Lord Popat
Main Page: Lord Popat (Conservative - Life peer)
Lord Peston
My Lords, on behalf of my noble friend Lord Haskel, and at his request, I beg leave to ask the Question standing in his name on the Order Paper.
Lord Popat
My Lords, the UK economy is recovering from the most damaging financial crisis in generations. The Government are putting in place the right policies to deliver balanced and sustainable growth in the UK. That will take time. We are already seeing some progress. Between 2010 and 2012 the UK climbed from 12th to 8th in the World Economic Forum’s global competitiveness index.
Lord Peston
My Lords, noble Lords are stuck with me because my noble friend is in hospital and I hope that they will join me in wishing him a speedy recovery.
Lord Peston
My Lords, given the massive size of the current account deficit—almost unprecedented—would it not be to the advantage of our country to improve the competitiveness of UK industry if the external value of sterling fell drastically?
Lord Popat
My Lords, the external value of sterling fell from 2007 to 2009 and led to modest growth in exports. The impact may have been negated somewhat due to global demand weakness, especially in the European Union, which is our largest export market. Evidence suggests that export growth is driven more by changes in foreign demand than by price competitiveness or other factors.
Lord Bilimoria
My Lords, would the Minister agree that we are all very proud that a British university, Cambridge, has won more Nobel prizes than any other university in the world? However, would he also agree that that is in spite of this country underfunding research and development expenditure as a proportion of GDP? We spend less than both the EU and OECD averages. We spend half of what a country like South Korea spends. Do the Government not believe that we should be targeting to spend a proportion of GDP at least equivalent to the EU or OECD average to maintain our competitiveness? Otherwise, we are going to be penny wise and pound foolish.
Lord Popat
My Lords, this issue has been raised by the noble Lord in the past. Education is our fourth largest export earning. I agree with the noble Lord that we need to spend more money both on research at universities and on further investment in training provided by businesses. I will take the noble Lord’s point into account and will be happy to ask my colleague in the office to write to him to see what investment we are making in research at our universities.
Lord Forsyth of Drumlean
My Lords, could my noble friend explain why there has been a dramatic fall in the value of the pound and yet our export performance is pretty poor? What is the explanation for that and what can be done about it?
Lord Popat
My Lords, the value of the pound is determined by the international market. The fall in exports is mainly due to the current economic crisis, not just in the UK but in Europe as a whole. Half our exports are to the European Union and there are real issues in the European Union. The currency changes that take place quite often have a limited impact due to the very high import content in our exports. Hence any depreciation or the value of the pound going down will not have real impact on our exports.
Lord Barnett
My Lords, as competitiveness is not going to be helped in any way by the Chancellor changing his fiscal policy, despite the strongest advice from people he depended on until recently, such as the IMF, can we take it that he will now be totally dependent for improving anything at all on help from the new Governor of the Bank of England through increasing monetary policy, even though it may hurt current inflation?
Lord Popat
My Lords, the Chancellor has the right policies in place to reignite our economy, growth and competitiveness. We are supporting SME exports and have allocated a huge amount of money for infrastructure investment, including some for regional growth. We are encouraging the free flow of funds from the Bank and fiscal consolidation. With regard to the International Monetary Fund, we cannot recover or be competitive without addressing the huge debt that we have incurred over the past 10 years. Our most important priority is to see how we reduce our national debt.
Lord Hamilton of Epsom
Does my noble friend accept that the key to competitiveness is competition, and that this therefore makes it extremely difficult to improve competitiveness in large nationalised monopolies such as health and education?
Lord Popat
My noble friend raises a very important issue. In both health and education, there is very much a monopoly. We use the private sector in areas where it can deliver real value for money for taxpayers.