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.

Turkey

Lord Bhattacharyya Excerpts

Thursday 13th January 2011 Lords Chamber

[Lord Bhattacharyya]

My Lords, I congratulate the noble Baroness, Lady Hussein-Ece, on securing this vital debate. I am pleased to declare that WMG at the University of Warwick, of which I am the director, admits many Turkish students on bursaries that we fund ourselves. We have a very close relationship with leading Turkish universities and businesses, such as the private university, Sabanci University in Istanbul, which I had the pleasure of visiting last year.

Walking the streets of Istanbul, you see how the western world found its axis there. Think of Belisarius, who reconquered Rome in the name of the Roman Empire, or of the great Ottoman scientists like Ali Qushji.

Our relationship with Turkey should be based on shared interests. Turkey's national interest lies in meeting its citizen's hunger for prosperity. Our interest lies in benefiting from its future growth. The first key to Turkey's prosperity is, of course, joining the European Union. That in turn relies on many things, especially solving the problems of Cyprus. I know that many noble Lords will address those issues today. I wish to focus on the economy, so I merely observe that it is in the interests of all of us to find an amicable way forward. I understand that Turkish leaders in Nicosia are keen for a solution as well.

The second key to Turkey's growth is to become the manufacturing powerhouse of the Near East. We should welcome that. If we want to prevent the Islamic world moving to fundamentalism, we need a successful and educated Turkey, for itself and as an inspiration to the people of neighbours such as Iran. After all, who would rather live in a closed city than an open, vibrant one, such as Istanbul? We should have confidence in the attractions of the free, open, prosperous society.

Of course, the path to prosperity can be a hard road. Turkey suffered greatly from the global economic crisis. Its peak to trough GDP decline was 14 per cent, the highest in the OECD. To take one example, the automotive sector, on which I am very keen, was responsible for a fifth of Turkey's export earnings in 2008. In 2009, those exports fell by a quarter.

Turkish leaders see that their position is exposed to external shocks. The economy is recovering strongly—over 6 per cent last year, as the noble Baroness mentioned—but they know that they must diversify to achieve stable growth. The first element of their strategy is supporting innovation. In 2008, Turkish business expenditure on R&D was less than a quarter of the OECD average.

I recently discussed that with the Minister for Foreign Trade, Zafar Caglayan. There is huge room for growth in the region, but it requires innovation. Take the automotive sector again. There are only 100 vehicles per 1,000 people in Turkey. In neighbouring countries, the number is lower still, though people are getting wealthier, so developing durable, low-fuel consumption vehicles will be crucial to meeting consumer needs. Furthermore, Turkey may move away from the textile trade, on which its economy has depended, to other areas.

That is why Turkey is now focused on increasing R&D. Facilities that employ at least 50 technicians get around half of their investment costs back. Ten of Turkey's 13 vehicle manufacturers are already taking advantage of that support. This is a major opportunity for British business. We have world-leading innovation in the automotive sector to offer.

Next, Turkey has a pressing need to improve its human capital, especially in science, skills, and other education. In the 2009 international education ratings, PISA, Turkey showed some of the biggest improvements surveyed, but that success needs to extend to the graduate and vocational level. The challenge is being taken seriously.

When I visited one of the biggest football clubs in Turkey, Fenerbahce, I found that it planned to establish its own university and asked us to help. Not many British clubs would do that.

Britain's university science sector is excellent. If we offer partnership with Turkish institutions now, we will reap rewards when expanding businesses look to the UK for support. After all, Turkey is not short of investment for entrepreneurs. A lot of the new universities are coming out of private capital.

The flow of money into Turkey has led the central bank to take the unusual step of cutting interest rates to cool the economy and lower inflation. As the EU builds a fence across the border with Turkey to keep out immigrants, Turkey is building fences to keep money from flowing the other way. We should follow that money. If we offer help now, we can be partners with Turkey as it develops and take advantage of the investment available to businesses operating there. If we spurn this chance, others will seek to take that place. I hope we do not betray our own interests by neglecting those of our allies. I trust that this Government, like the last, will see the great opportunity that lies ahead in the Near East.