Lord Vinson
Main Page: Lord Vinson (Conservative - Life peer)
Lord Vinson (Con)
My Lords, this is a timely debate and we are extremely grateful to my noble friend Lady McIntosh, but I fear that I am going to take a rather different line to hers. The fall in sterling gives us a chance to rebalance the economy and make jobs here, rather than use ever rising borrowing to buy goods from abroad.
How did we become such a heavily indebted nation? We kept borrowing without a care. Today, £730 of every taxpayer’s tax goes to pay interest on our international debts and that is steeply rising. When the history of central bank policies comes to be written, I believe that few economic orthodoxies will appear sensible, years after they were fashionable. We now rightly decry sticking to the Gold Standard in the 1920s and the harmful consequences. We recognise the damage done by sadomonetarism, when Geoffrey Howe put interest rates up to 17%, bankrupting thousands of companies in an attempt to control inflation but in effect setting it alight through wage demands. Incidentally, I agree that the causal relationship between raising interest rates and lowering inflation is highly questionable, though accepted as gospel. Then Greenspan got it wrong when he failed to do anything about fiscal exuberance and the American economy took off.
Today, our economic policy joins that list of follies. Keeping interest rates at 0.5% or less to encourage even more borrowing, when both individually and nationally we are borrowed up to our eyeballs and the mountain of debt is ever higher, must be madness. We should be saving more and using those savings to invest more. Up to now we have done little to correct our massive trade deficit.
How did we get into this problem? It started when we decided to let the pound go free and float in principle but not in practice, muttering, “The market knows best: we should show by example and not indulge in competitive devaluation. If China does it, what does that matter to us?”. We are indeed a trading nation that forgot about the importance of exchange rates during an orgy of credit-fed consumption. Because the Bank of England was mandated to be concerned about inflation, the pound was left to stay high and the damaging effect of that level ignored, making imports easier and exports harder.
There was another reason that the pound stayed high. So much of what is called inward investment was nothing of the sort, though inward investment of a certain sort was unbridled. That investment was not to improve and expand the economy but, often, a straight purchase of assets to secure income for overseas owners. It was still considered beneficial. We have sold hundreds of companies. We have sold not only the silver in this country; we have even started to sell the furniture, turning what used to be valuable foreign income for us into a massive outward flow of cash to others. We effectively rent many of our own businesses and utilities from overseas owners—Heathrow, ASDA, Cadbury, Northumbrian Water, and now ARM, which was sold for £30 billion pounds, to name but a few. But there are hundreds of them, and the effect has been damaging.
Uniquely, Britain—and only partially America—is alone in the belief that it is beneficial to extend the free market in goods and services to include companies. We have got it wrong. That belief is entirely unsupported by evidence, and I am very glad that our Prime Minister has noted it and has begun to be concerned.
The end result of this benign neglect is that the pound was substantially propped up by asset sales well above its fair parity. Its height was welcomed as virtuous and praised for the cheap holidays and imports it encouraged. Few economists thought outside the box or would admit that its height was causing our huge trade deficit, deindustrialisation, too much borrowing, too little investment, unstable, low productivity growth, stagnant wages and too many people losing out from globalisation. We only have to look to Germany, by contrast, to see what a converse economic policy can do. Unfettered free trade has left us in a mess, and I say that as a passionate believer in fair free trade; I declare an interest as someone who has spent a lifetime promoting the market economy. I just hate to see capitalism get it wrong and damage its whole cause.
We must recognise that the correct parity of the pound is essential to a trading nation, and we should make it a key part of our free trade policy. In so doing, we must accept that world prices are not necessarily fair prices reflecting the cost of production but are often, as in the case of Chinese steel, dumped market-clearing prices, lowered to obliterate competition, before raising them again. Reasonable protection against such practices is essential, or it should be, for key capital assets. This is sanity. It is not protectionism but self-preservation.
I realise that this may go against the sacrosanct dogma of the free market purist, but it is a necessity in the real world. Just look where present attitudes have got us. I also accept that this sort of view may not be welcomed by many in the City. Much of its work is beneficial and essential, but, because they are wrongly incentivised, many there would sell their grandmother for a quick gain. This results in much short-term thinking and consequent harm to the economy. The huge tax revenues the City brings to the Treasury have little to do with profit as a consequence of productivity but are mostly gained by a straight deduction from the capital assets the City handles, often through excessive commission. For example, the commission on the takeover of British Gas by Shell was more than £100 million. It could not possibly cost that if it was properly looked at. Such people take the icing off the national cake baked by others, and are overrewarded for so doing. The City makes money, but it creates less wealth. Its contribution is overrated. It also explains why our GNP per head has hardly risen over the years.
If we want true growth, we cannot do it through financial services, but we can do it with a fall in the pound with modern manufacturing, mineral and food production, which the noble Lord, Lord Skidelsky, touched on.
As we reset economic policy to reduce our indebtedness I hope the Chancellor will, apart from other proposals, mandate the Bank of England to keep sterling at fair parity, as best he can, to help rebalance the economy. Secondly, the Bank should get interest rates gradually back to sensible levels that reward saving and make pension provision worth while. For example, how about a 2.5% indexed infrastructure bond, used for that purpose but reserved exclusively for UK pension funds only? Thirdly, the Chancellor—and there are many other things he can do—could stimulate high productivity by letting companies recover the cost of the purchase of capital goods in the same year, not over 10 years or so as is done now. Our productivity is 21% below the G7 average and it is unlikely to be raised by opening ever more coffee shops, which are difficult to automate. Finally, we must accept sensible limitations on free trade, by bringing back the national interest test for mergers and acquisitions and dumping. It was part of the brief of the Monopolies and Mergers Commission and should be part of the brief for the new Competition Commission. I hope the Minister will note that.
The time has come, thanks to devaluation through Brexit, to rebalance and invigorate our inventive, creative and capable nation. I hope we can all grasp it and find a more stable and less indebted way of living with the global economy.
Baroness Kramer (LD)
My Lords, this has been an absolutely fascinating debate, with a wide range of views on a wide range of topics. I join in congratulating the noble Baroness, Lady McIntosh, on obtaining the debate.
I begin by disagreeing very much with the noble Lord, Lord Vinson. I feel strongly that devaluation as a route to export increases is a dangerous one to take. The noble Lord, Lord Skidelsky, underscored this, as did the noble Lord, Lord Bilimoria. If we look at our experience of the fairly sharp collapse in the pound since June, we have seen very little increase in exports from the UK. Frankly, most economists are surprised at the relatively modest level of export increases.
Lord Vinson
I apologise for asking the noble Baroness to give way so early in her speech, but clearly you cannot expect manufacturing, where it takes three or four years to introduce plant and capital and get people trained, suddenly to fill the gap. It will take five to 10 years for us to rebalance our economy. It is surprising that anything has happened at all in a couple of months.
Baroness Kramer
I point out that the noble Lord is assuming a permanent devaluation in the pound to the current level. I want to talk for a moment about the consequences that that would have, which was underscored by the noble Baroness, Lady McIntosh, for the standard of living in this country and the experience of very many people if we continue to have an economy where growth is so low that sterling remains at the current level.
As I say, there has been no dramatic pick-up in exports, and looking at devaluation as a route to increasing exports is a very dangerous one. At best, it has a short-term benefit, and over the long term it imports inflation. We have already seen significant rises in fuel prices, and ordinary people are feeling that. At the moment, though, people are being protected from large increases in retail prices because most major companies have foreign exchange hedges in place to get us at least through the Christmas season and into the early part of the new year. Some industries have not been in that position; we have heard the noble Lord, Lord Bilimoria, talk about the profit warnings that have come from the airline industries, from some of the retailers and, increasingly, from a large number of British companies across the board.
However, it is the small companies that were unable to put hedges in place that are particularly affected. A number of speakers have talked about that particular difficulty. Not only do the banks make hedging pretty much unavailable, it is also exceedingly expensive. I am very worried—I think the noble Lord, Lord Carrington, made this point—about the impact on small businesses. I have talked recently with some small chocolate manufacturers, who said that their import prices are already pushing them to the point where they think they can make it through the Christmas season without pretty significant increases, but they do not think they can make it into the new year season. The consequences for them are significant. I also happened to talk with some of the small wine shops that one sees. One could say that wine is an exotic product, but an increase of near on 20% for many of them on the products that they import is now putting them in a situation where even on modestly-priced wines, which are their meat and drink and their main source of trade, they are looking at having to pass on those increases.
What I have found fascinating in talking to these people is that, if one says, “What about substituting a British-made product?”, first, as others have said, frequently there are not many of those available, but, secondly, British suppliers are using this as an opportunity to increase their prices. Many have been feeling pressure on their profit margins for a long time, and the rise in the cost of imported goods is now putting them in a position to be able to increase their prices as well. So the knock-on effect for the consumer is genuinely a very serious one.
If anyone took a look at the survey done by the HR managers’ group that was made available about a week ago, they will have seen that overall, looking broadly at the economy, the general take is that inflation will be running at close on 3% next year, as several people have said, but on the basis of the surveys the expectation is that the average basic wage settlement will go up by only 1.1%. That is huge pressure in the pocket for ordinary people who have already gone through many years of austerity, and the consequence is really unpleasant and, frankly, very serious.
A big discount on sterling means there is almost a January sale on the price of buying a British company, whether you buy it on the stock market or buy it out from its current private owners. With a 15% discount, we would expect to see a large number of acquisitions of British companies taking place, but we are not. We are seeing some large and important investments—very often, ones that have been planned for a long time and are related not to price but much more to a global strategic move by particular companies. However, I have been looking closely at the fintech industry, where there has been a complete collapse in venture capital and equity available for UK-based fintechs since Brexit. Global investment has gone up significantly; in Europe, the biggest beneficiary has been Berlin. In the UK, though, we have seen that number fall very sharply. Anyone who wants more information about that should take a look at today’s Financial Times. That is just one of many reports coming in from that field.
The noble Lord, Lord Skidelsky, talked about the future. We have to have an economy that has many more roles than just being a financial services provider. Fintech—indeed, tech generally—surely has to be at the cutting edge of that. These are brand-new industries in an area where we have established ourselves as a leader, based on our brilliant universities, our experience in life sciences and our capacity in financial services. In all those areas, we have made extraordinary headway in being at the cutting edge of innovation. Yet this is the very sector that is suffering from a lack of interest from investors at a time when you would have thought they would say, “It’s exceptionally cheap. If we’re ever going to get in, this is the day to do it”. That is largely because of Brexit and, frankly, that worries me because it is the future that is being put at risk.
If British companies themselves thought the future was going to be so exceptional and a great time to advance exports, we ought to be seeing investment rolling into those companies. In fact, we have seen that British businesses have ditched about £65 billion of investment since June. Planned investment is down extremely sharply, some of it perhaps temporary and due to uncertainty but in some cases these are already permanent decisions to take the investment elsewhere. So when people talk about devaluation as offering a huge potential to restart the economy, spark it off and lead it into being an export-led economy, we need to look much more closely at what is actually happening.
Many, including the noble Lords, Lord Haskel, Lord Skidelsky and Lord Bilimoria, have pointed out the integrated nature of our economy today across the EU. I often suspect that, because we never really had any kind of political integration, people think that in the same way the business world stayed distinctly British, French, German, Spanish, Greek or whatever. In fact, what has happened in the last 40 years is that in a sense the business world—the economy—has become thoroughly integrated. It is almost like a piece of crochet; it is almost impossible to separate out the varying strands because it is now such a complex web. I think that is what the Government are finding as they go through the experience of trying to work out how they are going to deal with Brexit: what they thought would be very simple—say, identifying a British company that does imports, exports or whatever else—is in fact not. At every level, big, medium and small, we are in an entirely intermeshed world that is extremely difficult to identify. When you have something such as devaluation, it rebounds quite painfully on many aspects of that business network.
Others have said that one of the good things about devaluation is that it will encourage European workers to go back home, because their remittances will be worth less in their home currency. That has not happened; in fact, we have had the exact opposite, with employers desperately seeking to bring in European workers before what they think will be a gate that slams closed at the point where we actually exit the EU. So we have the opposite effect of the EU threat bringing in workers. As others have said, we are so close to full employment in the UK that that is not surprising, but the hope that devaluation would somehow send people out of the door has, I am very pleased to say, not actually transpired.
When we have inflation brought in through the increased price of imports, what will be the reaction of the Bank of England and the governor? Undoubtedly, at some point, interest rates will have to rise. Some have said that a rise in interest rates will be very good for the economy, but, my goodness, the impact on people who have mortgages, particularly when we are not getting increases in wages, will be really difficult. We are talking about people who have gone through years of austerity now beginning to face inflation in the price of products, then being hit by interest rates impacting on mortgages. Higher interest rates at a time when we need greater economic growth to take ourselves through a period of extraordinary uncertainty and disruption and to try to encourage companies to make a base here seem extraordinarily difficult.
So far, in my view and that of many others, Governor Carney and the Bank of England have managed this process with something of the skill of a tightrope walker, but it will be extremely difficult going forward. I have sympathy with the noble Lord, Lord Carrington, in calling for greater forward guidance to deal with some of the uncertainty. The problem is that I do not think that even someone with a crystal ball could give much guidance at this point, when it seems that the only thing that is expected is the unexpected and a sense of uncertainty is now so deep and prevailing that most forward guidance could not have a high level of certainty attached to it.
I also agree that it is time that UK Export Finance took on some of these issues for smaller companies trying to deal with both exchange rates and simply getting paid for their exports, as they are challenged to try to export much further afield. There is a very important role for UK Export Finance to play to get the banks back on the field in the way that they used to be until about 10 to 15 years ago.
In this area of uncertainty, which the noble Lord, Lord Paul, underscored, the most important thing that the Government could do is provide us with some clarity. By clarity I mean laying out the priorities—the principles on which they will negotiate our exit from the European Union. Companies, instead of finding themselves completely in the dark and having to make decisions on a worst-case scenario because that is all that is left to them to work with, could be provided with that kind of clarity. Will we be in the single market? What is our attitude towards the customs union? What will we do about migration and access to workers, both skilled and unskilled? We need answers; businesses need answers; and with that they could get at least a measure of certainty at a time when uncertainty is being reflected not only in the travails of quite a number of businesses but in this weakness that has driven down the value of sterling.
Lord Young of Cookham (Con)
My Lords, let me start by echoing the thanks of others to my noble friend Lady McIntosh for securing this debate. Initially I was rather worried about the idea of a two and a half hour debate on an issue on which, as I shall state in a moment, the Government have no policy—but the quality of the contributions has allayed that concern. There have been some outstanding contributions, including the speech that introduced the debate.
The contribution by the noble Lord, Lord Skidelsky, took me back more than 50 years to economics tutorials in Oxford at the feet of Sir Roy Harrod. We also had a heroic challenge to current economic orthodoxy from my noble friend Lord Vinson. There was not a lot with which I agreed, but I did agree with what he said about infrastructure bonds, and he will be pleased that the Government already provide Treasury-backed guarantees for infrastructure bonds and loans. They can provide up to £40 billion-worth of guarantees, and have already supported 10 projects with a total capital value of around £23 billion. So even if I do not follow my noble friend down some of the other avenues he suggested, I hope he will take encouragement from that.
One message that has emerged from the debate is that things are not simple. The straightforward relationships between currency values and imports and exports we may have learned about in economics textbooks simply do not hold today. A number of contributions by my noble friends, and by noble Lords on all sides, have explained how, with complicated supply chains, the responses to fluctuations are not nearly as straightforward as they might have been. We also had some very helpful contributions to assist my right honourable friend the Chancellor of the Exchequer, as he puts the final touches to his Autumn Statement, and some advice to the Government on more clarity as we approach our negotiations on exiting the EU. But I am grateful to everybody who has contributed to the debate, and I shall try to pick up some of the points.
Exchange rate movements, the subject of the debate, attract a great deal of attention and are a topic of economic importance at the moment, both on a national level and for people in communities, as my noble friend emphasised. She mentioned the rural areas of North Yorkshire, which she knows so well. Changes in the value of any currency take place, of course, due to a wide and complex range of factors, both domestic and international. The fluctuations that we have seen following the outcome of the US election last week, not only in the dollar but in the euro, pound and peso in particular, are a clear case in point. It is no surprise that, since our decision to leave the EU on 23 June—one not predicted by the markets—the value of the pound has fluctuated. As of today, it is 15% down against the dollar compared to the start of the year; many observers attribute this to the markets’ response to the inevitable uncertainties during this period of adjustment.
My noble friend Lord Carrington explained how larger companies can hedge against currency fluctuations, but raised the issue also touched on by the noble Baroness, Lady Kramer, about the problems confronting smaller companies that cannot take the same precautions. I shall certainly pass that on to my right honourable friend in the Treasury.
As noble Lords will be aware, it is a long-standing Treasury policy that we do not comment on the level of or fluctuations in the value of sterling, which is allowed to adjust flexibly in response to economic conditions and market forces, as the noble Lord, Lord Haskel, described. Neither the Government nor the Bank of England set a target for the sterling exchange rate, which is a reflection of the UK’s long-standing economic framework—business as usual, as the noble Lord, Lord Paul, mentioned. Our monetary policy, which is set independently, has free-floating exchange rates and free movement of capital, which allows us to focus on targeting inflation. The UK’s inflation targeting framework prioritises price stability, which is a fundamental pillar on which our economic prosperity is based. The noble Lord, Lord Haskel, reminded the House of the risks of fixing the value of our currency. Noble Lords may recall the ERM crisis of 1992, where sterling was pegged to the deutschmark, only to collapse in the face of currency speculation. Noble Lords with longer memories may remember the problems that Harold Wilson had back in the 1960s, to which my noble friend Lord Vinson referred.
But although we do not set any targets for the value of sterling, both the Government and the UK’s financial supervisory institutions monitor closely the effects of any fluctuations in sterling on our economy. The noble Lord, Lord Bilimoria, for example, highlighted the impact that the fluctuations have on particular industries, such as the civil aviation industry. He also made the point that the impact on companies in the FTSE 100 has been slightly more uplifting because of the amount of overseas earnings that they generate. The Monetary Policy Committee took action in August, for example, to give an important monetary stimulus package which helped to ease financial conditions after the referendum, keep consumer confidence high, and return inflation to its target sustainably. The noble Lord, Lord Davies, mentioned inflationary pressures ahead; the MPC judged that there may be inflationary pressures ahead, as the depreciation of sterling may lead to a rise in the prices of imported goods and services, given our globally integrated supply chains. He made a point about the impact that that has on those on low incomes. As for the MPC’s guidance, I shall certainly see that it reads the speech of my noble friend Lord Carrington on his view of how the guidance might be improved.
My noble friend Lady McIntosh highlighted today the impact of the depreciation of sterling on prices, with a seasonal reference to mince pies as one example of the potential impact this could have on household budgets. Six mince pies sounded rather a lot to me, but it was a valid point that we need to keep an eye on the impact on the fluctuation of food prices. The MPC has been clear that the best course is to focus on supporting employment and output, and therefore tolerate a temporary period of above-target inflation, which is expected to return to target in the medium term. In the meantime, the MPC will closely monitor inflation expectations and respond if necessary. It is working closely with the Financial Policy Committee to ensure that any financial stability implications of our monetary policy have been considered and managed. The FPC, for example, has worked to support lending in our economy through this period, by reducing what is known as the countercyclical capital buffer to zero, allowing banks to draw upon the capital buffers they have built up.
It is also, of course, the Government’s role to monitor any economic impacts of the lack of sterling on individuals and businesses across the country. My noble friend Lady McIntosh raised the example of the impact of exchange rate movements on farmers. I agree with her that farmers will see the cost of fertiliser and other tradable inputs rise, as a result of the weaker exchange rate, but the impact on other inputs is more lagged, and at the same time they are seeing higher product prices, as well as a 16.5% increase in the sterling value of CAP subsidies—a point made by the noble Lord, Lord Skidelsky—for the 2016-17 payment window, compared to the previous year. So while I agree that a weaker exchange rate is not one-way traffic for farmers, I am sure that overall the farming sector will see benefits from recent movements in the exchange rate.
The Government recognise the impact on the agricultural sector of our withdrawal from the European Union, which is why we have announced that it will receive the same level of funding that it would have received under CAP until 2020. The noble Lord, Lord Skidelsky, made the point about the rising cost of our EU contribution, which we take on board. I agree with what my noble friend Lady McIntosh said on agriculture. We should try to be more self-sufficient and grow more at home, driving up from 62% our current level of self-sufficiency.
My noble friend touched on the impact on savers and pensioners, as did other noble Lords. The Government are committed to supporting savers of all income levels and at all stages of life by reducing the taxes on savings. Savers have benefited, for example, from the new personal savings allowance of up to £1,000 for basic rate taxpayers and up to £500 for higher rate taxpayers. Throughout this period of economic adjustment, we will continue to plot the same course that we have taken from the start—namely, to make sure, as the Prime Minister has reaffirmed repeatedly, that our economy works for everyone.
I return to the question from my noble friend on how fluctuations in the pound have affected our economy since the referendum. Although this is a period of adjustment, there are none the less some heartening signs of the resilience of our economy that we should take note of. I was struck by what the noble Lord, Lord Paul, said about how change brings opportunities. Our financial markets, for example, have continued to function effectively. Employment remains close to a record high, with total pay up, too. Our first official growth estimate in the post-referendum period shows an increase of 0.5% in our GDP for the third quarter of 2016, and there are additional signs of resilience in other data that have come through in the last four months.
Consumer confidence, although it fell in July, has since recovered, and last month returned to the levels we had seen just prior to the referendum. Retail sales have actually grown 1.8% in the three months to September. There are also positive signs that the fall in the pound may have helped to revive tourist spending in Britain. I am not sure that anyone comes to the United Kingdom for the weather, as implied by the noble Lord, Lord Skidelsky, but I think that I read that this is the warmest year that there has been for some time—so maybe the gap between us and the Mediterranean, where the noble Lord may prefer to take his holidays, is beginning to narrow. But the downside is, as my noble friend Lady McIntosh, said, that if we go to the Mediterranean we may be able to buy slightly less abroad. I hope that the impact of a lower pound may help tourist spending in north Yorkshire, which my noble friend directed our minds to today and which I am sure is a fantastic part of the UK for tourists to visit. I understand that Yorkshire’s annual White Rose Awards will take place on Monday in Harrogate.
To return to our theme, the latest manufacturing PMI data also show some positive news, with the suggestion of increased activity in the manufacturing sector, which some have attributed to the depreciation in sterling. Indeed, some exporters are reporting fuller order books. It may be the case, as some in this debate have suggested, that the lower value of the pound could lead to a boost here. But here I agree with what a number of noble Lords said about being cautious about oversimplification. I think that it was the noble Lord, Lord Skidelsky, who referred to the global financial crisis of 2008, when sterling depreciated by 25%. Yet, with weak global growth, UK exports did not actually expand markedly, as exporters boosted their profit margins instead of their market share. Of course, the ability to boost one’s exports depends on the financial position of those countries to whom one is exporting; if they are in a downturn, it obviously makes it more difficult.
Another point that has been made in this debate is that exporters compete not merely on price but on quality and reputation. These are particularly crucial points when it comes to the service industries. It could also take time before demand catches up with our more competitively priced exports—a point made in an intervention by my noble friend Lord Vinson—and as businesses adapt their processes to sell more overseas. In the meantime, the Government will continue to help our businesses, including our agri-food sector, to boost exports. But I have to say to my noble friend—or maybe it was the noble Lord, Lord Skidelsky, who put the position forward—that import controls are not on the agenda.
I will touch on one or two of the other points raised in this debate. One concerns inward investment levels—and investment levels generally—during this period of adjustment and low interest rates. We might expect some potential impact as the UK adapts to new relationships with the European Union and the rest of the world. Anecdotally, as we have heard in the debate, it has been suggested that some businesses are waiting to see what happens in the negotiations with the European Union. None the less, thanks to the combined strengths of British businesses and our wider economy, we remain an attractive place to do business.
Following the referendum, we have continued to see investment into the UK. Immediately after the referendum, for example, we saw the largest-ever investment from Asia into the UK, as SoftBank invested £24 billion into ARM Holdings. Large car manufacturers have expanded their investments: Jaguar Land Rover announced a £500 million expansion in Coventry, Honda confirmed a £200 million investment in its plant in Swindon and recently, of course, we had the Nissan Motor Company announcing that both the next Qashqai and X-Trail models will be produced at its Sunderland plant, which will be expanded through new investment to be a super-plant manufacturing more than 600,000 cars a year. We have also seen investment in the pharmaceutical industry.
Lord Vinson
Now that he is on that subject, I wonder whether the Minister would be good enough to answer a question. The Prime Minister has shown considerable concern over the easy way in which our companies can be taken over. It has been suggested, and I put it to him, that the public interest clause should be reinserted as part of the remit of our new competition commission. Would he like to think about that?
Lord Young of Cookham
My noble friend urges me to go way beyond my negotiating brief at the Dispatch Box this afternoon, but I will certainly convey his suggestion to my right honourable friend the Chancellor of the Exchequer, or indeed the Prime Minister. I know that there has been anxiety about the ease with which UK companies can be taken over, but I make no commitment whatever in that respect.
I was saying that GlaxoSmithKline recently announced £275 million of new investment in UK manufacturing sites and £540 million in a new company in partnership with Verily Life Sciences. Then came Google’s decision a few days ago to invest in Britain and create 3,000 jobs, which is a big vote of confidence in the UK’s leading position as a global tech hub. So, to put it in context against some of the rather depressing predictions we have heard, we have seen that many companies continue to value the opportunities for business in the UK, which last year saw business investment grow faster than in any other G7 country outside the US—and that should not come as a surprise to any of us.
My noble friend touched on infrastructure spending, which is a really important priority. We have invested more than a quarter of a trillion pounds since 2010 and we are committed to spending more than £100 billion on infrastructure projects by the end of this Parliament. This will contribute to everything from big transport projects such as HS2, to rolling out superfast broadband and improving our flood defences—and I will ensure that the Chancellor of the Exchequer takes on board the proposal made by my noble friend about funding defence protection schemes. It is worth noting that we are investing more than £2 billion in 1,500 flood defence projects to protect our homes and businesses. We are also committed to developing the skills that our businesses need, including in the rural sector.
In conclusion, my noble friend Lady McIntosh is right to draw our attention to the fluctuation in the value of sterling and the effects it may have on people and businesses in this country, particularly in rural communities. The Government share her view on the importance of remaining vigilant to any potential impact of movements in the sterling exchange rate. We will continue to monitor developments closely, as will the independent Bank of England. At the same time, we will continue to use all the tools at our disposal to make sure that our economy is working for everyone across the UK and across industries. This means taking further steps to improve our productivity and to promote economic growth in communities in every part of the UK. It is this approach which will always inform this Government’s work to strengthen the British economy—including, of course, when the Government set out their fiscal plans in the Autumn Statement next week.
I conclude by thanking all noble Lords who have taken part in this debate.