Economic Prosperity and Employment

Baroness Valentine Excerpts

Thursday 18th July 2013 Lords Chamber

[Baroness Valentine]

I declare that I am chief executive of London First, a business membership organisation, which includes companies involved in infrastructure and development.

I thank the noble Lord, Lord Haskel, for introducing this debate and presenting such a cogent argument. However, I want to gently challenge the title and suggest that the role of government is not to generate economic prosperity and employment but to create the conditions in which that prosperity and employment can flourish. Timely interventions by a Government can do that. However, the most efficient, easiest and least costly interventions are often avoided because they are politically uncomfortable. Where business would act, government prevaricates.

Take our international links. To provide us with much-needed air routes to emerging economies we should have built a new runway in the south-east years ago. While we have been staring at our navels, Frankfurt, Paris and Amsterdam have built four-runway or six-runway hubs. There is an easy solution: the Government could just say yes to any of the privately funded offers to build more runways that are currently on the table.

Back in the real world, while I support the creation of the Davies commission, the business community needs assurance that whoever might be the Government of the day will act on its recommendations. Can the Minister reassure me that the current Government would? Can he also reassure me that, while we wait a decade or more for even one runway to be built, the Government will do everything in their power to enable more flights to emerging economies in the mean time?

On immigration, Paris attracts eight times as many high-spending Chinese tourists as London. Why? Because France is part of the Schengen visa, on which you can visit 26 European countries but, to add the UK to a European tour, visitors need to go through the hassle of applying for a separate visa. I accept that, politically speaking, we are unlikely to join a single visa system, strong as the business case may be. However, if we are to acknowledge that political reality, can we please do whatever we can to take the hassle out of applying for two visas? Let us build on the Government’s recent improvements to our visa process, but recognise that incremental improvements will deliver only incremental increases in visitor numbers. The step change will be achieved by sharing application centres in China with key European partners, once Schengen introduces biometric requirements.

In a similar vein, the practice of treating international students as a balancing number in our net migration target has had the unfortunate consequence of giving countries such as India the impression that their students are unwelcome here. Higher education is our eighth biggest export and we should be cultivating rather than inhibiting that sector.

I turn to an area in which positive government intervention can make a real difference, albeit at a cost: investment in infrastructure. I pay tribute to the Government on their recent spending review. A five-year settlement for Transport for London’s capital investment programme makes much more sense than an annual one. The guarantee for the Northern Line extension has enabled the redevelopment of the iconic Battersea power station, paving the way for up to 26,000 jobs.

We must keep that momentum going, though, and with a sense of urgency, if real progress on vital projects such as the Thames tideway is to be made before the next general election. If creating 9,000 jobs to build this new sewer is not enough of an incentive, then the Government might also consider the benefit of allowing the residents of London’s thousands of new homes to flush their new toilets. I am confident that the Government will do the right thing and give the go-ahead.

Finally, I must mention Europe. The UK is one of the most successful global trading nations. We are the third highest exporter of services and the sixth highest of goods. The global companies that base themselves in London do so as a centre for Europe. They have no interest in or understanding of the UK breaking away. While they certainly struggle with aspects of European regulation, particularly of our financial services post-credit crisis, they understand the need to address failures in regulation and for intensive negotiation to find solutions that balance stability, reputation and growth. I have not met anyone in any of these companies who is looking for an exit. Indeed, for most, talk of a referendum suggests a trigger-happy approach to sensitive diplomatic matters.

There is, though, the need to reassess the relationship between those inside and outside the eurozone, and to do that the Government need to fully engage and negotiate as an equal partner, rather than with one hand on the escape hatch. While there are political realities, therefore, there are also economic realities, and if the Government are serious about prosperity and employment, there are occasions when they need to recognise that government itself is the problem, rather than looking for new, politically easy solutions.