Sunday Trading (London Olympic and Paralympic Games) Bill [HL]

Lord Bates Excerpts

Tuesday 24th April 2012 Lords Chamber

[Lord Bates]

My Lords, it is always a pleasure to follow the noble Lord, Lord Judd, who does us a great service by touching the soul of the nation as well as by giving the social and economic arguments that we are about to look at. I will focus more on the economic arguments, although this is a bit like going down memory lane. I recall beginning my political campaigning with the campaign “Keep Sunday Special” against the Shops Bill in 1986, so this debate is like “Adversaries Reunited”. There I was on one side of the gangway handing out leaflets to political conference-goers that said, “Families that pray together stay together”, while the retail consortium was, on the other side, handing out leaflets that said, “The family that shops together stops together”. I do not think that the debate rose a great deal above that, but I hope in my time today to focus on some core themes and zero in on them.

I very much enjoyed the opening speech on the Bill by my noble friend the Minister, who has an acute understanding of these things. I want to make an argument about the nature of this Bill and what it says about the direction of the economy. Effectively, it is saying that there is a great commercial opportunity. We are totally agreed about the opportunity. The Olympics and the Paralympics—even more the Paralympics, because they are very much coming home to London, where they were invented in 1946—are a tremendous opportunity and they have been fantastically well organised. They are going to showcase Britain to the rest of the world. All of that is a given.

My contribution will focus for a little while on whether we ought to be looking purely at deregulation and opening our businesses for longer, or whether we ought to be looking a little more deeply at where economic value actually comes from. Here I take my inspiration from my father, who ran a successful small business in the north-east of England for 30 years. He was absolutely rigid about not wanting to work for any more than 40 hours per week and he always wanted to have his lunch hour. He used to say to me, “Michael, you know the truth of the matter is that it’s not the hours you put in but what you put into the hours that counts”. I thought that that was a very profound economic message. It is not about saying simply that we need to fling open the doors of Britain and work every hour available. We need to think about what we are yielding in terms of product and profitability in the process of doing so.

To give an example, at the moment we are being told of the great need to liberalise opening hours, but what would happen if you asked anybody in the street, “Do you know for how long shops are allowed to open at present”? The answer should be 150 hours per week, while we are talking here about whether they ought to be able to open for what I suppose is the maximum of 168. There is only 18 hours’ difference. The reality is that businesses would be crazy to open for 150 hours per week, as they are allowed to at present, because of the diminishing returns that come from having long hours when there are no customers. What you need is to somehow tailor your opening hours to make sure that you are available to serve at the time when the majority of your customers wish to be served. That is a basic principle and we need to remember it, but businesses are making that judgment all the time.

In chasing longer hours, we need to be conscious of what that is doing not only to the social fabric—a very important point, which I would not diminish—but to the economic fabric of the nation, because as the cake remains the same, you simply divide it up over a greater number of hours. The greater number of hours that you are open, the more your costs increase and therefore your marginal utility and productivity reduce. That is what I want to put a marker down on, in the time that I have available. Our focus and passion should not be so much on or about being open all hours; it should be about productivity.

What do I mean by that? According to the Office for National Statistics, in 2011 a full-time employee in the UK worked an average of 42.7 hours a week. That was greater than his or her counterparts: in Germany the figure was 42, in France it was 41.1 and in Ireland it was 39.5 hours. However, the measure of productivity per hour is really what matters. Whether you are UK plc or JM Bates and Co in Gateshead, Tyne and Wear, the answer is pretty much the same: it is productivity that counts.

When you look at the hours worked you get one answer, but here is the one that really matters: where does Britain rank compared with its competitors in terms of productivity? There you get a different answer. We may be open longer, but our productivity per hour worked is 107.2, given a base of 100 as an EU average. The productivity in France, whose economic model we often sneer at from this side of the Channel, is 136—almost 30 per cent more. In Germany it is 123.7—20 per cent more. In Ireland it is 125.6—nearly 25 per cent more. Essentially, I am saying that in these times we have to ensure that we are focusing on the right thing. If we just focus on saying, “We need to ensure that our pubs, offices and so on are open for business for longer and longer”, but do not focus on the quality and the productivity of what goes on in them, we will miss the point about what is so desperately needed in the economy.

If I were looking to generate a bit of interest in support of this, I might look at how we conduct our affairs in this House. We were told, just before the Easter Recess in March, that there was not enough business for us to look at last week and therefore the House was not going to sit. The reason given by my noble friend the Chief Whip—who, of course, in all matters is absolutely correct—was that it costs £496,000 for your Lordships’ House to sit. As we did not have sufficient business, we were not going to be open. That is a fair point. The quality of our scrutiny of legislation is what counts, not the number of hours that we are open. Heaven knows what the response would be if we said that we would all be coming in to scrutinise the Sunday trading liberalisation Bill on a Sunday—there would be a hue and cry. We need to remember that we are legislators legislating for people who have to do just that. As much as we might say that it is a wonderful thing, having watched Usain Bolt achieve a world record time on a Sunday evening, to be able to rush out and buy a T-shirt or a beer or something, someone would probably have to miss the final in order for that to be made possible and for us to be served. We need to remember that.

The heart of the issue has to be the economic case, because it may have relevance further down the track. We have been given different figures. Research by the Centre for Retail Research tells us that this act of liberalisation will yield £189.9 million. We then have another piece of research, produced by the Association of Convenience Stores, that says that the Bill will actually cost the economy £480 million. That is a pretty wide discrepancy. That is why the impact assessment that my noble and learned friend Lord Mackay of Clashfern alluded to, and which I followed him into the Table Office in search of, is very important. We need to have sight of it, not necessarily to spoil the party around the Olympics and the Paralympics—not at all; it is going to be a great event—but to learn something about what the driver of our economy is, and how therefore we ought to legislate and make ourselves competitive in future.

We need to have the self-confidence and belief to say that the measure of the competitiveness of our economy is not in the fact that some tourist visiting the Olympics and Paralympics can go out at 10 pm on a Sunday after the 100-metres final and buy a tube of toothpaste, but in the quality of the work, the skills of our employees and the level of investment and of innovation present in our businesses. That is what we are showcasing in these Olympic and Paralympic Games and we should remember that.

Economy: Budget Statement

Lord Bates Excerpts

Thursday 22nd March 2012 Lords Chamber

[Lord Bates]

My Lords, it is a pleasure to speak in this debate and I congratulate the Minister on the way that he introduced it. It is always a pleasure to follow the noble Lord, Lord Myners, but his description of the Budget as boring would not necessarily be borne out by a cursory glance at the headlines in the newspapers this morning. It seems pretty exciting. By nature, people always tend to focus on the negatives rather than the positives. If the House will bear with me, I should like to focus on a bit of good news and on a few of the positives that are coming out of the Budget as far as I am concerned, as well as the positive stories that I hear in my native north-east England. I want to pass on a few of those thoughts.

Sometimes we need to get a balance in this country and I do not think that the media help us in doing that. We had the fantastic news yesterday that the state pension is to be increased by 5.2 per cent. That is a record in recent years. It is going up by about £5.30 a week, which is an extra £250 a year. It would be nice to hear some more news of that nature as well as, rightly, hearing comments about taxation. It would be nice to hear how pensioners are benefiting in other ways through the Government getting inflation down and keeping it down. I am referring to the big picture of retaining confidence in the British economy from international markets. That is hugely important for us.

The north-east is in many ways a good place to look at as a sort of case study or test bed for how this Government’s policies are working. We have heard about the attempt to rebalance the economy away from an overreliance on the public sector to a strengthening of the private sector, and that is a very good thing. I recall a few years ago hearing the devastating news of the closure of the Corus steelworks, the shelving of plans for the Hitachi train order and the huge lay-offs at Nissan. However, the mood music is changing up there. We have heard the announcement of another 2,000 jobs at Nissan and seen the reopening of the Corus steelworks, with the Government giving the go-ahead for the Hitachi train orders, meaning 800 jobs. That is a bit of good news to hear about in the area.

We always observe weaknesses rather than focus on strengths but we should play to our strengths. One strength of the north-east is that it is the only region in the United Kingdom that exports more than it imports. In the last quarter of 2011, its exports hit a new record level. What is more, that is evidence of a resurgence in manufacturing. Just this week, an exhibition was staged here by the energy company Northern Offshore, and I talked to Keith Hunter, who helped to found the organisation. He told me that he is now working with Siemens, which last year recruited 37 apprentices to work on wind turbines in the new developments offshore in the north-east of England. This year, he will recruit another 37 apprentices, and the company intends to create another 35 to 40 new apprenticeships each year for the foreseeable future. That is real evidence of what is happening on the ground.

Today, I had the opportunity to meet Allan Cook of Arlington Real Estate and Neil McMillan of Carillion Developments, who are creating a marvellous development at Durham Gate in Spennymoor. It will be the global research and development centre for Stanley Black & Decker, providing highly skilled jobs in Durham. They are talking about the number of jobs on that site going up from 200 to 2,000. In a sense, it does not matter what I as a politician say about these things; this is what real people creating real jobs are saying. To add to that, I was very interested to discover that half the chemicals in the United Kingdom are manufactured in the north-east of England. When Andrew Witty, chief executive of GlaxoSmithKline, speaks, we all tend to stand to attention and listen. Regarding the Budget, he said that the patent box and fall in corporation tax have,

“really changed the investment decision for us”.

He is referring to the above-line R&D tax credit and the fall in corporation tax. The UK was among the highest corporation tax chargers in the world and is now one of the lowest. That is a real change and it sends out a message. It sets the mood music for decisions to be made, and companies such as GlaxoSmithKline are listening to that. That is very welcome, as is the change to the higher rate of tax.

We need to get away from a politics which is perennially based around arguments of greed and envy, and we need to focus on recognising that wealth creation is a wonderful thing. The more wealth creation we get, the more jobs are created, the more tax revenues come to the Government, and the more we can invest in our public services and care for the poor at home and around the world. That, to me, is what a good society looks like. Therefore, bringing down the higher rate of tax is a very good thing. In fact, I have an endorsement of this. I was reading the report of the debate on the Budget in the other place and came across a quotation from Tony Blair’s latest book. He is quoted as having said:

“I wanted to preserve, in terms of competitive tax rates, the essential Thatcher/Howe/Lawson legacy. I wanted wealthy people to feel at home and welcomed in the UK so that they could bring more business, create jobs and spread some of that wealth around”.

I think that Tony Blair was right, and in essence this Government are trying to build on that.

One thing that the north-east has often suffered from is that it has had far too much faith in governments of all persuasions in Whitehall and far too little faith in itself. People need the self-confidence and belief to say, “We can get out there. We can make a difference”. I was interested in a survey undertaken by the BBC—so it must be 100 per cent accurate—looking at the best places for business champions. Lo and behold, it found that according to the latest research the north-east is ranked first in England in terms of business champions. It said:

“The criteria for these include young, small companies which are less than 10 years old and with fewer than 50 employees, with directors with entrepreneurial appetite and are part of a wider corporate network”.

It is great news to be given top ranking. It is nice to see the BBC give more of a headline to that type of declaration about the north-east rather than perpetually run the region down and tell us about all the problems. We are all too well aware of our problems but we do not talk enough about our successes either as a region or as a country, and I think that that is what this Budget does. It helps us to remember that we have some fantastic businesses and some great entrepreneurs who are creating wealth in this country. We are incredibly proud of them. What they need is not a Government who are on their back but a Government who are on their side.

Economy: Government Policies

Lord Bates Excerpts

Thursday 24th March 2011 Lords Chamber

[Lord Bates]

My Lords, I join the noble Lord, Lord McKenzie, in paying tribute to my noble friend Lord Lawson for securing this debate. I also pay tribute to him for its title, which emphasises enterprise and the need for rebalance. I will come back to that in my remarks, particularly focusing on the north-east of England, which is where I am from and where I am for.

I also want to pay tribute to the excellent maiden speeches, particularly that of my noble friend Lady Stedman-Scott. Through Tomorrow’s People and its operation in Newcastle, she has made a profound difference to the lives of many people in the north-east. Tomorrow’s People takes some of the hardest-to-reach young unemployed people and puts them on a course. That gives them confidence, inspires them and builds their self-worth. It manages to get employment or training posts for 70 per cent of these young people. My noble friend is certainly someone who makes things happen.

The noble Lord, Lord Sugar, said that the test for being able to speak on these matters was being able to demonstrate that you run something. Having set up three businesses and currently being involved in two others, I probably just shave past the “Sugar test”. But, given the impact which my noble friend Lady Stedman-Scott has made on transforming the lives of so many in our inner cities, I am more interested in struggling a little closer towards a “Stedman-Scott test” of whether we are making a worthwhile contribution to society.

I want to focus on the north-east of England because to me it represents an excellent case study of the need for rebalancing the economy. The Centre for Economics and Business Research has shown that, over nearly 11 years of the previous Government, the public sector as a share of the north-east regional economy rose from 48.6 per cent to 63.9 per cent. This increase has gathered pace over the past two to three years and, if left unchecked, it is on a trajectory heading towards 70 per cent and perhaps even beyond. The claim is not that the north-east of England’s public sector is too large but that its private sector is too small. That is the reason for the imbalance and why we need to focus on growth.

The previous Government placed great emphasis on two things, one of which was the regional development agency One North East. Much was said in the debate last night lamenting its passing, as if the economy will stutter to a halt the minute it closes down. Yet, after 11 years of operation during which the agency received funding of £2.7 billion, the gap between the north-east and the rest of the country has widened: it was 83 per cent of the national average in 1998 and 78 per cent in 2010.

Moreover, during the recent recession, some in the north-east of England noted that the recession hit London, the banking sector and financial services, but that the north-east would mercifully be spared because a large section of the local economy revolves around the public sector and manufacturing—which I will come back to shortly—but that was actually not the case. The economy of the north-east contracted faster and more sharply, by 6.1 per cent, between 2008 and 2009 whereas London—at the epicentre of the shock, if you like—contracted by only 4.41 per cent.

My point here is that there is something fundamentally wrong with the understanding and the approach taken by the previous Government. We have seen a massive reduction in the number of manufacturing jobs in the north-east. Between 1997 and 2009, the reduction in employment in the manufacturing sector amounted to 95,000 jobs, and 56 per cent of those jobs were in the advanced manufacturing sector. That is important if we bear in mind that we need to do two things to get the economy of the north-east back on its feet and moving forward strongly.

First, we need to create an enterprise culture that is less concerned with state intervention and believing that organisations, strategies and structures will somehow deliver growth. Growth is delivered by businessmen taking risks; that is what creates wealth. Essentially, the Government can create the conditions for growth, but they cannot create the jobs. It was laughable when Ministers used to come up to the north-east and talk about agencies that had actually created so many jobs. I never came across an agency that created any jobs, but I did come across some that had destroyed a few. Businesspeople and entrepreneurs create wealth and jobs, and they are to be encouraged.

The second thing is the importance of manufacturing, which was what the Budget yesterday was all about. It talked about creating enterprise zones that will focus on manufacturing. It talked about the green investment bank that will invest in manufacturing. It talked about reducing regulation, which is important to manufacturing. It also talked about increasing apprenticeships and the new university technical colleges. All of these things are exactly what the economy in the north-east needs.

That is not to say for a moment that the Government have no duty to intervene in order to speed the economy of the north-east on its way. That is why they have announced significant investments in centres of excellence for renewable energy in Blyth and the Centre for Process Innovation on Teesside, and why they have invested £350 million in the Tyne and Wear metro and so on. The Government are taking an innovative approach while recognising that it is limited.

I shall close with this: a year ago almost to the day, the Labour Cabinet arrived in my home town of Durham in full gung-ho general election mode with a plan to announce a massive new trains order with Agility Trains for the north-east. Unfortunately, that happened to coincide with news of the closure of the Corus TCP plant and the loss of 3,000 jobs. The decision was that the good news of the trains order would be lost in the bad news of the steel plant closure and therefore the announcement was pulled. It is with great pride that I can say that over the past two weeks, the Corus TCP plant has actually been reopened by a new investor who is creating jobs, and that the Agility Trains order, stopped on that occasion, has been given the go-ahead. That is what this Government are doing for the north-east and I am proud of them.

Inflation

Lord Bates Excerpts

Wednesday 19th January 2011 Lords Chamber

[Lord Sassoon]

My Lords, I could not agree more with the starting premise of the noble Lord, Lord Davies of Oldham. The Government are concerned about the hard-pressed, hard-saving, hard-working low earners in this country. That is why, in April this year, 880,000 people will be taken out of taxation altogether. That is also why 23 million taxpayers will each receive back £170 compared with the plans of the previous Government. That is an absolute recognition of the fact that the Government understand how low-income families are suffering and are doing something about it.

[Lord Bates]

My Lords, will my noble friend also comment on the consequences for inflation of the reductions in corporation tax, the reductions in national insurance contributions, the freezing of council tax and business rates and, most importantly, the tackling of the deficit that have all been announced?

[Lord Sassoon]

I agree absolutely with my noble friend that these are all critical policies to ensure that growth gets going again. It is precisely by the Government both reducing the deficit and ensuring growth that the Monetary Policy Committee of the Bank of England will have a firm policy background against which to make its decisions that bear on the inflation target.

Comprehensive Spending Review

Lord Bates Excerpts

Monday 1st November 2010 Lords Chamber

[Lord Bates]

My Lords, it is a privilege to follow my noble friend Lord Allan after his excellent maiden speech, which observed all the conventions that he rightly outlined at the beginning of his speech. As someone who is relatively new to this House and made a similar journey from the other end of the Corridor, I think that the speed with which he has adjusted to the climate of this House bodes well for the future. One of the great joys of following the maiden speech of someone who is so intertwined with the world of information technology is that there is an embarrassment of material that one can refer to. I shall not mention much of it, other than to say that it is highly impressive and worth viewing, especially the noble Lord’s weblog. He began his undergraduate studies at Cambridge in anthropology and archaeology. I am not quite sure which of those areas will be of most value in understanding the workings of your Lordships’ House, but I am sure that they will both come in very handy. He also had remarkable prescience in giving way in the 2005 general election in his Sheffield Hallam constituency to an unknown politician from across the pond called Nick Clegg, who went on to achieve some rather impressive things, as I am sure the noble Lord will do in his contributions in this House. His contribution this evening has been very much welcomed.

Given the time constraints, I want to add something new to the debate, which I am thoroughly enjoying and have found provocative and interesting, as always. That newness will come from speaking about the region that I come from—the north-east of England, where I am involved in two small and medium-sized enterprises. I have a passion for the region, which is often cited as being one of those that will be most severely hit by the forthcoming public spending constraints. There is a great deal of fear in the region about the consequences of those decisions that are coming down the track. It is not easy. However, I have to preface my remarks by saying that we would not be in this position had the foot been applied gently to the brake two years ago in public expenditure rather than heavily to the accelerator. This accelerated the level of debt and, therefore, the initiatives that are necessary for this Government to take to correct the national macroeconomy. It is important that that is said, but it has been said many times already this evening and I think that it is generally accepted. I want to focus on what can be done and what the consequences might be.

The north-east of England has a higher dependency on the public sector than any other region in the United Kingdom. The public sector accounts for 56.4 per cent of the north-east economy. A study by PricewaterhouseCoopers—I retrieved it from the UNISON website, so I hope that it is accepted on both sides of the House as a reliable source—estimates that the impact of the public sector cuts on the public and private sectors over the next five years will be around 43,000 jobs or 4.1 per cent of the workforce in the north-east, which currently numbers around 1 million. Every single one of these job losses will be a personal tragedy for those affected, but if handled correctly these changes in our economy can put the north-east economy on a more sustainable and upward path for the future.

As evidence for this, I cite a collection of data that has been produced by the north-east public relations firm Recognition PR, which has tracked the new private sector job announcements in the regional press from September to the end of October. The total number of new jobs announced in the private sector was 4,451 in two months, which is very encouraging. Moreover, the same regional newspapers identified some £271 million of new investment by the private sector in its businesses in the north-east. That is more than the entire annual budget of the regional development agency, so it is a significant sum. It comes not from bureaucrats picking winners but from business owners investing in their own businesses, so the likelihood of its succeeding and leading to further growth is also there.

One of the great strengths of the north-east is that it is one of the few regions that exports more than it imports. Exports from the north-east in the second quarter of 2010 were at their highest level ever, at £2.29 billion. Again, that is a cause for some encouragement to believe that the private sector can, if freed up, fill the gap that will necessarily be created by adjusting the national public finances.

We are not an island in the north-east of England. Therefore, when you talk to businesses about what is necessary, they will tell you first that what we need is macro-stability. Unless there is macro-stability, investors will not invest in the region and customers will shy away. Therefore, it is essential that these actions are taken so that we retain low interest rates.

I am also keen that we create an enterprise economy—one that is very much focused on growth. In that effort, the decisions to reduce corporation tax rates, to do away with the previous Government’s proposed increase of 1 per cent in national insurance contributions, which would have ripped another £250 million from the north-east economy, and to freeze business rates will all help, as will freezing interest rates. The sooner we get back to growth, the faster the new jobs will come. If the economy of the north-east grows by 2 or 3 per cent, that is another £1.2 billion of investment in the regional economy. It is like adding a new Sage or companies the size of Greggs and Northumbrian Water to the regional economy every year. That will create jobs and wealth.

In the two minutes remaining, I will focus on the lessons that we can learn from the past. I was involved in public life in the 1980s when changes were made to the heavy, nationalised industries. I know the heartfelt pain that was caused in many communities, including to many members of my family who were involved in those industries at that time. One thing that I thought was a great mistake that we made as a Government, even though we did what was necessary at that time, was not to reskill and retrain people, allowing them to drift into the benefit culture, from which many of those communities still have not emerged. I think that there are some real opportunities. When people are leaving the public sector, we should provide them with the skills and retraining necessary to contribute to the private sector. As an example of this, the Northern Recruitment Group has set up a course called “Leadership Enterprise Opportunity”—a great title for a course. It takes senior executives who are leaving the public sector and retrains them to apply their skills to the private sector. That is having a hugely beneficial effect. Not only are those individuals securing jobs, but they are realising that a lot of the skills that they have—particularly in the areas of finance and IT—are easily transferable into the commercial sector and can contribute to the growth of that sector.

Finally, I love the imagination that was shown in introducing a cut or a break in national insurance contributions for new businesses that are setting up outside London and the south-east. This is an imaginative approach to providing incentives for businesses and for people to set up enterprises. However, I think that we could go further. I wonder whether the Minister would consider starting a discussion about whether we could recreate some of the attributes of the old enterprise zones, which did so much to bring about the physical regeneration of parts of the north-east of England. We could say that in certain black spots—for example, Middlesbrough, Hartlepool, Easington and Blyth—if you set up a new business, not only will you not pay national insurance contributions on the first 10 employees, but you could also get breaks in corporation tax, business rates or capital allowances. This would use the difficult choices that have to be made at this time in order to build a more sustainable footing for the regional economy going forward.