The Economy

Lord Sheikh Excerpts

Thursday 28th April 2016 Lords Chamber

[Lord Sheikh (Con)]

My Lords, the past six years has seen great progress in rebalancing and rebuilding our economy. This Government have made some remarkable achievements in repairing the damage caused by the recession and by Labour’s financial mismanagement.

Since 2010, our budget deficit has been more than halved and more than 2 million jobs have been created. Employment now stands at a record rate of 74%. This year, we are forecast to grow faster than any other major economy. It is clear that our long-term economic plan is paying off, but we are still living through uncertain times and potentially turbulent waters lie ahead. Global growth is slowing, with concerns about productivity and levels of debt. We are also facing the possibility of global deflation if forecasts do not improve. Even emerging economies now face increased risks, not least with falling oil prices and China’s attempts to rebalance.

In such a tightly interconnected global economy, it is perhaps more important than ever that we maintain financial discipline. Precisely because Britain is an open and well-connected economy, we are vulnerable to changes in other parts of the world. As the Chancellor has continuously made clear, we must always maintain an economic strategy of “act now so that we do not pay later”. I am pleased that the Government’s policies ensure that we are indeed taking appropriate measures. I continue to applaud the further increases in the personal tax allowance, which is set to reach £11,500 in 2017-18. Allowing more people to keep more of their own money gives them more to invest in our economy through spending and saving. With regard to saving, it is important that we encourage people to save by making it as flexible and accessible as possible. Increasing ISA limits is also most welcome. Moreover, the announcement of a new lifetime ISA, with bonuses from government, is generous and practical. It will encourage people to invest in their own long-term stability for the purposes of home ownership and retirement.

An area where the United Kingdom holds specific concern is with our weak productivity growth. This is also the case in many other major advanced economies. The way to address this is by supporting business and enterprise. Announcements in last month’s Budget Statement sought to do just this. Perhaps most notably, the further cut in corporation tax to 17% in 2020 will benefit more than 1 million companies both large and small. Significant cuts in capital gains tax will also reduce the burden on businesses, allowing them to reinvest more. In a world where businesses can so easily move between borders, we must also try to attract and retain the best. I believe such competitive corporate tax rates will serve to welcome businesses to the UK.

We must remember that small businesses are the backbone of our economy. Last year there were more than 5 million small businesses in the United Kingdom. They account for 47% of all private sector turnover and 60% of private sector employment. Again, measures recently announced in the Budget, including cutting business rates on properties, will specifically benefit smaller firms. In fact, 600,000 small businesses will pay no rates from next year. Reforms of stamp duty land tax on non-residential property transactions will also help many small businesses to reduce their costs.

An instrumental part of building a strong economy for the future is investing in the education of future generations. The better educated our society is, the more innovative and productive we will be. If our education system does not compete with others around the world, ultimately our economy will not compete either. This Government have done much to improve the integrity of our education system and to enhance our skills base. I hope that continues. I also applaud the Government’s continued drive on apprenticeships. Eighty-three per cent of apprentices say that their career prospects have improved, and 70% of employers say that apprenticeships have improved the quality of their products and services. It has been established that apprenticeship training pays for itself within two years of completion through increased productivity. Therefore, young people gain skills while our economy becomes more productive.

I would now like to mention the importance of our membership of the European Union. I believe that this gives us significant economic benefit. The single market gives businesses free access to 500 million customers. The EU has signed trade deals with many other countries. Therefore, remaining a part of the union provides us with advantages within and outside the region. Renegotiating our trade relationships with so many countries would bring uncertainty and instability to our business climate. It would also bring extensive costs and use valuable resources. It could prove very damaging in the long term and undo much of the Government’s hard work. I commend the efforts of the Prime Minister and others in working towards us retaining our place in Europe.

I have raised on many occasions the need for us to undertake more trade with overseas countries. Indeed, bilateral trading relationships should be seen as a way of providing mutual benefit to all countries involved and of building economies on both sides. I applaud the announcement in January by UKTI of a new cross-departmental approach to boosting British exports. It is important that everyone in our Government is mobilised to work towards the same goal and can share knowledge and expertise where necessary. I note that this scheme will focus on priority markets and sectors.

In particular, I continue to place a great focus on trade with the African continent. Africa is home to many fast-growing, emerging economies. Some of these countries contain many untapped resources and opportunities. I have visited several African countries to look at issues relating to business and trade. I recently led a delegation to Sudan, during which we discussed matters of trade and investment, among other issues. We learned of many opportunities in agriculture, mineral extraction, infrastructure development and community services. I prepared a report detailing my findings, which has been very well received. We should be investigating such opportunities in places where clearly the global marketplace has not done so. International sanctions are currently hampering Sudan, and I hope that they can be looked into further by the Foreign Office.

Towards the end of last year, I was a member of a delegation to Ethiopia. I met the British ambassador in Addis Ababa, as well as the Ethiopian Trade Minister and several businesspeople, and visited several factories. Again, I was told of the numerous and diverse investment opportunities across a number of sectors, including fisheries, textile manufacturing, hydro-electric generation and construction projects. These opportunities run alongside the significant progress and growth Ethiopia is already making for itself. I also prepared a report following that visit, which has been sent to UKTI and the FCO.

When visiting those countries, I was encouraged that there was already a lot of joined-up thinking between our representatives from DfID, the FCO and UKTI. Our embassies served as cross-departmental hubs in this respect and are very well geared towards building our trade links. I congratulate the Government on their efforts to achieve that.

Last year I also visited Kenya, Tanzania and Zanzibar, and looked into investment in those countries. Here in the UK, I have recently met representatives from Kenya, Uganda, Nigeria and Ghana, and we looked at ways that trading relationships between our countries could be improved. I commend the Prime Minister on his appointment of trade envoys for different countries. If we involve those countries in trade and business, they can become self-sustaining. In turn, that will present us with further opportunities for trade in the longer period.

I would also like to mention the important role that Islamic finance plays in our economy. I declare my interest as co-chair of the All-Party Parliamentary Group on Islamic Finance. The UK has the largest Islamic finance industry outside the Muslim world. UK sharia-compliant assets now exceed $20 billion. Worldwide, the industry is worth approximately $2 trillion. I commend the Government on the active role that they have played in the development of Islamic finance in this country. In 2013 the Prime Minister confirmed the issue of a sovereign sukuk for £200 million. He also mentioned student loans and start-up loans on a sharia-compliant basis. We must accelerate the good hand that we already hold in what is one of the world’s fastest-growing industries. What intentions do the Government have to expand Islamic finance and consider the issuance of another sukuk? The previous one was 10 times oversubscribed.

I pay tribute to the work of the Government in rebuilding our nation’s finances, but I recognise that there is more to be done to ensure that our economy is secure for the future.

Budget Statement

Lord Sheikh Excerpts

Tuesday 21st July 2015 Lords Chamber

[Lord Sheikh (Con)]

My Lords, I am pleased to have the chance to speak in this debate and to comment on the Chancellor’s Budget Statement. We are already seeing the benefits of a strong majority Government, just a couple of months into the new Parliament. Our growth is better than that of any other major advanced economy. We have created 2 million new jobs in the private sector. I look forward to seeing the Government implementing the Conservative Party manifesto in its entirety. Under the last Government, our economy began to get back on track. It is still on the mend, but it will be a long process, and that is reflected by the Government’s intention to run a surplus by 2019-20. Our economy needs to be more resilient and balanced. That is the only way to secure a better future for Britain and for our well-being.

This was indeed a positive Budget. As we move further out of the red and into the black, the Government are able to map out our future rather than just undo the mistakes of the past. I welcome the steps taken by the Chancellor of the Exchequer to trust people more with their own money. Increasing the tax-free personal allowance from £10,600 to £11,000 means that a typical taxpayer will now be £905 a year better off than previously. I place on record my support for the Government’s ambition to increase the personal allowance to £12,500 by 2020. When people work hard throughout their lives, it is only reasonable that this is rewarded and that they are able to provide a stable and secure future for themselves and their families. On this subject, I welcome steps to take the family home out of inheritance tax and to increase the higher-rate threshold from £42,385 to £43,000 next year. Also assisting in this regard will be the 30 hours of free childcare for three and four year-olds from September 2017.

It is my belief that this Government’s work on welfare and employment is one of their greatest achievements. It is important, however, that we remember that employment is not merely a matter of statistics. Every position filled means that another family has the security of a regular pay packet. We must not forget that this pay packet is put back into the economy in both taxation and consumer spending, supporting yet more jobs and growth. Nor should we forget the great benefit to the individual’s well-being. I am sure noble Lords will agree that work gives people pride and confidence. As an employer, I know that people tend to work for two reasons: the first is to earn a living and the second is to get job satisfaction. On the other hand, being out of work sometimes creates depression and has an adverse effect on people. Work is good for people’s mental health, their physical health and their general well-being—benefits that have been demonstrated repeatedly. Dependency is not good for the country or the people. It constrains people and prevents them achieving their ambition. What is more, if we can get more people into work, some of them will receive salary progressions and improve their standard of living.

At this point, I pay tribute to the Secretary of State for Work and Pensions, who has done some marvellous work in government. His most recent success was undoubtedly securing the living wage. The manner in which he greeted its announcement in the other place shows his passion for his portfolio and for improving the lives of working people in our country. The new national living wage of £7.20 an hour from April 2016, rising to £9 an hour by 2020, will really help to secure this.

My only concern is the possible effect that this could have on businesses. I would ask my noble friend the Minister to inform the House in his closing remarks of the assessment the Government have made of this. The cut in corporation tax and the rise in the employment allowance will, I hope, give employers the boost needed to get on and employ more people.

I spoke earlier of the need to rebalance our economy. This rebalancing should be twofold—first, rebalancing between the north and the south and, secondly, rebalancing so that our economy does not rely too heavily on certain areas, such as financial services, at the expense of others, such as manufacturing, which has declined massively in recent years. While some progress has been made, the growth is not enough. I therefore very much welcome Government’s plan to increase apprenticeships. We have already doubled the number of apprenticeships to 2 million, but the intention is to create 3 million more.

I pay tribute to the Government for providing a guarantee to increase the defence budget every year and for creating a joint security fund. I take a great interest in defence matters and welcome these commitments.

Finally, I conclude that this Budget will be good for the country and the British people.

Young People: Alternatives to University

Lord Sheikh Excerpts

Thursday 23rd October 2014 Lords Chamber

[Lord Sheikh (Con)]

My Lords, I, too, would like to thank the noble Lord, Lord Monks, for tabling this debate and to commend him on his excellent speech. This is an important subject. It is essential that we discuss the alternatives for young people who do not attend university, and even more important that young people not attending university are themselves aware of these alternatives.

Our vocational qualifications system has grown too complicated, bureaucratic and hard to understand. I personally am a big supporter of apprenticeships and that is why I want to focus particularly on this subject today. I welcome the fact that this Government have overseen the biggest ever boost to apprenticeships. My party has also committed to delivering 3 million more apprenticeships over the next Parliament. The Government have made huge headway since they came to power in raising the status of apprenticeships so that young people leaving school view an apprenticeship and going to university as having equal merit. That is long overdue.

The role of government should be to provide people with the foundations that they need to better themselves. It should not favour one path over another but provide the equality of opportunity that means that people can go on to do what they want to do and do it well, knowing that as long as they work hard and do the right thing the Government are firmly on their side.

An important step in advancing the standing of apprenticeships has been the move to pay apprentices a national minimum wage. Apprentices are paid from the first day of their apprenticeship. For those for whom university is not suitable, I am sure that the prospect of earning while working and learning is a very inviting one. What is also important to recognise is that when securing an apprenticeship many young people get themselves a job for life. There is a vast number of examples of people who have started working for a company as an apprentice and worked their way up throughout their career. That gives a boost not only to young people, who know that their employer can offer them career progression, but to employers, who can only benefit from having people at the top of their companies who have first-hand experience of all areas of their business.

I am pleased to see that apprenticeships are becoming increasingly popular with 16 to 17 year-olds, with 15% more of them in apprenticeships compared to last year. Schools are legally required to secure independent careers guidance for 12 to 18 year-olds that includes information on the full range of education and training options, including apprenticeships. However, in 2013, Ofsted’s study of the early implementation of that duty found that apprenticeships were rarely promoted effectively, especially in schools with sixth forms. I fear that this may have more to do with finance than it does with education. The fact is that schools get in the region of £5,000 for each pupil that they keep on post 16, so they may not want to lose them. I encourage the Government to look into this and find out what is the best way around it, because without doing so there is concern that apprenticeships, skills and our young people will always be held back.

Apprenticeships are critical to tackling the skills gap that exists in Britain, which has held Britain back in its export and manufacturing capabilities. We need to expand our manufacturing base: manufacturing should be as important as my own business, that of financial services. We are still massively underperforming as a nation, with the UK ranked 23rd in the world for manufacturing output per head and 114th in the world for manufacturing output as a share of GDP. We must put employers in the driving seat to create new apprenticeship standards that will deliver the skills and businesses we need to compete. The Government must do all they can to make apprenticeships more responsive to employers’ needs and help to raise standards. I welcome the fact that measures are being brought forward which will give English apprenticeship funding directly to employers, following a recommendation from the independent Richard review.

Apprenticeships help not only young people; they help the country and the wider economy. The National Audit Office estimates that for every £1 invested by the Government in an apprenticeship, the economy gets between £18 and £28 back. Employers are getting involved in the design of apprenticeships to make sure that people gain the skills they need for a job. Apprenticeships provide young people with much needed experience that often leads to a full-time job, bringing real value to the businesses that take them on and motivating these individuals to gain skills and qualifications. High-quality, rigorous vocational education is essential to our future prosperity and to improving the life chances of millions of young people.

Insurance Bill [HL]

Lord Sheikh Excerpts

Tuesday 29th July 2014 Grand Committee

[Lord Sheikh (Con)]

My Lords, at the outset I make the point that I very much support the provisions in the Bill, which has been welcomed by all sides of the insurance industry, including insurers, insurance brokers and their trade associations. The Bill is also supported by the Chartered Insurance Institute. I commend the Law Commission and the Scottish Law Commission for the considerable, valuable work that they have undertaken, which has resulted in the Bill being presented in your Lordships’ House. Businesses are expected to benefit by about £100 million over the next 10 years, as there will be less litigation and transaction costs will be reduced.

The United Kingdom has led the world in the field of insurance. The London market is well respected globally. The market is well known for its ability to be innovative, and it provides cover for a very wide range of risks. Some of the risks that it accepts and continues to cover are unusual, and the market is therefore unique. The market is made up of Lloyd’s, British and foreign companies. Britain’s insurance industry is a major success—employing more than 300,000 people across the country—and the market generates considerable invisible earnings, which help the country to balance its books.

At this juncture, I should like to state that I have business interests in insurance. I have been president of the Insurance Institute of Croydon and a director and regional chairman of the British Insurance Brokers’ Association.

Insurance law was developed in the 18th and 19th centuries but was codified in 1906 with the enactment of the Marine Insurance Act 1906. Although the codified Act related to marine insurance, its provisions applied to other types of insurance, as the Act brought together common law principles. The 1906 Act was enacted when the United Kingdom was expanding its insurance activities, and the legislation worked in favour of insurers. The insurers were granted wide powers. They have been able to repudiate liability under certain circumstances and their refusal to pay such claims was unfavourable to the policyholders. A number of overseas countries have modified the legislation and the insurance contracts issued by these countries are more customer friendly. It is therefore important for us to reform our legislation in order that we can maintain our prime position in the international insurance market. We can abolish clauses of the Marine Insurance Act 1906 only by primary legislation; hence, we need to introduce and pass this Insurance Bill.

At present, when an insured enters into a contract with an insurer, he is not sure whether a claim arising in the future will be dealt with adequately. When I started writing insurance business in the London market, I used to have a face-to-face meeting with the underwriter. Before my meeting with the underwriter, I used to write brief details of the risk on a slip, which the underwriter initialled, setting out the terms on which he would accept the risk. The world has now moved on. There are new systems and sophisticated data analyses, and we therefore need to reform the legislation relating to insurance.

Looking at the Bill, I welcome the fact that it provides clear definitions of “consumer insurance contract” and “non-consumer insurance contract”. Part 2 refers to the “duty of fair presentation”, which applies to non-consumer insurance contracts where most of the problems arise. I am pleased that, in regard to consumer insurance, the Consumer Insurance (Disclosure and Representations) Act 2012 applies, and the policyholder needs only to answer the insurer’s questions carefully and honestly.

With regard to non-consumer insurance, the duty of disclosure is set out clearly in the Insurance Bill and has two parts. I note that the Bill makes clear what the insured knows or ought to know, and this clarification will help the insured and the insurer. Under the Marine Insurance Act, any breach by the insurance broker fell on the insured, not the insurance broker. This is unfair, and I welcome the change so that the insured will not be required to know what the broker has learnt from sources other than the policyholder. I also welcome the remedies which are set out in the Bill in the event of breach of the duty of fair presentation. I emphasise that breaches of utmost good faith have previously resulted in disputes between insurer and insured, and I hope that the situation will now improve.

Part 3 relates to warranties. There have been problems relating to claims where it was felt by the insurer that there had been a breach of a warranty. Any warranty must be complied with strictly, whether or not it is relevant to the circumstances of the loss. I always felt that the application of warranties was, in certain circumstances, unfair and a more common-sense approach could have been followed in instances where the wording of the warranty does not have any bearing on the circumstances of the loss. Clause 9 relates to the application of warranties, and Clause 10 explains the situation where there is a breach. I welcome both clauses.

Part 4 discusses issues relating to fraudulent claims. Fraudulent claims are a major issue and are indeed a very serious matter. Fraudulent claims arise in all types of policies. They could, for example, relate to someone pretending that he or she has lost money while travelling overseas, and the amount involved may not be much. On the other hand, there are serious claims related to arson or staged motor accidents where there are allegations of whiplash injuries. Some people have benefited by making fraudulent claims, which result in higher premiums being charged for all policyholders, and honest policyholders therefore suffer. In 2013, there were nearly 120,000 fraudulent claims which resulted in payments of more than £1.3 billion. It is felt that fraudulent claims are easy to commit, and unfortunately the police do not take effective action where it is established that the claim is fraudulent. The industry therefore needs protection. It is understood that we cannot eliminate fraudulent claims, but we must take action to alleviate the problem.

Clause 11 sets out remedies where there are fraudulent claims. The Bill does not define “fraudulent claims” in statute, and the matter will therefore be dealt with under the common law principles. In regard to group insurance policies, I am very pleased to note that under such policies, if a fraudulent claim has been submitted by a member of the group, such a person would be the only one to be penalised and no severe action would be taken against other members of the group.

I would now like to refer to the Third Parties (Rights against Insurers) Act 2010. This Act is important, as it provides rights to an aggrieved party in the event of the insolvency of a policyholder, and the aggrieved party has the right to bring an action against the insurer. Clause 17 of the Bill grants the power to change the meaning of “relevant person”, and I feel that this change is desirable. I hope that the 2010 Act can now come into force.

Let me now deal with the issues where there has been late payment of a claim by an insurer. This has caused some problems, but I am pleased that the issue has not been included in the Bill as the matter needs to be looked into further—there may be legitimate reasons why the insurer is unable to pay the claim promptly. The issue must be fully discussed and assessed, and appropriate provision can be included in future legislation.

Apart from late payment of claims, there are other issues which need further consideration and these relate to the principle of insurable interest and brokers’ liability for payments of premiums. I hope that these issues will be looked into fully and we can legislate on these matters in due course. I support the Bill and I look forward to backing it as it progresses through your Lordships’ House.

Budget Statement

Lord Sheikh Excerpts

Thursday 27th March 2014 Lords Chamber

[Lord Sheikh (Con)]

My Lords, I am pleased to speak in this debate and pay tribute to the Chancellor of the Exchequer for another successful Budget. Under this Government our economy is on the mend. The problems inherited from the previous Government were greater than we had imagined, but slowly things are turning around. This Government are striving to be the most pro-growth in living memory. However, tough decisions are needed to reduce the deficit, heal our economy and keep interest rates low. Our economy needs to be more resilient and balanced. This is the only way in which to secure a better future for Britain and our well-being.

We are indeed on the way to growth, and this Budget was the next step. It was a positive Budget, one looking not only to solve the problems of the past but to secure a better future. The Budget will also indicate that people can be trusted with their own money. More money in the pockets of working people often means more money in the hands of business, through consumer spending. It is welcome that the personal allowance will rise to £10,500 in 2015-16. I ask my noble friend the Minister if there is scope to increase it further.

Much has also been made of the ways in which this Budget will benefit pensioners. People work hard throughout their lives and it is only reasonable that they expect flexibility from, and a good return on, their savings. There will be no obligation to buy an annuity if savers do not want to do so. As someone who has been actively involved in the arrangement of pensions, I can say that some people were not happy with the restrictions on their pension funds when the time came for their retirement. I therefore welcome the revised arrangements. I am pleased to note that everyone who retires on these schemes will now be offered free, impartial and face-to-face advice. Financial education has been insufficient in this country for far too long. While I wholeheartedly support people having the freedom to do what they wish with their money, it is important that we make sure that they are in a position to make wise choices. With this in mind, I ask the Government: what is being done to ensure that advice is offered not only to those who are about to retire but to younger people who must learn the importance of saving for later in life?

Manufacturing declined massively under the previous Government and is enjoying something of a renaissance under this Government, but still the growth is not enough. We must not rely purely on financial services but begin to make things again and reactivate our manufacturing capabilities. I was born and brought up in a colony where nearly everything we had was of good quality and was made in Britain. We had British-made cars, clothes, household appliances, bicycles and food products—the list goes on. The Empire is now gone but the British people have the ability to be great again in manufacturing.

On many occasions in your Lordship’s House, I have stressed the importance of placing a greater focus on trade, in particular our exports. In January, our trade deficit was estimated to be £2.6 billion. Our deficit on goods continues to be partly offset by our surplus in services, but we cannot allow this to go on. The continued efforts of UK Trade & Investment must be acknowledged. I applaud the Chancellor for expanding the resources available to it and going through it. Doubling the amount of lending available to exporters and cutting the interest rates on this lending will be welcomed from across the board. The Chancellor was clear that we will have the most competitive export finance in Europe. Our exporters need the confidence that Government understand the crucial role that exporters play and are willing to support them at every turn. I know that a great deal of progress has been made over the past couple of years, not least in recent months.

It was encouraging that the Business Secretary visited the United Arab Emirates on a trade mission back in January and launched a UKTI Gulf investment team. I visit UAE frequently because I own properties in Dubai. The economy of that city is indeed lifting, and we should make use of the opportunities that are now opening to outsiders. I was also very pleased to see the Trade Minister open British business centres in Slovakia and Hungary earlier this month. The drive to boost our trade with central and eastern Europe is most welcome. However, this is not enough.

We need to look in more depth at opportunities with countries such as Brazil, India and China, where export prospects are greatest. A report last month from the manufacturers’ organisation EEF found that emerging markets now account for half of manufacturers’ priority targets. In particular, Brazil has become a top priority, with one-third of companies planning to increase exports there. It is very important that our Government fully realise this potential and capitalise upon it swiftly and assertively. They must develop strategies to target these markets rather than react to potential opportunities.

The report also found that there is a lack of awareness among manufacturers of the support available to them. This further confirms my already held view that we need to market the services of UKTI more effectively. In particular, I should like to see a much more concerted effort on expanding our trading links with Africa. I know Africa as I was born and brought up there. I am visiting Kenya, Tanzania and Zanzibar in three weeks’ time.

A recent report from the World Bank forecasts that sub-Saharan Africa will grow by 5.3% this year. There are several African countries where growth exceeds 7% per year. Countries such as Ghana, Ethiopia, Mozambique, Kenya, Uganda and Tanzania are seeing increased consumer spending and need further investment in telecommunications and education. We have historic ties with some of these countries. We must act now and connect our businesses at home with the overseas markets of the future. I should be grateful if my noble friend the Minister could inform the House of any further plans to focus on these lucrative emerging economies.

Of course, none of these ventures will even be possible if we fail to nurture the talent and innovation of our young people. That is why I applaud the announcement to extend further the apprenticeship programme, supporting 100,000 more through extra grants to businesses. As someone who has been involved in training in my own business—financial services—I appreciate the training of our young in every field to ensure our growth and well-being.

The Federation of Small Businesses welcomed both the reduction in corporation tax and the doubling of the annual investment allowance for small firms. However, it cited as problems poor communication and the fact that firms often do not take advantage of government schemes simply because they do not know about them. This is a problem that has been mentioned in relation to business and exports many times. I ask the Government for clarification on what is being done to improve the way in which their policies are communicated to SMEs and others who can benefit from them. I also ask the Minister whether he believes that the Government will meet their exports targets. If the growth in exports continues to be slow, what plan do the Government have to deal with this?

Finally, the people who are paying 45% tax are often entrepreneurs and businessmen, who create jobs and generate revenue for the country. They should not be penalised and I feel that consideration should be given to reducing their tax rate from 45% to 40%. I would appreciate my noble friend’s comments on this point.

I believe that this was for the most part a good Budget. The Government are on course, as is our economy. However, I shall be grateful if, in his closing remarks, my noble friend is able to answer some of the points that I have raised.

Queen’s Speech

Lord Sheikh Excerpts

Monday 13th May 2013 Lords Chamber

[Lord Sheikh]

My Lords, I am very pleased to speak in this debate. Last week’s gracious Speech was rightfully centred above all else on the economy. It was a reminder to us all that although we have made some progress, there is still much to be done and our Government are committed to staying the course and maintaining our disciplined approach of austerity. Even more than that, it was about managing our economy in a way that is fairer for people and rewards those who work hard.

As a businessman myself, I was particularly heartened to see that central theme running through the very heart of our plans for the next 12 months. I am sure that everyone will agree that the way to strengthen our economic competitiveness is by growing our economy back to the health that it once enjoyed. That will be achieved only through more companies doing more business and offering more job opportunities.

I believe that the twin engines behind achieving that will be those of increasing our level of international trade and attracting higher inward investment from overseas. Last week, the Prime Minister spoke passionately to financial leaders at the global investment conference, when he rightly said that we face a sink or swim moment in the global economic race. Indeed, two of several key points that the Prime Minister outlined were focusing on trade deals and ensuring that the UK remains as internationally connected as possible.

Encouraging figures were also released last week which showed that our successful management of the 2012 Olympic Games brought the UK an extra £2.5 billion of direct foreign investment, increasing our productivity and, ultimately, our competitiveness. It created 58,000 new jobs, and 105,000 jobs were safeguarded as a result, firmly retaining our position as the leading destination for foreign investment in Europe. UK Trade and Investment was involved in helping to deliver the majority of those projects and should be applauded for its efforts.

Our focus must now turn to maintaining the momentum. We need to prove to the rest of the world why the UK remains an ideal place to do business. Specifically in terms of trade, I believe that we must begin to look much more seriously at developing our trade relationships in Africa. We have historic ties with some African countries and we can build on those connections further. Strong growth over the past decade has already helped to reduce poverty, and the International Monetary Fund recently forecast that sub-Saharan Africa will grow by 6% over the next four years. In fact, Ghana, Mozambique, the Congo, Liberia and six other African economies are expected to grow by 7% or more this year. To put that into perspective, the only other emerging economies in that 7% growth club are China, India and Vietnam.

It is therefore a very good time for British companies to get more involved with and invest in Africa. We must capitalise on that rapidly expanding economy simultaneously to grow British business and to help to drive further development and job creation across the African continent.

Here at home, as specifically mentioned in the Queen’s Speech, we must also continue to grow our private sector. Well over 1 million new jobs have been created since 2010, which has played a key role in the reduction of our deficit by one-third. I am very confident in our Government’s commitment to increase that further by a number of encouraging policies.

The £2,000 allowance on national insurance contributions has been welcomed with open arms by businesses across the board. It will particularly help those smaller firms which currently find that a substantial financial burden and means that one-third of all employers will not have to make any further national insurance payments. Research has shown that employers favour that measure, and it will be a business-boosting initiative. The Federation of Small Businesses has even stated that it went beyond what it was asking for.

The continued cutting of corporation tax is also helping private businesses to keep more of their cash to invest in expansions and employ more people, while promoting the UK as an attractive place for overseas companies to set up businesses here. Our Government have also promised to reduce the burden of excessive regulation on business. Again, that will make a considerable difference to small and medium-sized businesses, which find themselves bogged down with health and safety laws and restrictive red tape.

If there was ever a time to do away with the over-bureaucratic legislation that holds some businesses back, it is now. In particular, I look forward to seeing progress on the scaling back of consultations, audits and judicial reviews, as well as the elimination of equality impact assessments.

The latest figures show that we now have 4.8 million companies; 75% of them are sole traders; and 96% of all firms in the United Kingdom employ fewer than 10 people. It is therefore safe to say that small businesses will continue to drive us out of the economic downturn. The SMEs should, however, utilise digital technology as much as possible. That will be essential for their survival and growth.

I have always supported SMEs in my business life. In that regard, I declare the interest that I am chairman and chief executive of an insurance organisation which helps smaller organisations to place the insurance covers. I add that I was previously the chairman and chief executive of an organisation which had connections with more than 1,000 smaller insurance organisations.

In addition to cutting and reforming where necessary, it is also the job of government to invest in infrastructure to help to nurture growth and provide extra jobs. I was glad to see that explicitly referenced in the gracious Speech, with a specific focus on the development of the High Speed 2 railway line. I appreciate some of the controversy that inevitably comes with such a large-scale project, particularly on the acquisition of land, but the long-term benefits that it will provide to businesses across the country cannot be underestimated. It also takes a significant step in addressing two economic policies that I feel most strongly about—that of rebalancing our economy towards a manufacturing sector, which made our country so great; and promoting the redistribution of growth to many of our cities and regions nationwide.

Through such turbulent times, I believe that it is crucial that the Government are seen to be acting not just in the interests of economic health per se but in a way that also promotes economic fairness. That was another key pillar of the Queen’s Speech and one that goes hand-in-hand with our disciplinary approach to finances. It is heartening for me to see a government pledge on,

“building an economy where people who work hard are properly rewarded”.

I have always believed strongly in the notion of individual responsibility and reaping rewards from one’s own commitment and perseverance, and have spoken to that effect in your Lordships’ House in my support for reform of the benefit system.

Let us make no mistake: this Government’s welfare reforms are about making sure that the right people are helped back in to work while allowing for increased levels of support to those genuinely in need. Simplifying and rebalancing the ways in which benefits are considered and awarded can be seen only as progressive, particularly in the current climate.

I also welcome the inclusion of a Bill to help businesses protect their intellectual property. I have already declared my interest in the insurance business. I add that I have arranged insurance schemes for the protection of patents and copyrights. I therefore fully appreciate the value of a Bill to protect the intellectual property rights of businesses across the country. This is essential if we are to be seen as a centre for innovative ideas and products.

Before concluding, I wanted to mention my appreciation for the inclusion in the Queen’s Speech of the Government’s focus on preventing sexual violence in conflict worldwide. I have spoken on this subject both in your Lordships’ House and at several meetings elsewhere, and I am very grateful to the Government for placing a focus on it. The victims of these heinous crimes deserve justice, and it is up to countries like ours to provide the support that they need and to take effective action to deal with this dreadful problem. I have made clear my appreciation of the Government’s £1 million funding to the Office of the UN Secretary-General’s Special Representative on this matter, and I look forward to further progress in this regard.

Budget Statement

Lord Sheikh Excerpts

Thursday 21st March 2013 Lords Chamber

[Lord Sheikh]

My Lords, I was able to speak in last year’s post-Budget debate. Twelve months ago, we all hoped that we would now be in a healthier economic position. We have admirably cut our deficit by a third and seen more than 1 million new private sector jobs created. However, the wider global situation, particularly in the eurozone, remains such that full recovery is still some way off and the continued growth downgrades have been inevitable. Above all else, what is important in such times is that we maintain discipline and stick to our course of austerity, particularly in the face of the confused calls from the Opposition for higher borrowing. More borrowing is not the answer to our problems.

It is crucial that we are seen to be taking the right decisions for the right people by helping those who genuinely want to get back into work, by nurturing the talent and innovation of our young people, and by helping businesses in need of assistance, as businesses form the backbone of our economy.

I am very supportive of bringing forward the £10,000 income tax threshold to next year, positively impacting on 24 million people. The more of people’s hard-earned money they are allowed to keep, the more empowered and encouraged they will feel to spend it. That will result in greater revenues to those parts of our economy that so desperately need them and, ultimately, in a healthier all-round cash flow to stimulate growth.

The scrapping of this year’s fuel and beer duty rises is also very welcome. Again, it is a measure that will affect the average person in their day-to-day spending and, I believe, provide that small but foundational level of help that people really do notice.

I should also like to express my support for the very difficult decision to cut further the budgets of some of our government departments. Diverting £3 billion per annum from Whitehall departments to the implementation of major infrastructure projects such as roads, railways and power stations will make more of a difference to the everyday lives of working people and create thousands of new jobs.

I also applaud the proposals concerning home ownership. These will help people to buy houses and will assist housebuilders, generate more business activity and create jobs.

I endorse the decision to protect our health, education and international development budgets, as well as the responsible decision to exempt military personnel from the caps imposed on other public sector pay rises. As someone who is interested in humanitarian matters, I am pleased to learn that we will continue to spend 0.7% of our national income on overseas development.

One area where I hold particularly strong feelings is the erosion of our competitiveness, which has without doubt been one of the fundamental causes of our continued stifled growth. This has been due to the red tape and bureaucracy implemented by the previous Government, coupled with the very challenging shift in global wealth from West to East. In short, when this Government came to power, the UK was no longer an attractive place to start a business. Much of this is already being addressed through the Enterprise and Regulatory Reform Bill, and I was heartened to hear of the Chancellor’s decision once again to reduce corporation tax. We already boast the lowest corporation tax rate in the G7, but we can now proudly say that, based on projections, as of 2015 we will also have the lowest rate in the entire G20.

Perhaps one of the most notable announcements made yesterday was the cut in companies’ national insurance contributions, removing huge barriers for smaller businesses and meaning that a third of all employers will not have to make any further national insurance payments.

I support the Government’s announcement that we will be taking forward the recommendations in the excellent report of my noble friend Lord Heseltine, No Stone Unturned: In Pursuit of Growth. I agree with the Government’s policy of taking robust action and improving our system of training and education, particularly in relation to apprenticeships and vocational training. This will enhance our manufacturing base and help in our recovery.

As someone who is widely travelled and has contributed a great deal on trade issues in your Lordships’ House, I shall now focus my remarks primarily on the export-led recovery. There is no more obvious a way to grow a country out of economic turmoil than by increasing trading links—in particular, levels of exports—with other countries. I have been very heartened by the efforts of UK Trade & Investment since the previous Budget. In particular, earlier this month it announced that its Trade Challenge Partner initiative will be implemented, with 99 partners drawn from trade and other membership organisations, with the aim of getting more of the members exporting overseas and further supporting those that already do.

I welcome the appointment of parliamentary trade envoys, who have the potential to make a real difference. I should like to see an expansion of the role and number of these appointments. There are plans to develop British business support networks in 20 priority high-growth and emerging markets, and I know that my noble friend Lord Green led a conference just last week to announce the establishment of the India trade network. These are exactly the kinds of initiatives that I should like to see more of. Anything that we can do to help SMEs to move into emerging markets must be embraced to the point where it is no longer viewed as a challenge for us to increase our exports but it is naturally accepted that it is in our country’s fibre to be a world leader in selling our products overseas. I hope to see this progress continue to develop as we move forward in rebalancing our economy and refocusing our efforts on what made us such a great and powerful manufacturing and trading nation many years ago.

We need to aspire to raise our game in international markets and to support the most vulnerable in our society as the economy charts a course to recovery. We also have to restore order to our public finances. I welcome the Government’s resolve and commitment; it is now time to deliver.

Welfare Benefits Up-rating Bill

Lord Sheikh Excerpts

Monday 11th February 2013 Lords Chamber

[Lord Sheikh]

My Lords, I welcome the Bill as it will restore fairness and simplicity to the process of social security payments. It will also deal with the question of affordability. It is important for a Government of any persuasion to show that they empathise with taxpayers who are essentially paying for welfare handouts. The concept of fairness is one of the reasons for proposing this Bill. It is worth remembering that the coalition Government inherited the biggest budget deficit of any country in the developed world. It is estimated that capping social security benefits in this manner will save the Treasury £3.7 billion in 2015-16 and that, thereafter, there will be permanent savings each and every year in our welfare spending.

Welfare spending increased by 60% under the previous Government but this did not produce the intended result of helping individuals to return to work. If we can get more people in work, some of them will receive salary progressions and improve their standards of living. In the years 1997 to 2010, when average earnings increased by 30%, tax credit spending increased by 340%. One of the aims of this Bill is to tackle the lack of aspiration and ambition among a number of those who have been trapped in poverty. I believe that the 1% uprating stipulated in Clauses 1 and 2 will improve incentives to work.

It is true that the welfare debate has been described in overly simplistic terms in certain quarters. However, it is a fact that a culture of dependency exists in some areas. Previous Governments have tried to tackle this issue with the best of intentions but the complexity and scope of the problem has often meant that past strategies have not been successful in addressing the matter. Children and young people who live in households where adults do not engage in any form of employment are not only the most deprived in our society but are most likely to follow this path once they leave full-time compulsory education. This generational cycle of worklessness is a key factor in the rising levels of welfare dependency and poverty in our communities.

I am sure that all noble Lords will agree that work gives people pride and confidence. Unemployment sometimes creates depression and has an adverse affect on people. Work is good for people’s mental health, their physical health and their general well-being. These benefits have been demonstrated repeatedly. Dependency is not liberating; it constrains people and prevents them achieving their ambitions.

[Baroness Hollis of Heigham]

I am grateful to the noble Lord for giving way for a moment. Would he not agree that, on the contrary, what welfare benefits such as tax credits have done, and what universal credit proposes to do, is to make work pay and thus get people back into the labour market, exactly as he wishes?

[Lord Sheikh]

I still feel there is a culture of dependency. Obviously, we would like to get more people into work and incentives must be given to people to go to work. People have become trapped in our welfare system and they need to be freed. This Bill will make a great contribution to their liberation.

The Government deserve recognition for trying to ensure that we have a fair welfare system to support those in genuine need. Social security should be for people who find themselves out of work and are trying to get back into employment. This House recently debated the success of the Asian community who were expelled from Uganda and came to settle in this country in 1972. My family was among those people who were expelled by General Amin and who came here. A number of these Asians came here penniless and were initially housed in Army camps. At the outset they received state benefits but they came off those benefits, and started to work and established small businesses. They have been successful and now offer employment to others, pay taxes and create wealth for the country. It is unfortunate that some people have chosen not to make a contribution to society and have opted to receive benefits as a way of life. The welfare system was created to ensure that people were not left destitute if they lost their jobs. It was viewed as a matter of support for those who were down on their luck. It is unfortunate that the original purpose of this safety net has been distorted.

I wholeheartedly support the Government’s decision to retain the uprating of long-term disability benefits at the rate of inflation. I also support the triple-lock guarantee for basic state pensions, which means that pensioners will receive an increase of at least 2.5%. A compassionate society is one that shows respect and understanding to the most vulnerable. I am proud that the Government have taken these steps as they are both a moral and civil duty. Further to erroneous reports about these measures, I would be grateful if the Minister could inform your Lordships’ House of the steps Her Majesty’s Government are taking to ensure that people are well informed and reassured about policy regarding disability and pension provision.

It is neither prudent nor fair to distribute welfare payments or benefits without question or regard for our economic situation. The uprating measures in this Bill will show considerable savings by 2015-16 and for years after that. This is essentially about taxpayers’ money. We have a financial deficit that we need to rectify and we need to put the country on a sound financial footing. We can achieve this by reducing our spending, applying appropriate taxes and undertaking more business at home and overseas. I have spoken on the latter point in your Lordships’ House previously. We cannot afford to continue paying welfare benefits as in the past.

The Government have reduced the deficit by a quarter since they came to power in 2010. Obviously, this is to be commended. More than 1 million jobs were created in the private sector in the same period. The FTSE 100 index has risen above 6,300 points for the first time since May 2008. If we can achieve more growth we will create more jobs, and if we can encourage people to work rather than be dependent on the state, more people will be gainfully employed. I support the Government on getting the economy right and we must be firm and keep on the right track. It will indeed cause pain to some people but, of course, if a person is ill it is necessary to take strong medicine. We should not borrow our way out of the current financial crisis. Borrowing is the easy way but it is the wrong way.

There are wider social implications at the heart of this debate. We cannot ignore the resentment and anger felt by hard-working families who see others making a conscious effort not to work being rewarded handsomely by the state. Failure to address this issue may cause tensions within communities. I am sure that some of us have heard the expression, “I cannot afford to go to work”. This is an absurd situation and we are perhaps the only country where people are better off not working.

The measures in the Bill are necessary to remedy the culture of dependency that is blighting some members of our population. The Bill is a sign of the Government’s commitment to ensuring that we live in a fair society. The fact remains that since the economic downturn salaries have risen on average by 10%, whereas payments for some individuals in receipt of benefits have risen by 20%. We need to look at all areas of expenditure for our well-being, which will of course include the welfare benefits. The present state of affairs is simply not sustainable. I am supporting this Bill as it is a step forward in dealing with issues relating to affordability and fairness.

Economy: Growth

Lord Sheikh Excerpts

Tuesday 29th January 2013 Lords Chamber

[Lord Sheikh]

My Lords, I am very grateful to have the chance once again to contribute to a debate on what has been and continues to be our Government's number one priority: promoting growth to reduce our national debt and restoring stability to our economy. It is important that we continue to have such discussions in order to continually monitor progress and exchange ideas about how we can assist our recovery further. I congratulate my noble friend Lord Deighton on his excellent speech at the outset of this debate. I also congratulate him on his ministerial appointment.

Concerns were raised last week following Friday's announcement that our economy contracted in the last quarter, so this debate is most timely. The Chancellor was clear in the Autumn Statement that, despite the inevitable blips, our economy is ultimately improving. The deficit has been reduced by a quarter since the Government came to power in 2010, significantly lightening the further pressure on our debt each year. Employment is of course a key driver of growth and recovery and we have seen more than 1 million new jobs created in the private sector in the same period. Unemployment is at its lowest level for 18 months and the number of people in work has reached another record high. Demand for manufacturing orders is also expected to rise in the next quarter. Taking such indicators into account, it is fair to say that we are still on a stable path to long-term recovery.

We also received extremely positive news just yesterday that the FTSE 100 index rose to above 6,300 points for the first time since May 2008. It has now gained nearly 7% since the beginning of the year. The fact that the value of our top 100 companies is at its highest for nearly five years can only be seen as a bold endorsement of the direction in which the City of London and our economy as a whole is heading. Such a rise will only increase investor confidence further and continue to build its own momentum—which in turn allows business to expand, provides further employment opportunities and increases dividends, ultimately giving people more money in their pockets and a greater sense of financial stability.

I refer to an encouraging report recently produced by UKTI which found that 46% of major financial service companies in the UK are actually overseas-owned. In particular, it emphasised how the United States uses the UK as a springboard from which to access the rest of Europe and that we are particularly well placed to benefit from the ongoing boom in the world’s emerging markets. One of the Government's key targets on the economy has been to ensure that Britain is seen as open for business, and this report evidences just how accessible we have made ourselves to overseas investment.

This does of course remind us of the wider global context within which we are operating and to which our own economy is closely linked. In such a globalised economy, we cannot be fully confident of future prosperity unless our neighbours, allies and trading partners are also in positions of reasonable financial health. Just last week, the IMF downgraded its global growth forecast for the next two years, mostly due to the continuing crisis in the eurozone, which is now expected to remain in recession throughout 2013.

We will continue to be vulnerable for some time and must not be knocked off our disciplined course of austerity. The more severe the illness, the more cautious the treatment will be and the longer it will take to recover. Now more than ever it is important that we have strong leadership. Our Prime Minister was clear last week in Davos that trade, tax and transparency are our economic priorities heading forward. As a businessman, I fully support this approach.

The Government have already been taking numerous measures to stimulate growth: local enterprise partnerships and enterprise zones have been established; our corporation tax is now the lowest in the G7; and just earlier this month the expansion of the start-up loans scheme was announced. In particular, I commend the Government's continued commitment to seeing through the plans for the High Speed 2 railway line. I appreciate that there is some controversy surrounding these plans, but the wider long-term benefits to the United Kingdom simply cannot be underestimated. As the Prime Minister said, this project is an engine for growth in itself, ultimately creating tens of thousands of jobs. Reducing journey times between some of our major cities would be a significant step in addressing the north-south divide that currently exists in our economy and would regenerate regions that are sometimes overlooked.

I think that we would all agree that overseas trade is one of the most important elements to ensuring healthy, consistent growth. The Government understand this—one of their four aims to achieve growth is to encourage investment and exports. This is where we must create and maximise any and all opportunities.

I am concerned by the long-term decline in our share of global exports. We will not reach the great heights that we once did if we continue to buy so much more than we sell. That is why I am so pleased that the Government have developed a renewed focus in this area, with UK Trade and Investment actively encouraging small and medium-sized businesses to increase the exporting of their goods and services, particularly to emerging markets. I also welcome the wider commitment to double British exports to £1 trillion by the end of this decade.

I have previously mentioned in your Lordships’ House that over the past two and a half years I have travelled to a number of countries abroad and promoted trade between the United Kingdom and overseas countries. There are of course growing opportunities in countries such as Brazil, Russia, India and China. There are also prospects to do more business in the Middle East, central Asia and several African countries. I know some of these countries very well.

We should maintain and in fact strengthen our trade links with the USA and with other European countries. I am a great believer in the Commonwealth. We should build stronger trade links with other Commonwealth countries. I totally endorse what my noble friend Lord Howell said with regard to the Commonwealth countries. I believe that we have a good story to tell about provision of our services and manufacture of our goods. We must, however, make sure that our businesses are world-leading and globally competitive in order to attract inward investment and continue to increase further the potential for us to export to the rest of the world.

Our motor vehicle industry is a good example of where this is already happening. Last year 82% of all cars made in the United Kingdom were exported overseas. The total was 1.2 million vehicles—the highest ever. Britain is set to produce 2 million cars in 2017, following £6 billion of investment in the motor industry in recent years.

We have greatly improved our manufacturing methods and produced impressive vehicles which are now in greater demand. From trade comes growth, and from growth comes prosperity and stability. As a businessman, I have always believed that a successful organisation needs to produce very good products which should be competitively priced. It should then undertake an active marketing campaign. In doing so, it must always keep a close eye on its expenses. The Prime Minister has said that he wants every department in Whitehall to be a growth department, and he insists that every Permanent Secretary has growth as a key objective.

The Government are playing their part by giving business a positive and supportive framework around which to build and project itself. The Government are actively involved in improving infrastructure which will provide employment, attract investment and help businesses. Building up skills is also an important objective of this Government. We all believe in cutting red tape and giving more powers at local levels.

None of us has been naive to the fact that it was never going to be easy and would take some time for our economy to heal. The combination of the previous Government's financial mismanagement and the wider global situation was a mix so toxic that it caused damage on a monumental scale. However, I believe that these measures and a continued ideological drive towards growth as a means of rebalancing our economy will ensure that we continue on our path to recovery. I am confident that we will promote growth and cut the deficit if we maintain the course that our Government are pursuing. It will be a hard task that requires the co-operation of government departments, various sectors of the industry, the business community—in fact, everyone in the country. I am sure that Britain will live up to its name of being great.

Economy: Budget Statement

Lord Sheikh Excerpts

Thursday 22nd March 2012 Lords Chamber

[Lord Sheikh]

My Lords, there can be little doubt that the state of the economy is the most important issue facing the United Kingdom at the moment. The pressures facing individual households and businesses across the country are real and very difficult. I welcome the opportunity to speak on this Motion, not least since it has a wider focus than yesterday’s Budget Statement. However, that is not to diminish the importance of what the Chancellor of the Exchequer said yesterday.

We are wrestling with economic challenges on two main fronts: our own domestic budget deficit and the wider international concerns and potential threats in relation to the eurozone and oil prices. Growth in 2011 was lower than in 2010 and lower than the Office for Budget Responsibility’s forecast at the time of last year’s Budget. Prices have inflated more than previously predicted and, as a result, people have been able to afford less in their household spending. Our Prime Minister has been consistently clear that tough times call for tough measures, while some of those measures have not been politically convenient.

It has been refreshing to see decisions taken with a long-term view to nursing our economy back to good health. I was pleased to see that this disciplined approach allowed the Chancellor to make a number of positive announcements in yesterday’s Budget Statement. I welcome the raising of the personal tax allowance to £9,205 from next year. It is the largest increase in the personal allowance for the past 30 years. I am also highly supportive of the reduction in the top rate of income tax to 45p, which will help ensure that higher earners and businesses do not take their skills and practices elsewhere. I feel that this change in taxation will provide a fair deal for persons who help to create wealth in this country. The entrepreneurs, who include the high earners, provide employment for a considerable number of people.

The phasing out of child benefit for those earning more than £50,000 is also in my view a policy that is not only fiscally responsible but will have the support of the vast majority of hard-working taxpayers. We must be clear that giving people greater power and responsibility to manage their own budgets is a big step on the journey back to economic prosperity. Families and businesses across the country are living through these difficult times and it will be these families and businesses that help our economy to flourish once again with their spending power.

Thanks to this Government’s responsible fiscal policy, the OBR states that it now expects the economy to grow by 0.8 per cent this year, before rising to 2 per cent next year and higher in the medium to long term. Inflation has been a cause of concern and getting it under control is crucial. Therefore, I welcome the forecast that inflation will fall from 2.8 per cent this year to 1.9 per cent next year.

I have enjoyed a long career in business and have a strong connection with the City of London. As a chairman of companies and an employer I feel that I have an understanding and appreciation of how businesses and employers contribute to the economy, and the challenges they face in maintaining and increasing their productivity in such difficult times.

I have visited eight different countries in the past 18 months, where I have been privileged to meet various senior figures from politics and business and to speak at a number of conferences. Engaging with our overseas partners has reasserted my long-held belief that one of the best ways we can improve our financial position, both globally and domestically, is to place a much greater focus on trade. We are the world’s seventh largest economy and, as such, Britain’s economic health is closely intertwined with wider global stability. Our trade surplus and global market share in key industries such as aerospace and pharmaceuticals provide us with a solid base in manufacturing and research, and the City of London maintains its position as a major investment powerhouse. However, we must do more. I want to see more of our goods and services exported overseas. I was very pleased to hear our Chancellor make reference to the key role of trade in yesterday’s Budget. In addition to continuing cuts in the rate of corporation tax, he stated that we must help British businesses to expand and innovate, and that we want to double British exports to £1 trillion by the end of this decade. I believe that this will play an important role in helping our immediate economic recovery and ensuring that Britain remains a strong economic force for decades to come.

I applaud the work of UK trade and industry in encouraging more of our small and medium-sized businesses to focus on exports, and particularly in shifting focus to emerging markets. In regard to overseas trade, we should, of course, maintain our connection with America and Europe but we need to look for opportunities in India, China, Brazil and the Middle East; in fact, in every part of the world. We could do more to trade with the Commonwealth countries. We, of course, have a historic connection with the Commonwealth, which is indeed an advantage. The Chancellor announced yesterday that UK Export Finance will be expanded. This is all extremely welcome.

It is important that we clamp down on tax avoidance and tax evasion. No one can fail to have been impressed by the energy with which the Government have taken forward this effort since May 2010. It is to be welcomed that the Chancellor has given additional impetus to this effort in the Budget. People have a right to know how their money is collected and spent. The concept of personal tax statements seems very simple, and might beg the question why we have not made them available sooner. However, if we are truly to engage effectively with the public on public spending choices, these statements are a useful tool.

It is also good to see both the Foreign Secretary and the Business Secretary working with UK Trade & Industry. I hope that this paves the way for greater co-operation between these and other government departments. I believe that if we are truly to realise our potential in identifying key markets and developing and promoting our products overseas, we must consider even more long-term joined-up thinking between those in the Foreign Office, the Department for Business and the Department for International Development. I, of course, welcome the fact that the Government have made headway on this. One of the most effective means of promotion will come from the networking and coverage provided by international trade missions. We should organise more trade missions to overseas countries. I am pleased that recently I was able to assist in arranging a trade mission. We provide aid to foreign countries but we must consider giving more financial assistance to properly organised trade missions. Aid and trade can go hand in hand. In addition, our ambassadors and high commissioners overseas could play a more significant role in this respect.

Two years ago, this Government inherited one of the biggest budget deficits in the G20. Times since then have been turbulent and have involved taking a number of difficult and sometimes controversial decisions. Let us be under no impression that there are any quick fixes, but yesterday our Chancellor delivered a Budget Statement that will ensure we continue on our road to recovery and uphold the United Kingdom as a fair, attractive and prosperous place in which to invest. We have already had a positive reaction from GlaxoSmithKline, which has announced that the company will invest £500 million in new manufacturing facilities, creating 1,000 new jobs. I would like to conclude by saying that we are indeed on a road to recovery.