Queen’s Speech

Lord Bhattacharyya Excerpts

Tuesday 10th June 2014 Lords Chamber

[Lord Bhattacharyya (Lab)]

My Lords, it is a pleasure to speak in this debate and to have heard the outstanding speech by the noble Lord, Lord Bamford. It is an even greater pleasure to follow the right reverend Prelate the Bishop of Durham. On his arrival in Durham, he made it a priority to take the church’s message into the most difficult, challenging and inaccessible places. No wonder, then, that he has arrived in your Lordships’ House.

The right reverend Prelate’s history of ministry in our inner cities and deprived communities, his desire to speak for his new home county and his passion for Africa, particularly for Rwanda, remind us of the great value that religion can bring to our public debates. Perhaps his desire to spread the good news explains why he maintains both a blog and a Twitter account, bringing the message of the church into the most virtual, though perhaps not the most ethereal, of spaces. Indeed, it was thanks to his Twitter account that I learned that he was a fan of “Strictly Come Dancing”, and that today he was nearly kept from this debate by a delayed train—another reminder of the need to invest in our national infrastructure. Durham Cathedral is famously,

“Half church of God, half castle ’gainst the Scot”.

Whatever happens in Scotland this year, I am sure that he will focus on the first description, not the second.

The right reverend Prelate’s maiden speech was a fine example of a great tradition with a modern emphasis; the gracious Speech itself was also a fine example of tradition. After all, there is no political tradition greater than a Prime Minister seeking to win an election. I do not judge the speech drafters of Downing Street harshly for this. After all, it is hardly a trait limited to one party. It does pose a challenge, however. How do we debate in a non-partisan way a speech developed more for electoral success than for legislative purpose?

I would like to suggest one or two areas where we might scrutinise the Government’s progress against the ambitions set out in the gracious Speech. First, there is the pledge of 2 million apprenticeships by the end of this Parliament. Declaring my interest as both a former apprentice and the chairman of Warwick Manufacturing Group at a Russell group university, the University of Warwick, I can assure your Lordships that big, round numbers are not what we should focus on. For example, we should not be increasing the number of apprenticeships for those over 25, who are already in work, which is where the growth has been over the past few years. Such people are rarely learning a new trade but are simply getting on-the-job training paid for by the state. That is not apprenticeship. Nor should we see apprentices as a way of keeping the unemployment statistics down.

Rather, our objective should be delivering a better skill base for the British economy, just like the German economy. For this, the total number of apprentices matters little, but the quality of skills training each apprentice receives matters a great deal. The truth is that this can vary widely. Young people know this, which is why the best apprenticeships are massively over- subscribed. To improve our skill base, we need better vocational and technical education for school and college leavers and a better integration—that is very important—of higher and technical education, even if that means a smaller overall total of apprenticeships. The Government made a worthwhile step forward here in the Budget by expanding the apprenticeship grant for small businesses for 16 to 24 year-olds.

However, a renewed focus on quantity may lead funding bodies to neglect the importance of quality. It would be better to get our best institutions involved in delivering vocational education. That is why I decided at Warwick that I would set up a university technology college, which was also sponsored by the noble Lord, Lord Baker. We take these people, get them into the automotive sector, because it is designed for the automotive sector only, and while they are getting their higher apprenticeships in the company, we, in a Russell group university, get them into part-time graduate education so that they have a career from school to there. I learnt this entirely from a very big German car company which shall remain nameless. That is what it does because the skills it requires are what make Germany what it is today. We do not have that.

The second area where we should monitor the Government’s progress is how their plans to deliver growth over the long term might conflict with restraining the booming London property market. With property prices up nearly 9% this year, we already hear calls for higher interest rates. The noble Lord, Lord Livingston, is working flat out to help British exports, and I wish him well. However, higher sterling makes his life much harder by sending a chill through our manufacturing sector, just as it finally begins to show signs of vigour. For a British manufacturer in the automotive sector—the biggest in this country—exporting finished goods to fast-growing markets, for every £1 billion of export revenue, a 10% appreciation of the pound reduces income by £100 million. That damages profitability and competitiveness in markets such as China and the US, which have both seen sterling appreciate by more than 12% this year. This reduces the amount that is available to be invested in the UK.

Of course, people tell me that international businesses can mitigate this by sourcing supplies and materials overseas, but that reduces investment in the UK. I have helped bring many industrial investors to Britain, and the largest are here. I know how rising sterling makes the UK a less attractive place to invest, especially when coupled with a long-standing lack of skills. For smaller businesses, too, higher rates and higher sterling limit their ability to invest in the future, leading to a worsening of the British disease, an economy with low business investment. Some people talk about productivity. People do not understand that unless you invest you cannot increase productivity. It cannot be done by workers working harder or more. You have to have the technology to get the productivity up, and if you cannot get that, your productivity will never go up.

These are not partisan points. Indeed, I think the agenda to deal with this is shared right across the House. Ahead of potential rate rises, the Government must press ahead with their plans to support manufacturers and exporters by investing in developing skills. They must make progress on their ambitions for deregulation and deliver on their promises for lending through an expanded British Business Bank, which we have talked about in this House for the past five years. This would represent an excellent programme of scrutiny for the final year of this Parliament. It would not be partisan or electorally divisive but would represent a common agenda for a long-term economy. If a gracious Speech about plastic bags tells us anything, it is that there is little else to occupy us. This would be a worthy programme of work. Surely, on this issue, we can all be in it together.