Economy: Productivity
Debate between Lord Haskel and Lord Popat
Lord Haskel
To ask Her Majesty’s Government what steps they are taking to raise the United Kingdom’s productivity.
Lord Popat (Con)
My Lords, the Government’s long-term economic plan is working, with GDP increasing by 0.8% in the first quarter of 2014. Productivity is also growing, with output per worker increasing by 0.6% in the first quarter of 2014. Alongside deficit reduction and an active monetary policy, we are making longer-term structural changes to support long-term growth. The Government’s industrial strategy policies and four key growth ambitions are also attracting investment and creating jobs.
Lord Haskel (Lab)
I welcome what the Minister says but is it actually working? Thanks to the Government’s policy of the job-rich, low-wage, low-skill, long-hours economy, as a nation we are producing fewer goods and services than we did six years ago. With such a policy, how do the Government intend us to pay our way in a competitive world, reduce our balance of payments deficit and raise living standards, if not through productivity?
Lord Popat
My Lords, the party opposite is quite often desperate to find worrying economic news. I will talk about productivity: our growth is up, exports are up, manufacturing is up, employment is up, SMEs are up and inward investment is up. Productivity is an area that has remained static. From experience, noble Lords will know that this is a long-term project; it takes time to filter through our economic cycle, to see more productivity.
Pfizer and AstraZeneca
Debate between Lord Haskel and Lord Popat
Lord Popat
I agree with the noble Lord; the Government are very neutral on this thing and there is no formal bid at this stage. If the merger or acquisition process continues, we will keep a close eye on the subject to make sure that Pfizer cannot come and invest in this country simply as a tax haven.
Lord Haskel (Lab)
My Lords, the World Health Organisation advises that priority number 1 in public health is to develop new antibiotics, because germs are becoming resistant to old ones. The Government’s major responsibility is public health. In what way will this merger help public health in this country?
Lord Popat
My Lords, as I said earlier, as yet there is no formal bid for this merger. The relevant government department is looking into a number of things, including public health and the supply of medicines to the NHS by AstraZeneca. We will have to wait and see what developments take place over the next few weeks on this merger.
Banks: Small and Medium-sized Enterprises
Debate between Lord Haskel and Lord Popat
Lord Popat
My Lords, the noble Lord makes a very important point. One way to solve the problem we have with SME lending is to bring in more competition. We are spinning out Williams and Glyn’s from the Royal Bank of Scotland and TSB from Lloyds Bank. The regulators have relaxed the regulations to issue new banking licences, and I am pleased to say that we have 21 applications in place. We have launched the British Business Bank. More competition will solve some of the problems, and of course more lending to our businesses will help the economy.
Lord Haskel (Lab)
My Lords, along with equity funding, the hedge funds and equity funds are doing the work of the banks to some extent. Is the Minister satisfied that they are being properly regulated in doing this work?
Lord Popat
My Lords, equity funding is within the government department and is currently being consolidated with the British Business Bank, which will obviously be regulated in its equity funding. So will the FCA.
Small and Medium-sized Enterprises
Debate between Lord Haskel and Lord Popat
Lord Popat
The noble Baroness makes a very important point. SMEs are more likely now to have an alternative source of finance, including asset or leasing and quite often inward discounting. They are not approaching their own banks as much as they used to, but I am pleased to report that banks are now proactively lending money to SMEs.
Lord Haskel (Lab)
Will the Minister respond to my noble friend’s question about real estate? The Bank of England report states:
“The outlook for corporate lending also depends on developments in the commercial real estate (CRE) sector, which makes up around a third of lending to non-financial businesses”.
The point is that the property bubble is taking money away from the SME sector. Will the Minister respond to that?
Lord Popat
My Lords, under our Funding for Lending scheme, £80 billion has been allocated by the Bank of England, of which some £17.6 billion has been taken up by SMEs. I agree that a large proportion of that is in the property sector. We have relaxed some of the conditions for lending money to SMEs, which are now able to finance their debt or their stock. Hence we will be lending more money to SMEs and this figure is gradually going up. Real lending to businesses is now taking place.