Brexit: Options for Trade (EUC Report)

Lord Mawson Excerpts

Thursday 2nd March 2017 Lords Chamber

[Lord Mawson (CB)]

My Lords, the findings of this excellent report are in the document before the House. Having listened to evidence of companies on the cutting edge of our economy, I wanted to take this opportunity to talk about what our future as a country might need to look like if we are to trade, post the decision of 23 June last year, in a changing world and to truly optimise the development of products and services that we can sell not just to Europe but across the world.

Sitting on House committees sometimes feels for me a little schizophrenic, because I am conscious that as a working Peer, I live my life nowadays in two very different worlds which gloriously collide in this place. This, of course, is one of the reasons why the House of Lords is such a treasure and needs to be preserved at all costs in a modern economy, but it can also be a little painful when you find yourself riding two horses at the same time.

I have spent most of my working life growing and developing modern entrepreneurial environments that generate innovation both in public services and in wider products and services, that do not sit neatly in traditional government silos. I am an innovator by nature and know that new ideas and ways of working do not come out of the clouds, but develop when very different skills and experiences collide. New products and services in the modern world will now come from between the siloed worlds of government and business, and not from within them. In this internet age this is increasingly so.

We have heard in the evidence that sits behind this report that modern digital entrepreneurial environments generating these new products and services that we must now sell across the world come about through networks of individuals engaging together across different disciplines, from clusters where different skills and businesses sit cheek by jowl. The modern entrepreneurial environment is not about policies, strategies and reports so favoured by civil servants; it is all about people and relationships and learning through hands-on experience. The traditional governmental environment is increasingly no longer fit for purpose in a very fast-moving business environment, within which SMEs certainly now live, and are a rapidly expanding sector of our economy. This is as true here as it is for our partners across Europe.

I am responsible today for the development of 10 entrepreneurial campuses in 10 towns and cities in the north of England, based on 33 years of work in east London, and I declare my interests. My 10 clusters in the north are bringing together very entrepreneurial business people, leaders in the public sector, local residents and emerging business and social entrepreneurs. They are generating lateral, out-of-the-box relationships, and it is fascinating to watch the speed with which these organisms are growing if the conditions are right. In time, I can see already lots of opportunities for new, cross-cutting products and services that we could export across the world if these young flowers are watered and given time to blossom.

Brexit is a real opportunity for new thinking about the opportunities now presenting themselves in a digitised world that exists outside traditional silos. To grasp it, we all need a real change of mindset, both in Europe and in this country, if we are to trade with the world. I suspect we have more in common than we realise. The clues in this new world are in the micro and not the macro. They are not necessarily in large corporate businesses and institutions. Small is beautiful in this new world.

Last week, a former finance director of one of our most established banks came to see me—a young man who had decided to resign from the security of his position. Why? Because he was fed up with the outdated politics that went with the job, with the endless treacle and bureaucracy he had to drown in. He wanted a more fulfilling life: to innovate in financial services and use his many skills and knowledge to rethink the industry. He now has a £50 million fund and within one hour, with no forms or papers, we were agreeing practical work that we could start to do together on the back of a handshake.

Another of our very large government-controlled banks that I have been dealing with recently, which will remain nameless, has forced me into endless meetings in silos and red tape, with no joined-up thinking. The middle management and those at the front edge of this bank were great; they wanted freeing up to engage with me and my colleagues. Those sitting in the boardroom were apparently unaware of and uninterested in all this entrepreneurial behaviour below them, which did not fit in with their policies. I worry that that bank will be out of business in 20 years’ time if it does not focus more on this entrepreneurial activity at the leading edge of the business. This bank felt more siloed and bureaucratic then anything I have experienced in our universities or the NHS, and that is saying something.

Two weeks ago, I attended an NHS awards ceremony in Liverpool to celebrate the new health products and services being generated by some of our finest minds. We saw great examples of products and innovations generated out of the real-life experience of our northern hospitals. But when you dug below the surface, you could hear the frustration of a young generation of entrepreneurs and innovators in our health world who were swimming through treacle with their hands tied behind their backs. We are asking them to dance with lead weights on their shoulders. There was also a sense of despair and resignation about the NHS culture from the senior managers present, who were looking forward to retirement.

I read recently in the Financial Times that in the City, a lot of business analysts are losing their jobs because it has finally dawned on people that no one was actually reading the reports they produced. The emperor has no clothes. Instead, businesses are developing real-time dashboards to give them information about what is happening to their businesses right now, not three or 12 months ago. I found myself wondering whether central government, local authorities or NHS trusts might take this approach. We might develop some world-beating technology to sell around the world. I am not exactly holding out hope because it is rare to find examples of real learning organisations in the statutory sector. Sadly, I feel that may be true for some large businesses and some charities; it may also be true in a lot of Europe. But unless we can make this sort of change, what will our world standing be in the post-Brexit world?

One assumption that I find fascinating in the Brexit debate is the idea that British bureaucracy, and rule from Westminster rather than Brussels, will inherently or automatically be more imaginative—more responsive, more forward-looking—as suggested by these examples. If we do not manage this, I fear that future generations will scratch their heads as to why people thought Brexit would lead to real and positive change.

I am sorry that sometimes at our meetings, I sound a little crusty and difficult. I am only trying to ensure that the voices and experiences of this next generation of entrepreneurs and innovators I have described is heard and experienced. Our future economy and trade, post-Brexit, depends upon them. The noble Lord, Lord Howell, reminded us that the great repeal Bill is a real opportunity to help them get hold of our regulatory and bureaucratic world and bend it in favour of that new generation, for the reasons that the noble Lord, Lord Green, has just articulated to us.

I think that the noble Lord, Lord Howell, is right: there is an opportunity to remove lots of treacle and create more flexibility to boost our trade, products and services. But has anyone seen this important opportunity marching up this new road? I say to the noble Lord, Lord Whitty, that perhaps our committee should look at that. Perhaps we should try to get into a different kind of conversation about this emerging entrepreneurial world, focused on innovation, that affects both us and our partners in Europe. It affects all of our trading, and will do into the future.

I suspect that we have more in common in this new trading world than we may think as we negotiate a new trade treaty. It may be that all of us, in this country and Europe, need to start to think a little more outside the box.