Queen’s Speech

Lord Giddens Excerpts

Thursday 5th June 2014 Lords Chamber

[Lord Giddens (Lab)]

My Lords, I also congratulate the right reverend Prelate the Bishop of Rochester on his excellent maiden speech, which was both forceful and charming—two qualities which are hard to merge. I hope that the right reverend Prelate enjoyed the reference to “up to the heavens and down to Hades”, because that is the way we speak in the House of Lords.

I have recently, after many years, been rereading Marx. After all, capitalism is in the middle of probably the biggest crisis that it has experienced in its existence, because it is now a global system. Here are one or two choice quotes which I dug out from Marx:

“just as any revolution eats its children, unchecked market fundamentalism can devour the … long-term dynamism of capitalism itself”.

Here is another juicy little quote:

“Capitalism loses its sense of moderation when the belief in the power of the market enters the realm of faith”.

The net result, Marx concluded, is revolution.

I do not know whether I have fooled anyone—probably not the Minister—but these phrases do not come from Marx at all but from an altogether different source: Mr Mark Carney, the Governor of the Bank of England. They were made not a century ago but as recently as last week. Moreover, Mr Carney’s objective was not to overthrow capitalism but to rescue it. The speech was, however, remarkable, especially given the source from which it came. I ask the Minister for his opinions on some of the themes which it contains. They are pretty powerful. The speech was full of implications for policy-makers and is relevant to the themes of the gracious Speech.

Mr Carney identifies some of the economic stresses and strains that have caused disillusionment among citizens, have alienated many of them from orthodox politics and have helped to fuel the rise of populist anti-establishment parties. He identifies three sets of factors in his speech. All, I suppose, are pretty well known but they are fundamentally important. First, he mentioned the emergence of staggering levels of inequality, especially at the very top, with the bankers in the lead. He says:

“Bankers made enormous sums in the run-up to the crisis and were often well compensated after it hit. In turn, taxpayers picked up the tab for their failures”.

Huge resentment has followed from the fact that ordinary people have had to pay for the excesses of the rich. At the same conference at which Mr Carney spoke, Christine Lagarde, the head of the IMF, made similar points in an equally forceful fashion, not about inequality in general, but about extreme inequality at the very top. I am pleased to see that the gracious Speech contains not one but two references to creating a fairer society. I would like, later on, a bit of expansion on how this is going to be achieved.

Mr Carney’s second point, made by many noble Lords here this morning, is that the recovery leaves large swathes of young people especially isolated from prosperity or jobs. The famous “lost generation” is a phrase used by everybody but is no less powerful for that because it is a serious risk. Even in my sector, as a university person, a substantial proportion of college graduates are unemployed—much larger than was the case a few years ago.

The governor’s third point is about the enduring effects of the crisis upon the poor, of which we have again heard mention today, especially in decaying working-class areas. These people bear,

“the real costs of financial instability—unemployment and the seizure of credit”.

Does the Minister accept this analysis, which seems to me to be very accurate? I particularly ask the Minister whether the Government accept the key theme of the speech—which is why it is such an important speech to be given by the Governor of the Bank of England—that market fundamentalism has proved divisive and dangerous. That is a big thing for the Governor of the Bank of England to say, and its implications are important.

Mr Carney indentifies three basic strategies which the Government should actively pursue to try to pick up the threads of these difficulties. Again, I will list them as a threefold set of remarks. The first policy should be to reintroduce competitive markets where market principles have become undermined. As Mr Carney puts it,

“Many supposedly rugged markets were revealed to be cosseted”.

Would the Minister agree that this includes situations of oligopoly? In circumstances of oligopoly, you have neither public control of the companies concerned, nor do you have a market. That situation applies in fairly large chunks of British industry today. It would be interesting to know if the Government have any policy of attacking that issue.

Secondly, Mr Carney says we should affirm the centrality of social justice, concentrating especially on the redistribution of wealth and income. He said,

“inequality… is a critical determinant of well-being”.

What policies do the Government have in place to reduce inequalities at the very top? The stress on tax avoidance has been important and consequential, but it is clear that much more needs to be done and we are dealing to some extent with a global and not just a national issue. What progress has been made, in the Government’s eyes, in either closing down or limiting the impact of tax havens?

The third point made in the speech is that we have to rebuild a sense of vocation in business and especially in banking. Mr Carney said:

“In the run-up to the crisis, banking became about banks not businesses; transactions not relations; counterparties not clients”.

What should the role of Government be in promoting a culture of ethical business? How can relationship banking be introduced on a substantial scale?

I do not ask these questions in a particularly partisan spirit because we all have an interest in saving capitalism from itself.

Publishing Industry

Lord Giddens Excerpts

Wednesday 6th February 2013 Grand Committee

[Lord Giddens]

My Lords, I, too, congratulate my noble friend Lord Dubs on his excellent introduction. I declare an interest as founder and director of Polity press.

Publishing is an industry in absolute turmoil. I am not sure that even the contributions to the debate thus far have brought this up strongly enough. This is true not just in the UK but in the US and other countries, too. One can say that absolutely no one knows where these trends will lead. Many people have their best guesses, but nobody actually knows.

There are three intertwining factors in the transformation of the publishing industry. First, as has been said by other noble Lords, e-books have arrived with a bang after several years in which they made little or no headway. It is important to recognise how massively popular they are in some sectors. In the United States, for example, among more popular titles, more than 60% are now produced as e-books. Will the traditional book survive? Will the e-book survive? One should not think that the e-book is the cutting edge here. E-books themselves are being transformed by all sorts of multilayered devices; you can hold conversations with authors and so forth. The e-book is certainly not the end of the story.

Secondly, the publishing industry here and in many countries is becoming hollowed out, with ever fewer large conglomerates at the top and an array of small publishers at the bottom—all of them, in a way, following a precarious existence. The rise and rise of Amazon, as has been mentioned by the noble Lord, Lord Lucas, is one main factor in this. Publishing is not really about the production of books but about marketing and distribution. Because of its massive size, and its mainly automated warehouse and delivery system, Amazon absolutely cuts prices to the bone.

Thirdly, a trend which overlaps with these is the emergence of self-publishing on the internet, where an orthodox publisher might not be needed at all. There is lots of experimentation going on here. For example, one publisher invites prospective authors to pitch their book proposals on its website. If sufficient people pledge to buy it, the author can then go ahead and write it, reversing the traditional relationship. It is not clear that this will succeed. These are overlapping trends, but they are creating something fundamentally new after centuries of domination by traditional book publishers.

I have three brief questions for the Minister. Often, technological innovation is followed by a “back to the future” reaction; for example, when nylon was invented, people went back to wool and cotton. The same thing might happen to traditional books. For this reason, I hope that the Government will not take too big a scythe to public libraries.

Secondly, as other noble Lords have asked, what is the latest position on open-access publishing? Many publishers, as well as academics, are quite worried about that and the Government’s endorsement of the Finch report. What will it do to traditional journal publishers?

Thirdly, apart from the issue of taxation—following on from what the noble Lord, Lord Lucas, so eloquently said—are the Government happy with the dominant position that Amazon has taken in the book trade? In conclusion, I hope that no noble Lords will be caught reading a Kindle in a Starbucks.

--- Later in debate ---

[Lord Gardiner of Kimble]

My Lords, I, too, thank the noble Lord, Lord Dubs, for securing this debate. It is certainly true to say that I have learnt a great deal today from the expertise of all your Lordships. I have listened and it is indeed a privilege to reply. Perhaps I might say that there were quite a number of questions and I hope that noble Lords will be tolerant if I write a general reply wherever I have not dealt adequately, as I would believe, with their questions.

Without doubt, the UK’s creative industries make a vital contribution to national life but they also have a key role to fulfil in helping our economy to grow and helping the people of the UK to compete globally. Employment in the creative industries has grown at double the rate of the economy as a whole, and 1.5 million people are currently involved in creative employment. They are, in many respects, British culture and I was very much taken by what the noble Lord, Lord Howarth of Newport, said about culture. I am sure that the Prime Minister is very keen and that he champions British culture too.

The entire publishing sector is the largest of our creative industries. It contributes £11.6 billion a year to the UK economy and employs some 244,000 people across 9,700 companies, which cover books, e-books, academic journals, national and local newspapers, magazines and print music, to name a few. Our publishers are the largest exporters of all the creative industries. With 40% of the sector’s revenues coming from export—the noble Lords, Lord Dubs and Lord Howarth of Newport, referred to this—that is a bigger proportion than in any other country.

However, as noble Lords have mentioned, it is not limited to print alone. UK consumer e-book sales grew by some 366% in 2011, as the noble Lords, Lord Dubs and Lord Giddens, referred to, making the UK the largest e-book market in Europe. The UK is a market of early adopters. Consumers in this country are quick to take up new products, services and channels, particularly in entertainment. In publishing, this appetite on the part of consumers has been matched by the willingness of publishers to explore new opportunities, in spite of the challenges that new technologies undoubtedly present, as the noble Lords, Lord Wills and Lord Giddens, referred to. I reaffirm my personal support for bookshops and the many happy hours I continue to spend in them. I have to admit that I have never bought a book from Amazon.

The Government are committed to fostering an environment that will stimulate world-class content creation. We want the current level of success and investment not just to continue but to increase. I am very conscious of course that the noble Baroness, Lady Rendell, and my noble friend Lord Dobbs, whose work is so widely admired at home and abroad, are in their places. Indeed, I very much hope that there will be many more generations of their like in British culture.

The issue of VAT was raised by my noble friend Lord Black, the noble Lords, Lord Dubs and Lord Stevenson, and the noble Baroness, Lady Rendell. As has been pointed out, Luxembourg and France at present operate a reduced rate of VAT on e-books. Under existing law, e-books are electronically supplied services and therefore should be taxed at the standard rate. The European Commission has launched infraction proceedings at the European Court of Justice against Luxembourg and France on this matter, the outcome of which is awaited.

My noble friend Lord Black of Brentwood raised a point about the recent EC report on pan-European press regulation. The Government have noted the contents of the report on media freedom and pluralism and await with interest any resulting debate and the response from the European Union. However, the Government have no intention of allowing European institutions to regulate the British press. The Government believe that this is a matter for individual member states and will resist any European legislation in this area.

Many noble Lords referred to copyright, including my noble friend Lord Lucas, the noble Baroness, Lady Rendell, and the noble Lords, Lord Dubs and Lord Howarth. It is vital that the publishing industry is supported in addressing copyright issues. I am mindful of the difficulties the music industry has suffered in its own digital transition, which my noble friend Lord Lucas specifically referred to. The Government are acting in a number of areas to ensure that the UK copyright framework meets the demands of the digital environment while continuing to maintain the success of sectors such as publishing. An appropriate regime is vital for copyright in the UK. The Government are very well aware of the range and strength of views and interests, which is why the Hargreaves review of intellectual property and the development of government policy since then have included broad and deep consultation.

Last December, the Government outlined a number of ways to support efforts by creative industries to protect copyright, in particular: action to educate consumers about the importance of respecting copyright and paying creators; launching a superfast patent processing service; a campaign for smaller businesses; and looking at enforcement. The Government are exploring with the City of London Police and the content industries what more can be done to bring to book the criminals who make a living from counterfeiting and piracy, particularly online. Protections for the interests of property rights owners and creators must be built into the revised framework. The noble Lord, Lord Dubs, mentioned that in particular.

The Government have sought to increase the number of options available to rights holders looking to protect their intellectual property online—the noble Lord, Lord Wills, referred to that—in particular, by ensuring proportionate responses are available at every level, from court action to a voluntary response. The Government have supported collaboration between industry and law enforcement and a regular round table for those involved is now held at the Department for Culture, Media and Sport under the chairmanship of my honourable friend the Minister for Culture, Communications and Creative Industries. The noble Lord, Lord Stevenson, in particular raised that. The round table has seen several successes, including an agreement with internet advertisers to cut off payments and advertising to illegal sites.

On exceptions, noble Lords raised in that connection the potential impact of changes to copyright law on business, for example the impact on exceptions to copyright rules on music publishing for educational use. The noble Lord, Lord Dubs, and my noble friends Lord Black of Brentwood and Lord Dobbs mentioned that. I will write to my noble friend Lord Black about the particular matter he raised. The Government want teachers to be able to use creative materials in the classroom without copyright being an obstacle but—I emphasise “but”—this should not be done at the expense of our educational publishing sector, on which our schools depend. We will give teachers more flexibility to use copyright works in new and creative ways but they will not be given a free pass. It is important that we strike the right balance. Copyright is the means to reward creativity; it generates investment, stimulates wider dissemination and delivers balance.

The noble Lord, Lord Dubs, mentioned the national curriculum. The Secretary of State for Education is due to announce the statutory consultation on the new national curriculum shortly. Publishers will therefore be able to consider the proposals for all national curriculum subjects. Again, the matter of young people was raised by the noble Lord, Lord Howarth of Newport. I entirely agree that reading and libraries are a great source of inspiration for young people—and adults. Next week, I am due to answer a Question in the Chamber on libraries. Libraries come under the budgets of local authorities and I am sure that we will have a full discussion in the seven minutes permissible on that next week. Again, I am personally a staunch supporter of open access to libraries. There are many exciting opportunities. New libraries are being opened and communities are coming together to ensure that reading and the opportunities that it provides to young children are well understood and recognised.

The Government also recognise that there are significant potential threats and opportunities with regard to how, for instance, text and data mining may be affected and how these technologies are used. I think we would all agree that the priority must be to develop the best environment for scientific and medical research. That has to include a successful research publishing sector. I am very mindful of what my noble friend Lord Smith of Clifton and the noble Lord, Lord Giddens, said. I will write to all noble Lords on the Finch review because I would like to consider the matter and then write in full detail. It is fair to say that the Government will proceed carefully in this sector.

The Government are supporting the industry through the expanding intellectual property attaché network abroad, which is already in China, Brazil and India. There is a new one now in south-east Asia. Progress on the EU patent front is a major step forward.

I appreciate that the sector faces many challenges. Noble Lords today have raised them in full and I am mindful of them.

[Lord Giddens]

Would the noble Lord care to say one or two words about Amazon and its industry dominance?

[Lord Gardiner of Kimble]

I should like to finish my few words. My commentary on Amazon is already on the record. However, many opportunities can be seen by the way in which the sector is embracing the digital revolution. The Government recognise the sector’s importance for cultural and economic reasons, and are working closely with the publishing industry to create an intellectual property environment which sustains success and rewards creativity.

Britain’s Industrial Base

Lord Giddens Excerpts

Tuesday 9th October 2012 Lords Chamber

[Lord Giddens]

My Lords, I also welcome the noble Lord, Lord Marland, to his role, and I look forward to many interesting debates with him.

I have been a practising social scientist for several decades—a sign of a misspent life, one could say—and never before has the future of world society and the world economy seemed to me so opaque and imponderable as it does now. To me, this is not a recession like other recessions; it is an expression of much more deep-rooted forces that none of us at the moment fully understands. When we look at manufacture worldwide, it is a big mistake to suppose that the dominant force in the world economy is a simple transfer from west to east. That is happening, of course; in 2010 China became the world’s largest manufacturing country by output. Yet that simple statistic conceals complex changes whose consequences are not at all clear—at least not to me.

Manufacturing output has risen sharply over the past 30 years the world over, but the proportion of jobs created has actually gone into reverse. Worldwide, there has been a net reduction in manufacturing jobs since 1990 in spite of the rapid growth of manufacturing in China and other emerging economies. When we see areas in the UK, the US or the EU where unemployment is over 20%, this results as much from technological innovation as from a shift of manufacture eastwards. In other words, the advance of manufacture is very different from the creation of net new jobs. Moreover, much manufacture now takes place in global chains rather than in particular countries. As the FT journalist Peter Marsh points out, to be a star manufacturing company you do not need to make anything, and the biggest manufacturers in the world do not in fact make anything. Rather, what happens is that the company co-ordinates a diversity of businesses in different countries. This is radically different from the past.

We are currently experiencing what Marsh calls, in his book of the same name, a “new industrial revolution”. It is initiating an era of mass personalisation, much more decentred than old manufacturing processes. A good example is the firm Essilor, based in Paris. It is the leading maker of lenses for glasses in the world, making 100 million lenses, unique to each customer —amazing—that are sold to 400,000 opticians in 100 countries. In order to do this, the company has a network of 20,000 computers in Essilor offices around the world. This is a totally different pattern of manufacturing from the past, and we do not quite know—as social scientists, anyway—where it is leading us.

Against this backdrop, it certainly makes sense that we should build up and expand the UK’s manufacturing base, but we have to do so in terms of the trends that I have been describing and to be very sensitive to them. I have three brief points to make in working this through. First, although it is right to emphasise a return to industrial policy—the new wisdom, as it were—it will actually have to be totally different from the 1970s. It will not be a matter of picking industries or of simple investment in infrastructure; if it is going to work, it will have to be much more holistic and involve large chunks of the economy and of government, and at the same time be highly flexible. That is a great challenge. At the moment we do not really know how to do this and an awful lot of work will have to be done, so loose talk about industrial policy should be avoided.

My noble friend Lord Adonis mentioned renewables, but they are very unlikely to create new jobs. It is no good just saying that they create jobs; they have to create new net jobs, but jobs will be lost in the older fossil fuel industries as renewables come on track. New technology tends to destroy jobs rather than just create them, at least in terms of net jobs.

Secondly, we have to be very careful about borrowing naively from what appears to be current best practice—for example, “Let’s be more like Germany”, “We need more technical skills”, “We need more apprenticeships” and “Let’s create the equivalent of the Mittelstand”. It is only 10 years ago that Germany was regarded as the sick man of Europe, and its status as a manufacturing country gained enormously from its membership of the euro. A detailed study shows that if Germany exited the euro, it would lose probably 40% of its manufacturing capacity competitively in world markets. One should reflect on that.

Thirdly, we should not assume that current trends are unilinear. I do not understand why people in this country are not taking notice of the reindustrialisation debate in the United States, which I have mentioned in previous discussions. The Boston Consulting Group reckons that 3 million net new jobs in the US can be created by 2020, but these result from a reversal of the existing chain transfer from west to east. The price of oil, the need to protect patents and the rising costs of labour in China are likely to reverse some aspects of the current trend of movement of manufacture from west to east. These are likely to be not in high-tech industries but in low-tech ones. That debate should be pursued in detail in this country too.

--- Later in debate ---

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Lord Marland)]

My Lords, my wife said to me in the car as we came down from Birmingham that this was going to be a very interesting, high-quality debate. As always, my wife is right. I am very grateful for the support of my noble friends Lady Garden and Lord Gardiner, who are obviously showing their trade at skills very early on.

[Lord Giddens]

I thank the Minister for allowing me to speak. I find it interesting that there are no women taking part in this debate. Perhaps one thing we might do is encourage more female entrepreneurs—viz, your wife.

[Lord Marland]

My wife does not need any encouragement, but I am sure she will be very grateful.

I thank the noble Lord, Lord Adonis, for making this debate available because this is a massive challenge for the country, for the Government, and for those of us who have to set about the challenge. What came through to me about this debate was how passionate we all feel about the future of British industry, British manufacturing and Britain plc. We have a lot to do and we can all play our part. If we have passionate people who want to be involved, that is very good.

The noble Lord, Lord Adonis, summed it up by saying that we have been negligent in the past. That is true, and it is not just the previous Government but the Government before that. As has been referenced by the noble Lord, Lord Bilimoria, the present Government have inherited a reduction of manufacturing output from 22% down to 11% in the past 20 years. Why has that happened? It is because there has been a lack of investment, as has been referenced, and a lack of competitiveness, which we need to reverse.

However, it is not the end of the world. Years ago, as the noble Lord, Lord Hennessy of Nympsfield, reminded us, 92% of the activity in this country was in agriculture. The right reverend Prelate mentioned the industrial output in Blackburn. My family on both sides were involved in Ashton-under-Lyne, of all places, and further south in Manchester in the cotton manufacturing industry, in Lancashire Cotton. Now look at that industry; it has changed out of all recognition. As has been referenced by many noble Lords, including the noble Lord, Lord Haskel, we live in a global world with fast-changing global dynamics, where Britain has been at the forefront of moving with those dynamics and changing our economy into a diversified economy, which, of late, has become overdependent on the financial sector, and we are licking our wounds from that overdependence.

We have also failed to store the benefits of our prosperity for a rainy day. So many other countries do so, such as Norway, which has a marvellous sovereign oil fund and so much of its oil profits have gone into those oil funds.

We have to redress the mess and we intend to do so. It will not happen overnight. Nothing does happen overnight. This is a big country where we need to change things. People have got used to a way of life that has revolved round a very munificent European purchasing economy and that is now changing as that economy goes into the doldrums. The Government are at odds with the noble Lord, Lord Bilimoria, in the sense that we believe businesses do better when government does less. We also believe that people do better when government does less. That is why it is important for government to set a framework for business and allow business to take things forward with the right initiatives and incentives, which I shall come to later. However, we cannot hold the hand of business. We can take it to the trough but we cannot make it drink.

The corporation tax plan that the Chancellor has outlined, which takes corporation tax down to 22% by 2014, which will make it the lowest in the G20, is a real incentive for business. Our Red Tape Challenge is being looked at very closely by this Government with a view to reducing 1,200 red tape regulations. We have revolutionised our UK trade and industry department with a very outward looking, purposeful export drive. Export is the key to our growth recovery. That is why, as I referenced earlier, I have done 25 country visits in the past 10 to 12 months. The noble Lord, Lord Green, has carried out some 43 such visits. The Prime Minister always takes a large delegation with him when he goes on overseas visits because without an export drive we will not get growth.

Time does not allow me to go through all the various schemes that we have put together. However, noble Lords will know that we have the regional growth fund, the Plan for Growth, mentoring schemes and schemes to develop education and skills, a lot of which I mentioned at Question Time yesterday. In manufacturing alone we have the Advanced Manufacturing Supply Chain, the Manufacturing Advisory Service and the High Value Manufacturing Catapult centre. I applaud the excellent work of our colleague, the noble Lord, Lord Bhattacharyya, who has been at the forefront of that as he has been at the forefront of the excellent Tata company, for which we are very grateful.

As the noble Lord, Lord Adonis, put it, we can all go round the country finding examples of good news and bad news, and he gave eloquent examples of each. The most important thing is to support the bad news stories and turn them into good news stories and that is the job of government. I am grateful to my noble friend Lord Bates for pointing out that all is not lost. We have 1 million new jobs in the public sector and 450,000 businesses have registered with Companies House in the past 12 months—the highest figure since records began, so there is a platform for starting this change of emphasis. Both the noble Lord, Lord Adonis, and my noble friend Lord Bates mentioned—

[Lord Giddens]

I thank the noble Lord for giving way. Could he also give an analysis of the businesses that have closed down?

[Lord Marland]

I cannot take too many questions as I shall never get through my speech in the 12 minutes which have been allocated, but I think the figure is about 290. However, we can give the noble Lord exact figures later.

The noble Lord, Lord Hennessy, talked about having a business Select Committee. That is a very good idea. There is, in fact, a BIS Select Committee and a Lords inquiry into SMEs. One of the initiatives that I have undertaken is a trade representatives programme appointing specific trade representatives for specific countries. This will be announced by the Prime Minister in the not-too-distant future. We need to look at initiatives as regards how we can review trade. I am very grateful for that suggestion.

The right reverend Prelate referred to the British Aerospace and EADS merger. We think that we will know more about that tomorrow evening. Therefore, I think he would not expect me to talk about that at this point. We regret hearing that he will not be with us for much longer. We wish him every success. His contribution was extremely beneficial.

The noble Lord, Lord Selsdon, talked about energy and the rail infrastructure as being key areas of development and I cannot but agree with him. I have already mentioned the noble Lord, Lord Bhattacharyya, who has so much experience and knowledge of this area and feels deeply about the need to enhance our skills to provide a platform from which we can emerge into growth.

The noble Lord, Lord Empey, talked about trade and manufacture. He talked very interestingly about Northern Ireland, of which he has great knowledge. I take on board everything he says. The speech that the noble Lord, Lord Giddens, made was an immense tour de force. I compliment him on it and I totally agree that the holistic view has to be taken and that we need to consider globalisation. I am not going to be able to deal with all the questions the noble Lord, Lord Bilimoria, raised. I make the offer to him and to all noble Lords that I will be happy to discuss any of this at a later stage or at further debates. The noble Lord, Lord Haskel, again talked about globalisation and he is absolutely right. The noble Lord, Lord Hunt of Chesterton, reminded me of the need for laboratories but, again, all is not lost as Sir John Gurdon has been rewarded for his expertise.

The noble Lord, Lord Young of Norwood Green, talked about broadband. Broadband is fundamental; I was discussing it with the Minister responsible today and urging him that we should move on further. As a Government we took the initiative to sell 4G, which we are in the process of doing. It takes a while but it was an initiative I am proud to say our Government took part in.

We have a world-class country. All of the countries I travel to want to do business with Britain. We are in the top three of any countries in the world that countries want to deal with. We have design and technology of the highest quality, architecture, accounting, agriculture, oil, defence, aerospace, digital music, motor cars. For the first time in many years we are exporting more cars than we are importing. We have insurance, strategic planning, medical, education, et cetera. We are a world-class country which is looked upon with huge favour by the world. I invite all Peers who feel as passionately as I do to support and champion business as we try to get ourselves out of the economic problems that noble Lords have all very kindly addressed. With that I thank all noble Lords for their contribution.

EU: Financial Stability and Economic Growth

Lord Giddens Excerpts

Thursday 3rd November 2011 Lords Chamber

[Lord Giddens]

My Lords, I also congratulate the noble Lord, Lord Newby, on initiating this debate on such a momentous topic. The Government rightly recognise that it is in the UK’s interest to achieve stability in the eurozone and, moreover, that this presumes much greater fiscal integration than has been true in the past. Some speak blithely of the euro collapsing, but that would cause social and political as well as economic chaos. I fully agree with the remarks of Germany’s Chancellor Merkel about the dangers of such an event, which must be prevented.

However, I will talk primarily about economic growth and job creation, on the premise that it is no good just preaching austerity, even to beleaguered Greece. We have to provide some kind of message of hope. We have to think in the long term, not just the short term. This has to be coupled to practical plans for investment and renewal. Where will new net jobs come from?

In approaching this question it is important to recognise, as the right reverend Prelate hinted, that the travails of the eurozone and—to some extent—the rest of Europe do not come just from the problems of the euro but from a failure to implement the Lisbon agenda. To put it more precisely, the Lisbon agenda was implemented only partially and regionally within Europe. Some countries, such as the Scandinavian countries, the Netherlands, Germany and to some extent the UK, followed some of the prime suppositions of the Lisbon agenda and are in a superior economic situation to other countries largely situated in the south, such as Spain, Portugal, Italy and Greece, which did not reform. Instead they borrowed and these borrowings have conjoined with the debt in the banking system to generate the extent of the crisis that we see now.

What policy should the Government support to promote growth and job creation in Europe? As I said, to do this one has to think beyond the current crisis. I will mention four main elements. They are not exactly the same ones as the noble Lord, Lord Newby, mentioned.

First, it is possible to promote the return of manufacture to Europe. I ask the Government to pay attention to the really interesting debate on reshoring—the opposite of off-shoring—that is going on in the United States. It is quite a technical debate and the issues are complicated; there is not a simple map that comes from it, but it is important. Many companies suffer from disruptions to their supply chains. Wages in China and India in core manufacturing sectors are rising rapidly. It looks as if it might be possible to recreate manufacture in certain core sectors in some industrial countries, including European ones. It is important to recognise that Europe is strong in manufacture—and not just Germany. For example, even Spain has a higher ratio of manufacturing output per person than the United States. The reshoring debate suggests that if you want to promote manufacture it should be done not only in high-tech, cutting-edge areas. It may be possible to build on established strengths. This is a different orientation from the past.

Secondly, as noble Lords have said, we have to complete the service directive and increase competitiveness in service industries within the single market. I work in higher education, where we are well behind on the possibility of standardisation which would promote mobility of labour. Thirdly—we do have to do that. To have a flexible, competitive economy, you must have mobility of labour. How does that sit with the Government’s strictures on immigration? Of course, movement of European citizens is not technically the same as immigration but mobility of labour is crucial to competitiveness. It is one of the main areas where Europe finds it hard to compete with the United States.

Fourthly, and finally, we have to concentrate on quality of growth and not just on quantity. This means two things, the first of which is distributional. What is the use of growth that only goes to 1 per cent of the population? Not much. It also means an environmental thing. Europe could be in a highly competitive position vis-à-vis the United States or China, neither of which provide a sustainable, environmental model out of which job creation can come. I would welcome the Minister’s comments on any or all of those points.