Department for Business, Innovation and Skills (Performance)

Debate between Lord Willetts and Tom Harris

Wednesday 2nd February 2011 Commons Chamber

[The Minister for Universities and Science (Mr David Willetts)]

What a dismal picture of the business of government the hon. Member for Wrexham (Ian Lucas) has just painted. He thinks that all we should ever do is wage war with our own colleagues in order to raise the growth rate. That might be how the Labour Government functioned, with everyone having to fight their own corner against all the other Departments, but it is not how the coalition Government function. We all work together on an agenda to sort out the mess we were left by the previous Labour Government and the only way we can sort out a mess that big is if all the Departments share the same agenda—and we absolutely do. That agenda has business and being pro-business and pro-growth at its heart.

Let me take hon. Members through the measures we are introducing that are aimed absolutely at backing British business and raising our growth rate. For a start, we are reforming corporation tax, bringing the main rate down from 28% to 24%, making it one of the lowest rates in the advanced western world. We have already eased the burden of national insurance on British business by £3 billion and we are specifically helping small businesses. Several colleagues, including my hon. Friends the Members for Brighton, Kemptown (Simon Kirby), for Northampton South (Mr Binley) and for South Staffordshire (Gavin Williamson), have raised the issue of small businesses, to which we are committed. There is the scheme that the hon. Member for Wrexham mentioned, which we inherited from Labour—the enterprise finance guarantee scheme—which helps small businesses. We have put an extra £600 million into it so that there is extra lending to small businesses. In addition, we have created the new enterprise allowance scheme, aimed at helping unemployed people to get work as self-employed. Of course, we know that one of the biggest problems that small businesses face is the burden of employment regulation, which is why we are committed to reforming employment tribunals—to give small businesses confidence to take on new staff.

Of course we are committed to bringing down the burden of red tape. We are absolutely committed to the one-in, one-out rule, and we are also ending the gold-plating of regulations from Brussels that add completely unnecessary burdens to British business. We are committed to well-balanced regional growth, which is why we already have 28 local enterprise partnerships going. They already represent two thirds of all businesses across the country. There is a regional growth fund with £1.4 billion to invest on excellent projects across our regions.

Yes, we are absolutely backing growth and we are tackling the fundamental weaknesses that we inherited from the Labour Government, such as insufficient investment in infrastructure. That is why we have produced a national infrastructure plan, with a green investment bank and £1 billion for energy-efficient investment, with more to come as asset sales come through.

We are committed to trade and to ensuring that Britain is open for business. I can tell my hon. Friend the Member for The Cotswolds (Geoffrey Clifton-Brown) that we absolutely understand that and we will be setting out in our trade policy White Paper, which is due very soon, the overall framework of trade policy. We do not believe that LEPs should automatically be held responsible for trade policy. Inward investment will be a responsibility of UK Trade & Investment, but if LEPs wish to work with UKTI on that, they are welcome to do so.

[Mr Tom Harris (Glasgow South) (Lab)]

Will the Minister give way?

[Mr Willetts]

No, I shall try to make progress.

We have taken a deliberate decision to focus our trade activity on the big, growing economies of the future—Brazil, Russia, India and China. My right hon. Friend the Secretary of State has already personally led trade missions to all four of those growing economies—crucial markets for the future. So yes, we are absolutely battling for Britain in trade talks.

[Mr Willetts]

I intend, time permitting, to go to Indonesia, where we have some specific trade objectives, and I think the Secretary of State plans to be in Turkey, so we recognise those countries’ importance. All of us, working with Lord Green in the other House, have trade promotion at the top of our agenda for this Government.

I have referred to the burden of tax, the burden of regulation, our support for small businesses, infrastructure and trade. There is also the crucial investment in the skills that we need for the future. Again, we inherited a mess from Labour. Many Members on both sides of the House will remember the disappointment when further education colleges, having had their hopes raised that there would be billions of pounds for capital projects, found that the money ran out. Labour’s problem with further education was that the money ran out even before the election, so Labour Members were holding the baby. They know the situation they left us.

[Mr Harris]

The Minister has outlined the impressive growth strategy being pursued by this Conservative-led Government, which has resulted in a 0.5% contraction in the economy. What would that have looked like without his growth strategy? What would have been the result if we had been deprived of that strategy?

[Mr Willetts]

We do not know what would have happened to the British economy if the Labour party had been in office, but I tell the House that if Labour had carried on borrowing in the way it was, we could well have faced a crisis of the kind that happened in Ireland, Greece and Portugal. We will never let Labour Members forget that they were taking Britain to the brink of that type of financial crisis. We have taken our country away from it.

I was about to refer to the investment that we are also making in skills, with support through the capital renewal fund for our FE colleges, steered by my hon. Friend the Minister for Further Education, Skills and Lifelong Learning, and a commitment to 75,000 extra apprenticeships. We can already see the impact of our commitment on apprenticeships: in the first quarter of the year, we had 120,000 new apprenticeship starts, while a year ago, at the same moment, the figure was 100,000. Extra apprenticeships are already coming through because of our practical commitment to vocational training.

Alongside vocational training, of course we recognise the continuing pressure on our universities. That is why we had to reform their financing. Had we not done so, we would have faced reductions in the number of university places or reductions in the financial support for each student at university. Instead, we have been able to maintain our commitment to 10,000 extra places at university and urge universities, with requirements to back this up, to focus on the employability skills of their students. When people emerge from university, they should have had practical experience of the world of work already, so we are focusing on skills and universities as well.

We are protecting the budget for science and research and enabling important capital projects to go ahead, such as the UK centre for medical research and innovation at King’s Cross. We are taking practical steps to ensure that we can enjoy the benefits of our excellent research effort—speeding up the process of getting a patent and intellectual property protection, which can be too slow. Yes, we are backing research and development, and we are backing the technological application of that by encouraging our new technology innovation centres.

It was a great disappointment when we had the news from Pfizer. I met the global chief executive officer and the UK chief executive of Pfizer on Monday 24 January, when they informed us in strict confidence of their intention to close the Sandwich plant. We did, of course, press them on their decision. They made it clear that it was a decision based on global strategic considerations by the company as a whole, as it moved away from some of the lines of research in which Sandwich specialised. They made it clear that it was not because of any disagreement that they had with this Government’s economic policies.

Since then we have been in close contact with Pfizer. I have asked Paul Carter, the leader of Kent county council, to lead a local task force on the matter. The Secretary of State and I will be working hard to try to find innovative alternative uses for that excellent research facility and to back the very skilled people there.

We are doing all this against the background of a serious financial crisis left for us by the previous Labour Government. The shadow Secretary of State, the right hon. Member for Southampton, Itchen (Mr Denham), said, “There are no deficit deniers” on the Opposition Front Bench. He was able to say that only because the shadow Chancellor was not sitting beside him at the time. We know that deficit denial is one of the fundamental problems that the Labour Opposition face if they are ever to become a credible party of government again.

Although the shadow Secretary of State said that he was not a deficit denier, he went on to say that the large deficit had arisen because of the banking crisis. Britain was running one of the worst structural deficits of any advanced western country before the banking crisis. One of the tests of whether people recognise the seriousness of the challenge that they face is their willingness to accept that that was the problem. If they do not accept that that is the problem, they are deficit deniers. It is as simple as that.

Then the right hon. Gentleman seemed to fail to recognise the wide range of business leaders in Britain and elsewhere who have backed our policy to tackle the deficit. He went on to say that we just blamed the snow for the economic problems that we faced. Okay, I will do a deal with the shadow Secretary of State. We do not just blame the snow; we blame the last Labour Government.

It was the last Labour Government who got us into this mess. They left us an economy with the worst deficit, unsustainable spending, the most leveraged banks, the biggest housing boom, unsustainable levels of personal debt and personal saving negative—almost unprecedented in any advanced western country. That is the mess that they left us. That is what we have to sort out. Already, working with the Secretary of State, we are putting in place a growth strategy to emerge from the mess.

My right hon. Friend the Secretary of State was one of the most eloquent and effective people in warning about the mess that Labour was making of our economic situation. He warned about the level of debt. He was quite right to do so. Now, the present Government must tackle it. It was those on the Labour Benches who left the patient dangerously ill. Now they complain as we, sadly, have to deliver the treatment.

Question put.