Queen’s Speech

Lord Lang of Monkton Excerpts

Wednesday 18th May 2022 Lords Chamber

[Lord Lang of Monkton (Con)]

My Lords, it is a pleasure to follow the noble and gallant Lord, Lord Craig of Radley. I claim no expertise in defence matters, but I have a strong sense of commitment to the maintenance of the defence of the realm. I will focus mainly on the Army, where I believe there is another side to the impressive list of actions mentioned by my noble friend the Minister in opening the debate.

Last year’s integrated defence review was underpinned by the assumption that, in the words of my right honourable friend the Prime Minister:

“We have to recognise that the old concepts of fighting big tank battles on the European landmass … are over”.


We all say things that we later come to regret. Far from Ukraine vindicating the review, as the Government have now been claiming, I venture to suggest the opposite and that recent events in Ukraine show that the basis of the review was fundamentally wrong and needs to be put right.

Thirty years ago, at the supposed end of the Cold War, 4% of our GDP was spent on each of defence and health. Now, over 7% of our GDP is spent on health and 2% on defence; that is not enough. Germany and Poland are doubling their expenditure and many neighbours are increasing theirs. We must raise ours too by as much as is necessary.

However, percentages and cash figures are not the right way to address this. It is not what we spend that matters most but what we need to defend ourselves and our allies. The integrated review feels more like a cost management report driven by cash limits and not defence needs. In the Army that is reflected, for example, in the false distinction it makes between equipment and manpower—between technology and boots on the ground. We need both. Of course, technology matters, as the heroic soldiers of Ukraine have shown with British weaponry, but manpower is essential and more fundamental. Technology can assist but not replace it. Soldiers on the ground are vital to turn defence into attack, take the fight to the enemy, change tactics quickly when required and to seize and hold recovered ground. Manpower matters and, for our warfighting ability, mass matters.

Overnight, the world has changed; we are back in the Cold War. Conventional war is not dead, as so many assumed, and we must react to that and not be driven by an accountant’s ledger. The first and most obvious need is surely to cancel at once the 11% cut in our manpower that so demoralised our allies and cheered our adversaries, leaving us with the smallest Army for two centuries. Instead of the 73,000 figure, we should be aiming upwards towards 100,000, for that is the direction in which a proper assessment of our needs must surely drive us.

I am told that the Army’s warfighting division now contains only two armoured brigades with only four infantry battalions between them, comprising just 29,000 fighting men. I further understand that out of over 200 tanks we have only 112 serviceable ones, of which fewer than 50 are ready for immediate use. These are frightening numbers; the Russians count their tanks in thousands. They have already lost many hundreds in Ukraine. What use would our contribution be in a major NATO engagement or in fulfilling our new promises to Sweden and Finland? Tanks need support from armoured formations of infantry to hold terrain won. A lack of that is what has caused Russia to lose so many.

As the noble Lord, Lord Dannatt, mentioned, the Warrior armoured fighting vehicles which could support tanks have already been scrapped under the review. What a help some of them could have been in Ukraine. There is also said to be a serious shortage of long-range artillery support. So, we have at present a lack of weapons of all kinds, a lack of integration, a lack of co-ordination and backup on the battlefield, a capacity on the ground so small as to be of limited value, and a severe shortage of manpower with which to face what could be the greatest threat to our country and the rest of Europe.

I believe that we need to face up to the new reality and our present vulnerability. We should especially heed the recent statement of the present Chief of the General Staff, General Sir Mark Carleton-Smith, who has now said in the Soldier magazine that Ukraine has

“highlighted the fact that mass and size are important.”

He has also said:

“I’m not comfortable with an Army of just 73,000. It’s too small.”


Coming from him, this is a powerful message to the Government, and I urge them to heed it.

Exports: Government Support

Lord Lang of Monkton Excerpts

Thursday 29th January 2015 Lords Chamber

[Lord Lang of Monkton (Con)]

My Lords, I begin by declaring my business interests as per the Register of Lords’ Interests in case any of them should be thought relevant. I thank my noble friend Lady Wheatcroft and congratulate her not only on securing this very important debate but on opening the debate in such an effective and informative manner.

I believe that exports are a very important component of our economic performance. The environment for them to expand and grow is beneficial because the economy itself overall is performing so well at present, with growth in the last year of 2.7%—the highest in the G7. How different that is from the eurozone, which of course accounts for half our exports and creates certain headwinds for us.

It is notable that volumes of imports and exports tend to move broadly in tandem, with imports apparently exceeding exports by quite a margin. Our deficit in goods is long established and well recognised, but the substantial surplus in our services sector, which accounts for a far higher proportion of GDP, is less well known and is indeed potentially more important in the longer term. There, we face headwinds from the EU not just because of its poorer economic performance but because of the kind of regulations that threaten to impede the success of our financial sector in developing further there.

Overall, the last three months of 2014 produced a good trend, with exports up by £2 billion and the deficit in goods down by £2.5 billion. However, I know that one should not read too much into short-term figures. When we think of exports, we should remember that quite a proportion of our imports consists of components and commodities that subsequently find their way into exports and are re-exported. So, again, the picture is never quite as simple and straightforward as it sometimes appears, and that is one of several factors that impinge on our debate today.

We should not think of exports as a separate world detached from the overall economy; they are part and parcel of our overall economic activities. Exchange rates have an important effect. At present, there is almost a currency war going on in some countries, with attempts to help their own export performance by manipulating their rates down. That is not a sensible policy. Currencies have minds of their own, and estimates of what can and cannot be done can be very sadly mistaken.

During the last few years, the pound has risen against a basket of currencies and is now trading up against the euro, increasing the problems that we have in exporting into flat economies. However, the pound is falling against the dollar. The dollar is an interesting case because overall it has risen by 20% against all currencies since May this year. That creates exporting problems for the US but its productivity record, by contrast, is unrivalled, and the US consumer confidence index is at its highest for seven years. That confidence and that exchange rate create major opportunities for us. The US market is our largest single export market, worth £40 billion a year. The dollar exchange rate also helps the UK in the matter of repatriation of profits, although it is obviously less good for the United States, with those from the US going the other way. It is perhaps not very widely known that United Kingdom companies have huge investments in the United States—even larger, it is sometimes said, than those of US companies over here. That benefits our balance of payments and points to the fact that overseas investment, whether inward or outward, has an important role to play in exporting.

To give one very obvious example, from the inward investment wins by the United Kingdom of recent years, from overseas missions, car manufacturers have come here—Nissan, to name but one. Cars are now among our biggest export commodity: hundreds of thousands of cars leave our shores every year, mainly to Europe, where, despite the economic slow-down, sales continue to hold up. So it makes sense to handle, as UKTI does, inward investment and overseas trade within the same body.

I mentioned productivity in the context of the United States, and that is another factor vital to exporting success. In turn, it relies on business investment. With the revised and highly encouraging recent business investment figures now comes a clear improvement in manufacturing productivity—up more than 5% in the last year. It is not enough after years of being in the doldrums but it is an important start. The Government’s unprecedented development of apprenticeship schemes should also feed into further gains in both productivity and indeed manufacturing employment in due course.

I hope that my noble friend will say a word later, in winding up the debate, about the progress, if any, on international free trade negotiations. There are still too many obstacles, overt and hidden, to unrestricted trade within the EU as well as globally. With Doha seeming to fade into history, one cannot but reflect that almost 20 years ago this country was pushing hard for progress on free trade. To be briefly autobiographical, I attended the World Trade Organization annual get-together in Singapore when the momentum seemed to be really taking off. On returning, my department launched a campaign with a target of global free trade by 2020—“2020 vision”, we imaginatively called it. It seemed almost attainable then, but sadly one has to admit that it looks less attainable now. When I asked the Trade Minister in the incoming Labour Government a year or two later in this House about how the 2020 vision was progressing, it was plain from what he said that he had never heard of it. That is unfortunate because momentum and perseverance are vital if one is to secure new markets and develop them.

I welcome the Government’s continuing commitment to UKTI as a way of encouraging and helping our exporters and traders in overseas markets, boosting trade opportunities—particularly for small and medium-sized businesses, to which my noble friend Lady Wheatcroft referred—and helping to identify particular high-value opportunities globally. The budget increase this year to £70 million is being well focused and that, too, is something that we should welcome—concentrating on high-value opportunities and on the emerging markets. I have always had a paternal feeling towards UKTI because it flows from a joint initiative that my right honourable friend Sir Malcolm Rifkind and I developed—he as Foreign Secretary and I as Trade and Industry Secretary—in about 1995 or 1996, when we published a White Paper on combining the resources of the DTI and the Foreign Office on these matters. It was based on something that I had already initiated in the Scottish Office, combining inward investment and trading activities. Since then, UK exports have doubled, despite the serious decline in our manufacturing base, which is good. However, globally, exports from countries around the world have trebled so there is no room at all for complacency—quite the reverse.

I noted that the Public Accounts Committee in another place a couple of years ago urged UKTI and the Foreign Office to examine the reasons behind that difference in success. It also made a number of other useful recommendations, and perhaps my noble friend will have an opportunity to update us on the response to those. Analysis, focus and follow-through are all important in exporting. So, for exporters, is persistence and indeed courage, particularly for SMEs, because exporting is a risky business. It is a lonely business and they need the kind of help that is now being put in their direction. I sometimes think that our embassies around the world are not taken sufficient advantage of. There are people there who are skilled, committed and only too willing to help people on the ground. I have personal experience of that.

Conditions at home are favourable: low inflation, low interest rates, high employment, expanding apprenticeships, strong business confidence, low business taxes, focused assistance and advice from government. These are the many positive reasons—and there are more—for businesses, large and small, to broaden their ambitions into the global marketplace and for the Government and our embassies to continue to refine and promote assistance to exporters whenever they can.

Trade and Investment

Lord Lang of Monkton Excerpts

Wednesday 9th February 2011 Lords Chamber

[Lord Green of Hurstpierpoint]

I thank my noble friend Lord Razzall for his comments. I absolutely agree with his first point about the practicalities. As I said, this is a marathon, not a sprint. One of the reasons why that is true is that the production of a White Paper is not the culmination of a process but the beginning. The next step is to translate the White Paper into a large number of action steps, assign responsibilities, time lines and all the rest of it, and drive it through. One of the most important aspects of what we have announced today in the White Paper—this may seem a rather bureaucratic point but I absolutely underscore its importance—is the creation of a new interministerial committee. It is, in fact, a sub-committee of the Cabinet Economic Affairs Committee and the Prime Minister has asked me to chair it. The committee will bring the Ministers in different departments involved in this whole project together on a monthly basis to drive these actions forward. It is in that context that we will review how well it is all going and make any adjustments as we go along.

My noble friend raised some particular issues about banks. For reasons that the House will understand, I am slightly nervous about commenting on banks, but I think there will be considerable recognition in the banking community engaged in commercial banking in this country of the force of a good deal of what my noble friend said. For example, he spoke of the need to ensure that in the context of businesses where there are credit committees and so forth—and rightfully so—nevertheless there is a real relationship that we need to keep alive with individual firms, even small ones, so that there can be a real understanding of the needs of the business.

I do not think anyone in this House would want to go back to some of the culture of lending prevalent in the go-go years in the early part of the previous decade, when lending was carried on as if it was going out of style. There is a need to introduce some prudence and credit control into banks’ business if we want to ensure that banks themselves are stable and profitable. But that must be balanced with an appropriate understanding of the real needs of businesses. We need to monitor that. The Merlin agreement that was announced by the Chancellor of the Exchequer in another place this afternoon includes agreements by the banks on this front, and the Government will hold the banks to account on it.

I have had the opportunity in recent weeks of meeting a number of UKTI people both here and overseas and my experience is that on the whole it is a good institution. There is always scope for improvement, certainly, and in any institution employing some 2,500 people you will find those who are average in quality and those who are very good. But coming at this from the outside, I am impressed by the dedication, hard work, commitment and enthusiasm of UKTI people in the many offices that I have had the opportunity of visiting.

On the specific question of whether to charge for its services, the Government believe that it is appropriate to charge for some UKTI services, but there are plenty of services that are not charged for. OMIS—I am afraid that I cannot remember what that stands for—is a service that is charged for, but generally the feedback is that it is widely welcomed.

[Lord Lang of Monkton]

My Lords, I warmly welcome the well focused nature of my noble friend's announcement. I suggest that the key to growth in the long run is surely increased productivity, as the example that he gave of Germany indicates, though rather to the detriment of Germany's unfortunate partners within the eurozone. Against the background of the sad decline in productivity growth during the period of the previous Government, will he indicate the extent to which he believes the announcements that he has made this evening will stimulate further productivity growth and thus lead to the creation of more jobs and prosperity?

[Lord Green of Hurstpierpoint]

I thank my noble friend Lord Lang for that question because it is an important one. Productivity is indeed something of an Achilles’ heel, at least in parts of the British economy, and we need to work at that. It is a complex matter that involves the whole question of the skills base. There is one very interesting fact about exports that is extremely important to this question. Research shows that as small companies get engaged in the international markets, they not only tend to be the more efficient ones, they tend to get more efficient as they do so. In other words, an enhanced trade performance engaging more SMEs in the international markets has the effect of strengthening the backbone of the whole economy. That is an extremely important consideration that leads me to underscore again the very centrality of this trade agenda to the growth strategy for this economy for the next few years.