The Economy

Lord Selsdon Excerpts

Thursday 28th April 2016 Lords Chamber

[Lord Selsdon (Con)]

My Lords, these are rather great times for the United Kingdom. It is the one country in the world that has the greatest opportunity on a global basis. That could be in part due to the Commonwealth and in part due to communication. I have to admit that I am only here because my grandfather, as Postmaster-General, laid the copper cables under the sea to the rest of the world. Those cables are the sole method of secret and confidential communication.

I spent my life in trade and the financing of trade. I remember, on odd occasions, when people would ask what I did for a living, that someone would whisper, “He’s in trade, you know”, as though being in trade was not a very gentlemanly or smart thing to do. However, we are and always have been a trading nation. We are global. With or without the Commonwealth, the historic nature of this nation is effectively to do things wherever it may be on the face of the earth.

When we come to look at our trading future, we have to look at what we are going to trade. When trade was the life-blood of the United Kingdom I got a bit worried and suddenly wondered how we could survive when we were not making steel anymore. When someone said that we cannot build the ships that we need for the Navy to defend ourselves on a global basis because of the collapse that has taken place recently, I wondered why and how these ideas come about. If we look at our own institutions on trade, I had the pleasure of serving under Lord Shackleton and Lord Jellicoe on the East European Trade Council in the very early days of communism. They kindly took me in under their wing, hoping that someone might be alive when the United Kingdom emerged from the ashes and wanted to trade on a global basis.

The opportunities are there, but one of the most important factors is how we train people and what for. Does it matter that the trade developments and investment opportunities go through embassies, or are there new institutions that could be created to advance these things? The noble Lord, Lord Bilimoria, is very good at promoting India, which is one of my favourite countries because, for a period of time, I was appointed as an economic adviser to research the future of trade with India. I remember going into the Savoy Hotel to meet the head of the Indian delegation, Manubhai Shah—a remarkable man—who was sitting cross-legged on a table. We were paid by one of the aid agencies to look at the opportunities for India. It was one of those strange things when I arrived in Calcutta. I was obviously too young and unfit for the job that I was about to perform. I sat at dinner at the table and one of the waiters brought in a telephone and said, “Are you Lord Selsdon? There’s a telephone call for you”. The voice at the other end said, “Hello Peter, it’s Jai here. How’re you?”. How could I know that that was the Maharaja of Jaipur, who had played cricket with my father years before?

We were doing this job for six months. We were invited to go to the Lok Sabha. A car came to collect us and I went round there. The speaker—I think Hukam Singh, but I cannot remember who it was at that particular time—greeted me and said, “Where’s Lord Selsdon?”, because at a very young age I was not up to the job or the image. The car was sent round again so I could come back and the band could play. I had a great affection for India. I worked with many of the other Commonwealth countries. For me, one of the great roles that we can perform is to help these countries in their development and provide and arrange the necessary finance with appropriate offtake agreements.

We often say that the Commonwealth is the institution, but the direct one has become more important. Who are our future allies? Trade, we have said before, is the life-blood of the United Kingdom. Are we doing well at the moment? How do we know that the value of the pound will be retained? Is that the key factor? One of the principal opportunities is to look at the migration situation. We have always needed migrants in this country to work and perform jobs. Looking at the steel situation in the West Country, are we suddenly going to have no ability to produce steel, which, after all, is effectively essential for the British economy? When we look at the industrial developments needed, is it investment or attracting foreign bodies? We have a good balance of payments position at the moment. I always quote:

“Gold is for the mistress—silver for the maid—

Copper for the craftsman cunning at his trade.

‘Good!’ said the Baron, sitting in his hall,

‘But Iron—Cold Iron—is master of them all’”.

I feel optimistic about the trading future of this country, but I am not sure who is in charge. Are we after solely exports or imports? As far as finding foreign investment goes, we have no problem at all these days raising funds. We have, through ECGD, a remarkable institution with adequate credit available for most of the world. So the question is a very simple one: we have a glorious future, but who is in charge and what do we do next?

Economy

Lord Selsdon Excerpts

Thursday 10th September 2015 Lords Chamber

[Lord Selsdon (Con)]

My Lords, I am a little confused. I am not sure what austerity is. I do not see abject poverty around. Therefore I will use what the Financial Times says as an introduction: austerity marks a period of adverse economic conditions where the Government cut their spending or increases taxes in order to reduce their budget deficit.

The factors that I considered when I was in the banking world are rather favourable. The pound is strong and stable. Our balance of payments is reasonable because of services, but we have always had a balance of payments deficit on manufactures and that is agreed year after year. But when you look at that balance of payments deficit on manufactures, you realise that many components are already imported. So if you try to search through the pattern, you want to look and see what is wrong, or whether you can prove what is wrong.

At the other end of the scale, we have vast sources of wealth in other parts of the world looking for investment. I know that my noble friend Lord Howell has visited some of the major funds around the world. They have visited me, too, and they have asked what opportunities there are for investment. Well, there are not many requirements from the United Kingdom other than new infrastructure. Our balance of payments deficit has not caused us any problem, the universities are doing well, technology is in the forefront of activities, and it is a question of where and what direct investment we should be encouraging more of into the United Kingdom and in what sectors. I am asked regularly during my international trips, “What would you invest in?”. In the early days, suggestions were made to me that they should invest in the automotive industry, which I thought would be a complete waste of time. I never realised that the automotive industry in the United Kingdom had virtually fallen into foreign ownership.

So what is foreign ownership and where are the problems at the moment? I detect that those economic minds I see around me—for whom I have great respect; I used to study some of their papers—are perhaps at a loss to find any reasonable conclusions as to what the Government or Governments should do next. Our balance of payments is not a difficult one: we have, as I say, the surplus on services and that surplus will continue.

So I ask the Minister: what is wrong? I spend most of my life internationally and find great respect for the United Kingdom these days. Probably one of the weaknesses is that everybody wants to come and live here. One factor that comes up is the element of personal taxation, which is unfair if it is levied upon the British and not upon foreigners, but this is more of a social issue. Therefore we find that the investment that comes in is not necessarily direct, but comes through all sorts of corridors. There is no pressure on the pound sterling, there is no pressure on inflation. There is pressure for a slightly better bus service and fewer strikes in London. But when you are confronted by some of the sovereign wealth funds who say they would like to invest in our country and ask what our future plans are and what major exciting projects they could invest in, the answers are not necessarily there. So I have no concern at all. In fact, I am worried that I cannot find a worry—and maybe some noble Lords could demonstrate what is wrong. It is not a party-political issue. In general, those who come out of university are finding jobs. The training schemes are getting better and better. The arguments seem to be only about major jumbo projects about where we should put an airport, which international people cannot understand. I would like someone to say, “What do we need money for?”—because I am not sure.

Queen’s Speech

Lord Selsdon Excerpts

Wednesday 11th June 2014 Lords Chamber

[Lord Selsdon (Con)]

This is perhaps one of the few occasions during my time in this House when I feel confused. A couple of hours ago, I snapped a tooth off and it was repaired very quickly. Therefore, I may appear a little gaga. However, I would like to ask the Government some questions.

I begin by saying that the world is round, the earth is flat and in the middle of the world is Greenwich. The United Kingdom is in the centre of the world, so some things are to the east of us, some to the west and some to the north and the south. However, does the EU come under the heading of foreign affairs or domestic affairs? I am slightly confused about that. We joined the EU because of trade but there is no mention of trade in the debate’s title. We are faced with a form of European Japanese knotweed—that is, legislation which seems to throttle everything that we want to do. People believe that by introducing new rules and regulations progress will be made.

Perhaps the Minister will say whether the EU comes under the heading of foreign affairs. I do not approve of referendums—I always wonder whether the plural of referendum is referendums or referenda—as I was treasurer of the Conservative group on Europe and had to raise money to fund the previous referendum. They are not British instruments. Is Scotland a referendum, and what is devolved? Am I? I am a Scot; but I am not sure whether I am—I have never had a vote.

In this confused environment, could we please consider the importance of trade? Like my noble friend Lord Howell, I wish to draw attention to the significance of the Commonwealth. Does the Commonwealth come under the heading of foreign or domestic affairs? We should look at the remarkable strength of the countries to the east and west of us and at the political changes that have taken place. If we look at coastlines, which is a favourite subject of mine, we will see that 60% of the economic exclusion zones—that is, the 200-mile limits around countries—belong to Commonwealth countries. France is the only other country that comes anywhere near us in this regard, with about 15% of this area. We are a maritime nation and 21% of all the ships floating on the face of the earth are Commonwealth ships. Does this matter? I am confused as I do not know what strategy we have in this regard.

As regards defence, I never understood why we had troops in Germany for so long and why we have withdrawn them. What will happen to the Navy if Scotland becomes independent? Will all of it move down to Portsmouth? There is much uncertainty about these issues and I am confused about them. Indeed, I am too confused to make a constructive speech. I would just like somebody to tell me which of the headings shown on the annunciator constitute foreign affairs and which constitute domestic affairs. We are mixing up foreign with domestic.

Payday Loans

Lord Selsdon Excerpts

Wednesday 11th December 2013 Lords Chamber

Asked by

[Lord Selsdon]

To ask Her Majesty’s Government what steps they are taking to regulate the issue of payday loans to those without a regular income.

[Lord Newby (LD)]

My Lords, the Government have made it clear that payday lenders should make loans only to those who can afford to pay them back. From April 2014, the Financial Conduct Authority will require lenders to undertake thorough affordability assessments to ensure that borrowers are able to make sustainable repayments. No later than January 2015, the FCA will cap the cost of payday loans so that borrowers in financial difficulty do not face spiralling debt.

[Lord Selsdon (Con)]

My Lords, I am most grateful to the Minister for his reply, but he has not actually given me the answer I needed because my skills at mathematical calculations are not great at the moment. If my noble friend wanted, for example, to take out a payday loan for £1,000 to cover him over the Recess, what would the rate of interest and repayment be over a matter of a few weeks?

[Lord Newby]

Almost certainly too high, my Lords.

Financial Services (Banking Reform) Bill

Lord Selsdon Excerpts

Tuesday 26th November 2013 Lords Chamber

[Lord Sharkey (LD)]

My Lords, this amendment has been somewhat overtaken by events. As little as four weeks ago, the Government were claiming in this Chamber that there was insufficient evidence for a cap on the cost of payday loans. They said:

“The Government do not believe that current evidence provides sufficient justification to support a cap on the cost of credit”.—[Official Report, 23/10/13; col. 1109.]

On Sunday, the Chancellor underwent a kind of Damascene conversion. He is now convinced that there is sufficient evidence for a cap. That is very good news. Surely it would be unkind to point out that there was no more evidence available to him on Sunday night than there was four weeks ago.

After the Chancellor’s announcement that there would be a mandatory cap, there was another late intervention. At nine o’clock last night, like all of us, I was e-mailed a letter from the noble Lord, Lord Deighton. Without elaboration, it says that,

“the balance of evidence has tipped in favour of a cap”.

He says that the Government,

“will give the FCA a clear duty in legislation to use the powers we have given it to implement a cap”.

He continues:

“The FCA must ensure that it designs a cap that works in UK consumers’ interests and fits the UK market”;

but he goes on to say that the FCA will draw upon,

“the analysis and findings of the Competition Commission, whose investigation of the payday lending market is currently underway”.

The investigation is indeed under way, but it has a statutory reporting date of 26 June 2015. That is far too late. It means that any cap is unlikely to be in place before the end of 2016. That would mean millions of the most financially troubled people continuing to pay millions of pounds to PDL companies entirely unnecessarily. The Chancellor, in his interview on the “Today” programme on Monday morning, said clearly that installing a cap could happen in parallel with the Competition Commission investigation. I spoke to the noble Lord, Lord Deighton, about this issue earlier today. At the close of our conversation, he committed the Government to have the cap fully implemented by the end of January 2015. This seems to me to be reasonable and to allow the time necessary to put all the systems in place. I would be grateful if the Minister would explicitly confirm to the House the commitment made to me by the noble Lord, Lord Deighton.

The main difficulty this evening, of course, is the lack of any concrete proposals from the Government. We cannot know exactly what the Government will propose. This is a fundamental problem because the devil is very much in the detail when it comes to the regulation of payday loans. We can only make a little progress tonight, but it would help to hear the Minister confirm to the House that they will by legislation oblige the FCA to impose a cap on the total costs associated with any payday loan.

It would help to hear the Minister say that the FCA will be instructed to look again at the restrictions on rollovers. The FCA has said that it is minded to restrict rollovers to two. This is completely wrong. Some 28% of all borrowers have one or more rollovers, and a full 50% of payday lending revenue comes from rolled-over loans. Rollovers should be banned. We should do here what they have been doing in Florida for the last 11 years. In Florida, no loan may be taken out until any previous loan has been settled in full; and no new loan may be taken out within 24 hours of the settlement of a previous loan.

Will the Minister confirm that he will instruct the FCA to consider this system? In Florida there is a real-time lending database in operation. This database prevents rollovers. It also prevents borrowers having multiple simultaneous loans. Will the Minister confirm that we will have a similar real-time database here in the UK? Will he confirm that the FCA will be instructed to consider banning multiple simultaneous loans?

There are another couple of features of the Florida regulatory system which should be closely examined on the basis that we should use them here unless there is overwhelming evidence to the contrary. First, in Florida, any loan may be extended by 60 days without any additional charge at all. That is certainly not true here, but it should be true here. Secondly, any borrower in Florida who extends a loan by 60 days is required to undergo approved credit counselling and to abide by the plan agreed to retire the debt. This helps stop the spiral of increasing debt and provides a way out. We should have this here in the UK too.

The fact is that the Florida regulatory system is a model for payday loan regulation. Perhaps this is what the Chancellor suddenly realised on Sunday night. I ask the Government to ask the FCA to consider all aspects of the Florida regime for adoption here in the UK. At its simplest, in Florida, if you borrow £300 for 30 days you pay back £333. Here, if you borrow £300 for 30 days from Wonga, you pay back £397. That is three times as much—a wholly unjustifiable transfer of cash from the poor to the rich.

In closing, I simply ask the Minister to confirm that when we come to the capping amendment at Third Reading, we can operate under the less restrictive Committee-stage rules, as I think is entirely appropriate given the late stage at which the amendment is being introduced. I beg to move.

[Lord Selsdon (Con)]

My Lords, I support the noble Lord, Lord Sharkey, but I speak from a slightly different point of view. After so many years in your Lordships’ House, from time to time certain problems are raised with me when people have nowhere else to go. I want to talk about the link between the payday loan and credit and other things, particularly unemployment.

Take the situation at the moment of the young unemployed, or with some sort of weighting allowance in some form or other, who want to buy a mobile telephone or an iPad or something like this. They go along to any one of the suppliers, which then offers them a package that means they do not need to pay £500 up front but can pay it later. They sign up to something that they do not quite understand and then find that they cannot meet the necessary payments. They may have various allowances but, before they know it, the pressure builds up. So what starts as a £500 transaction can multiply into £1,000 fairly quickly. They cannot afford to pay the bill, so they go to a payday loan company—I will not mention their names—which, without the necessary research, offers them facilities at an exorbitant rate of interest. What starts with the wish to buy an iPhone or something of that sort for £500, when they have not got the money up front, can turn into nearly £5,000.

EU: UK Membership

Lord Selsdon Excerpts

Thursday 24th October 2013 Lords Chamber

[Lord Selsdon (Con)]

My Lords, I have the great pleasure and privilege to follow the noble Lord, Lord Wrigglesworth, and to thank him for his most interesting maiden speech. He would not know, and I had forgotten myself, that I began my own industrial activity in the north-east. There was the least business there; as a representative, you got commission in your sales, and there were no commissions to be had in the north-east, until we managed to win a contract at Blyth colliery, which was my introduction to the coal mining industry.

I have listened to the noble Lord, Lord Wrigglesworth, before. It is strange that those who come from the northern parts of the country always speak slightly more seriously, but there is something behind the words they say that pricks. I realised what it is today when the noble Baroness, Lady Northover, spoke, and referred to the balance of power within the House and the different departments. I suddenly concluded that it is probable by my calculations that the noble Lord, Lord Wrigglesworth, now holds the balance of power. I refer him to my great-grandfather, who served in the Lloyd George coalition. Coalitions are not necessarily a good idea, because you have that awful phrase coagulation.

Then you come to the referendums, and things like that. I got a phone call, because I found that I had to give up being in industry because I had been summoned to your Lordships’ House after my father died. I did not know that I did not have to come; I had no writ of summons—I had no knowledge of any of this. I had to change my job. A friend of my grandfather said, “You may not be bright, but you ought to be brighter. Why don’t you do some research in a research company?” I joined it, and one of our clients was JETRO, the Japan External Trade Organisation, which we visited regularly and took to London to encourage it to invest in the United Kingdom. We produced a very good report, but we forgot that the Japanese drove on the same side as we did and that therefore it was much cheaper for them to set up a manufacturer here.

One of the main points that I wish to make today is to ask why are going to have a referendum. I was at one time treasurer of the Conservative Group on Europe, and had a lot of problems trying to raise money for the referendum campaign. I remind your Lordships of some of the background to this. On 28 October 1971, there were votes in the Lords and Commons that,

“this House approves Her Majesty’s Government’s decision of principle to join the European Communities on the basis of the arrangements which have been negotiated”.

In the Lords, there were 88.6% in favour and in the Commons 59.3%—an overwhelming majority. That led on to 1975, when the new Labour Government held a referendum and we found once more to our surprise that in response to the question,

“Do you think that the United Kingdom should stay in the European Community (the Common Market)?”,

64.5% were in favour. So why are we now going to have another referendum? Is it necessary, or is it a matter of internal politics? I congratulate the noble Lord, Lord Wrigglesworth, on his speech. If he has the balance of power, we know which way things will go.

My noble friend Lady Noakes and I agree on so many things, but not necessarily on the things she says. Trade has been my lifeblood and fate. The European Union is our biggest trading partner by far, and it also represents our biggest deficit; with the exception of Ireland, with which we have a big surplus, we have a deficit with practically all the EU countries. Our biggest trading partner is still, just, the United States, followed by Germany. But it is not so much the EU that counts; it is the international development and activity that follows on a global basis.

We have managed to attract, in recent years, a sizeable volume of foreign investment in the United Kingdom, not just in manufacturing or in service industries but in pure investment. Our balance of payments deficit in general, without invisibles, would be very significant indeed. On all areas, we have a manufacturing deficit—but the growth areas, surprisingly enough, are those that used to be those of our Commonwealth partners, where the added value is created, in agriculture, minerals or semi-manufactures. At the same time, we have encouraged successful entrepreneurs from those countries to come and invest in the United Kingdom. It will not surprise your Lordships to learn that much of the investment that has come into the United Kingdom in recent years has come from what we would once have called the third world. We can look at the success of India and the development of China and south-east Asia, and even some of the African countries that are producing growth. Our future does not lie within the EU, but it is those markets that are the closest to us and those that foreign investment companies and manufacturers are looking to serve. When they invest, they are looking to invest not in the limited United Kingdom market but in the markets with which the United Kingdom has the greatest relationships.

It is sometimes a good idea to sit and think. I do not propose that we should have a referendum; it is a complete waste of time and money. If you were treasurer of the Conservative Group on Europe and you suddenly found one day that you had a bill for £323,000 and no money, because you could not raise any, you would feel how sensitive it is. I do not know how strong a campaign will be waged, but I wish that the Government would think again and that the noble Lord, Lord Wrigglesworth, with his balance of power, will make sure that we do not have a referendum. I thank him again sincerely for his contribution. I know that we will hear much from him in future.

Economy: Growth

Lord Selsdon Excerpts

Tuesday 29th January 2013 Lords Chamber

[Lord Selsdon]

My Lords, when the noble Lord, Lord Desai, joined this House in 1991, I always found myself speaking on economic and trade debates from one of these Benches—either this side or that side—but there was something strange about it: he always seemed to be at a much higher level. I thought that perhaps the seats were higher. However, this was part of his life and I learnt much from him. When he first arrived, I wanted to know why we had so many economists. I had already asked the Department of Trade why we needed economists connected with trade, and I found that there were about 230 of them. This started when we had the desire for a relationship with eastern Europe. Somehow people felt that economists came from eastern Europe, where they were more intelligent or more highly trained. The noble Lord, Lord Skidelsky, is someone totally different—he is a trader at heart. He has entertained and amused me over a long period of time.

As I stand up to speak today, I am slightly worried. I did not want to insult the noble Lord, Lord Deighton, but I was not sure how to pronounce his name: “i” before “e” except after “c” or before “g”. Although Hansard cannot correct our pronunciation, it would be wrong of us in your Lordship’s House to get someone’s name wrong.

I stand here today to speak on behalf of the remains of my “gang”: the noble Lords, Lord Ezra and Lord Stoddart of Swindon, and the noble Viscount, Lord Falkland, who is in his place. We had the honour of serving on a Select Committee on overseas trade, back in 1985. We are going to make an approach and ask whether that committee can be re-established, and the Chairman of Committees will already have received a message from the noble Lord, Lord Ezra.

I was put on that committee because I would be young enough when it became important to do something serious about everything. This has been much the story of my life in your Lordships’ House. No one realised that I might be able to do something on my own. However, I did write a report. The Select Committee was called the Aldington committee, after Lord Aldington, and it had some quite bright people on it. We had an enormous amount of support and interviewed people from well over 100 companies. Our report asked, “What do we do when the oil runs out?”. This was in the 1980s—the committee was formed in 1985—and the oil was steadily running out. Everybody was spending the money from oil but not investing it. As it ran out, the balance of payments deficit began to grow, because people were not interested in the balance of payments. The deficit soared, particularly on visibles. It became so enormous that we could hardly support it. As we know well, today we have quite a lot of deficits on visibles. The total figure is around £50 billion, although there are some good aspects. In the pharmaceutical field we have a surplus of perhaps £20 billion; in food, excluding alcohol, it is minus £20 billion; with alcohol, it is a little less, because the whisky which my family used to make historically is probably doing quite well abroad.

However, does a balance of payments matter? I think that it does, but it is trade that I am interested in. I sail very happily in the wake of my noble friend Lord Howell in recognising that, if we do not trade with the world, we will no longer have an economy. Your Lordships know well that our visibles deficit with the EU is very significant. We have a surplus with non-EU countries—Egypt and the Middle East are among the greatest—but with that form of deficit and no investment following, we have a certain difficulty.

I declare an interest in that, having been involved in trade and the financing of trade, I do not like economists quite so much as they always find reasons why you should not do something rather than why you should. We have a scenario where we are looking for new technological growth and trade which is technology-led. We have forgotten that over a short period of time new technology has been developed in the United Kingdom. Because my father spent most of his life and all our family money motor-racing, I have an interest in cars. The success of Formula 1, which was built and designed over here, led to a revitalisation of the automotive industry. Our friends from India worked that one out, so they came over here and in a relatively short space of time completely revitalised Land Rover and other areas.

The same happened with the Japanese and Nissan. In my early days, surprisingly enough, I was meant to be doing economic, industrial and trade research. We acted for the Japanese. They said that they would like to invest in England, when we were more interested in selling to them. On the automotive front, it took a long time to get the go-ahead. We did a study on cars and forgot that the Japanese drove on the same side of the road as we did. That was quite a problem, but it was one of the reasons why we said, “Why don’t you come and make cars over here, because it will be more economic?”. However, they just wanted to make cars that lasted. So those were two areas of success.

For a while I was rapporteur of the European Council of Ministers of Transport, responsible for the standardisation of heights of bridges, bogie couplings, and so on, and the building of bridges across the Bosphorus, across Sicily and in Denmark. When you are on a committee and are young, the others know that they may have someone who can actually type. One of the things that I learnt in the Navy was to type seven copies and put holes through the a’s and the e’s. So I still believe in the written word.

We have considerable experience in transport. However, if we confine our experience, desires and ambitions wholly and exclusively to our own country, we will have forgotten what my noble friend Lord Howell described—the opportunities in the world and the willingness outside, in the Commonwealth and in a whole range of other countries, to co-operate with us on development. If we look at the mineral sector, it is logical that our Canadian and Australian cousins have experience and knowledge which we could easily put together to create and develop added value and wealth wherever we may be on the face of the earth.

I look back at the old-fashioned maps and charts. To me, Greenwich is the centre of the earth. To get to the west coast of America, you have to go east and right the way round; otherwise you have to go through the Panama Canal or round the south. Looking at our own relationships—not using the British language but the background, trading and culture—I believe that in co-operation with the Commonwealth and with other territories we could succeed very quickly and very well.

I turn to the doubtful area of taxation. I had a great regard for Michael Heseltine—now the noble Lord, Lord Heseltine—not at first, but when he set up the enterprise zones. That was when I went to Toxteth. We looked at what happened in Docklands and the regeneration. Although there were people who normally would never have invested in these sorts of doubtful ventures—we have only to look at the slightly disastrous beginning of Canary Wharf and the complete failure of developments of any significance to get off the ground economically in Docklands—it was the ability to claw back tax that permitted people to take an added risk. We should look at this again. Rather than having our foreign friends who want to live in London being told they will have to pay mansion taxes or things of that sort, I should like to set up a fund that would enable them to invest in infrastructure development and claw back that tax for a period of time.

I am not a dreamer. I am quite happy to think that, as age goes by, the things that are happening now will be history. We talk in this House about five, six or seven years before an economic upturn, but to me that is too long. I would rather see it happen at the moment. I should like my noble friend Lord Howell and others to go out in the world and sign the sort of Elizabethan treaties that we used to have, where we would buy the “turds of birds” from South America, as someone said; where we bought things because we needed them or could trade them on. Where are the great trading companies? They all seem to have died. I am happy to admit that I am in trade and that normally I sit below the salt.

Economy: Government Policies

Lord Selsdon Excerpts

Thursday 24th March 2011 Lords Chamber

[Lord Selsdon]

My Lords, I have to confess that I have spent the bulk of my life in the financing of trade and in your Lordships' House. It is in the latter that I have probably had the greatest benefit, because I was told that I should listen to everything that noble Lords said over years and that I would be suitably drip-fed by geriatrics. Much therefore of what I have learnt I shall try to regurgitate today.

I ask and beg, as someone who has been involved in trade, that the Government should please return to using the word “trade” and restore the Board of Trade. I hate the word “business”, as it reminds me when in the morning my mother would say to me, as a small boy, “Take the dogs out for a walk and make sure they do their business”. When we came back she would say, “Was it little business or big business?”

We can learn much from history. Like the noble Lord, Lord Brooke, I like to return to things and go back into the history of trade. I go back only 500 years to when the Council of Trade was formed. Its mandate was to,

“take into … consideration the true causes of the decay of trade and scarcity of coyne and to consult the means for the removing of these inconveniences”.

Moving on another 70 years, the mandate for the Council of Trade was extended:

“Ye shall take into your consideration ye inconveniences the English Trade hath suffered in any parts beyond the seas. And are to enquire into such articles of former treaties as have been made with any princes or states in relation to trade”—

maybe even the EU. Your Lordships and those who produce such papers today should look at the latest one in the early 18th century, which was:

“To examine into and take an account of the state and condition of the general trade of England and of the several particular trades into foreign parts… to consider what means profitable manufactures already settled may be further improved and how new and profitable manufactures may be introduced”.

Why do we need all these statements when it is already there?

When I joined the House, I used to get put on committees by my noble friend Lord Jellicoe and the noble Lord, Lord Shackleton, because I was young enough at the time. One point they made to me was that, when things are really bad, that is the time for really good opportunities. I served on one of the first Select Committees on trade. I was told that it would not be appropriate for me to intervene or to speak but that, if I listened, I might learn something. That Committee was looking at trade and we had a visit one day from a very important Minister: my then right honourable friend who is now my noble friend Lord Lawson. He came and stood before us and gave us what we described later as a very interesting lecture on the different Ms—relating to the money supply—which I am afraid I did not understand. I did not dare to ask any questions but Viscount Amory, who had been a Chancellor, asked him a few. The noble Lord, Lord Lawson, responded with vigour—in those days, he had slightly more latitude than he has today—and Viscount Amory then said, “Thank you so much, Chancellor, for your clear and lucid explanation”. I admit I am still confused but happy to be confused at a much higher level. I am really grateful to my noble friend for what he has done today because some interesting matters have come out of this debate.

If I may return to the subject of trade, we have had a growing trade deficit since 1947, when my great-uncle Sir Stafford Cripps was effectively President of the Board of Trade and was followed in that by Harold Wilson. That deficit has grown and grown. I raise this in many debates as the noble Lord, Lord Myners, knows. We have a deficit in manufactures of around £100 billion, which has grown and grown. We have a surplus in invisibles—some of which are really becoming invisible now, such as the North Sea revenues and others—of about £50 billion and therefore an overall deficit of £50 billion. On the current account, can the Minister tell me what the UK budget deficit is at present? We seem to be a country of deficits. When we look at where we trade it is with 71 countries of the world, yet we have a surplus with only 12 of them. The biggest surplus we had was with Ireland, followed by the United States, but the Irish surplus has fallen away. It may not be important that we should have trade surpluses, but I have a feeling that, unless something is done about it, the situation could get worse.

On the subject of investment, over the years since the war we have always had a pretty even balance between inward and outward investment. However, what that investment is put into is of considerable importance; hence I welcome the concept of the enterprise zones. I spent a lot of time in inner-city projects, particularly in Docklands. I found it remarkable how quickly something could take off once it reached a certain height. The declaration of enterprise zones here is a good idea, as is the idea that foreigners who live in England might be able to get tax allowances from reducing their taxation levels if they genuinely invest in new projects. We should give the same thought to the United Kingdom’s activities overseas. We need to import food and therefore to invest in agriculture in Africa and in all the ancient areas where we went, because we only expanded our economies internationally or created an empire because we needed the materials and products that came from those countries.

If we do not have a lot of money, somehow the application of clawing money back by granting tax allowances on international and national investment appeals to me. I have said enough and I hope that your Lordships will realise that I did not intend to drip-feed you in any way at all. Please remember that we can learn an enormous amount from your Lordships. I have learnt very much indeed today.