Business and the Economy

Baroness Burt of Solihull Excerpts

Monday 14th May 2012 Commons Chamber

[Lorely Burt (Solihull) (LD)]

I would like to respond to this section of the Queen’s Speech on behalf of my Back-Bench Liberal Democrat colleagues.

On the day before the Queen’s Speech, when the rose garden became a tractor factory in Essex, the Prime Minister set out the coalition’s aims for the coming year. We are certainly not in a rose garden now, either metaphorically or in reality. The tractor symbolised the heavy work that we have done and still need to do to get our country out of the slough of debt that we inherited. It also symbolises the change of emphasis away from the financial sector—although this is still an important part of our economy—towards something that we are very good at, although one feels that the Opposition had to some extent written it off: manufacturing.

In the past two years, the coalition Government have been doing plenty of heavy lifting. We have already put in place many policies designed to help companies to grow. Indeed, our recovery is predicated on growth. We have already established the regional growth fund, created a record number of apprenticeships, cut red tape through the red tape challenge and the one in, one out system of regulation, cut corporation tax and exempted micro-businesses from £350 million-worth of regulation. There is still much to do, though.

[Steve McCabe]

On the regional growth fund, how many of the successful bids in the west midlands have achieved funding to date?

[Lorely Burt]

I am slightly confused by the hon. Gentleman’s question. Will he repeat it?

[Steve McCabe]

Does the hon. Lady agree that out of 72 bids, five of which were approved, one company has received funding? Is that a measure of success?

[Lorely Burt]

There is a lot of due diligence to be done so that we do not waste taxpayers’ money.

Opposition Members might agree that we have to be fair to employers and to the work force. Liberal Democrats seek a balance to ensure that staff can achieve their full potential and have a home life as well as a work life. Unlike some in the Chamber, we are not in the pockets of the unions, but seek to work with the unions and with management to achieve fair outcomes and fair rewards. We will extend the right to request flexible working, and entitlement to parental leave will be shared. All parties bemoan the fact that we often lose female talent when the babies come along; now there will be no point in employers discriminating in recruitment against women of child-bearing age. Both men and women will be entitled to parental leave. That is one small step for equality.

However, Liberal Democrats would say that in some areas the pendulum has swung too far in the direction of the employee. Some employees take advantage of, and try to play, the employment tribunal system, which has become clogged up with cases waiting to be heard, costing time and money and causing stress for all. New legislation will put a greater emphasis on conciliation and give employers longer to give underperforming employees a chance, before the spectre of the unfair dismissal tribunal looms.

Clearing away unnecessary regulation is a big job, and we have already started. We will reform the competition regime by creating a powerful new body to enable the speedier prosecution of anti-competitive behaviour. We are also taking action on executive pay. If there is one thing that really bugs the British worker, it is seeing overpaid executives getting even more for even poorer performance, so we will give shareholders the power to exercise greater control over executive pay through binding votes.

[Lilian Greenwood (Nottingham South) (Lab)]

Will the hon. Lady give way?

[Lorely Burt]

I am sorry, but I cannot give way again.

I think that all hon. Members are looking forward to the Groceries Code Adjudicator Bill, which at last offers some fairness for producers at the mercy of the powerful supermarkets. Then there is the green investment bank. It has £3 billion at its disposal for investment, but Liberal Democrats would like it to have greater powers to act like a real bank, investing and borrowing as well as lending, and we are working on that.

All that will be to no avail if we cannot sort out the biggest problem still faced by business today: access to finance. Project Merlin has had some success, with £195 billion lent by banks to business, but we need more. Liberal Democrats will be doing all we can on policies to widen the range of banks and lower the almost insurmountable barriers to entry for new banks. We want to introduce more peer-to-peer lending, such as the funding circle, and would like to examine the feasibility of community banks.

Perhaps the most important piece of legislation of all is one that will stop a repetition of the banking crisis that resulted in the house of cards that the previous Government allowed the finance industry to build tumbling down. The Business Secretary foresaw it all: he warned Labour that light-touch regulation, over-optimistic ratios, complex financial instruments that few could understand, banks that were too big to fail and banks whose casino and retail arms were wedded would bring disaster, but not even he could have imagined the scale of the economic crisis that gripped the UK, America, Europe and large parts of the world and made them much worse off. The crisis is taking longer to sort out than anyone hoped.

We need only look across the continent at Greece, Spain and Italy to see what would have happened had we not gripped the situation there and then. Too far, too fast? It would have been “too little too late” if the Labour party had had its way. We would be paying treble the current interest rates, with much higher unemployment and much higher bond yields, as those countries have today. We are sorting it. The little blue and yellow tractor is taking the strain and pulling us out of the mire that the Labour party helped to create.

[Stewart Hosie (Dundee East) (SNP)]

The Queen’s Speech contained precisely nothing to help growth in the economy. It set out a feeble programme. The Government talk about growth but are doing precious little to achieve it. We have all noticed the change in rhetoric over the past few weeks; growth is now important. It is not enough to hope for growth or will it and then fail entirely to introduce in the Queen’s Speech the policies that would deliver it.

We are now in the absurd situation where we have gone from the Chancellor upgrading his growth forecasts in the Budget in March to the announcement of a double-dip recession in April and warnings today from Marian Bell and Howard Davies, formerly of the Bank of England, that the Government might have to slow their deficit reduction plan before they effectively squeeze the life out of the recovery entirely. Howard Davies said that even

“the markets recognise that if the economy turns out to be weaker than expected and you try to compensate for that by tightening even further, then that way madness lies.”

One could paraphrase that by saying, “Trying to stimulate economic growth by cutting consumption is very foolish,” and I would agree entirely, but that is precisely what the Government are attempting to do.

So there is nothing in the Queen’s Speech to compensate for the shrinking demand in the economy that the Government’s own policies are creating; nothing to compensate for the £73 billion of fiscal consolidation that they inherited; nothing to compensate for the £113 billion of cuts and tax rises planned for 2014-15; and precisely nothing to compensate for the £155 billion that will leave the economy every year from 2016-17. Indeed, they are exacerbating the problem with cuts to Government consumption and expenditure of between 1.3% and 2.6% a year from 2013 to 2016.

[Lorely Burt]

The Institute for Fiscal Studies confirmed that Labour’s plan would necessitate borrowing £201 billion more. What effect would that have on the market, on investment and on growth?

[Stewart Hosie]

I think that the words of Howard Davies this morning were very interesting. I shall find the quotation if the hon. Lady wants it, but it was about the credibility of the plan, not the speed of the cuts.

There is, of course, one other thing: trying to cut one’s way out of recession and to generate growth by spending less money, putting in place a series of measures that militate against the business investment growth on which the entire strategy is dependent, is not a very clever way to proceed. But that is precisely what this Government have planned.

I said that the Government have done nothing to stimulate a shrinking economy—unless one thinks that the Foreign Secretary’s berating of businesses for not working hard enough counts as an economic strategy. Of course it does not, but his intervention shows just how out of touch the Government are. I am sure that the Liberal Democrats have a little speech to say that they are not really in the same Government as the Foreign Secretary, but that will not wash either.

The Government could have taken action in the Finance Bill or through measures in the Queen’s Speech to ease the price of fuel, which members of the Forum of Private Business say is the main cost pressure on their businesses, but they did not. They could have taken action to bring forward direct capital investment, the most effective thing that any Government could do to stimulate economic growth, but they did not—and that was a particularly short-sighted piece of inaction, given that the fall back into recession, the double-dip recession, was led by a large fall in construction output. One would have thought that even the Chief Secretary to the Treasury, the Chancellor or the other Treasury Ministers had read the economic indicators.

Indeed, the Government had such a programme in their election manifestos, and they could have brought forward the legislation on high-speed rail. It would have given the signal that a large capital investment programme was coming, and it could have stimulated economic growth throughout the UK, but the political imperative of one or two shire Tories in the south seems to have overtaken the rather sensible measures that High Speed 2 would have delivered.

So what are the Government doing? They are introducing a banking reform Bill to ring-fence narrow retail banking activities. I welcome that measure, which is fine so far as it goes, but, as the Scottish Chambers of Commerce said, it

“does not go far enough in terms of providing a direct boost to business lending”

to small and medium-sized enterprises—a vital part of any recovery.

The Government are introducing an enterprise and regulatory reform Bill, and we will look very carefully at each measure that they intend to introduce, but, in general terms, if one is trying to rebuild an economy and to grow out of recession, one needs confidence. I can understand why keeping people in their jobs would help confidence, but I am at a loss to understand why the Government believe that making it easier to sack people will bring any confidence into the economy, particularly the consumer spending sector.

There are no measures on direct capital investment, which is the most effective thing that any Government could do—not even proposed legislation on HS2. There is no action on SME lending and no action to build confidence; indeed, the Government are making it worse by making it easier to sack people when keeping them in their jobs would help to rebuild confidence. That lack of action explains why we are in recession, why unemployment is high, why net debt is going up, why net borrowing is higher for 2011-12 than was forecast a year ago, and why the deficit is planned to be higher for 2011-12 than was reported in the Budget a year ago.

At their heart, this Government have a problem. They are sticking ideologically to a rigid, fixed-term deficit consolidation plan that offers no flexibility whatsoever. The one Bill that they should have had would have put in place a new fiscal responsibility plan so that instead of a rigid, ideological slashing of costs, we could have a flexible, medium-term, credible deficit consolidation plan that allowed growth in the economy.

--- Later in debate ---

[Paul Maynard (Blackpool North and Cleveleys) (Con)]

It is a pleasure to speak in this Queen’s Speech debate, although I fear that I might have stumbled into a constitutional innovation: a state of the nation debate. Of course, we do not have a state of the nation speech in this country; we have a Queen’s Speech in which Her Majesty lays out legislation for the coming year. Yet having listened to Opposition Members, I think that the debate has really been a discussion not of what was in the Queen’s Speech, but of what was left out.

I am a proud believer in limited government. I remember Queen’s Speeches under the previous Government groaning under the weight of unnecessary legislation. Barely a year went by without a criminal justice Act being added to the statute book. Did they ever look at whether those Acts had the desired impact? Of course not. They just kept on legislating because, in the end, that is what politicians on the left need to do; they need to pass laws, because otherwise, heaven forfend, people might not think they needed to exist, and we cannot have that, can we?

When I speak with local businesses in my constituency, they do not beg me for legislation. Actually, I tell a lie. It would remiss of me as a Blackpool MP not to mention one measure that was missing from the Queen’s Speech. I am sorry that the Chief Secretary to the Treasury is no longer in his place, as otherwise I would congratulate him on the massive benefits he has brought to the ski lifts of Aviemore. Having accepted the principle that there should be a level playing field between different European nations, he lowered the VAT rate for ski lifts and did well by the people of Aviemore, but the hoteliers of Blackpool would like him to make a similar contribution by lowering the VAT rate on the provision of goods and services related to tourism. Many other European countries have a lower rate of VAT on such services, which means that the UK is suffering through competition. Having accepted that principle, I hope that the Government will now look at how it can be expanded to other sectors of the economy.

[Lorely Burt]

Many laws were passed under the previous Government—more than one for every single day they were in government—but what did that achieve? Unless we enact them and then ensure that people adhere to them, they are not worth the paper they are written on.

[Paul Maynard]

I thank the hon. Lady for that intervention. My only surprise is that so far no Labour Member has proposed a law stating that two plus two should equal five, because that is the only way they could get their sums to add up for the policies they would introduce. What local firms in my constituency are asking for is better implementation of existing legislation. The Economist stated only last week that we are the most radical Government in the west. We have introduced fundamental reforms in welfare and education, and they need time to bed in. Good governance is different from good legislation. Public administration is about implementing what is passed, not moving on to the next big item just for the sake of giving oneself something to do. That is not how to run a country properly.

One local firm I visited only the other week is AGC Chemicals in Thornton, which makes a wonderful product called Fluon, which I had never heard of before. It is apparently very similar to Teflon. Those Members who are familiar with the Allianz arena in Munich or the Water Cube where the swimming events took place at the Beijing Olympics will be interested to know that the fancy cladding surrounding the stadiums is made of Fluon, which I am very proud is manufactured in my constituency. The company told me that what it needs is our existing legislation to bear fruit. It is delighted by the education reforms we are putting in place, because it needs better skilled employees and cannot find them in the local area, which is a tragedy for not only the firm, but for the local people on the Fylde coast who need jobs and need to acquire those skills. That is why it is vital that we welcome what the Government are doing on apprenticeships, for example. Also, the firm should not have to look two or three hours away to get the highly skilled specialists it needs, because those people will have lengthy commutes, which puts stresses and strains on our infrastructure. That cannot be the right way to go. There must be a more local approach to skills, and that is what the Government are seeking to ensure, but that does not need a Bill or legislation; it just needs us to allow the Government to get on with the business of good governance. It is that simple.

Let me give another example. We already have local enterprise partnerships and enterprise zones. I welcome the enterprise zone that the Government have introduced near my constituency in Warton, where BAE Systems is based, but once again that is an evolving situation. The local enterprise partnerships are barely a year old, and certainly the one in Lancashire had something of a traumatic birth—something to which other Lancashire Members in the Chamber can no doubt bear testament. Once again, local firms in my constituency are saying that they want to be certain that the local enterprise partnership is not being hobbled or constrained and that the periphery—the Fylde coast is, after all, always a periphery because it is the coast—is not neglected when decisions are made.

In my view it is fundamentally important that as we move forward we remember the first line of the Queen’s Speech, which is that deficit reduction is at the heart of what the Government are doing. I can accept that Opposition Members might not agree with every element of the Queen’s Speech or like the general approach that the Government are taking, but I ask them to bear witness to what is happening in Athens and in France. I ask them to bear in mind the fact that we cannot make two plus two equal five, as much as they might wish us to, because two plus two will always equal four, and that has to be the basis of any sound, intellectual economic policy. We cannot keep channelling our inner Venezuelans and hoping that if we nationalise everything somehow all will be well. I realise that it is a seductive message for politicians to offer, that somehow they can offer all the gain with none of the pain, particularly when they are desperate to win elections, but the more the Labour Members go on in that manner, the more they will show that they are yet to understand fully why they lost the last election. I am quite happy for them to continue in their ignorance, for they need to look within themselves that little bit more to understand fully why they were thrown out in 2010. I was there; I remember.

[Mr Ronnie Campbell (Blyth Valley) (Lab)]

I think that the Queen should have just carried on in her carriage and gone past Parliament and on to Windsor castle. She would have been better off, because she spent only 15 minutes here.

I want to raise the question of the green investment bank and the enterprise zones within it. In my constituency we asked a few months ago, at the time of the autumn statement, whether we could have an enterprise zone, because we have a big energy sector and are doing a lot of work on wind turbines and at the port of Tyne. I am a bit worried about the green investment bank, because I do not think that it has enough. There is £1 trillion of money in the green industry. I might add that our competitors are well ahead of us; Sweden, Denmark and Germany are far in advance of us on green energy, especially wind turbines. Green investment is a road to our recovery, and I am sure that we will eventually manage it, but unfortunately, because of what we have in the Bill, it will not happen.

[Lorely Burt]

I agree with the hon. Gentleman that we should give the green investment bank more powers, and those are coming. However, the Government have made £3 billion available to the bank. How much would his party contribute to a green investment bank, because it has not been forthcoming on that so far?

[Mr Campbell]

I will not know that until we get into power in 2015, so I will ask the Government then how much they will give. I do not have the answer now, because I do not have that foresight.

One of the other things I want to mention, if the Minister is listening carefully, is that at the Tyne and the port of Blyth, where these industries are up and coming, companies are coming in, having a look around and saying, “Great. We like the two ports of Tyne and Blyth.” But unfortunately for us they go up to Scotland, because they can get more money, grants, investment and incentives there. That is the problem, because Scotland is only 100 miles up the coast. Why would a company invest in the port of Blyth or the Tyne when it could go up to Scotland and get more money? That is a big problem. I would like the Government to have a very careful look at that and to find out about Scotland. Obviously, the Scottish Government are pushing money there, because Scotland is flying away with that industry, and unfortunately we cannot compete. We have had some successes, but unfortunately we know companies that have been to our area, left and gone to Scotland because there is more money in it for them there.

We have a lack of demand in the economy; that goes without saying. We can talk to any economist, but they will all say the same. We have householders who are not spending, banks that are not lending and companies that are not investing, and on top of that we have a crazy decision by the Chancellor to cut capital spending. Some 3% of the construction industry has been cut by this Chancellor. How on earth are we going to get growth when he is doing all those things?

The other week, I saw the Prime Minister and the Deputy Prime Minister, and I was not sure if it was a Punch and Judy show, a Morecambe and Wise show or the Chuckle Brothers, but when I saw them at that tractor factory my mind started to boggle. I thought, “What are they doing?” and then I started to imagine. There was the Prime Minister taking his coat off, and he turned around to the Deputy Prime Minister—the Liberal Deputy Prime Minister—and said, “I beg your pardon, I didn’t promise you a rose garden,” and the Deputy Prime Minister, straight back to him, said, “Two wheels on my tractor, I’m still rolling along.” That just summed it up, because all those workers were at the back of them, with all their smiling faces. They did not tell them that they were going to sack them, cut their wages or halve their pensions if they could get away with it. That amazes me, and I do not know how those lads felt, but I have not seen a smiling face yet.

Then there is efficiency, as I said before. I jumped ahead of myself there, but on efficiency I saw the ex-Defence Minister, the right hon. Member for North Somerset (Dr Fox), on the telly the other day, and he wants to cut our wages and pensions and make us work longer. I would like to see the Register of Members’ Financial Interests, because I never thought about getting the register to see how much he is making on the side. When the ex-Defence Minister says that he would like to cut the wages of working people, I would like to see what he has in his locker, in the register, and how much he is making on the side. Those are the people we should be getting at—those who have two or three jobs, especially on the Government Benches. There are one or two on the Opposition Benches, but there are more on the Government side.

We should be spending money, not cutting it like this Chancellor has because he is into austerity. I begin to wonder sometimes about austerity. I begin to wonder about democracy, too, because when I hear Government Members I wonder, “What is democracy?” Those in Greece are not having austerity, and neither are those in France—and they have all been to the ballot boxes. In Germany, after the weekend results in the local elections, the German Chancellor got toast. She got toast—[Laughter.] They even turned her down. Those countries in Europe do not want austerity. Are we not listening—never mind laughing, as this is not a laughing matter—to the people?

The Tories are hell-bent on destroying this country over the next couple of years, instead of going for growth, building houses, schools, roads, bridges and anything we want to get our hands on. Let the capital programme begin again, instead of cutting it. The argument over the cuts is not about economists or economics. It is about real people, and it is real people who we should be defending in this Chamber tonight.