Budget Statement

Lord Haskel Excerpts

Thursday 27th March 2014 Lords Chamber

[Lord Haskel (Lab)]

My Lords, I start by thanking the usual channels for giving us an extra week in which to consider the Budget before we debate it. Things that first of all seem too good to be true often benefit from this rather longer consideration. For instance, the pension reforms mentioned by many noble Lords may be welcomed a little bit less when you realise that annuities are an important source of long-term finance for investing in our infrastructure—investment which concerns many noble Lords. Or is the Chancellor after the early tax revenue from the consumption that early withdrawals will produce? My party is absolutely right to call for a more considered and careful scrutiny. Pensions have to be a consensual matter, not a political toy. The noble Lord, Lord Stoneham, just reminded us of the pensions mis-selling scandal which resulted from a previous change.

What about the public finances? I think the Minister told us that they are not bad. Headline borrowing is down. However, my noble friend Lord Myners reminded us that the OBR tells us that, if you take into account the upswing in the economic cycle, the figures are actually worse than a year ago. Growth estimates are not going to do very much for this because what the Minister did not say is that the OBR is concerned that the recovery may not last, as it is largely cyclical.

Where are we looking for the recovery? The Minister mentioned industry. There are modest incentives to invest more, export more, train more and do more research. This will require better management by business—the people referred to by the noble Viscount, Lord Eccles. I put it to the Minister that it also requires better management by government.

Every year, the Government pay some £90 billion to private contractors and the voluntary sector to provide public services, and that is going to rise. Unless this is well run, we will end up with a weak and sickly state and poor civic life. Most of this money goes to a small group of companies that seem to be good at winning contracts but mediocre at delivering services. In some cases, they are dishonest. These services are central to our civilised society, as is banking. Like the banks, these companies are becoming too big to fail. I put it to the Minister that part of a Budget should be to examine the Government’s competence to manage these enormous sums, and not just hide behind commercial confidentiality, as happens at present. It is no good having a policy if you cannot manage it. The few figures released in the Budget show that failure of the Government’s contractors to deliver on things such as disability benefits, the jobs programme and other schemes is stacking up huge costs for the state.

The Minister declared that raising productivity is most important, and I agree. Does he agree that subsidising low pay through the tax system also encourages low productivity? Instead of subsidising low pay, surely it makes more sense for the Government to encourage people to run their businesses better. With his background, the Minister must know that subsidising low-paid, low-skill jobs through the tax system encourages a low-productivity economy. Housing benefit paid to people in work is also rising sharply. I put it to the Minister that this is another way of subsidising a low-pay, low-productivity economy. I agree with my noble friend Lord Myners that low pay is no way to encourage economic growth.

On 20 February, the Office for National Statistics gave the final productivity estimates for last year. It told us that output per worker fell compared with the previous year. We were told that we are 21 percentage points below the average for the rest of the major G7 industrialised economies. I agree with the Minister that we are not going to pay our way in a globalised economy if we stay like that, and neither is that how we are going to increase our exports to deal with our balance of payments. It is this that leads to the inequality described so graphically by the right reverend Prelate the Bishop of Chester. Unless we address this inequality, the economic recovery for which we are all working cannot be healthy and will not be balanced, as the Minister promised and as the right reverend Prelate the Bishop of Sheffield called for.

The TUC’s fair pay campaign demonstrates that many jobs being created are low pay and low productivity. Many exclude security, training and good prospects. Some employers insist on dehumanised terms and working conditions. Successful leadership means that people have to think that you believe in what they believe in, otherwise you get the social problems referred to by a number of noble Lords. No, it would not be difficult for a Labour Government to manage this better because the current level is so low.

I welcome the Budget’s encouragement for training, apprenticeships and qualifications to raise productivity, but the economy is changing, too. We are moving into the kind of economy that does not pay you just for your qualifications and knowledge but for what you innovate, as my noble friend Lord Kestenbaum explained. That kind of knowledge economy requires a different kind of investment that is less tangible. I put it to the Minister that it is strong investment in these less tangible assets that explains the success of many of our younger, newer rising businesses. Although you cannot touch these investments now, they are made in the hope of benefit in the future—not only in training but in designing a new service, in building a database or in producing something that is copyrighted. They involve branding and marketing. In this changing world, this kind of investment is just as important as the more tangible investment in machinery, buildings and transport.

I mentioned this in last year’s Budget debate, and someone must have listened because, on page 73 of its outlook, the OBR says that we do rather well at this kind of investment—better than most of our competitors—and we have kept it up. Good for us. So why do we not recognise this in the Budget’s tax and incentive systems? Surely this is part of our journey away from the low-tech, low-pay and low-productivity economy. It is this kind of economy that demands more and more group enterprise—the kind of enterprise that depends a lot on leadership, collaboration, adaptability, and ability to learn and relearn. It is the absence of these less tangible skills that concerns so many employers today.

There was a time when we were promised an industrial strategy that would produce balanced and sustainable growth. However, as many noble Lords have said, it looks as if we are getting a recovery based on low productivity, a housing boom, consumption involving households dipping into their savings, and increased borrowing. Instead of a recovery that works for us all, it is working for the few. Many have to make do with low wages and dehumanised working conditions. This Budget is going to produce neither the economy nor the society that I would like to see.

EU: UK Membership

Lord Haskel Excerpts

Thursday 24th October 2013 Lords Chamber

[Lord Haskel (Lab)]

My Lords, last week I had the privilege of representing your Lordships’ European Sub-Committee B at the 15th European interplanetary space conference in Brussels. I was delighted to attend, as the space industry is one of the eight growth sectors identified by the Government for special support. Indeed, our contribution to the European Space Agency has recently been increased by 25%. How right we are.

The priority of the European Space Agency is not necessarily to encourage space travel to Mars. It is to encourage growth here on earth. This has been done by helping to create new marketplaces, more particularly in Europe, using the satellites and equipment in space —markets that provide improved services to EU citizens through new communications platforms for the internet, TV, telephone and radio; that help agriculture and fishing with better weather forecasting and better understanding of climate change; and that use observations from space in cities and the countryside for better management of road, rail and air.

You must be asking why I am telling you this. I put it to your Lordships that our membership of the European Space Agency is a microcosm—a miniature—of our membership of the European Union. The obvious economic benefits gained from our membership of the ESA reflect the economic benefits gained from our membership of the European Union. It illustrates the arguments put by the noble Lord, Lord Shipley, whom I congratulate on moving this debate. It also illustrates how wrong are the arguments of the noble Baroness, Lady Noakes, and the noble Lord, Lord Stoddart.

The European Union is not a new institution. Times and circumstances change and so do institutions if they are to remain fit for purpose, creative and beneficial. You do not achieve this change by walking away, or even threatening to walk away. That is how you paint yourself into a corner. Obviously it is now dawning on the Government that that is exactly what they are doing. You change by building on what has gone before. You complete the single market by reviewing the rules, bringing them up to date and making them smarter, not by walking away.

As many noble Lords have told us, including the noble Lord, Lord Wrigglesworth, in his maiden speech, this is not only the view of our large foreign investors in car-making, technology and nuclear industries, it is also the view of 85% of the EEF members, who said that they would vote to remain in the European Union if there were a referendum now. This is because people in business know that it takes months and years of hard work to build up the trust, confidence, connections and knowledge to sell and trade successfully in overseas markets. EEF members do not want to see their years of effort in Europe wasted by the incompetent and uncaring short-termism of some members of this Government. This is why, after listening to his members, the chief executive warned us not to gamble on our future in Europe. “The stakes are enormous”, he said,

“it is naive to think that we can simply pull up the drawbridge and carry on as normal”,

and do the business elsewhere. My noble friend Lord Giddens was also concerned about this.

China has been mentioned as an alternative. The noble Lord, Lord Hannay, asked why Germany has been so successful there. The fact is that their Chancellor has been there some 25 times since the open-door policy was announced in 1978, to emphasise their strengths and commitment. This is not as an alternative to Europe, but in addition to it—and so it should be for us.

It seems to me that, instead of surrendering our capability and strengths in the space industry for the sake of appeasing Eurosceptics, we too must take advantage of our strengths. Our companies, our people and our universities are full of new ideas and technologies for the space industry, as a result of our investment in the European Space Agency. We benefit from our participation and our membership fee. This is a model that works. I put it to the Minister that the same applies to our membership of the single market and the EU.

Economic Prosperity and Employment

Lord Haskel Excerpts

Thursday 18th July 2013 Lords Chamber

Moved by

[Lord Haskel]

That this House takes note of the role of government in generating economic prosperity and employment.

[Baroness Garden of Frognal]

My Lords, the timing for the next debate is very tight indeed. Could I encourage all noble Lords to keep within their time limit, in order to enable the noble Lord, Lord Haskel, to have a few minutes to respond at the end of the debate?

[Lord Haskel]

My Lords, we are all concerned about the future of our economy and we all have a different view as to where the answer lies. However, I think that we all agree on one thing: the relationship between government and business is central to whatever the future may hold. I thank all noble Lords who have come to debate this important issue.

I will start by speaking of my early experience of government and business. Many, many years ago, new, higher standards were introduced for fabric safety, particularly for the flammability of fabrics in aircraft. As a young textile engineer, I had to develop fabrics and processes to meet these standards. I did this with the help of Bolton Tech, now Bolton University. At that time, the big market was the US. I went over there to sell our product but was amazed to find that a similar product was already available. It had been developed by the US military and was offered for sale, not only by large companies, but by smaller ones by virtue of a government assistance scheme.

I am pleased to say that we did rather well because of superior design, which is another lesson. That is how I learnt that, at the same time as preaching tough capitalism, the US Government have been engaged in risky research, on a large scale, in radical new areas from which business has benefited with products like the touch screen, GPS, the internet and nanotechnology: I could go on.

True, there must have been failures that we do not know about. However, over the years, this has illustrated the advantages of business and government consistently working together, not only in research and development but in reducing risk by taking public funding much closer to the market—far closer than EU regulations allow here.

Here in Britain, we have veered between extremes. When I started in business in the 1960s, the state had a role through public ownership and the public interest. It was a sort of command and control. Then we moved into a phase in which markets ruled through liberal capitalism. Private initiative, private enterprise and risk were encouraged. Markets were left largely to self-correct and self-regulate. The year 2008 demonstrated that that system did not really work. Some still see the solution in lower taxes, less red tape and less regulation, but an increasing number of people are calling for an industrial strategy that defines the relationship between the state and business. The problem is that the Government, the CBI, academia, finance and manufacturing all have different ideas as to what that strategy should be, largely because of sectional interests.

I would like to find a way in which government and business can work together, while allowing market forces and private initiative to flourish. Business would be free to experiment with new ways of doing things, with government having an enabling role that supported the public interest, not the factional interest. My noble friend Lord Sainsbury put this together rather well in his recent book, Progressive Capitalism. Unfortunately, he is not able to speak today, but he argues that prosperity is fostered by market-supporting institutions of an enabling state. They should be enabling, not market-directed, and far stronger than the weak institutions of the minimal state. These he calls progressive capitalism. These institutions do not start up and evolve spontaneously but are designed to resolve conflicting interests, and involve a strong measure of social justice. They are institutions with a purpose, not set up as an apology for failure.

Recently I have noticed frequent calls for such institutions. For instance, the Royal Institution of Chartered Surveyors’ Housing Commission recently proposed that such an institution was necessary to address the housing crisis in order to end the,

“short-term and partial policies”,

that created it. During the Second Reading of the Energy Bill, several noble Lords were concerned that its implementation was likely to continue over the lives of two or even three Governments and of many Ministers, and that, if nothing else, we needed an institution to provide continuity. I concede that this may take power away from Ministers, but it would be an enabling and more effective implementation of policy that is seen to be in the public interest and free from unpredictability.

Science and technology is one area in which we are already doing this. When the Labour Government came to power in 1997, one of their first priorities was to increase the funding for science and to prepare a 15-year road map for large research facilities. The then Government supported collaborative and applied research, which was first administered by the DTI but then handed over to the Technology Strategy Board, an executive, non-departmental public body. That gave it the independence necessary for it to be staffed by people with industrial and technological backgrounds and experience. It is to the credit of the coalition Government that they have continued this work. They have made a number of key investments, including a national network of technology and innovation centres, as a means of improving our innovation performance as an essential component for growth.

An evaluation in 2012 of earlier R&D projects showed an average return of £6.71 in additional gross value added per pound spent. So we know that this pays. Perhaps this explains why Germany spends nearly 10 times as much on its equivalent institutions However, there are still doubters. An announcement last week that the Government will match £500 million of industry investment to develop cleaner car engines was greeted by the Institute of Economic Affairs with the comment that if the Government have £500 million to spare, they should cut taxes.

Transferring this work quickly into products and processes is a key to growth. Knowledge transfer is a means of achieving this. I declare an interest as the honorary president of perhaps the largest knowledge transfer network, the Materials Knowledge Transfer Network, funded by the TSB, the Research Councils and some 4,500 business members. I am trying to practise what I preach.

Although we have made progress in science and technology, we have failed in other areas. If we are to raise our game, technology is not enough. We must also raise our game in skills, finance and infrastructure. The latest McKinsey paper on innovation says that research and development is only 25% of what it calls our knowledge capital.

We have rehearsed many times the failures of the financial system. John Kay told us how savers have been let down by the system. The banking commission told us of serious flaws. We have rehearsed hostile takeovers, poor governance, short-termism and the isolation of shareholders many times. To achieve prosperity, we must ask again: what is the purpose of the financial markets and are they performing efficiently? The task is to create enabling institutions with a compelling vision that will change the culture and the narrative, so that the financial sector, rather than serving itself, serves society and the rest of business. I join many in thinking that the proposed banking Bill fails in this by not going far enough.

Some tell us that the economy is improving. Others ask if it is improving in the right direction, and point to the dangerous use of housing and consumption, instead of productivity, to rebuild the economy. A strong enabling institution, rather than a data institution, would recognise and help sort out these priorities.

Another area where we have failed is in the supply of technicians. This failure is there for all to see. There are currently many able young people who are unskilled and unemployed, in a nation that is desperately short of technicians. We are getting it right on technology, which is shaping our markets, economy and society. We are not getting it right on skills. We have millions of people working in jobs that do not earn them a living. Temporary work, zero-hour contracts and low wages characterise a trend that has been made worse by the recession.

Some seek inspiration from Germany. It is the strong trade associations in Germany that set the standards. Taking on apprenticeships is a condition of being in the trade association—and if you are not in the trade association, you are not in business. There are penalties for poaching and for apprentices who leave their courses early. The lesson is not just to copy Germany but to recognise that Germany’s success is associated with strong and long-lasting institutions that ensure that the world of education and training is synchronised with the world of work.

If we are to create strong institutions, Whitehall, too, has to raise its game. Yes, Whitehall does review its capabilities and is well aware of its problems. Its style of employment career planning, which rotates people, ignores building up the very expertise that Whitehall and Ministers need to create our lasting institutions. Even in the time of Harold Wilson, the Fulton Commission drew attention to these matters. So did my noble friend Lord Adonis in his recent review of BIS, as did the Institute for Government in its report today on the way that government outsources public services to the private sector. This was again referred to in the Private Notice Question.

So what about the private sector? There was a time when we had complete faith in private enterprise. Now we are not so sure. G4S, Serco and other companies seem to treat us as a business opportunity—an opportunity where vulnerable people who have no voice can be exploited, and where the private provision of public services is seen to be sometimes incompetent, often unaccountable and sometimes uncaring.

We tried to create institutions to support localism. They did not last long. We abolished the RDAs on an ideological whim, instead of developing them and building on what was there. The LEPs set up to replace them are embryonic and need time. The noble Lord, Lord Heseltine, tried to come to their rescue with a major amount of money. The Government watered this down to £2 billion, and then it transpired that this money was taken from local housebuilding support and the local road-building fund—hitting the political target, maybe, but missing the institutional point.

Many noble Lords will have heard businesspeople say that a major block on investment and business confidence is a lack of continuity, and uncertainty in government policy. A series of initiatives, however clever and generous, dealing with market failure or other problems is seen as short-termist and intermittent. Addressing this has to be shared between government and business. Properly conceived institutions will do this, as has been demonstrated by the TSB. We have to repeat this in other sectors with institutions which are long-term, continuous, in which we can take pride and which will look after the public interest in the battle between the parties. Whatever the future may hold, a crucial part of our competitive advantage must lie in the quality and closeness of the relationship between government and business. We have work to do. I beg to move.

--- Later in debate ---

[Lord Haskel]

My Lords, unfortunately our time is up and I cannot respond to each individual speech. I hope that the Minister on the Woolsack will give me a moment to say that this has been an informed, interesting and lively debate. I thank the Front Benches for their responses, which have been most fulsome. I hope that the rest of the Government are listening with an open mind because an awful lot has been said today that is based on knowledge, experience and an enormous amount of good will, which we can all value.

Motion agreed.

Taxation: Evasion and Avoidance

Lord Haskel Excerpts

Thursday 6th June 2013 Lords Chamber

[Lord Haskel]

My Lords, I, too, congratulate my noble friend on this very topical Motion. Tax avoidance has really captured the public’s attention. I am very sorry to see that there are no speakers on the Conservative Benches, because all of us have to shine a light on these practices. It is only in that way that we will be able to test their credibility and acceptability. I hope that this debate will be part of shining the light on these practices.

I will speak about corporate tax avoidance. We need to shine a light on this because, in this age of austerity, not only do we need the money—as other noble Lords said—but the products, services, jobs, innovations and all the good things in our lives and in the economy that these companies bring. If we get it wrong, all of us will be the losers.

What is the key test? It seems to me that it is credibility. Businesses, especially publicly owned ones, must be credible. They go to great lengths and great expense to appear so. Yes, it is credible to locate production where skills are available. Yes, it is credible to locate services where costs are lower. But is it credible to sell, package and ship a book—not an e-book—from a UK warehouse, and for it to arrive at my house with a UK stamp on the parcel, and then to say that really the transaction took place in Luxembourg—where, incidentally, many of our roaming telephone charges are located? Is it credible that the intellectual property rights for a product should lie in the Cayman Islands, when the science, engineering, design and technology, and all the brain work were done in Europe, Asia and the USA? The Cayman Islands played no part in generating the value, and nor does it provide the patent protection that is so highly valued in these circumstances. Is the transfer pricing credible that goes on with coffee, metal ore and minerals? As the American Senate committee asked, is it credible for a company to have no domicile at all? In the FT, Robert Shrimsley put it rather well when he said that these companies were domiciled somewhere on a cloud. Equally, it is not credible that HMRC should accept these activities as lawful. Is this really what Parliament intended? Is this really the law? I do not think that it is.

The executives of these companies tell us that they pay all the taxes that are legally required. Amazingly, Ministers and HMRC seem to accept this. But, surely, what is legally required is that these companies pay corporation tax on the profits earned in this country, less any allowances that the Government think fit and less any incentives, such as the rather successful patent box for R&D. Routing profits through a low-tax jurisdiction is not a legal requirement. As my noble friend Lord Browne reminded us, it is a matter of choice—a choice made by company executives. John Kay made this very point in his column yesterday.

Some executives say they act in this way because of their fiduciary responsibility to shareholders. Yes, they have a legal fiduciary responsibility but it does not include avoiding tax, particularly avoiding tax by non-credible means which brings the company into disrepute. Again, this is a matter of choice—a choice by the directors. When directors claim that they are paying all the taxes they are legally required to pay, I hope that the Minister will respond by saying that this is just not credible. It is not credible because they pay the tax they choose to pay. I hope that such a statement will encourage HMRC to be more credible as well.

In reality, we know that most large corporations make this choice. ActionAid reported that 98 of the FTSE 100 companies use tax havens. Indeed, the Finance Bill 2012 relaxed the controlled foreign companies rules to facilitate the use of tax havens, presumably because regulation was too strong for this Government. Do we really want to go down this path? We learnt that lesson from the banks. Weak regulation produced weak banks and contempt for bankers. We do not want contempt for our major businesses. We are all losers if that happens.

My noble friend asks what are the social and economic consequences of all this. Many noble Lords have spoken of the less developed countries and aid. On 11 December last year, your Lordships debated the impact of this activity on developing countries. In moving the Motion, the right reverend Prelate the Bishop of Derby explained how the use of tax havens enabled multinational corporations to shift profits from developing countries into tax havens. We have heard about the detrimental effect on the revenues of these countries. Indeed, my noble friend Lord Browne gave us some extraordinary figures regarding Zambia. These same countries are often in receipt of development aid from us, aid which makes up for the shortfall in tax revenue. So that is a social and an economic consequence for us, the taxpayers of this country.

This gaming of the system is available only to well resourced, well advised, powerful companies, as my noble friend reminded us. The noble Baroness, Lady Kramer, told us that this activity helps big firms squeeze out their smaller rivals and she gave as an example the book trade. We hear plenty of fine words from the Government about open markets, fair competition and encouraging SMEs, so here is another economic consequence. What are the Government going to do about it? This is particularly important for our economy now that digital technology has opened up so many new possibilities, markets and opportunities for business and it is the ICT firms that are at the forefront of these new opportunities. How ironic that they should be at risk of losing credibility through their tax avoidance activities. That is another reason why we should not allow this to happen.

What is the solution? One answer is, of course, international co-operation and, yes, the G8 meeting next month provides an opportunity. The G8 may not have the power to impose its will, but it certainly has the authority to persuade. This is a chance not to be missed and I welcome the Government’s efforts in this regard. Meanwhile, we can do other things on our own. The noble Baroness, Lady Kramer, spoke of the general anti-avoidance rule—GAAR, as she put it. Will this enable HMRC to be more assertive and aggressive in challenging these arrangements, which are just not credible? I found what the noble Baroness said rather disappointing because I expected it to be much more powerful. I join other noble Lords in asking whether there is the expertise, staff and will within HMRC to fight the tax avoidance industry and bring more prosecutions. Naming and shaming is helpful, but it is not enough. For instance, will the Government deny public sector contracts to any company which is named and shamed? A solution which I find rather attractive is being investigated by the Oxford University Centre for Business Taxation. This focuses on the residence of the customer rather than on the residence of the supplier or where the click takes place for online business. This kind of sales tax would at least ensure that companies selling here would also make a contribution towards the infrastructure, services and facilities which enable that business to be carried out.

It is also partly the complexity of our tax system which enables companies to game it. There is an Office of Tax Simplification. It obviously needs a much greater sense of urgency injected into its work and probably needs to be given a lot more resources. Are the Government up for this? The current level of public anger over this matter should offer every encouragement for the Government to act. Ministers tell us that they are committed to transparency but they should act on this and require much more transparency showing beneficial ownership in the accounts filed in Companies House. The Government are absolutely right to make more transparent the activities of the UK dependencies which act as tax havens. Showing the beneficial ownership of companies and limited liability partnerships there will expose not only tax avoidance but money laundering. I wish the Prime Minister every success in his forthcoming conference with representatives of the dependencies prior to the G8 meeting and I hope that the outcome will be an automatic information exchange system. The EU has transparency rules for banks and important resources companies. This is now being extended to all large companies, both public and private, and a law requiring companies to break down tax, profits, revenues and staff numbers by country should be passed by the European Parliament within months. I hope that the Government will support this.

“The times they are a-changin’” and I hope that this debate will be instrumental in catching the spirit of these changing times—a more challenging spirit, which means that nowadays business plans have to stand up to scrutiny socially, ethically, morally and environmentally as well as commercially and financially. I think this is what the current Lord Mayor of the City of London meant when he spoke about his year in office being directed towards a City,

“reaching towards a newer, healthier capitalism”.

The new Archbishop of Canterbury expressed similar views. My noble friend spoke of a moral imperative. They are expressing the values that many of us share. Let us therefore encourage our business leaders to join in and make the appropriate choices.

Budget Statement

Lord Haskel Excerpts

Thursday 21st March 2013 Lords Chamber

[Lord Haskel]

My Lords, many noble Lords seem to agree that we are in a difficult economic situation. Some noble Lords have explained that this is because the Government’s plans to stimulate, rebalance and grow the economy are clearly not working. Yet we are told that there is no alternative and that one day the policy will work—but at what cost? The highly respected Trussell Trust expects the number of people in the north-west using food banks to rise to more than 230,000. That is the cost. Is this the kind of country we want to live in?

The Minister spoke of economic realism. Blaming others and factors outside our control is not economic realism. Adapting to and embracing, not blaming, the changes is realism. Our economic problems are many and complex and each requires realistic attention.

The noble Lords, Lord Flight and Lord Bilimoria, spoke of exports. The Government have tried to help them through devaluation. However, that does not really work any more. A lot of our exports are made up partly of imports and that does little for productivity. According to the Bank of England’s analysis, the major economies in the eurozone have seen their exports grow faster since 2009 than has Britain. Why? It is partly because of the drop in exports of financial services but also because those economies have not been able to devalue because they are tied to the euro. Their only alternative is to produce more goods and services that others want to buy. Here, devaluation allows some firms to stay in business and become “zombies”. Is this why employment is increasing but productivity is plunging?

It could be that some firms are retaining skilled labour in the hope of better times to come. Meanwhile, those people are not as productive as they might be. Also, firms may be investing in things other than plant and buildings—investments that are not being measured. They are so-called intangibles such as investing in business processes and systems, writing new and better software, enhancing their brand and investing in new concepts such as big data. Has the Minister seen the research that shows that this kind of investment is growing but not counted?

The Government also have to be realistic about the fact that the financial sector is changing, not only because of the loss of trust through mis-selling, excessive pay and market manipulation but because much of its business has become trading value. Trading in value is a zero-sum game—some get richer and some get poorer—whereas trading in goods and services that people want and need benefits everyone. Trading value as our major economic activity cannot be the right course, and people have now realised this. As my noble friend Lord Eatwell put it, that is why the Government have to put far more emphasis on trading in goods and services that people want and need. That is where our efforts should be going in this Budget.

The Minister emphasised the cut in corporation tax. Of course that is welcome, but the headline rate does not change things much. It is all the other facets of tax that determine what a business really pays. The cut in employers’ national insurance, when it comes, will affect far more businesses, as will next month’s rise in business rates.

Yes, this Government talk about making efforts to adapt and embrace change in their support of our industrial sector, the supply side. The Secretary of State for Business, Innovation and Skills has fought to maintain the size and excellence of our science base. The Technology Strategy Board is being supported and strengthened. That is fine but, as my noble friend Lord Bhattacharyya asked, is it enough? My noble friend Lord Kestenbaum also made that point.

I recently visited Bavaria and learnt that what we spend as a nation to support industry is matched by the single state of Bavaria in Germany, and it shows. What we as a country export to Germany is matched by the exports of the state of Bavaria alone. The reason is that for 50 years Bavaria locally has consistently maintained and supported the fundamental planks of a modern industrial strategy, the strategy that my noble friend Lord Kestenbaum described, involving skills, technology, innovation, procurement, infrastructure, finance and supply chains—a policy that can be roughly described as the Heseltine view. That view was expressed in his report and debated in your Lordships’ House on 6 December last year. In that debate, nearly all speakers welcomed his recommendations, and the noble Lord, Lord Shipley, did so today. They welcomed the active role of the state in promoting economic growth while devolving power to other centres away from London. In his Budget, the Chancellor, too, accepted some of those recommendations. Does this indicate a change in direction?

My noble friend Lord Bhattacharyya told us that rebalancing and growing our economy is a long-term project. It is a project done successfully by building, not destroying. There were many good things to build on in the fields of innovation, science, technology, local funding, skills and apprenticeships. Yet for short-term political gain, Ministers destroyed or talked down much of this. Indeed, they continue to do so.

If the Government want to build confidence—confidence that we can grow our way out of these economic difficulties—they must signal their commitment to continuity by indicating that all these elements, whoever created them, will be tackled and built on in the interests of our long-term economic growth and not talked down in the interest of short-term political point-scoring.

Banks: Funding for Lending Scheme

Lord Haskel Excerpts

Tuesday 4th December 2012 Lords Chamber

[Lord Newby]

My Lords, I think that the noble Lord is missing the fact that, over the period, the banks that are signed up to this scheme have made an additional £500,000 of loans to businesses and individuals. This is exactly what the scheme was intended to do. All the evidence is that the participating banks intend to use it to a greater extent in the future than they have up to now—it is very early days—and therefore I am sure that the question that the noble Lord has in his mind will not arise.

[Lord Haskel]

Did the Minister notice in today’s paper that some of the banks have not yet prepared their offer under this scheme? What are the Government doing to chivvy them up?

[Lord Newby]

The important thing is that the big banks have got a very clear offer. RBS, for example, has launched a £2.5 billion fund for SMEs specifically under this scheme, with the rate of interest charged being 1% less than would otherwise be the case. Lloyds TSB has also reduced its rate by 1% and noble Lords will no doubt have seen the double-page ads that it has taken out in the papers to persuade small businesses to take out a loan. Barclays has introduced a 2% “Cashback for Business”. So the big banks are already absolutely on the case; the smaller banks, which have signed up over a period, are, indeed, developing their offers.

Queen’s Speech

Lord Haskel Excerpts

Wednesday 16th May 2012 Lords Chamber

[Lord Haskel]

Like the noble Baroness, Lady O’Cathain, I welcomed the words in the gracious Speech that the Government would concentrate on economic growth and restore economic stability—amen to that. Those are fine words but how are we going to put them into action?

I agree with the noble Lord, Lord Low: surely the place to start is for the Government to realise that their policies are not working. When quantitative easing was introduced, its purpose was to increase the quantity of money to encourage more spending. We now know that the money has got stuck in the banks. It is not working, as the noble Lord, Lord Higgins, just explained. Austerity is not working. Many feel that the double-dip recession means that the medicine is killing the patient, as many noble Lords have explained.

Job cuts in the public sector were meant to be replaced by jobs in the private sector. It is not working, as the noble Baroness, Lady Royall, explained. As a bright sixth-former said to me on a school outreach visit the week before last, “Until the private sector can absorb them, would it not be more sensible to keep people employed in the public sector where they would be doing something useful? After all, working or not, the taxpayer is paying them anyway”. Perhaps the Minister should try a few school visits.

All this gives the Government an air of incompetence and it does not do any of us any good. It is not only sixth-formers who feel this way. We have had similar views from our major business organisations and, on Monday, the Prime Minister’s own Business Advisory Group. All hoped that the gracious Speech would show an understanding that changes need to be made.

What was in the business section of the gracious Speech? There were a number of piecemeal Bills whose common theme seems to be fairness. The gracious Speech speaks about supermarkets that deal fairly, electricity prices that are fair, state pensions that are fair and markets that are fair. Are the Government speaking in some sort of code here? Are they trying to make up for the lack of fairness to women, the disabled, minorities and the elderly in the legislation on health, legal aid and tax that they rushed through? The recent report from the Equality and Human Rights Commission makes this very point.

What would I have liked to have seen in the Queen’s Speech? How can the Government show the leadership that the noble Lord, Lord Bilimoria, called for? First, they should show that the lesson has been learned: that they are prepared to show flexibility where the policy is not working. There should be more balance between growth and austerity, with the pace of austerity being slowed. I would have liked to have seen a modification of our attitude towards the financial markets. The National Institute of Economic and Social Research said last month:

“It remains our view that fiscal policy could be used to raise aggregate demand in the economy with little to no loss of fiscal credibility”.

With the cost of government borrowing the cheapest in living memory, and many unemployed people, plenty of spare capacity, a chronic lack of housing and a creaking infrastructure, surely there should have been something about construction, as my noble friend Lord Myners suggested.

What else? I repeat the appeal I made in the Budget debate for the Government to lead a crusade on technology, particularly digitalisation, which would be inspirational to the young people about whom my noble friend Lord Young was concerned. Yes, BT and others are improving broadband services but it is the use of technology to improve productivity, introduce new services, start new businesses and create new ways of manufacturing such as additive manufacturing that will help to produce growth.

There are other ways that the Government can show leadership; for example, bringing businesses back home. Offshoring has been a common strategy for the past 30 years, but that seems to have run its course. Cost, variety, speed, proximity, quality control and stock reduction are all now moving in favour of onshoring. President Obama makes a point of visiting companies that have brought employment back to America. Perhaps Ministers could show support for job creation and take a leaf out of his book; the BBC has. Did the Minister see the programme about the young man who is enlarging his factory in Britain to bring the manufacture of cushions back from China? If it makes sense for cushions, for how many other things would it make sense?

The Minister will say that there are all kinds of government schemes to encourage these activities, and he is right. If you go to the website, click on “manufacturing” and inquire what assistance there is for starting and running all aspects of a manufacturing business—I clicked on Barnet because it asked for a location—the number of schemes that comes up is 137. I am sure that some work and some do not; some are accessible and some are not. My point is that these are mainly gestures. What we need are initiatives with which people can identify, by which they can be inspired, and that mean something to them in their lives.

The Minister will be happy to know that I am not calling for more expenditure, but I am calling for leadership. The Government should recognise that their policies are not working and demonstrate their determination to lead us out of this recession with an industrial policy committed to technical progress and jobs, a policy that we can all identify with, and action that creates the confidence about which the right reverend Prelate the Bishop of Durham spoke in his excellent maiden speech. This is the sort of thing that the Minister’s colleague Vince Cable calls a “compelling vision”. This is what I would like to have seen in the gracious Speech.

Economy: Budget Statement

Lord Haskel Excerpts

Thursday 22nd March 2012 Lords Chamber

[Lord Haskel]

My Lords, last month I was in the United States, another country with a very large deficit. But I could not help noticing that its policy for tackling its deficit is much closer to Labour’s policies than to the Government’s measures. I also could not help noticing that its policy seems to be working, so I hope that the Prime Minister took note of that during his visit, because a lesson is there for all of us to learn.

The Minister spoke of the Government’s intention to support business and to get more balance into the economy. He pointed to some of the successes. He mentioned Nissan and Jaguar cars, and in pharmaceuticals a decision that was made within 24 hours of the Budget. They work fast at GSK, or was it just a PR stunt? But even so, the economy is forecast hardly to move. My noble friend Lord Myners reminded us that we are still producing less than we did four years ago and that the job situation is getting worse. Indeed, unless we get the economy growing faster, it looks as if our children and grandchildren are going to have a lower standard of living than ours, in spite of the granny tax. What is the Government’s Budget going to do about it? Apparently, very little.

We all know that the way to cut the deficit is through growth, and growth needs investment. Yet as a result of what has been proposed in this Budget, as my noble friends Lord Eatwell, Lord Wood and Lord Myners told us, the OBR has reduced its forecast for investment this year and next year, partly because we all know that reducing corporation tax does little for investment but encourages retention.

There have been all kinds of policies to provide business with finance. Quite rightly, my noble friend Lord Sugar and the noble Lord, Lord Bilimoria, expressed their doubts about their validity. They are doubtful because the schemes do not seem to be working. Project Merlin had hardly any impact. Why will this one work? Funds intended for business development are being used by the banks to strengthen their balance sheets. They have borrowed €8 billion from the European Central Bank at 1 per cent interest for three years, yet business is still being starved of funds. It is no wonder that a frustrated Vince Cable wrote to the Prime Minister drawing his attention to the piecemeal policies to help business. I agree with Mr Cable. Let us unite behind an objective which has relevance to every part of the economy and every part of government, and can create jobs and encourage innovation. It should be familiar to us all and not necessarily just in terms of money.

Without this kind of objective, the outlook will feel bleak. We need something which gives people hope and business confidence—the confidence that the Institute of Directors is calling for. The noble Baroness, Lady Randerson, accused me and others on this side of the House of living in a parallel universe. Perhaps we are, but we are living in the real universe. So let us try a different approach in the real world and ask: what is it that has brought growth, progress and jobs to our economy? What is it that has helped us raise productivity and use intelligent machines to make the Jaguar and Nissan cars that we have heard about? What is it that enables us to invest in modern systems of additive and high-speed manufacturing? What is it that has enabled us to create lots of new small businesses with products and services which are exported all over the world? What is it that has enabled us to use the discoveries of genomic science to create all kinds of new health products? What is it that has enabled us to build the creative economy and the knowledge economy? The answer, in a word, is digitalisation.

Where have many of the well paying jobs come from in the past 10 years? It is the digital economy. Where have many of the improvements in productivity, in processes and services that we have seen in the past ten years come from? They have come through innovation using clever software, microelectronics and clever design. In manufacturing, in services, in communications, in health and in entertainment, digitalisation in its broadest sense has been the key to growth and progress. Before the Minister says to me, “Well, you're 10 years too late. Digitalisation is too mature. We need the next thing”, let me say that he is wrong and that it is only just starting. We are only just beginning to feel its impact and to learn what it can do. There is a long way to go.

So here is a strategy for the noble Lord, Lord Heseltine, who is searching for competitiveness, as he explained in his excellent maiden speech. Digitalisation can be the theme that unites and joins us together in our plan for growth and competitiveness. It is everywhere. Let programming be taught as a language in every school. Digitalisation is familiar to every one of the young unemployed people who concern the noble Earl, Lord Listowel. Let us use it to encourage them to get involved and to seek the training and skills which they and the economy need. The Technology Strategy Board and the technology centres of excellence are all aware of what digitalisation can do for industry. Let this be a theme for their valuable work. The same goes for healthcare and medicine. Instead of selecting industries which the Government think have a future, let us support the introduction of digitalisation in every industry. We know that it will make them more competitive. It is essential at this time when the rising cost of energy and materials affects every business. We have become very good at the innovative and clever stuff of using microprocessors, of writing clever software and of miniaturisation, and selling it. So let us use it to grow our economy faster. As other noble Lords indicated, there are a couple of pointers towards this in the Budget, such as a tax break for digital entertainment and less tax if you manufacture your patented inventions here. But that hardly scratches the surface. The Minister spoke about providing better broadband facilities in some parts of the country. The noble Lord, Lord Fink, welcomed that. But, as your Lordships’ Communications Committee was told only this week, the plans are completely inadequate and leave us far behind our competitors.

Digitalisation can have an impact even on those industries that we have all but written off. Is the Minister aware that the first new yarn dyeing plant for 20 years was opened in Yorkshire recently? It is competitive thanks to digitalisation.

The Prime Minister must be in favour of this because recently he signed a letter together with 11 other EU Prime Ministers calling for the creation of a truly digital single market by 2015. That is not central planning: it is a way of encouraging everybody to pull in the same direction—a co-ordinated, cohesive strategy accountable to Parliament, to industry and the public, designed to create growth.

In the Budget, I would have liked to have seen digitalisation become a crusade which unites the piecemeal efforts that Mr Cable is so unhappy about. It will help us to create jobs, find investment and find the growth that we all seek. It could be the start of something that is not only made in Britain but imagined in Britain.

--- Later in debate ---

[Lord Sassoon]

My Lords, the simple fact is that if you talk to businesses around the world about why they are not moving business into this country and are not moving high-earning individuals back to this country, you will find that it is simply because of the disincentive effect of the 50p tax rate. It is entirely consistent that there is a disincentive effect on business decisions, even though the net take is nothing. I listened to what the real businesspeople in this House—the noble Lord, Lord Bilimoria, and my noble friend Lord Fink—said about the damaging effect of high rates of tax. Their voices present the true position.

[Lord Haskel]

We have some real businesspeople on this side of the House as well.

[Lord Sassoon]

Indeed, there are distinguished businesspeople, including the noble Lord, Lord Haskel, on the other Benches, but I do not think that the noble Lord, Lord Haskel, made this particular point. He made other points which, if I do not have more interruptions, I might be able to turn to. There is also the noble Lord, Lord Sugar. I shall refer to as many speakers as I can, if noble Lords want to hear me rather than make additional points themselves.

My noble friends Lady Randerson and Lady Kramer importantly referred to the significance of our new anti-avoidance regime, particularly in relation to homes with a value of more than £2 million. Some issues have been raised on the measures that will claw back five times the amount of the cost of a 5p drop in the top rate of tax. My noble friend Lord Fink, and the noble Lord, Lord Davies of Stamford, in particular, raised the question of the capping of tax reliefs and the effect on philanthropists and charities. The Government will explore with philanthropists ways to ensure that the new limit will not significantly impact on charities that depend on large donations. It is an important restriction, but we will make sure that charities are protected.

On other areas of tax and tax avoidance, the noble Lord, Lord Davies of Stamford, asked about the general anti-avoidance rule. Under the new structure, a pre-clearance system will no longer be warranted. GAAR’s focus will be on artificial and abusive tax avoidance schemes. We will have a completely different construct from the present one, and it is not proposed that there should be a clearance system.

A certain amount was said in different ways on the question of distributional impact by the noble Lords, Lord Liddle and Lord Myners, the noble Viscount, Lord Hanworth, and others. Again, since the Government came to power, we have in the Red Book done the transparent thing and made it absolutely clear what the distributional effect is of Budget after Budget—something that the previous Government never did. I set out the figures in my opening speech. In cash terms, losses for the households in the top 10 per cent will be almost five times the average, and more than eight times those of the bottom 10 per cent by income. We have real and deep concern for the distributional effects of our tax and spending policies.

My noble friend Lord Northbrook, and the noble Lord, Lord McFall of Alcluith, asked about the lowering of the starting point of the 40p band. There is nothing untoward about this; it is simply a partial offset of the effect of the increase in the personal allowance, so that higher-rate taxpayers will receive only a partial benefit rather than the full one, which is targeted principally and rightly at lower earners.

Finance (No. 3) Bill

Lord Haskel Excerpts

Monday 18th July 2011 Lords Chamber

[Lord Haskel]

My Lords, I did not serve on your Lordships’ Economic Affairs Committee, but I congratulate the noble Lord, Lord MacGregor, and his committee on the report. It was very sensible.

By tradition, the Second Reading debate on a Finance Bill in your Lordships’ House is an occasion to consider the country's economic situation. As my noble friend Lord Myners explained, it is not going as well as we would like—that is an understatement. The accusation by the shadow Chancellor that the Government have recklessly been cutting too far and too fast is beginning to stick. The noble Lord, Lord Owen, put it rather well in last week’s House Magazine. He said:

“There is a scratching air of general incompetence beginning to infiltrate this coalition Government”.

Why? I think it is partly because this Government have fallen into the age-old trap which has pervaded economic life in this country over many years. It is the trap of separating the financial sector from the rest of the economy. Many business people complain of this. It is the kind of thing that JK Galbraith was referring to when he spoke of the belief that monetary policy is the highly professional preserve of the financial community and has to be protected from interference by the rest of us.

What has been the effect of the Government’s handling of the debt crisis? What it seems to be doing is transferring the debt from the Government to the citizen. The Joseph Rowntree Foundation recently reported that if you have suffered the average cut in pay and require childcare, your standard of living will have gone down by 10 per cent. As the noble Lord, Lord Myners, said, we are told by the OBR that it expects families to go deeper into debt between now and 2015. The result of the Government’s policy will be Government debt perhaps down, family debt certainly up—a typical financial solution which ignores the rest of society and incidentally discourages investment, as many other noble Lords have pointed out.

The Government speak of balance in the economy, but balance in their sense is a compromise. You achieve real balance by working on the whole economy. The noble Lord, Lords Higgins, spoke of this, and he is right, because the line between financial and other services and manufacturing has now become so blurred that it is frequently difficult to tell on which side of the balance an activity lies and what impact it has on jobs. The Government’s growth paper ignores this, and the “march of the makers” also ignores this. Selling IT services and software that challenge established businesses is an example of this. Earlier this year, President Sarkozy commissioned from McKinsey a report about this for the G8 summit in Paris. That report calculated that for each of the 500,000 jobs lost in France due to internet innovation over the past 15 years, 2.4 new jobs had been created. These services create manufacturing growth.

Another area where the real world and the financial world seem to be out of kilter is in the matter of enterprise zones. The Government want to encourage them through tax incentives, rate relief and other financial tricks. In the real world, business believes in clusters. The old ways of the supply chain, consisting of standard services or standard components, is giving way to much more complex systems. Advance manufacturing needs particular products and services, and this is why they all need to be together. They need each other’s skills and services to stimulate and find new products. This is where the incentives are needed, but the Government have dismantled the mechanism to do this.

Another area where the balance has got out of kilter is in the taxing of overseas profits. It may have satisfied the financial sector, but some see the low tax on overseas profits as an incentive to export jobs overseas and bring back the profits at a low rate of tax.

The Government talk about being green. The noble Lord, Lord Ryder, does not like green taxes because they encourage carbon leakage. However, the green taxes which the Treasury has imposed are not what the Office for National Statistics calls green. The recent House of Commons report quite rightly says that they should be justified by finding a way of showing that taxing pollution goes towards green expenditure, such as less polluting vehicles or better public transport. This is just another example of financial considerations ignoring the rest of us.

Another area where the Government know that there is potential for growth, and about which they should be making many more encouraging noises, is the single market, particularly in services and the digital single market—and this in spite of what the noble Lord, Lord Newby, said about the euro crisis. The single points of contact are well established. Indeed, they are all in English, and if the Minister and other noble Lords would care to look at them, they would be quite impressed. So why have the Government not been giving their wholehearted enthusiasm and support for British business to grow through greater participation in the single market? Because they are afraid of ridicule in the press and criticism in the City. I hope that the new relationship between politics and the press, which seems to be emerging during these past few days, will extend to something as important as our membership of the European Union and that we will see enthusiastic encouragement for the business opportunities in the single market.

It has always seemed to me that there is a distinctively British way of doing business; that is, providing services and goods based on honesty and integrity. Encouraging the proper kind of balance has an important role to play in this, which is an important part of our economic success. In today’s commercial world, people have to know what you stand for. Winston Churchill famously said that America will always do the right thing but only after having tried everything else. I have a terrible feeling that that is what is happening here.

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.