Jobs and Growth

Ann McKechin Excerpts

Thursday 17th May 2012 Commons Chamber

[Ann McKechin (Glasgow North) (Lab)]

Last week, I travelled with the Business, Innovation and Skills Committee to Brazil, as part of our new inquiry into our export trade with that developing nation. I wish to put on the record our appreciation of the work of the UK Trade & Investment team in Brazil and the efforts they are making to meet the Government’s ambitious targets. What struck me time and again, however, was that we were visiting a country that had a clear and unambiguous industrial strategy. That is not to say it is perfect—in fact, in terms of ease of doing business, our countries are poles apart: the UK is fourth and Brazil 121st on the list—but everyone I spoke with appreciated the ability to work within a political environment that is firmly focused on job creation and growth. I noticed a sense of purpose and momentum that is totally absent here at home.

The previous Labour Government recognised—later than they should, but with unequivocal passion from our last Business Secretary, Lord Mandelson—the need to form a convincing industrial strategy, with a relentless focus and wholehearted support from Government at all levels. The result was developments such as High Speed 2, carbon capture and offshore wind, with science and innovation at their heart and a recognition that we must take risks if we want to be leaders in new industries. Two years on from the election, we are still waiting for the coalition’s strategy. HS2 has been kicked into the sidings of potential oblivion; there is yet more equivocation about airport capacity, as planes stack up waiting to get into our major airports; carbon capture has been put back several years at least; and offshore wind receives only cursory support.

Where are the big ideas? Where is the narrative that allows industry and finance to make the necessary commitments? Where is the financial support to allow us to enter those new industries? The establishment of the Green investment bank is welcome, but as one leading figure in the renewable energy sector told me this week, it must not be the bank of last resort. It needs to lead the way, not take the cast-offs that no one else wants to touch. It needs to be big enough to meet the challenges and opportunities we face. Instead, we have had a painfully slow start. The original concept has been watered down and now the bank will not have full borrowing powers until 2016. It is not fast enough or deep enough to do the job.

Our international competitors will not be sitting idly by. We need to learn the lessons of why we lost out on onshore wind production and ensure that that is not repeated. Since 2010 the UK has dropped from third to seventh in the world ranking for green growth investment. Our competitors know that investors need a stable environment, not the farce we witnessed over feed-in tariffs earlier this year. We also need to address the lack of capital grants, which are vital in forming the new supply chains of the future. Cuts in corporation tax are the wrong priority at this time.

As the Business Secretary correctly pointed out in his leaked letter to No. 10, we need to address the lack of confidence in the business sector. UK companies have some of the largest cash reserve ratios of any advanced economy, but there was nothing in the Budget to encourage the release of those funds. At the same time, we have many companies that are not cash rich, particularly in the SME sector, which cannot find affordable finance. The case for a business investment bank has never been stronger, yet there is more silence.