Economy: Growth

Lord Northbrook Excerpts

Thursday 6th December 2012 Lords Chamber

[Lord Northbrook]

My Lords, I welcome this opportunity to debate the important report produced by my noble friend Lord Heseltine but I regret that the usual channels have not allowed the opportunity of a full three or four-hour debate. To limit contributions to three minutes makes each contribution only a speed-dating effort in addressing such an important publication.

The Government gave only the briefest of initial responses to the report until yesterday, so I look forward to hearing what the Minister has to say. The Government are planning to strip Whitehall of about £58 billion of business support funding and place it in the hands of local enterprise partnerships, LEPs, in the biggest act of financial devolution ever seen. The CBI has commented:

“LEPs have so far lacked the power and resources to impact local growth”.

Given that this review highlights a number of key areas in which LEPs can support private sector activities, it is pleasing to hear that they have been given appropriate resources to help them to meet this challenge. Does the Minister believe that they have the powers and the skills?

The British Chambers of Commerce generally welcomes the report:

“Lord Heseltine’s analysis of the state of the UK economy is compelling”,

it says, yet his report for action,

“focuses too much on institutions, rather than on the fundamental barriers to business growth. Ministers should think carefully before committing to a restructuring of government, and focus first on the key restraints facing the real economy: the availability of growth finance, practical help for our exporters, our creaking physical infrastructure, and an education … system that responds to businesses needs. Government can best support enterprise by collaborating with business to get the basics right”.

Does the Minister agree with its observations?

The Federation of Small Businesses also welcomes the report by the noble Lord, Lord Heseltine. It suggests, however:

“The boards of LEPs must represent all sizes and sectors of local businesses. Otherwise they will fail. The FSB does not believe that the chambers should be legislated as they do not represent all businesses, particularly self-employed and micro firms”.

It concludes:

“To create a stable environment for businesses to thrive, the Government should look to the success of the US Small Business Administration—SBA—to coordinate small business policy, such as lending, procurement and exporting”.

I will end by congratulating the Government on three measures in the Pre-Budget Report that I believe will encourage growth. First, the increase in capital allowances from £50,000 to £250,000 is an excellent signal to manufacturers and has rightly been praised by key industrialists such as Sir Anthony Bamford of JCB. Secondly, the cut in corporation tax of 1% is equally welcome to increase UK competitiveness. Finally, the extension of the empty property rate relief is a measure to be much welcomed.