Government: Convergence Programme

Lord Haskel Excerpts

Thursday 12th May 2011 Lords Chamber

[Lord Haskel]

My Lords, my interest in this debate is less in the economics, which we have heard from the Minister today and on several other occasions, and, indeed, have debated on several occasions, than in the way the system works and whether it is all worth while.

I should explain that I am a co-opted member of European Union Sub-Committee B. As the noble Baroness explained, our responsibility is to scrutinise the working of the single market—business, employment, transport, innovation and technology. Our work of course is highly relevant to this debate, so I start by joining the noble Baroness in welcoming the recommendation in paragraph 30 of the EU Committee’s report that the NRP report and the Select Committee's report should be debated together. That is very helpful, and I hope that we will do it in the future.

I also noted in the committee’s report that some members were sceptical of the value of these reports. I could almost hear murmurings of national plans meaning too much administration and too little management. I do not agree. Indeed, I agree with the Minister. In his evidence, he said that, used properly, the reports are a way of galvanising action and of having a dialogue with other countries and among ourselves. Yes, there are problems. One is keeping up with the times—the globalised world seems to be moving very quickly; the other is making the reports meaningful to ordinary people and ordinary businesses.

The NRP report suffers from both of these. The section on bottlenecks may have great meaning to a Treasury economist, but less so to somebody running a business or working in industry. You can correct this by putting it another way. Instead of setting out how we are going to tackle these bottlenecks, we should ask what we actually want to achieve. People would then understand the report better. It would have a purpose; it would point to action. It would be more inspirational, more easily understood and more likely to be implemented.

Let me give an example. One bottleneck is to facilitate,

“an increase in aggregate fixed private investment”.

Quite rightly, business reacted to the recession by cutting costs and it is crucial that as the economy recovers these costs do not return. After all, that additional competitiveness and productivity are helping us to recover. To sustain these lower costs means more investment and lower head count—lower head count with greater skills. Said that way, it means something to people. I put it to the Minister that, if the Government would like to involve the public more, putting things in terms of what we wish to achieve rather than what we need to overcome will mean more.

In his evidence to the committee, the Minister also spoke about consultation. The record of this Government on consultation is pretty poor. Your Lordships’ Merits Committee commented on that and the Minister may have heard the debate on 3 May when I had to point out how decisions in the Home Office had cut right across policy laid down in the Treasury's plan for growth. We must do better at consulting both inside and outside government.

The paper calls for fewer regulations, but if the Government want the support of the general public, they must understand that one man's red tape is another man's polluted water or difficult working conditions. It is the rules that are important—how they are targeted and how proportionate they are. The numbers are of secondary importance. Regulatory failure is because the rules are wrong, not that the numbers are high. More and more of these rules are part of Europe 2020 and are being made in Brussels, outside our direct control. The Government have not made it clear how they will engage with this, so perhaps the Minister could say something about that.

In contrast with Europe 2020, I find the NRP paper pretty thin on the green economy. Certainly, the plan for growth talks about putting the economy on a low-carbon basis, but Europe 2020 makes energy efficiency one of its highlights, especially in transport and buildings. Indeed, it offers financial support. Will we take advantage of that? Our plans seem reluctant to commit investment in this area. Presumably that is because the Government do not want to burden our grandchildren with the debt. However, neither will our grandchildren thank us for burdening them with a high-carbon economy. Debt is less dangerous than global warming.

In these reports, keeping up with the times is essential but difficult because globalisation is moving really fast. I strongly support the intention of producing and debating an NRP each year. Personally, I would find it helpful if there were a section that told us what had changed from year to year. For example, in previous years, all the talk was about the inexorable move of manufacturing to Asia, particularly to China. Indeed, I was one of those businessmen to go there in 1979 when it started the open-door policy.

However, the wheel has nearly turned full circle. Rising wages and an ageing population in China, rapidly rising transport costs and rising productivity here in Europe, mean that it is already attractive to produce goods here in Europe that require frequent design changes or are of low volume. That is especially true for products where labour is a third or less of the cost. Our hourly worker wages adjusted for productivity are now much the same as Germany’s and are lower than those of France and Italy. Yes, that does have something to do with the weakness of a pound against the euro, but this is a very important change for the economy of Britain and Europe. It is an important trend and I would like to see this sort of thing highlighted in the National Reform Programme. It not only points towards a new trend in globalisation, it also justifies our concentration on skills and investment, and on productivity and innovation. That is why I would like to see a section on what has changed over the year.

Another way in which this kind of approach is helpful is that it helps us to address the problems that globalisation has thrust upon us and justifies our impatience to complete the single market as well as the work and the expenditure on doing that. Incidentally, it also helps explain the benefits of the single market, something that we never do enough of. In its NRP 2011 paper, the Government say they strongly support Europe 2020, its challenges and its opportunities. Who could disagree with more jobs, more research and development and innovation, more investment, greener energy, better education and less poverty? It is because we are all in agreement with the aims and objectives of Europe 2020 that I would like to see this support shouted from the housetops and given a much higher profile. Could it be branded in some way, so that projects that contribute towards these objectives are identified as being part of Europe 2020?

The Government’s paper, Let’s Choose Growth, is a start. As well as calling for change, it expresses a lot of the right ambitions and identifies many things that we have to do. But who has seen it? Has it had an impact? Most of the people I know have actually never seen it. Some people would like to separate the economic from the social aspects, but the two are intertwined and cannot be separated. That is why it has to be expressed in terms that explain its impact on the lives of ordinary people. As the committee said in its report, the Lisbon strategy suffered because it had a low public profile and a low political profile. I join the committee in calling for a high profile to be given to Europe 2020. It creates a purpose to which all of us want to contribute. If there is one thing that I would like to take away from this debate, it is that we are all committed to that.