. Small businesses often have fewer resources available to get involved in Government consultations and reviews. We often hear from big representative organisations, and sometimes from large corporations, but ensuring that we have a dialogue with small businesses seems critical. The high response rate from SMEs tells us how important IP issues are to them. The hon. Member for Wrexham is right that the amount of correspondence and information that Ministers, shadow Ministers and MPs have received on the subject reinforces the level of commitment and proper concern felt.

[Lorely Burt]

Given all that the Minister is saying about the importance of submissions from small businesses, I am sure that he is as mystified as I am that the submission from the SME Innovation Alliance was never alluded to or listed among the submissions. Will the Minister confirm that he is prepared to meet me and the SME Innovation Alliance to rectify the Hargreaves report’s failure to take certain things into account?

[Mr Hayes]

The hon. Lady made both those points earlier. With her usual assiduity, she has taken advantage of this opportunity to intervene on me to amplify them. I will deal with them in turn. First, that submission was indeed received and considered, and it played a part in informing the review’s recommendations, although it was not listed because, as I understand, it was received informally rather than through the formal process. Secondly, I am more than happy to commit my noble Friend Baroness Wilcox to meet her. My right hon. Friend the Minister for Universities and Science will want to be involved, too, and will be happy to join that meeting. The Under-Secretary of State for Culture, Olympics, Media and Sport, my hon. Friend the Member for Wantage (Mr Vaizey) was also mentioned, and I shall deal with him later in my remarks. Given his Department’s involvement in the digital industries, an interface with him would be desirable, too. Having committed three of my colleagues’ diaries, I had better end on that point. However, we will have the meeting. I will insist that it happens.

Professor Hargreaves delivered his report, “Digital Opportunity”, to Ministers and the Government in May. Members know that the Government are considering that report and will not expect me to anticipate our response, but—it is right that the hon. Member for Wrexham raised the issue in his role as shadow Minister—I again make a clear commitment that the Government will publish our response within a month. There is another commitment made by a Minister who is not responsible for these matters; that is one of the virtues of being in this position.

Oral Answers to Questions

Baroness Burt of Solihull Excerpts

Thursday 9th June 2011 Commons Chamber

[Vince Cable]

That is exactly what I am doing, as I explained to the right hon. Member for Wolverhampton South East (Mr McFadden). Before the hon. Member for Coventry North West (Mr Robinson) writes off what we are doing, he should consider the undoubted benefits that have already flowed from it. The banks have put £2.5 billion into the business growth fund to provide equity, which is the kind of issue that he was exercised about when he was a Treasury Minister. That problem has now been dealt with.

[Lorely Burt (Solihull) (LD)]

The Forum of Private Business is calling for a return to the traditional bank manager model, and some banks are in fact now doing that. What can we do to encourage banks to give small businesses individual attention, increase the autonomy of bank managers to make decisions and get rid of the culture of “computer says no”?

[Vince Cable]

My colleague puts the point extremely well. What we are dealing with is not a short-term problem but the long-term issue of how to change the culture of banks. One bank in particular, Lloyds, which I think I mentioned yesterday, already has SME lending on its monthly board meeting agendas, and the system of incentives is being changed to create more of that type of relationship management. Crucially, there are new banks entering the market that have exactly the focus that she describes. Competition, ultimately, will help to solve the problem in a major way.

Higher Education Policy

Baroness Burt of Solihull Excerpts

Wednesday 27th April 2011 Commons Chamber

[Lorely Burt (Solihull) (LD)]

I have been listening carefully to the debate so far, and the remarks made by Opposition colleagues make me feel as though I have been transported into some sort of alternative reality. This is a reality where the Labour Government did not introduce up-front tuition fees in the first place, one year after Tony Blair had promised not to in 1997; where they did not introduce top-up fees two years after they had promised not to in the 2001 Labour manifesto; where they did not go into the last election having commissioned the Browne review; and where Lord Mandelson did not say, this very March, that had Labour still been in government it would have needed to double tuition fees, at least. So we will not be taking any lessons from Labour Members this afternoon.

Now I have got that off my chest, it is fair to say that the motion poses some important questions, and it is fair that they should be properly addressed. Let me start with the £9,000-a-year exceptional student tuition fees. At the moment, universities are publishing their maximum fee, not their average fee. Institutions with a “sticker” price of £9,000 will have a significantly lower average fee because of fee waivers. At Oxford, for example, some first-year students will pay only £3,500—about the same as now. At Cambridge, all students from households earning under £25,000 will pay £6,000. At Warwick, students whose family income falls below £25,000 will receive a package of up to £4,500, and their two-plus-two degrees and part-time degrees will have a fee of £6,000, which may be further reduced by an additional fee waiver.

[Paul Farrelly]

I do not want to make party political points about broken promises, and I shall not, even when those promises were being written while people were planning to break them, because that amounts to hypocrisy and the Deputy Speaker would rule me out of order. However, I have one question. If the Government’s policy is to allow universities to charge the top amount of fees only in exceptional circumstances, is it not incumbent on the Government, the Business Secretary, the leader of the Liberal Democrats and the deputy leader of the Liberal Democrats to define, in percentage terms, what counts as exceptional and therefore what percentage of applications charged the £9,000 fee will be refused?

[Lorely Burt]

I was trying to be helpful to the hon. Gentleman by explaining some of the examples of how average fees will be lower than that figure.

The motion tries to commit the Government to guaranteeing that there will be no fall in the number of university places. This is another bit of collective amnesia. Labour Members cut places; they promised additional places and then cut the numbers. In 2009, the shadow Secretary of State, who was then Secretary of State for Innovation, Universities and Skills, put a 10,000 cap on the expansion of places, leaving 140,000 A-level students chasing just 10,000 unfilled places at the UK’s universities. That is 14 anxious students for every unfilled place available through clearing and 130,000 willing and able students without a place. They encouraged thousands of hopeful students to apply for university and then slammed the door in their face when they got there. In 2010, they did it again, leaving 150,000 people without a university place, some of whom had six A-levels at grade A. In 2009, they cut the budget of the Department for Business, Innovation and Skills by £1.9 billion, and in 2010, they cut the universities budget by £500 million.

If I may, I will read a quotation from a debate in the other place:

“The Government have made it clear that higher education needs to shoulder its fair share of the burden of reductions in public spending”.—[Official Report, House of Lords, 21 January 2010; Vol. 716, c. 1101.]

Those were the words of Lord Mandelson in January 2010, when he was Secretary of State for Business, Innovation and Skills. In the same debate, he said that student numbers should be dictated by what is affordable with the resources available. The numbers should not be dictated by a central Government diktat, which says that 50% of young people should go to university. Labour set that target, but quickly realised that it did not know how to pay for it. It was left with a financial black hole and was forced to slash student places to fill it, leaving thousands of students in the lurch. Surely the right number is the number at which every student who has the desire and capability to benefit from university can go. Despite the previous Government’s undoubtedly strenuous efforts, the number of students from poorer backgrounds did not increase proportionately. That is Labour’s legacy on universities.

It is no secret that had the Liberal Democrats won the general election, we would have done things differently. However, I am proud of the coalition agreement, which incorporated two thirds of our manifesto pledges. Sadly, our tuition fees policy fell into the group of manifesto pledges that remain unfulfilled. Working in coalition has its challenges, believe me, but it also has its rewards. One of the rewards was negotiating with Conservative colleagues to make the system that we have ended up with more progressive than the Labour system we inherited. That is not only my view, but that of the Institute for Fiscal Studies. There are no up-front fees for students, graduates will start to pay only when they can afford to, and there will be lower lifetime contributions for the poorest quarter of students compared with the system that Labour left behind. There will also be more support for the Cinderellas of the HE and FE systems, part-time students, who had previously been shunned by a system geared towards full-time students.

In conclusion, it is hard to predict what will happen, given that universities are yet to announce many of the measures such as bursaries and waivers. I have concerns about the number of places and their uptake. As the Minister said earlier, that will be reviewed in autumn 2011 and I greatly hope that the steps we have taken will be vindicated.

Oral Answers to Questions

Baroness Burt of Solihull Excerpts

Thursday 17th February 2011 Commons Chamber

[Mr Davey]

We do not propose to take away all the rights to which the hon. Lady refers. We are approaching our employment law in terms of ensuring fairness for employees and that businesses have the freedom and flexibility to take on more people. I would have thought that she welcomed the fact that we want to reduce the dole queues by ensuring proper employment reform.

[Lorely Burt (Solihull) (LD)]

I greatly welcome this week’s news that the directors of Farepak and its parent company have been disqualified, and I am sure that the whole House, alongside all the families who lost money, will do, too. What can we do now to ensure that companies like that are not able to bleed their subsidiaries of savers’ and families’ money?

[Mr Davey]

Disqualification proceedings have been issued against the nine directors on the grounds that their conduct makes him or her unfit to be concerned in the management of a company, so I am afraid that my hon. Friend’s remarks are slightly premature.

Independent Debt Advice

Baroness Burt of Solihull Excerpts

Tuesday 8th February 2011 Westminster Hall

[Lorely Burt (Solihull) (LD)]

I congratulate the hon. Member for Makerfield (Yvonne Fovargue) on securing this very important debate. To some extent, it follows on from the Opposition-day debate that we had in the main Chamber last week.

Obviously, everyone in this room wants to see the same thing. We want to see a fair and open system of financial support for people who get themselves into financial difficulty. I know personally that the National Association of Citizens Advice Bureaux is a wonderful organisation. It took on the role of providing specialist debt management advice and it has done a really good job, so I share the hon. Lady’s concern regarding the financial inclusion fund.

Local authority cuts will mean that the citizens advice bureaux will not have as much support as they have had. That is having a drastic effect in my own region, the west midlands, where all five bureaux are destined to be closed. I hope very much that the Minister will be able to intervene in some way to ensure that that vital service for the Birmingham area is maintained. In Solihull, we have faced cuts to our citizens advice bureaux before and we have managed to survive them.

[Ian Austin (Dudley North) (Lab)]

I am grateful to the hon. Lady for giving way, but I must say that it is not good enough for Liberal Democrat MPs to come along to these debates and complain about what this Government are doing while they are supporting them. What has she said to Ministers? Has she threatened not to support the Government’s proposals? Has she told them that if these cuts go ahead she will not vote for something else that they are proposing? What have she and her colleagues done to try to prevent these cuts from happening?

[Lorely Burt]

I am glad that the hon. Gentleman made that intervention, because his Government caused cuts to be made to citizens advice bureaux. It is how the Government manage that is important. He asks what I have done and I will tell him. I have worked quite considerably on the issue of debt. In fact, I advise the Government and I am putting in my help and advice, as much as I can, to Government. That is what Governments do and that is what responsible coalition Governments do. We can make our points independently as Liberal Democrats, but we support what the Government are doing because of the financial situation that the hon. Gentleman’s Government left us in and everyone has to bear a share of the pain.

[Several hon. Members]

rose—

[Lorely Burt]

I would rather move on than talk about things other than the subject that we are here to discuss today, which is citizens advice bureaux and debt management.

[Chris Ruane]

Deeds, not words.

[Lorely Burt]

Despite the heckling from a sedentary position, I will continue.

In 2009-10, citizens advice bureaux experienced a 23% rise in demand for their services. Of the queries that they dealt with, 150,000 were about quite complex debt problems, as outlined by the hon. Member for Makerfield. It is estimated that the loss of the financial inclusion fund reduces the debt advice capacity of citizens advice bureaux by 40% to 50%. So I am looking forward to hearing from the Minister today about what steps are being taken, particularly in relation to the national money advice service and how that service will help people and make up the shortfall.

[Kate Green]

Will the hon. Lady give way on that point?

[Lorely Burt]

If the hon. Lady will forgive me, I will not give way.

So how will the citizens advice bureaux replace that loss of support, because as I said we have faced such losses before? In relation to Birmingham, I am hopeful that the Minister will have some good news.

I also wanted to pick up on what the hon. Member for Makerfield said about debt management companies. I am absolutely delighted—as I am sure she is—that the licences of a number of debt management companies were withdrawn by the OFT. I think that 42 companies in all had their licences withdrawn. Those companies can lead to a spiral of debt. Some debt management companies operate free of charge to the recipient. They do that because they are able to be paid by the creditors. It is much better if those who stand to gain pay, rather than those who stand to lose.

The spiral of debt that comes with companies that charge up front is clear. Two months’ repayments are made up front, the company promises to get creditors off people’s backs, but often that does not happen and six months later the company says, “We’re very sorry, but we can’t do anything for you now. We think you should file for bankruptcy.” They then charge for bankruptcy, and the spiral continues.

[Mr Umunna]

In many respects, is not the hon. Lady seeking to face two ways at once? She makes these welcome comments on unscrupulous lenders, but she failed to vote in favour of the motion that was tabled by my hon. Friend the Member for Walthamstow (Stella Creasy) last Thursday. She says that she agrees with my hon. Friend the Member for Makerfield (Yvonne Fovargue), yet she refuses to vote against the measures to abolish the financial inclusion fund. The money will run out in March, so will she vote against the Budget if it does not reinstate the funding?

[Lorely Burt]

I was deeply disappointed by last week’s debate. In her last sentence, the hon. Member for Walthamstow (Stella Creasy) accused the coalition Government of being in the pocket of loan sharks. If any hon. Members imagine that we will vote for being castigated in that way, I am afraid that they have another thing coming. [Interruption.]

[Mrs Linda Riordan (in the Chair)]

Order.

[Lorely Burt]

I am seeking to be helpful, and am not facing two ways at once.

[Tim Farron]

My hon. Friend is generous to let me butt in. Perhaps I could help Opposition Members. They spent 13 years in power towing the line and voting for things such as cuts in CAB funding—as they did in South Lakeland—and they do not seem to understand that it is entirely possible to be within a Government and at times be a critical friend instead of constantly being told what to think.

[Lorely Burt]

I am extremely grateful to my hon. Friend. [Interruption.]

[Mrs Linda Riordan (in the Chair)]

Order. Can we listen to the hon. Lady and let her speak?

[Lorely Burt]

Thank you, Mrs Riordan, I am grateful.

I am disappointed with Opposition Members. I am sure that there must have been moments, in the 13 years during which they built up the biggest structural deficit in the G8, when it occurred to them that perhaps their Government were not going in exactly the right direction. We are a united coalition Government—[Laughter.] Opposition Members may laugh, but we are seeking to work together to help people in bad financial situations, situations that have been hugely exacerbated by the actions over 13 years of Members who are now in opposition.

In conclusion, I very much welcome the national money advice service. I ask the Minister: how will it help, and how will the Government help CABs to manage the shortfall caused by local authority cuts, and the cut in the financial inclusion fund?

Department for Business, Innovation and Skills (Performance)

Baroness Burt of Solihull Excerpts

Wednesday 2nd February 2011 Commons Chamber

[Lorely Burt (Solihull) (LD)]

The thrust of the Opposition motion is that the coalition failed to deliver its promise on growth and jobs. Let us consider the facts. We are seeking to rebalance an economy which, under Labour, became over-dependent on the financial sector. For a long time I have called for more focus on encouraging manufacturing in the UK. Last year, sadly, we dropped to seventh in the global league in manufacturing, but now we have the beginnings of a different story.

In January this year, manufacturing hit a record high. The purchasing managers index recorded:

“Rates of expansion in UK manufacturing new orders and employment accelerated to reach levels without precedent in the nineteen-year survey history”.

Manufacturing employment rose for the 10th successive month in January. How have we as a coalition Government contributed to this encouraging expansion?

I often say that the role of Government is not to interfere, but to create a fair playing field and then get off the pitch. Government should create an atmosphere in which businesses can survive and grow, and the coalition is doing that. The effect of the moves that we have made to reduce regulation is not yet being felt. The Secretary of State has announced new rules that will be coming in to create fairness in employment law so that employers and employees can navigate through disputes more easily, and tax rules are being simplified.

We can restore economic stability in this country only by bringing the deficit under control, but we need to ensure that business continues to invest. That is why the Government have set out plans to promote growth by reducing corporation tax to the lowest level in the G7. Many welcome measures are being introduced, and I particularly welcome the new enterprise allowance that will allow unemployed people to get off the dole and realise their often long-held dreams of starting up their own business.

[Ian Murray]

The hon. Lady, like many of her coalition colleagues, has mentioned the cut in corporation tax as a massive driver of economic growth. Does she agree that corporation tax is paid only on profits and that many small businesses, particularly those in the service and tourism sector in my constituency that write to me, are more concerned about their profits because they have either no customers or fewer customers as a result of the massive VAT hike?

[Lorely Burt]

The Government have been particularly generous to small businesses for the coming year. The hon. Gentleman is right that no one wanted to increase VAT, but unfortunately the alternatives were even less palatable.

[Mr Mike Weir (Angus) (SNP)]

Will the hon. Lady give way?

[Lorely Burt]

In a moment.

There is also the national insurance contributions holiday for the first 10 employees in the first year of business for new companies outside London and the south-east. The regional growth fund has been much maligned today, but I think it will play an important part in stimulating growth.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

When providing help to business, one of the most important things is to check that it is administered correctly. One need only look at the Export Credits Guarantee Department to see the symptoms of the previous Government’s failures: 90% has gone on aerospace help, which is wonderful for that industry, but the 10% for other industries has dropped by 40%. Such funding is obviously not fit for purpose, compared with other countries where it is going up. That is a perfect example of the previous Government’s failures of administration.

[Lorely Burt]

I totally agree with the hon. Gentleman. The big companies that shout the loudest often benefit disproportionately from Government funding. On that point, I note that the Government have an aspiration to procure 25% from small businesses. With regard to exports, it is important that small businesses receive their fair dues. I also welcome the technology and innovation centres, which will bridge the gap between good ideas and their implementation and the readiness to bring them to market.

[Angela Smith]

Will the hon. Lady give way?

[Lorely Burt]

I am sorry, but I have given way twice already and that is it.

All those measures are yet to come into effect, so how can we claim that the improving business situation is due to us? We have created a climate of confidence in this country. We have put in some pretty harsh measures to tackle the deficit. Not a single Liberal Democrat colleague has taken a moment of pleasure in that, but we joined the coalition and signed up to the agreement because we felt that it was necessary to restore confidence, and it did. Following the June Budget, we saw our triple A credit rating restored. The credit rating agencies backed our deficit plan, and so did the International Monetary Fund, the OECD, the CBI, the European Commission, the World Bank, the Governor of the Bank of England and one Mr Tony Blair. Other countries, before and after the Budget, have faced financial meltdown, and if we had not done that, we would be paying the crippling interest rates that people in Ireland are now paying.

[Ian Lucas (Wrexham) (Lab)]

Fiction.

[Lorely Burt]

We are hearing a lot of denial from those on the Opposition Front Bench. Had we not taken that action, we would be facing greater wage cuts than we are already suffering and more job losses. Not everything that John Cridland, the director-general of the CBI, has said about the coalition Government has been complimentary, but this week he said that

“the coalition government has a lot of credit in the bank with the British business community for the way it’s tackled the deficit. That was task number one and it needs driving through and it mustn’t allow itself to be knocked off course”.

The Secretary of State has referred to the £4 billion cut in the Department’s budget. Labour has opposed this, but it has failed to say even once where it would have cut to achieve their stated £44 billion worth of cuts. BIS was an unprotected Department under its plans. It criticises us for our plan for business, but it does not have a plan. It should criticise after it has produced an alternative, because what it did for the past 13 years certainly did not work. Under Labour, Britain fell from seventh to 13th in the World Economic Forum’s global competitiveness league. Tax competitiveness also fell: in 1997, the UK had the 11th lowest corporate tax rate in the world; but in 2009 it was the 23rd lowest. The British Chambers of Commerce has claimed that Labour created £83 billion of red tape that was simply choking off businesses’ ability to grow.

I know that things are choppy, and we have heard about the lack of growth in the past month, but I would like to finish on a positive note, because it is not just about manufacturing. The Reed job index, which is run by the country’s largest recruitment website, has shown that employers seem to be in job creation mode. I am not pretending that we are out of the woods yet, but things are certainly improving under this Government.

--- Later in debate ---

[Mr Mike Weir (Angus) (SNP)]

I am very pleased to follow a typically robust speech by the hon. Member for Northampton South (Mr Binley). I assure him that I ran a small business before coming into the House, and it is small businesses on which I wish to concentrate.

Many Conservative Members have talked about what has been done for small businesses, and they have mentioned the reduction in corporation tax. That is fine, but I remind them that very many small businesses do not pay corporation tax, because they are self-employed individuals or partnerships. They pay income tax, so a reduction in corporation tax does not in fact help them. They are suffering as much as anyone else who pays income tax.

I also note that towards the end of Labour’s time in government, Her Majesty’s Revenue and Customs made the situation slightly worse by examining small companies and deciding that many of them were not real companies, because they were operated by a husband and wife. They therefore had to come back out of the corporation tax system and pay income tax again. Many people are not being helped by what the Government are doing on corporation tax, so I ask them to consider how those people can be helped.

[Lorely Burt]

I am glad to inform the hon. Gentleman that we are indeed examining a lot of those issues, particularly the vexed issue of IR35, which the previous Government did not manage to sort out. It is difficult to do so, but I am sure it is not beyond the wit of man to make tax fair for all small businesses.

[Mr Weir]

I hope that is correct—but action is needed, not just talk. The situation has been going on for a long time, and many small businesses in my constituency and rural constituencies throughout the country are in serious difficulties and struggling to keep their heads above water. They need help now, and the Government have to move on that.

The motion mainly concerns growth in the economy, which I understand, and I wish to talk about some of the things that small businesses need in order to grow. Many of the points in the motion are specific to England, but I wish to mention two matters that cover all small businesses, including in Scotland.

The Minister may know that, just today, the First Ministers of all the devolved Administrations have issued a joint declaration calling for action to protect the economy. The second point made in it is about addressing access to finance, and it states:

“It is clear that securing affordable finance remains a considerable challenge for many of our companies. This is particularly true for many small and medium sized firms—the bedrock of the Scottish, Welsh and Northern Irish economies.

It is unacceptable that many businesses are being prevented from expanding or are faced with significant increases in lending charges and we need to ensure there is in place transparency and accountability in the flow of finance for SMEs. We must also ensure that the planned £1.5 bn Business Growth Fund is implemented now to support lending to viable companies.”

That is the vital point. Many companies in my constituency are finding it very difficult to access finance, and even when they can, it is at a high cost. At a time when the Bank rate of interest is 0.5%, probably the lowest in recorded history, it is ludicrous that small businesses are having to pay ever-higher charges to banks to get finance, if they can get it at all. It is worrying to small business people to read daily in the papers that the Monetary Policy Committee is being pressed to raise the interest rate to deal with fears of inflation, because that would hit small businesses seriously.

For all the talk of making banks pay more to small businesses, there is no sign of that actually happening. The mood music from the Davos summit, which the Prime Minister and the Chancellor attended, appeared to be that the banks are not interested in that any more. They seem to think that they have got through it all and can get on with business as usual, which is totally unacceptable. The issue has to be tackled now. My constituents do not understand why so much taxpayers’ money bailed out the banks yet they are unable to get finance and help local employment. The banks have a duty to help the people who helped them when they were in trouble.

--- Later in debate ---

[Jack Dromey]

I believe in the real world of work and in listening to the voice of the business community. There has been widespread concern and criticism from across the business community in the midlands about the abolition of Advantage West Midlands. Indeed, Business Voice WM, on behalf of the business community in the midlands, has put forward a proposal that stresses the importance of maintaining a regional strategic structure if the success of that motor manufacturing cluster is to continue.

[Lorely Burt]

The hon. Gentleman’s experience of the business community in the west midlands is not mine. I have found that the business community has been excited about the prospect of taking its destiny in its own hands, together with elected representatives from the local authority, and creating a forward-thinking local enterprise partnership.

[Jack Dromey]

Again, with the greatest respect, I am not sure which business community the hon. Lady is talking about. All five of the organisations that represent the business community in the midlands have told me that they are determined to try to make the best of a bad job, following the abolition of Advantage West Midlands, and make the LEPs work, but they are dealing with confused and competing voices. The LEPs have no statutory basis and no funding at a time of major local government cuts. Those organisations are increasingly despairing, because they have lost what worked in favour of something that, at the moment, looks like it will not work.

I listened with amazement to the arguments which in effect said that the Government should get out of the economy and industry. Anyone who has ever had anything to do with the real world of work, here in Britain and in France or Germany, knows the simple truth that the role of good government is key to a successful economy. Time and again over the years I have worked with the private sector and engaged with the Government to try to get them to do the right thing—such as the scrappage scheme and the stimulus scheme that kept our house building industry from collapse.

In the next stages, I hope that Ministers will recognise the value of partnership and industrial activism, and will make the right decisions. Jaguar Land Rover is making applications, under the regional growth fund, on both the lightweight platform and the small engine. Investment in those will create tens of thousands of jobs in Britain. Warwick university’s proposal to become a technology and innovation centre would make it the global hub for automotive research and development worldwide and is strongly supported by Jaguar. Investment in that would greatly strengthen the motor manufacturing cluster in the midlands.

Let us not repeat the mistakes of history. It was a tragic error of judgment not to agree the Forgemasters application. If we are to see a renaissance of the nuclear industry in Britain, with British manufacturing benefiting as a consequence, we should back Forgemasters.

Royal Mail Privatisation

Baroness Burt of Solihull Excerpts

Tuesday 18th January 2011 Westminster Hall

[Katy Clark (North Ayrshire and Arran) (Lab)]

It is a great pleasure to see you in the Chair again, Mr Dobbin. I am pleased to have secured this timely debate on the implications of the proposed privatisation of Royal Mail for our post office network. There will, of course, be many repercussions if the privatisation goes ahead, but the subject of this debate is, perhaps, the aspect about which the public are currently most concerned.

No other country in the world has separated its mail service from its post office network, and I hope that the Minister will accept that there is genuine concern that this privatisation will have a negative effect on an already vulnerable post office network. Many of the issues that I will raise today have already been raised with the Government during the proceedings of the Postal Services Bill in this House, and I suspect that they will be raised again in the Lords. I have given the Minister notice of what I will say today—I will ask him many questions that have been put to the Government but that have not, as yet, been answered adequately.

We heard many warm words from the Government during the progress of the Bill about their commitment to the post office network, and, indeed, an announcement of a short-term subsidy. However, my contention is that those warm words will not be sufficient to protect our post office network and that the legal framework that the Government are putting forward with a privatised Royal Mail, which will have a legal duty to its shareholders to maximise profits rather than any duty to the general public, provides no guaranteed protection in law for the post office network as we currently know it, and will put our post offices at risk.

We have read in the media that some fear that the privatisation will result in 4,400 post office closures. That figure comes from the fact that the current access criteria mean that we would have a post office network of 7,500 post offices, and we also know that approximately only 4,000 post offices are currently considered to be financially viable. There is, therefore, a great deal of concern that privatisation could lead to the closure of post offices. There is also concern about whether the standard rate for stamps will be able to survive in a uniform way throughout the country, and that there could be a serious deterioration of the service provided, particularly in rural communities, deprived urban areas and in any part of the country where the postal service is expensive. There is a concern that a privatised Royal Mail will cherry-pick the business and that the post office network will be left with what was left.

During the passage of the Bill, the Government were asked to guarantee the size of the network. The Minister will be well aware of those calls being made to him. We currently have 11,905 post offices. The access criteria laid down by the previous Government would, according to Post Office Ltd, mean that there would have to be a minimum of 7,500 post offices. The Government have said, in the course of proceedings, that they are committed to the post office network and would like to see a network of 11,500 post offices. In her evidence, Paula Vennells, the managing director of Post Office Ltd, said:

“What is absolutely important in this new approach is that there will be no closures whatsoever.”––[Official Report, Postal Services Public Bill Committee, 9 November 2010; c. 5, Q6.]

That call has been made repeatedly to the Government in the past few months. I ask the Minister again today whether he agrees with that statement by Paula Vennells and that a central plank of the Government’s policy is that there should not be post office closures, and whether he will undertake to ensure that the size of the network will remain at 11,500 post offices, as opposed to outlets, which is something that I will come on to in more detail later.

When those questions have been put to Ministers, the response has been an explanation of how the post office network operates—that, as we all know, post offices are run by private individuals who may decide that they do not wish to continue in the business for a whole range of reasons and that such decisions may not be in any way connected with Government policy or, indeed, the framework in which those people are operating. We all appreciate that, but we are asking the Government to confirm that their policy will be to create a framework that enables existing post offices to continue. It would assist if we had a specific answer on why legal guarantees would not be helpful. Surely the Minister agrees that it would be helpful to the post office network if he came forward with a legal guarantee on post office numbers, given the huge concern. If he is not willing to do so, will he explain why it is such a priority to get a quick sale—probably to a foreign buyer—but not a priority to find a way to give legal guarantees to our post office network?

We also know that the Government are being pressed by a wide range of organisations to guarantee the inter-business agreement between Royal Mail and the post office network. The National Federation of SubPostmasters, the Communication Workers Union and Consumer Focus, as well as a whole range of other organisations, have made that call and, in particular, are asking that a 10-year contract be entered into by Royal Mail to ensure some kind of security for at least that time. Consumer Focus has said that it is concerned about how few safeguards the current legislation proposes. Andy Burrows, its postal services expert, has said:

“There are few safeguards to keep that contract in the long term. It’s entirely conceivable—though it seems an odd thing to suggest—but several years down the line you could have a post office network where you cannot undertake mail transactions. It would be for Royal Mail to determine which operator—whether it was Post Office Ltd or Tesco or whomever—to offer mail services and there would be no requirement for stamps or parcels. You could see a scenario where Royal Mail looked to cherry pick so Tesco, say, could meet its requirements in urban areas and the Post Office could pick up the slack in rural areas where there isn’t anyone else. And that has very serious implications in terms of the viability and integrity of the network because urban areas typically make money.”

That really goes to the nub of the concerns that many people have about the future of our post office network.

Will the Minister respond to the allegation, which has been made again and again, that many of those who run post offices will view the future of work in a privatised Royal Mail to be so uncertain that they will be more likely to leave the business? The Government must respond to that allegation. There is huge uncertainty about what will happen if Royal Mail is privatised, which is bound to lead to individuals making business decisions that will take them out of the trade.

Will the Minister say what steps the Government would take if a privatised Royal Mail decided to award the work to supermarkets rather than to post offices? I want to know whether the Government would allow that to happen. If Royal Mail were to decide not to award work to post offices but to another organisation or range of organisations, would they allow that to go ahead?

My final request to the Minister—again, it has been put to the Government on many occasions—is that we use the opportunity of the Postal Services Bill to guarantee the access criteria in law, so that there is more certainty about the future. I have already referred to the view that the access criteria guarantee only 7,500 post offices, but even that is subject to uncertainty, given the legal framework.

I ask for all that because our post office network is already so vulnerable. More than 150 post offices closed on a long-term basis over the past year, and 900 are up for sale. Over the past 30 years, the number of post offices has almost halved, and the trend has been consistently downwards, irrespective of which political party or, as now, combination of parties is in power.

As someone who represents many deprived mainland communities, many small towns in areas of unemployment and rural island areas, it is clear is that the public are well aware of the vulnerability of the post office network. They are rightly suspicious of the Government’s assurances. That may be why people express a great deal of concern about the proposal to privatise Royal Mail whenever they are asked about it, whether it is through opinion polls or in other ways. The fear is that post offices will be at risk, particularly in deprived and remote rural communities. The Government may say that there will be no closure programme—indeed, they have said that—but that does not mean there will not be post office closures.

We know that the majority of work for post offices comes from either Royal Mail or the Government, but business from those providers is not secure. Royal Mail provides post offices with about one third of their work, and we are told that it is unthinkable that it would not use the network. However, it is clear that many competitors may be interested in the work, including supermarket chains, PayPoint—they are the two most obvious options—and a range of other providers. Surely it is a real possibility that a privatised Royal Mail would tender the work, either in whole or in part, to the cheapest provider in the future.

The reality is that because of how Royal Mail will be constructed legally, it will be under an obligation to ensure that it gets best value for its shareholders. There will be nothing to make it use post offices to the same extent. As a private company, its duty will be to its shareholders, which would put the work that many post offices currently rely on at risk. It is only common sense to think that more post offices would be in greater financial difficulty and that more of them would find it difficult to justify their existence.

We have heard a great deal about alternative sources of work for post offices. Indeed, the previous Labour Government were doing a considerable amount of work to develop a people’s bank, which was dropped by this Government. Will the Minister explain why the Government are not proceeding with some form of post bank or people’s bank? We would like an explanation as to why they do not accept that local post offices would be on a stronger footing if the post bank work had gone ahead. I also understand that the Department for Work and Pensions green giros contract is under threat. Will he explain why DWP work is not being channelled to the Post Office?

The reality, of course, is that the historic link between Royal Mail and the Post Office means that Royal Mail supports post offices in a range of different ways. The Royal Mail chief executive has said that, in effect, Royal Mail subsidises the post office network by £150 million a year through the central provision of services alone. Obviously, if the two organisations were to separate, that would be another way in which funding and support would be taken away from the network.

The previous Labour Government put substantial funding into the post office network, and this Government have announced a £1.34 billion subsidy, which I welcome, although I have been told that it will not increase the level of annual social subsidy to the post office network. However, my greater concern is that the funding is not guaranteed beyond 2014-15, and, even more, that the Government’s stated policy is that the subsidy will reduce over time. That must give us great concern. I do not know whether post offices will be able to survive in the future.

Does the Minister expect that the number of post offices or outlets will shrink over the coming period? Also, does he believe not only that the number of post offices or outlets will reduce but that the quality and extent of the service operated at post offices will shrink? The Government’s plans for changing the network over the next four years include replacing 2,000 post offices with “essentials” or “locals”, which will provide a more limited range of services, often from a venue such as a shop. I understand that the scheme is designed as a pilot, but many of us will already know from our constituency experience of examples of a Crown post office closing down and the service moving into, perhaps, a local newsagent. It is clear that our constituents feel that the quality and range of the service has decreased, even if it is simply because there is less space in the post office area. There is less ability to take in wheelchairs—the conditions are more cramped. That is a great concern to our constituents.

[Lorely Burt (Solihull) (LD)]

I congratulate the hon. Lady on securing this important debate. There is great potential for a more flexible approach to the format of post office that people want. I have one in my constituency that is in a convenience shop. A point has been opened in the shop itself, so people do not have to wait for post office opening hours. The number of open hours is phenomenally greater, so everyone who wants to cash in their lottery winnings goes to the shop. There are great opportunities, and not everyone needs all the services or wants them at specific restricted times.

[Katy Clark]

There may be some benefits in certain circumstances. The example that I was thinking of is a local one. The small town of Kilwinning in my constituency previously had a spacious Crown post office that was heavily used by the local community. When the service moved into a newsagent, the quality of service experienced by constituents became much worse. However, there may well be other situations that are success stories.

One of the concerns at present is that many of the proposals would actually mean a reduction in the number of hours that postal services will be available in some communities. That is the point that I have put to the Minister. There may be exceptions where the service improves, but my contention, and the evidence from the work that has been done, is that the trend is for the range and quality of services to diminish. The reason for that is the difficulty in making post office services pay, which is why we are having this debate. For public policy reasons, post offices are essential parts of our communities, and we should be finding a framework within which post office success would be most likely.

Related to that, a great deal of concern has been expressed about the network size being affected by the extension of outreach services, which are often provided by a van and often mean a substantial reduction in the hours a postal service is available in a specific community. Instead of having a post office, which would be available all week, a van might come once or twice a week, for a relatively small period. Those vans, or many of the facilities to which the hon. Member for Solihull (Lorely Burt) has referred, often do not provide the whole range of postal services that might have been available in a more traditional post office. I ask the Minister to respond to the considerable concern expressed about the quality of services provided by some outreach services.

The Select Committee on Scottish Affairs, for instance, made submissions to the Government after taking evidence in Scotland on such issues. An extension of such outreach facilities leading to a continuing deterioration of service is a concern. I have to declare an interest, because of the kind of constituency that I represent. I have many remote rural areas in my constituency, in particular the island of Arran, the kind of area for which outreach services are often proposed. As we know from the evidence given by members of the public and by hon. Members, often the view is that the level of service is far less good than that which was previously provided.

Huge concern has been expressed about the universal service obligation and whether a postal service could be maintained in all parts of the country, no matter how remote. What is perhaps more at risk is the continuation of the universal service as a six-day service everywhere and of a uniform affordable price throughout the UK. Can the Minister give an assurance on that continuation and whether there will be legal protection? The proposed legislation, similar to current legislation, allows Ofcom to waive the universal service obligation given exceptional geographic or other conditions. Will the Minister outline when that opt-out would be used? What guidance would be given about when Ofcom is allowed to say that the universal service obligation need not operate?

If the Postal Services Bill becomes an Act, we are creating a legislative framework in which it would be quite possible and highly likely that Royal Mail will move its work in the future. MPs of all political parties are concerned about their local post offices and wish them to survive. I urge the Minster to ensure that we organise our postal services in a way that enables them to have the business to make that a realistic possibility in the future. In particular, I ask that he uses the opportunity of the legislation to ensure that we have a legal framework whereby post offices can continue. There is huge concern that a privatised Royal Mail will operate in a manner that will undermine our post office network. Will the Minister please respond to the points made today and over the past few weeks?

--- Later in debate ---

[Lorely Burt (Solihull) (LD)]

The hon. Member for North Ayrshire and Arran (Katy Clark) has rightly initiated this debate today. It is important that we ensure that the Post Office is protected and that legislation such as the Postal Services Bill does not have an undue effect. She asked many pertinent questions of the Minister and, like her, I look forward to hearing the answers.

Having worked for some years on issues within the remit of the Department for Business, Innovation and Skills, under its various names, I have attended numerous statutory instrument Committees whereby the Government of whom the hon. Lady was a supporter put in subsidies year after year to support the Post Office. That was absolutely right. However, what happened under the previous Government was that they managed a decline. The very important social value of the Post Office has been recognised. Nevertheless, it has not necessarily been given the legs to be able to compete in a changing business situation in this country.

The new coalition Government are taking a different approach to the Post Office. We have no less desire than the Labour party to ensure the Post Office’s future, but we are trying to adopt a different approach to enable the Post Office to stand on its own two feet. Several hon. Members have mentioned the £1.34 billion that the Government have committed to protect the network of 11,500 post offices, which we have said will remain. That is considerably better than managing the Post Office’s decline. We do not want any more post office closures. We want the Post Office to remain in public ownership, unless it goes for mutualisation itself.

The hon. Lady mentioned the inter-business agreement at a little length. The chairman of Royal Mail has said that such an agreement will be drawn up for the maximum legal period before any sale. My hon. Friend the Member for Colchester (Bob Russell) raised the issue in a new clause for the Postal Services Bill. It was argued at some length that a long period would benefit the Post Office, and I totally agree. Where I perhaps disagree, however, is on the practicalities. We are talking about an agreement between two commercial companies, which need the flexibility to negotiate an inter-business agreement that benefits both; if it does not, it will not necessarily hold together. There was also some discussion of how such an arrangement could be implemented, and the conclusion was that it would not necessarily work well under existing EU law.

The hon. Lady mentioned the post bank, and I, too, was disappointed that we did not go down that path. However, we have secured the ability for people belonging to virtually every bank in the United Kingdom to conduct transactions. That is a very good second best, which will at least make sure that the banks start to play ball and respond to the need to be more flexible in conducting their financial transactions.

What about the Post Office’s future? My hon. Friend the Member for Argyll and Bute (Mr Reid) mentioned some of the losses that we have seen, as well as some of the potential losses. A little while back, the Post Office card account went out to competitive tender. Lord Mandelson, who had just been appointed Business Secretary, stopped that straight away. I thought, “Brilliant.” We really cannot afford to lose the Post Office card account in that way. Like my hon. Friend, I hope that it will continue.

[Sheila Gilmore]

The hon. Lady mentions the Post Office card account, and those who are active in promoting financial inclusion have suggested that introducing more functions into the Post Office card account might be one way of assisting people who do not have access to mainstream banking. Another issue, which is much discussed, and about which I have heard a lot of discussion since I arrived in the House in May, is the possibility of linking credit unions with post offices. I have to say that there has been more discussion than actual tying things down, and I understand that there are cost issues, but does the hon. Lady agree that those two additional functions would be useful for post offices and contribute to the financial inclusion agenda?

[Lorely Burt]

I certainly agree that it is important that we extend the range of services available to people who do not have a traditional bank account, and the Government are actively considering how that can best be done. I certainly applaud the work of credit unions, although I am not entirely sure whether they have sufficient coverage and continuity to form a national service at this stage. However, the Government are actively considering these matters, and we are doing all we can to reach a practical solution on increasing financial inclusion for those who are unbanked.

The hon. Member for Newton Abbot (Anne Marie Morris) described all sorts of different ways of introducing flexibility, and the Government are fizzing with ideas about how we can be more flexible. We can adapt to the changing commercial landscape and to the internet. My hon. Friend the Member for Argyll and Bute mentioned vehicle excise duty licences, and I am sorry to say that I am guilty of using the internet to renew mine, because it takes five minutes. The point, however, is that there are many other functions that post offices can carry out; they do not have to exist in their traditional format to deliver a postal service to their customers.

I am very hopeful that some of the pilots that are being undertaken will prove successful. It is good that schemes are being piloted, because we can iron out some of the problems that might otherwise ensue. We will take the best ways of responding to the changing landscape. We do not want to continue giving subsidies to the Post Office; we want it to be vibrant, commercial and profitable and to stand on its own two feet.

Oral Answers to Questions

Baroness Burt of Solihull Excerpts

Thursday 14th October 2010 Commons Chamber

[Vince Cable]

We are anxious to ensure a fairer solution than the existing graduate contribution system that we inherited. The right hon. Gentleman has used the analogy of mortgage payments, which is interesting. No building society or bank that I am aware of would exempt people from any payments until they were earning £21,000 a year, which is the progressive element that we are trying to introduce. He has rightly referred to the difficulties that would arise if certain Russell group institutions were allowed to charge very large variable contributions. That is why I made no commitment on Tuesday on how we would deal with that problem, on which we need to reflect further. He is right that there is an issue of fairness, which we will address.

[Lorely Burt (Solihull) (LD)]

Will my right hon. Friend do all that he can to stop higher education from disintegrating into a free market free-for-all, either by imposing a cap or by requiring a high proportion of additional fees levied by some of the top universities to be paid out in bursaries to poorer students?

[Vince Cable]

Yes, my hon. Friend is quite right; there has to be choice and there will be some competition among universities, which is welcome. That is very far short of a laissez-faire free market. We do not want that. There has to be protection for low-income students when they graduate. We will build in those protections and will ensure that there is a proper progressive scheme.

Oral Answers to Questions

Baroness Burt of Solihull Excerpts

Thursday 8th July 2010 Commons Chamber

[Mr Prisk]

I must correct the hon. Gentleman and give him the facts. We have had to reduce capital allowances to enable us to fund the corporate tax cuts, but the net result of the changes is that manufacturing—and not the industries to which he referred—will still be better off. Indeed, by 2014-15, it will be better off by £250 million per annum. I think that that is a very good policy, although I detect that the Labour party may now be opposed to it.

[Lorely Burt (Solihull) (LD)]

We accept that the coalition Government have put many good things in place to help industry generally, but I have a specific question about manufacturing. Will the Minister say whether the Government are planning any particular help for manufacturing to restore it to its rightful place, which is leading the world?

[Mr Prisk]

Indeed we are, and our plans include the changes to corporation tax that mean that manufacturing industry is better off by £250 million, the reduction of the burden of red tape and the removal of many regulators, and the £150 million that has been set aside to fund up to 50,000 more apprentices. The Government’s stronger long-term approach contrasts with the pick ‘n’ mix tactics and the tinkering and meddling that we had from the last Labour Government.

I remind the House that manufacturing investment declined in 10 of the last 11 years. That is the record of the Labour Government, and Labour Members should be ashamed of it.

Industry (Government Support)

Baroness Burt of Solihull Excerpts

Wednesday 16th June 2010 Commons Chamber

[Mr McFadden]

The previous Government set out many proposals, including some £900 million over the next few years in the expenditure of the Department in which I was a Minister. We also said that we would save billions more than that on public sector pay and pensions, and we set out many other proposals. I do not stand here as someone who says that there should never be cuts. My point today is that cuts must be made in a way that supports a strategy for growth, not in a way that militates against it. That is why I raised the issue of industrial support and regional development.

Apart from the Budget, what about the future of the RDAs themselves? Government policy on this is in a total mess. We have had statements that they will be abolished, that they will be replaced, and that their replacements will both be different and look the same. Can the Secretary of State tell the House today exactly what the position is and how he is going to make a judgment on this? He talks of business and local authorities deciding in particular regions. How will that be done? Will it be one vote per council or one vote per business? Will it need a 55% majority? If it will be up to the region, how will he make the judgment on this important issue?

[Lorely Burt (Solihull) (LD)]

RDAs are important, but does the right hon. Gentleman concede that the performance of some RDAs has been patchy—to put it kindly? Does he agree that we can still deliver support for business in a cost-effective way, but more flexibly using local enterprise partnerships? One size does not fit all in all areas of the UK.

[Mr McFadden]

I know that the hon. Lady cares about these issues, but I have to disagree with that point. Until the situation is clarified, businesses in various regions do not know with whom they will be working, and a damaging lack of confidence is emerging about how projects that cross local authority boundaries are to be managed in the future.

--- Later in debate ---

[Vince Cable]

I have taken an enormous number of interventions; I will take one from the hon. Gentleman later.

Before I leave the car industry, I must point out that these projects were part of an assistance scheme for the industry, and I think that the Opposition Front-Bench spokesman would acknowledge that they were time limited. Other projects have already made applications, which are being properly considered, but we cannot have a situation in which the car industry, or any other, assumes that it can come to the Government for money, just because it has an interesting project.

It is worth underlining the point that, in large parts of the British car industry, brilliant companies have got through the recession without Government support. My first visit as a Minister was to the Bentley factory in Crewe—[Laughter.] Hon. Members might laugh, but that factory provides thousands of highly skilled jobs and a high-quality product. It is a subsidiary of BMW. It was very badly hit by the recession—it lost half its output—but it kept going. The management took a big pay cut, and the workers joined them, accepting that they had joint responsibility for the company. The company survived; it is now flourishing—it has some of the most sophisticated technology in Britain—and it did all that without a Government guarantee.

[Lorely Burt]

Land Rover, in my constituency, is another brilliant example of a company that has weathered the economic storm. It is now surging forward, and it is investing in research and development. I welcome the decision on GM and Ford, and we should all be concerned about having a level playing field in relation to the UK economy and those in other parts of the world. Can we use R and D investment and capital investment in advanced manufacturing plants such as these to provide at least a level playing field in relation to other countries, and to secure investment for the United Kingdom?

[Vince Cable]

I know that my colleague takes a close interest in these matters. She has represented the interests of Solihull and the factory extremely well over the past few years. I am very happy to talk about her proposal, but I want to emphasise the fact that the automotive assistance scheme does not have a permanently open door. Applications have been made, and they will be dealt with on their merits.

I was giving examples of car companies that have flourished and coped with the recession without coming for Government support. Before I went to visit Bentley, I went to another factory, Cosworth—one of several Formula 1 manufacturers in this country, using very high technology. It was flourishing, providing highly skilled manufacturing employment and was not dependent on Government support, like many others. It is not just the specialist producers either, as mass producers—Honda, for example—are also relevant. Honda took a big hit during the recession and the work force accepted part-time working and cuts in pay in order to keep the company together. They did so, and the company did not come forward asking for specific Government assistance. That will now be the pattern.

We have made it very clear—I made it clear in a speech—that we are willing to do what we can to support growth in the British economy, and we will do it by helping build up competences, skills, research and development and so forth, but we are not in the business of handing out money to individual companies. Quite apart from the merits of the proposal, there is an issue of affordability in the financial climate in which we now operate.

Let me start to conclude by clarifying some things that we want to do. We believe, like the right hon. Member for Wolverhampton South East, that the Government have a role. I do not believe in laissez-faire. The Government have a role; there are many market failures; there is, of course, an important role for Government in this field. It has to be cost-effective, however, and it has to be affordable. Let me summarise some of the things we are starting to do, having been in office for only a month.

The first element is skills. One of the first decisions made by the Government when they came into power was to fund 50,000 apprenticeships. That compares with the 200,000 built up under the last Government over 10 years.