Oral Answers to Questions

Bill Esterson Excerpts

Thursday 11th January 2018 Commons Chamber

[Graham Stuart]

The hon. Lady is quite right to highlight and champion exports from Scotland, and she will know that the greatest export market for Scottish businesses is the rest of the United Kingdom. I can tell her that this Government will stay committed to promoting trade within the United Kingdom, with our neighbours in Europe and with the rest of the world to boot.

[Bill Esterson (Sefton Central) (Lab)]

I, too, welcome the Minister to his place. I enjoyed serving with him on the Education Committee, and I look forward to debating these important matters with him.

Evidence to the former Business, Innovation and Skills Committee showed a budget of £23.6 million for the trade access partnership in 2013-14, which fell to £11.05 million in 2014-15 and to just £8 million the following year. We are now in the final quarter of this financial year and, just as last year, the Government still have not said what the current budget is. When are they going to end the uncertainty for business, and tell us how much money they are giving to support exporters who want to go to trade shows to promote exports for business and the economy?

[Graham Stuart]

As usual, I am afraid, Opposition Front Benchers are confusing inputs with outputs and outcomes. We are focused on promoting exports. We are doing that successfully, building on the position in 2010, and that is why we are seeing a record level of the manufacturing and other exports on which the hon. Gentleman’s constituents depend.

Trade Bill

Bill Esterson Excerpts

Tuesday 9th January 2018 Commons Chamber

[Bill Esterson (Sefton Central) (Lab)]

It is vital for our economy and for jobs that new trade agreements are signed to replace the arrangements to which we are party as an EU member, before the UK’s exit from the EU. Contrary to the bullish assertions of Ministers, the implementation of existing arrangements actually means the renegotiation of each of the many agreements that the EU has with our partners. This is not a rollover—a point made very well by my hon. Friends the Members for Nottingham East (Mr Leslie) and by for Warwick and Leamington (Matt Western). New trade arrangements will require new governing and regulatory institutions and consideration of quotas and diagonal cumulation for rules of origin.

In an intervention during the powerful speech by my hon. Friend the Member for Edinburgh South (Ian Murray), the Minister for Trade Policy said that third countries are not seeking “significant changes”. When the Minister sums up, perhaps he will explain why he is so keen to deny Parliament the right to judge what is and is not significant, because the problem with the Bill is that it proposes powers for the Secretary of State without scrutiny, and without the opportunity for Parliament to have its say on what is and is not significant. Those powers hold open the prospect of cuts in workers’ rights and opening up access to our public services to large corporations. They also raise the prospect of cuts in environmental and consumer standards—all pretty significant.

Fifty-seven per cent. of UK trade is either with the EU or with countries with which the EU has a trade agreement. Forty-four per cent. of trade is with the EU alone. Given that the EU is our largest source of trade, it is significant that the Chancellor has backtracked from the Prime Minister’s position where she ruled out membership of a customs union. We welcome the Chancellor’s clarification that he is supporting Labour’s position of leaving open the option of joining the customs union with the EU.

[Angela Smith]

Will my hon. Friend give way?

[Bill Esterson]

I will not, because I have an awful lot to get through.

Labour supports having new agreements for trade with those countries with which we currently have arrangements through our EU membership—hence our reasoned amendment. Anyone who has run a business knows that it is far more productive to maximise the benefits of existing relationships before developing new ones. It costs far more and takes far more time to negotiate new contracts, and that maxim applies to agreements between countries as well as those between businesses. It is simply not credible to expect existing trade with the EU to be replaced by trade elsewhere for many years—a point that was made very well by my hon. Friend the Member for Bristol East (Kerry McCarthy) with her story of the pig trotter protocol. In recognition of just how important existing trade arrangements are, it is therefore important to agree new trading arrangements both with current partners of the EU and with the EU itself.

The democratic deficit in the Bill is the reason for our objections and for the second part of our reasoned amendment. What happened to the agreement not to legislate on matters that affect the devolved Administrations without the consent of those Administrations? The White Paper included the pledge to obtain that consent. What happened to that pledge? Has the Secretary of State considered the fact that he is undermining the devolution settlement?

The Bill is silent both over Parliament’s involvement in scrutiny and its ability to block any trade agreement. Trade agreements concluded by the EU are subject to scrutiny by its Committee on International Trade at the European Parliament and by our own European Scrutiny Committee. Crucially, the loss of both scrutiny provisions leaves a vacuum—as pointed out by my hon. Friends the Members for Swansea West (Geraint Davies), who spoke of the cloak of darkness, and for City of Durham (Dr Blackman-Woods), who reminded us of the concerns raised by the Institute for Government.

The No. 1 problem with the Bill is that Parliament is being sidelined, which will allow the attack on workers’ rights and the opening up of our public services to the highest bidder that many on the Government Benches want to see. We know of the Secretary of State’s desire for a deal with the US, so that its healthcare companies can enjoy a big payday at the expense of our NHS, and we know, too, of his views on employment rights. He told us:

“It is too difficult to hire and fire, and too expensive to take on new employees”—

his words. The Bill allows him to start his race to the bottom by opening up public services and cutting workers’ rights by enabling him to change domestic law to do so, all in the name of that being the price of agreeing new deals.

Other clauses in the Bill anticipate the need for the UK to join the government procurement agreement in its own right. The GPA gives access to contracts with foreign Governments—an area in which UK businesses need to do better—and we support the creation of a trade remedies authority, but the TRA needs to balance the interests of stakeholders, not simply back the import of cheap goods and services at the expense of UK manufacturing. The Secretary of State is looking very smug again. [Hon. Members: “He always looks smug.”] Yes, he does. He talks about consumers at the expense of producers, but successful economies balance the needs of both. [Interruption.] He is sitting there talking about steel protection. I am coming to that, so I am glad he mentions it.

The Government’s track record on trade defence and remedies is a further cause for concern. It was this Government who blocked attempts by the EU to protect our steel industry against cheap Chinese steel through their insistence on the application of the lesser duty rule and their refusal to allow the EU to take the necessary actions. At a time when the use of a lesser duty rule is being reduced elsewhere, the Government are out of step in wanting to continue with its use.

We also have concerns over the independence of TRA appointees. How independent will they be, when it is the Secretary of State who appoints them? We have just seen in the universities sector how easily the Government reward their friends by appointing them to do their bidding and how this can go badly wrong. Yes, Toby Young, we mean you. Questions have also been raised about the composition and actions of the Trade Remedies Authority. How will all stakeholders be represented—producers and trade unions, as well consumers? What about representatives from the devolved Administrations, who understand the needs and legal frameworks of the different nations of the UK, and what about representatives of local government?

Where is any proposed parliamentary oversight or scrutiny of the TRA? The mechanism to ensure that the TRA delivers a fair and level playing field for UK businesses, alongside workers and consumers, was raised yesterday during the Second Reading debate on the customs Bill. I am glad that the Financial Secretary is here, because we are none the wiser following his inadequate comments in that debate. The Bill also allows for data sharing with foreign Governments. Although the data to be shared is for trade purposes only, we know that some Governments share information between different Departments, the United States being a prime example.

I thank all right hon. and hon. Members who have contributed to the debate, particularly my hon. Friends the Members for Newcastle upon Tyne North (Catherine McKinnell)—unfortunately I missed her speech, as I had to rapidly leave the Chamber—and my for Warrington South (Faisal Rashid). The Bill, with its Henry VIII powers, gives Ministers the right to agree deals with far-reaching consequences, with no opportunity for scrutiny or rejection. That cannot be right. If a deal is not in the interests of the people of this country, our sovereign Parliament should be able to scrutinise and reject it, yet powers are being handed to the Secretary of State with no checks and balances for Parliament. Taking back control so that the Secretary of State can allow foreign companies access to our public services and cut workers’ rights, consumers’ rights and environmental standards—I rather doubt that that is what those in my constituency who voted to leave had in mind when they did so.

We will have no opportunity for proper scrutiny, completely inadequate checks and balances, and no right to a meaningful process in Parliament for trade deals. This Trade Bill, like the European Union (Withdrawal) Bill before it, is deeply flawed. That is why we tabled our amendment, and why we are opposing the Bill.

Oral Answers to Questions

Bill Esterson Excerpts

Thursday 23rd November 2017 Commons Chamber

[Greg Hands]

The hon. Gentleman mentions the European Parliament. Perhaps he might have a word with his own colleagues, who have sought in the recent vote in the European Parliament to frustrate the process of us even talking about trade with the European Union to start with. The purpose of trade remedies measures is to address injury caused to domestic industry. The lesser duty rule provides adequate protection to achieve the same so that industry can operate on a fair playing field and without imposing unnecessary costs on downstream industry and consumers.

[Bill Esterson (Sefton Central) (Lab)]

I should remind the Minister that it was this Government that argued against trade remedies in Europe and that failed to protect our steel and ceramics industries. That is why it is not surprising that manufacturers are concerned that the new trade remedies authority will focus on consumer interests at the expense of businesses and jobs. What assurances can the Minister give that it will not always seek to apply the lesser duty rule? Will he now commit to include social and environmental criteria in the remit of the trade remedies authority, so that the UK does not become the dumping ground for goods that can no longer be dumped in the EU?

[Greg Hands]

We have taken robust action on steel in concert with the European Union, and we are playing an active role within that. The Government of course recognise that overcapacity is a significant global issue, which is why we have been working proactively through the EU and our G20 partners. The hon. Gentleman seeks to downplay the interests of consumers in all of this, but they will be absolutely vital and at the heart of our trade remedies process—exactly where they deserve to be.

Oral Answers to Questions

Bill Esterson Excerpts

Thursday 12th October 2017 Commons Chamber

[Mark Garnier]

Indeed. I have visited Israel; we do a lot of trade with it, and the investment it is making in this country is very welcome. Importantly, since the Brexit vote, a huge number of investment projects are coming to the UK, which is creating new jobs. Doom mongers like me who during the referendum were part of the “Project Fear” campaign have been proved wrong, and it is important that we stand up and say that so far we have not got this right, and that is incredibly good news for both Britain and our individual constituencies.

[Bill Esterson (Sefton Central) (Lab)]

The Government’s own figures show a 9% drop in the number of new jobs created through foreign direct investment projects and a record trade deficit in goods exports. In the real world, that means thousands of workers losing their jobs, as we have seen at BAE Systems. Does the Minister accept that it will take a fully aligned trade and industrial strategy to protect jobs in this country? The current policy of relying on a falling pound is simply not good enough.

[Mark Garnier]

I would refer the hon. Gentleman to the fact that we now have record numbers of people in work, record employment and record low unemployment. None the less, he raises an important point on the relationship between this Department and the Department for Business, Energy and Industrial Strategy. It is absolutely the case that in creating a pitch book for the UK, we must offer a number of different opportunities for companies around the world. Part of that is our tax regime, part of it is our tax credits regime, and part of it is our enthusiasm to legislate, for example, to allow autonomous vehicles to be tested on all British roads. This is a whole package from the entire Government working together. The hon. Gentleman is absolutely right to raise the industrial strategy as part of what we are presenting to the rest of the world, but this also involves the whole Government.

Foreign Direct Investment 2016-17

Bill Esterson Excerpts

Tuesday 12th September 2017 Westminster Hall

[Bill Esterson (Sefton Central) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Gray.

We should celebrate the United Kingdom’s long-standing success as the premier destination for EU inbound investment, but we should also be under no illusions about the scale of the challenge facing the UK in retaining current investment, let alone building on it. As research from Michail Karoglou, David Bailey and Nigel Driffield of Warwick Business School shows, of all relevant recent events only two positively affected the long-term trend for FDI: entry to the European Economic Community and entry to the single market in 1992. Only two events caused a reduction in the long-run level of inward investment flows: Britain leaving the exchange range mechanism under John Major, and Harold Wilson’s devaluation of sterling. After both those events, it took an average of four years for the level of FDI to recover. If anyone in this room or elsewhere thinks that there might be just a short-term blip or no blip at all, the evidence from history suggests that we need to think very carefully. The uncertainty caused by Brexit is cause for concern.

Let us look at some of the figures behind our FDI position. In 2016, the UK remained the premier preferred destination for inward investment projects, but despite a rise in the number of projects, the UK’s market share in Europe fell from 21% to 19%. Meanwhile, we are losing ground in emerging growth industries, high-growth markets and in the attraction of investment from emerging powerhouse economies such as China. Celebrating the number of investment projects is all well and good, but what really matters is the value of those projects and their wider contribution to the economy.

Figures from fDi Markets investment monitor suggest that in the 10 months before the referendum, investment flows were $42.7 billion, and in the 10 months after, the figure dropped dramatically to $28 billion. If we are to evaluate fully the vital work that the Department for International Trade undertakes, we need to see the economic value—really drill down into those figures and look at the value of the projects for each financial year, notwithstanding commercial sensitivities that might prevent the release of information on a case-by-case basis. It might be an idea to see exactly how the Department allocates investment projects to specific annual statistics, so we can avoid what happened in January this year, when the Secretary of State was widely ridiculed for including projects unveiled years ago.

The Government will concentrate on the success stories, but it is important to learn from the failures as well. The recent decision by Nestlé to relocate some 300 jobs making Blue Riband biscuits to Poland is a case in point—I have pointed out elsewhere that failure to find £1 million to save 300 jobs. The fall in the value of sterling has of course made it cheaper to invest here, but as Nigel Driffield and his colleagues point out, the benefits of a favourable exchange rate are set against the uncertainties of changes in our access to the EU. Their research also shows that investors like to return profits to their home countries, so a low-cost investment may be of less interest than might appear at first glance.

The UK has traditionally been seen as a relatively easy place to do business, ranking seventh in the latest World Bank Doing Business ranking. That is in part due to a skilled and educated workforce, the dominance of English as the global business language, a robust regulatory framework, a strong legal system and a wide array of supporting service industries, but the main reason in recent decades has been our access to the largest free-trading area in the world. The big challenge, therefore, is to maintain our attractiveness as we leave the EU—hence the need for strong transitional arrangements, the avoidance of a cliff edge and a seamless move to post-transitional arrangements. A link with trade policy and a robust industrial strategy are also essential.

[Rishi Sunak]

The hon. Gentleman talks about maintaining our attractiveness to international investors after we leave the EU. Does he think that Labour’s proposed 50% increase in our corporation tax rate to 26% would make it more or less likely that international investors would want to invest here in the UK?

[Bill Esterson]

The evidence is mixed on whether the fall in corporation tax since 2010 has had benefits in attracting inward investment. Under our proposals, we would still have the lowest corporation tax in the G7. Although investors like the idea of a low-tax economy, they equally dislike the consequences. Recent research by the London School of Economics shows that the downside implied by a low-tax economy of poor public services is profoundly unattractive. The approach that the Prime Minister set out at Lancaster House may be the preferred route for many Conservative MPs who want to shrink the state, but as well as continuing to damage our NHS, schools and pensions, such a policy will restrict the Government’s ability to deliver the very infrastructure and skills that foreign investors want and need.

The view of our investors is set out starkly in EY’s UK attractiveness survey. EY said that it has been a “mixed year” and that it is

“difficult to make a clear assessment of the UK’s performance attracting foreign direct investment and maintaining its appeal to investors since our 2016 attractiveness reports, because every positive indicator is offset by an equivalent negative development.”

It added that,

“the UK’s share of European R&D projects slumped from 26% to 16%, its lowest since 2011. With software projects also slipping despite a Europe-wide increase, these results raise concerns over the UK’s future performance in key growth sectors.

Europe was the leading origin for projects into the UK…Cross-border investments in Europe grew in 2016, with Central and Eastern Europe becoming an important area for higher value-added FDI such as R&D. As European value chains become increasingly integrated, investors appear concerned about the UK’s future access to these value chains.”

The EY 2017 global survey of investors’ perceptions

“reveals a split between current plans and future expectations…Some 31% of investors expect the UK’s FDI attractiveness to decline over the next three years, while 33% expect it to improve.”

Before we get too excited about the net positive figure, EY states that those figures are

“significantly worse than the long-term average, and 50% of investors based in Western Europe expect the UK to become less attractive.”

[Michael Tomlinson]

I have listened carefully to the hon. Gentleman’s speech. If I may say so, it is a rather glass-half-empty sort of speech compared with some of the other contributions. He is absolutely right about some of the notes of caution in EY’s attractiveness survey, but does he accept that there are also positive noises coming from it, including that the UK remains hugely successful in attracting FDI?

[Bill Esterson]

I read out the key point about the mixed picture. We must do everything we can to retain our existing successes as well as build new ones—that is the thrust of what I am saying—but there is no point in the hon. Gentleman or any of his colleagues pretending that there are not great challenges and causes for significant concern. I was tempted to say in response to his earlier comment that he has rose-tinted glasses half full. [Interruption.] It is too early in the morning for that, isn’t it? That one is a work in progress—I will leave it in the locker.

The hon. Gentleman is quite right about a positive attitude; I do not disagree with him. Of course we have to be positive and do everything we can—some of my questions for the Minister are along those lines—but it is worrying that the EY report shows a sharp fall in how global investors rank the UK’s attractiveness on key criteria, such as education, transport infrastructure, local labour skills, political stability and access to the European market. There has been a year-on-year decline of up to 30% in some of those criteria, which is unprecedented in the past decade. Bank of England Governor Mark Carney said just last month, as the Bank reduced its growth forecasts, that Brexit uncertainty was holding back investment. Of course, in the past year we have grown more slowly than our competitors—a fact that supports that comment and some of the other analysis I have described.

Mr Carney’s comments go alongside AIB’s decision to suspend investment in the UK due to uncertainty about the UK’s future. Two Japanese banks are establishing European bases in Frankfurt, and reports suggest that JP Morgan and Goldman Sachs are considering relocating significant business operations. Japan is a major investor in the UK, with some 1,000 UK businesses under Japanese ownership generating an estimated £72 billion of turnover last year. The Japanese ambassador estimates that 10,000 Japanese firms operate in the UK, employing 140,000 people. Many of those jobs are in the UK’s flagship automotive industry with big players such as Nissan, Toyota and Hitachi.

[Jim Shannon]

At a meeting with a firm this morning, I spoke to someone who attended a conference in Japan at which the UK and Japan looked at Brexit and how they could work together. For the record, he told me that there were positive contributions with respect to Brexit from firms in the United Kingdom and firms in Japan. They see possibilities and opportunities, and that should be recorded in Hansard.

[Bill Esterson]

The hon. Gentleman is absolutely right to raise that point. Japanese firms have already invested here, as have other foreign firms. They need to do everything they can to maximise their existing investments and to be in a position where it makes sense for them to build on those investments. That comes back to what the Minister has to say and what the Department has to do to enhance our position so that those investments continue to deliver and attract additional investment.

[Hannah Bardell]

The hon. Gentleman is making a detailed and informed speech. To counter the point made by the hon. Member for Strangford (Jim Shannon), Mitsubishi, which is a major employer in my constituency, has significant concerns about its ability to continue to invest and grow in Livingston and across the country, due to issues such as market access and the continued employment of EU nationals. Does the hon. Gentleman share my concern that companies such as Mitsubishi should be able to continue trading in Scotland and across the UK?

[Bill Esterson]

Yes. I am grateful to the hon. Lady for showing that there is a balance between two viewpoints: our foreign investors’ desire to continue their investments, make the most of them and build on them is set against their very real concerns. I am glad that she touched on the challenges with respect to skilled workers’ ability to come here and stay here, given that we have such serious skills shortages.

Nissan’s car plant in Sunderland employs 6,100 staff and an estimated 24,000 additional jobs are linked to it through the domestic supply chain. That fact and the hon. Lady’s point about Mitsubishi demonstrate just how important Japanese investment is for our car industry. The previous Labour Government helped to establish the Automotive Council UK, which turned around the struggling UK car sector and has contributed so much to making it a success story. Labour intervened to boost that vital industry—the 2009 car scrappage scheme played a key part in increasing demand for new cars. In contrast, the Government’s current inaction is a serious threat to the industry’s ability to compete.

The threat to UK car industry jobs is very real, and is compounded by the recent sale of Vauxhall to PSA Group, with the possibility of job losses as a consequence of any restructuring of UK operations. The Prime Minister is alleged to have told PSA that her Government are committed to the UK car industry, but the investment figures show a very worrying picture and serious concern on the part of investors. Figures from the Society of Motor Manufacturers and Traders quoted in the Financial Times suggest that investment in the UK car industry fell to just £322 million in the first half of 2017, compared with last year’s £1.66 billion.

The Secretary of State has repeatedly referenced the UK’s service sector in his various speeches and appearances before the House, but the Government have been largely silent on how they intend to ensure the future strength of this sector, which is vital to our economic success. The passporting regime is critical to the ongoing ability of UK-based banks to engage with EU-based customers, and it has been essential to decisions by US and Swiss banks to use London as a centre of operations, but uncertainty about its future continues; as a result, decisions are being taken to relocate to the continent.

The Government have finally decided to produce a trade White Paper in advance of the upcoming trade Bill. The fact that they have taken more than a year to do so may well have had a significant impact on investment appetite—often, decisions are made years in advance of committing capital to investment projects—and the trade White Paper must address the critical issues faced by domestic and foreign investors alike. Investors need to know what the Government will do to encourage investment across the United Kingdom, including the devolved Administrations and regions; whether the Government intend to prioritise support for certain industry sectors in preference to others; to what extent those industries will be able to continue to operate within global and, in particular, intra-EU supply chains, and what impact the rules of origin regulations will have on their capacity to continue to participate therein. Furthermore, what trade defence mechanisms do the Government intend to introduce and how will they use trade remedies to address any unfair practices undertaken by foreign competitors? What efforts will the Government make to ensure that standards are maintained in order to prevent unfair market distortion as a result of imports from markets with less stringent regulations and standards? What efforts will the Government make to maintain regulatory equivalence with key markets? What investment dispute settlement mechanisms does the UK intend to pursue in future trade agreements?

Labour has been clear about what our trade priorities will be and how we will seek to ensure that all of Britain benefits. We have addressed that in our manifesto. We recognise that the UK’s ability to continue to be a premier destination for FDI is essential to our future prosperity and to creating the jobs and economic growth we need. Now the Government need to minimise uncertainty and set out how they will reassure and support investors and deliver an attractive strategy that encourages foreign investors to continue to come here and to invest more.

Many investors come here precisely because of our access to the EU. The Government need to set out how they will maintain that access in financial and professional services, in manufacturing and across the economy. Time is fast running out. Investors are worried—remember those SMMT figures for the car industry and the actions of Japanese banks. Those are not isolated examples. Businesses want to know how their investments will be supported and enhanced; they need to know that trade policy is linked to an industrial strategy. Piecemeal deals for one business at a time are not an industrial strategy, however much they are welcome to the businesses, workers and communities in which such businesses are located. The future of FDI is vital to our national interest. The Government must intervene now.

[The Parliamentary Under-Secretary of State for International Trade (Mark Garnier)]

I thank my hon. Friend the Member for Mid Dorset and North Poole (Michael Tomlinson) for securing the debate. It is encouraging to see him coming along, and he has been supportive of the work of the Department for International Trade since he became a Member of Parliament.

The Prime Minister has been absolutely clear about this Government’s ambition to build a global Britain, which is about being the most passionate advocate for free trade in the world. That means championing British business in global markets; remaining a hub for global inward investment and a source of outward investment; and building a competitive trade policy for when we leave the European Union. I have been struck by one thing in the debate, which is that everyone across the House seems to believe in that idea of global free trade and a global Britain. It is encouraging to have no protectionist dissenters among us in Parliament, and that is a good thing for this country.

For the first time since 1983, a Department dedicated to international trade exists to drive forward that global ambition and meet the global challenges that face us. Personally, I am delighted that, following a departmental reorganisation, I am now the Minister for Investment, covering foreign direct investment and a renewed emphasis on overseas direct investment out of the country. Responsibility for FDI, which was previously held by UK Trade and Investment, now falls directly under the remit of the Department for International Trade—we are the Department responsible for going out and harvesting opportunities from around the world and bringing investment to the UK.

We intend to leverage our presence in 108 markets around the world—we are in 179 diplomatic posts in 108 countries—where we will harness the capabilities of the most revered diplomatic network to bang the drum for UK plc to overseas investors. Trade and investment is a key pillar of the Government’s industrial strategy, and I will convene colleagues from across Government to ensure that we target investment in the right areas and build an economy that works for everyone throughout the UK, including in all our devolved regions.

As we have discussed, FDI creates jobs, develops our skills and makes us more innovative. Global investors do not simply provide capital, but facilitate the transfer of technological know-how and new ideas, which increase our skills base and our productivity. Billions of pounds have poured in since the referendum from the likes of Toyota, Facebook and Google. To respond to the point about Japan made by the shadow Minister, the hon. Member for Sefton Central (Bill Esterson), FDI from Japan actually rose in 2016-17, with new jobs provided from Japan rising from 2,600 in 2015-16 to more than 3,500. Global investors therefore continue to see opportunity in the UK. They realise, as the Government have said all along, that Britain remains open for business.

The Department for International Trade was established just over a year ago. As I said, this is the first time since 1983 that we have had a Department dedicated exclusively to promoting trade policy and investment. That was as a consequence of the EU referendum result. Our purpose is absolutely simple: to turn the UK into the most passionate advocate for free trade.

We have heard a number of people speaking about the changes brought about by Brexit. I for one was a very passionate remainer; I campaigned fervently to stay in the European Union. As a Minister in the Department for International Trade, however, I absolutely recognise that we have enormous opportunities around the world that we must go out and seek. As last night showed us, we must not disrupt the will of the electorate and try to frustrate the Brexit process. We must realise that the remain side lost and that we must get on with this, embrace the opportunities, and not hold back and come up with a fudge that prevents us from striking new free trade deals with countries which we could not otherwise do.

The DIT promotes the UK as a destination for investment by providing specialist support for foreign investors in 60 markets worldwide. In 2016-17 we supported the creation or safeguarding of more than 91,600 jobs through our work with foreign direct investors. That equates to nearly 50 new and safeguarded jobs per project that we undertake. A key part of our investment approach is to leverage the power of the GREAT Britain campaign, the Government’s flagship international marketing and branding platform for the UK. It represents the whole of the UK and is present in more than 144 countries. The GREAT campaign effectively signposts the wealth of opportunity in the United Kingdom, including Northern Ireland.

In January we launched the Invest in GREAT Britain and Northern Ireland international campaign to promote the UK as a natural choice for overseas investment. Since its launch, the campaign has generated more than 600 inquiries, which have so far resulted in 89 qualified leads for investment into the UK. The campaign’s focal point is a new website—invest.great.gov.uk. One of the key aims of the marketing activity is to direct traffic to the website, where prospective investors can find out more about the UK as a destination for investment.

We have a strong global footprint. The UK leads Europe in foreign direct investment and is third in the world for inward FDI stock. DIT welcomed a record-breaking number of FDI projects to the UK in 2016-17, at 2,265—up 2% on 2015-16. The level of FDI stock in the UK is currently at £950 billion. Inward investment into the UK is estimated to have created and safeguarded nearly 108,000 jobs in 2016-17 alone.

According to official figures, just 1.1% of registered non-financial businesses in the UK are owned by foreign investors, but they account for 34% of annual turnover and 38% of gross value added. Only one European country featured among the top six individual countries of origin for foreign investment projects in 2016-17. The USA was our largest source of investment. American FDI stock in the UK stands at £252 billion and accounts for 27% of inward investment stock. The whole of the UK continued to attract FDI, with parts of England and Scotland seeing growth above the national average. I am pleased to tell my hon. Friend the Member for Mid Dorset and North Poole that the south-west had one of its strongest annual results in 2016-17, with a 13% rise in FDI projects to 101.

Although those figures look very good, it has been said that the jobs numbers are not keeping pace with the increase in the number of investment projects. It is fair to say that we need to do more work to analyse how those numbers are collected. The data are collected on the basis of investment projects. If, for example, somebody invests in a new factory in the midlands costing £50 million, they would have the same representation as somebody opening a chip shop in Barnsley for £50,000. We need to do more work to understand exactly how much money is coming in and how many jobs are being secured.

More productive businesses coming to the UK will not necessarily employ more people. Higher productivity does not necessarily increase the number of people employed, but we see different patterns, from one year to the next, with different types of business coming to the UK. Ultimately, we want to create the wealth of this country, which includes good, high-paying, productive jobs; that is absolutely crucial to what we do. Moreover, and I will return to this point later, we are keen to spread that activity throughout the entire region—most people say from John O’Groats to Land’s End, but I say from the Scilly Isles to Shetland. We are absolutely determined to ensure that that work leaves no part of the United Kingdom untouched.

Global investors repeatedly say that the strength of the UK’s economic fundamentals is the reason they choose the UK. They cite our political and regulatory stability, our transparent rule of law, our low regulatory environment and our low-tax economy, including some of the lowest business tax rates in the G20. We have some of the best universities in the world—and now the top two—feeding a highly skilled workforce and fostering world-leading R and D hubs across the country. We speak the international language of business, and the UK offers a perfect time zone for global trading, where someone can do business with China in the morning and with the US in the afternoon. There is also our cultural diversity and quality of life—but not, sadly, our weather. Those economic fundamentals mean that the UK is now considered one of the easiest countries in the world with which to do business. It is ranked seventh, according to the World Bank. At the start of 2016, the UK had 1 million more small businesses than it had in 2010—a total increase of 23%—and our tax system ranks in the top 10 most business-friendly in the world.

The prospect of taxation was raised, and the shadow Minister responded to the prospect of a Labour Government introducing higher taxes. He was absolutely right that if he adheres to the manifesto pledge from the recent election, the business tax rate would merely rise back to where it was at the beginning of the coalition Government.

[Bill Esterson]

It would be lower than that.

[Mark Garnier]

Indeed, lower. A really important point is that businesses look not necessarily at absolute numbers, but at the direction of travel. One of the things behind businesses coming to this country is the fact that the direction of travel for businesses taxes—which, frankly, raise only about 8% of total taxation—is downward. That creates a greater opportunity for business. If businesses see that direction of travel reversing and taxation going up, they will not know where it will stop. The problem is the direction of travel, not the absolute numbers.

[Bill Esterson]

I do not want to wander too far from FDI, but most businesses I talk to tell me that improving the incentives in taxation is more important to them than dealing with the taxation of the results and successes. It is the tax level in business rates that needs reform, not the rate of corporation tax. Does the Minister agree?

[Mark Garnier]

The hon. Gentleman is right that taxation is not simply about the headline corporation tax rate. It includes, of course, business rates, and businesses that operate factories do not necessarily pay the higher business rates for retail spaces, which are calculated per square foot. It is also about national insurance and various other taxes, so we need to bring together a package. Taxing a population too much stifles growth and investment into that economy. The whole package has to come together to ensure that the businesses that invest in the UK can be confident that the Government recognise that those businesses’ taxes—not just business rates, corporation tax and national insurance, but all the money that gets paid to workers, who then pay tax and spend money and pay VAT—buy the hospitals, schools and public services that we value so much in this country. It is vital that we get the business environment right and attract businesses to this country to ensure that we continue to provide the public services that all of us, across the whole of the House, hold so incredibly dear. We do not want to lose any of them.

The hon. Member for Livingston (Hannah Bardell) talked about business certainty and the uncertainty of Brexit, and so far people like me, the remainers, have been proved wrong—thank goodness, because none of us wants anything to go wrong with our economy, and we are very keen that things progress. The prospect of a second independence referendum, which the Scottish National party could put forward, although Westminster would not necessarily recognise it, is creating more uncertainty. Businesses need to know what is going to happen. One thing we can say about Brexit is that it is a quantifiable uncertainty: we know that, in the worst-case scenario, our trading relationship will go to World Trade Organisation rules.

What was not decided and resolved during indyref 1 was the fundamental issue of what currency Scotland would use. I think it will be very difficult for businesses to invest in Scotland if they do not even know in which currency they will do their accounts and charge their customers. I do not want to castigate the SNP; I want to work hard with Scotland—and, indeed, Northern Ireland, Wales and all the regions—to ensure we are working together to the benefit of the whole of the country. We see Scotland not as a different part of the United Kingdom but as our friends, whom we want to support. I am incredibly proud, as Minister with responsibility for the food and drink sector, that I spend a lot of time dealing with the Scottish Whisky Association, which generates £3.9 billion-worth of exports and benefits all of us in this country. That is fantastic. We are going to do whatever we can to support the devolved Administration in their efforts to boost investment in Scotland. We do not see Scotland separately; we will always be there to help, and we are doing as much as we can to ensure investment comes into Scotland.

My hon. Friend the Member for Richmond (Yorks) (Rishi Sunak) raised our industrial strategy, and said that we need to look at science research and innovation, the skills agenda and infrastructure. The industrial strategy is about delivering those incredibly important things, and we need to look at supporting business to grow—also in the industrial strategy—and several other areas. My hon. Friend referred to three important and fundamental points, and the industrial strategy is part of the package. In some respects, the Department for International Trade is the sales force of the country. We are the hard-working salesmen with a trolley bag behind us going through airports around the world making sure we are banging the drum for British business. At the end of the day, the product that is being sold is the industrial strategy, plus a number of other items. We are out there. Of course, we feed back and say what the international world is saying; that is very important.

The industrial strategy is about building an economy that works for everyone, improving living standards, creating good jobs for all and cultivating the conditions for competitive, world-leading businesses to start and grow. Encouraging trade and investment is one of the key pillars of the industrial strategy. The right investment in the right areas builds world-leading sectors and develops our skills base. Targeted investment also strengthens our supply chains, putting UK companies in a better place to work together and present a “Team UK” offer for some of the biggest global contracts.

The industrial strategy will use our record investments in infrastructure to unlock and drive growth in every part of the country and it will use major new investments in research to support innovative businesses across the country. I want to reiterate the point that we are a Department for the whole of the UK. We will look to attract investment across all of the English regions, all of the devolved regions, including Greater London, the midlands engine and the northern powerhouse, and, of course, the south and south-west. We will also work with our partners in the devolved Administrations, because investment in one part of the UK has a positive knock-on effect for all of us in every part of the UK.

In March, I launched the midlands engine investment hub, which acts as a focal point for FDI. Its priority is developing and articulating a pan-midlands FDI offer. The northern powerhouse investment taskforce was established in 2016 as part of the cross-Government northern powerhouse strategy, of which trade and investment is one of the main strands. FDI into the northern powerhouse continues to rise. In 2016-17, it grew by 5%, attracting 348 projects and creating nearly 15,000 new jobs.

I think it is fair to say that the south of England looks to the super-region, and quite a significant amount of FDI comes into the region near London because London is a natural hub. However, I have recently been to visit boat-builders as far afield as Falmouth, just about 20 miles from the end of the country, where we see truly global brands such as Pendennis yachts building luxury yachts for oligarchs and big investors around the world. It is a great topic of ridicule: those who have yachts and those who have not. None the less, those who build yachts provide jobs. It is important to remember that building those luxury boats brings in a lot of money. There are some fantastic businesses down there—Rustler Yachts is another—and we are all about promoting every one of those businesses. It is important that my hon. Friend the Member for Mid Dorset and North Poole can take back to his constituents that we are working hard on that.

The shadow Minister also made a great deal of reference to the Automotive Council UK, the car industry and what is going on in terms of investment. It is right to highlight the car industry, which is an amazing example of a great success story in the UK. By the way, we can look at the experience of Jaguar Land Rover as a historic example. It has always been a great British brand that has built some fantastic cars, but it is the Indian production techniques that have turned it into a truly profitable and successful business. The foreign direct investment coming into JLR and continued investment of the UK demonstrates more than anything else how productivity and jobs are increased by FDI.

[Bill Esterson]

The Minister is right about JLR, the value of the FDI from Tata and the partnership between Government and investor in achieving that. Is he aware of comments from the head of JLR last week who said that, should we end up paying the tariffs implied by the WTO, that would cost his business £1.1 billion extra a year? Does he share my concern? I urge him and his colleagues to do everything they can to avoid ending up in that situation.

[Mark Garnier]

Absolutely. I met the chief executive of JLR and he shared those concerns with me. We have concerns—actually “concerns” is the wrong word. We are striving to have a Brexit that feels, in every commercial sense, exactly the way things are at the moment.

It is worth bearing in mind that the history of trade negotiations has been one where we have started with a bad position and tried to work out how to go forwards. People go into a negotiating room and say to the two people across the table, “This is how we trade”—let us say it is under WTO terms—“How are we going to improve this?” What is fascinating about the proposed free trade arrangement with the European Union is that, for the first time ever, people are suggesting that we will have negotiators going into a room, saying, “We have the best outcome that we could want in terms of free trade. How are we going to make this worse?”

It is in everyone’s interests to maintain the trading relationship we have, whether we be in the UK or the European Union. It is a different dynamic, but from the conversations we have with people and businesses in the European Union—bear in mind that we also talk to them about what they want from Brexit—it is crystal clear that no one wants to run into a position where WTO tariffs are being charged. We are doing everything we can to ensure that we get to a tariff-free and customs-free outcome of Brexit.

Oral Answers to Questions

Bill Esterson Excerpts

Thursday 6th July 2017 Commons Chamber

[Mark Garnier]

The value to the economy of the food exporting sector is absolutely enormous. I think it is the biggest manufacturing sector in the world. We have already seen a number of opportunities for going out and exporting it, and trade figures are up by some 7%. We can give a breakdown of the actual data, and I would be happy to write to the hon. Lady about that later. Without a shadow of a doubt, the Department for International Trade is successful in what it does. We have seen exports increase across all sectors and, as I pointed out earlier, we have seen record numbers in food and drink exports.

[Bill Esterson (Sefton Central) (Lab)]

Why have the Government done nothing to stop Nestlé moving production from the United Kingdom to Poland, with the loss of 300 jobs? The Government confirmed this week in a written answer that Ministers met Nestlé in April. Nestlé has said that it would take an investment of £1 million to keep production in the UK. The Government found £1 billion to save one job in Downing Street, but they cannot find £1 million to save 300 jobs at Nestlé. Unbelievable!

[Mark Garnier]

The hon. Gentleman raises a number of issues. The hon. Member for York Central (Rachael Maskell) has been working hard on behalf of her constituents to try to help with the redundancies at Nestlé, as indeed has the Department for Work and Pensions, which is standing ready to put in place its rapid response service. We are happy to meet representatives of Nestlé, and I would be very happy to meet them again. [Interruption.] Fantastic. Thank you.

Exiting the European Union and Global Trade

Bill Esterson Excerpts

Thursday 6th July 2017 Commons Chamber

[Bill Esterson (Sefton Central) (Lab)]

Labour’s manifesto stated:

“Labour is pro-trade and pro-investment. The UK’s future prosperity depends on minimising tariff and non-tariff barriers that prevent us from exporting and creating the jobs and economic growth we need.”

The negotiations for the UK’s exit from the EU have already begun, and our future prosperity as a nation is vitally dependent on our international trading relationships. Of those relationships, the UK-EU trade deal must be the Government’s priority. A no-deal with the EU is the worst possible deal and must be ruled out. Anyone who has run a business knows that you look after your existing business relationships first—if you do anything else, you do so at your peril.

We have heard many speeches today. The hon. Member for Livingston (Hannah Bardell) spoke about the transitional arrangements and the question of how to deliver frictionless trade.

The right hon. Member for Wantage (Mr Vaizey) gave the first of the many speeches that we could call pro-Chancellor, given the interesting interrelationship between the Chancellor and the Secretary of State for Exiting the European Union.

My hon. Friend the Member for West Bromwich West (Mr Bailey) spoke about the car industry’s importance to the UK economy and the need to ensure that we continue to support car exports. He also spoke of the damage that no deal would do to that industry.

The hon. Member for Hornchurch and Upminster (Julia Dockerill) made her maiden speech; I congratulate her on the enthusiastic way she spoke about her constituency.

My hon. Friend the Member for Bishop Auckland (Helen Goodman) spoke about her commitment to her constituents and their need for a Brexit that supports exports and jobs. She also spoke about the importance of the European Medicines Agency to this country and about the need to support the hill farmers in her constituency.

I think the hon. Member for Rochford and Southend East (James Duddridge) spoke in support of the Secretary of State for Exiting the European Union.

My hon. Friend the Member for Lincoln (Ms Lee) made an excellent and passionate speech and spoke about the importance of the transport hub delivered by the Labour council of which she was part. Support for transport infrastructure is of course crucial to backing the businesses and jobs of her constituents, including those involved in international trade.

The hon. Member for Gloucester (Richard Graham) clearly backed the Chancellor.

The hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) reminded us of his late friend, Charlie Kennedy, who was much respected by Members from all parties. I congratulate him on his confident maiden speech; I enjoyed his story about his predecessor, Charles James Fox.

The hon. Member for Bromley and Chislehurst (Robert Neill) was with the Chancellor.

My hon. Friend the Member for Midlothian (Danielle Rowley) made an excellent maiden speech in which she reminded us that she is the first woman to represent her constituency. She comes from a family of miners and is keeping that Midlothian tradition going. I was pleased to hear her remind us that she was elected, as I was, on a platform of hope for the many, not the few.

The hon. Member for South Suffolk (James Cartlidge) was clearly with the Chancellor—[Interruption.] I think he was, anyway. He gave a good example from his constituency of the dangers of a cliff-edge exit and spoke about the importance of transitional arrangements.

The right hon. Member for Carshalton and Wallington (Tom Brake) made a good speech, and the hon. Member for Hitchin and Harpenden (Bim Afolami), who I think was backing the Chancellor, gave another good short speech.

The debate finished with a great speech by my hon. Friend the Member for City of Chester (Christian Matheson), who reminded us of the importance of fair and free trade and how it engenders prosperity and peace. He, like me, will be supporting a Brexit that promotes jobs and retains environmental and consumer protections—

[The Parliamentary Under-Secretary of State for International Trade (Mark Garnier)]

He, like I.

[Bill Esterson]

I thank the Minister for the correction. No doubt the fee note will be in the post.

The Government have promised to deliver the “exact same benefits” as we currently have inside the single market and customs union, and Labour will hold them to account on that commitment. We recognise that once we leave the EU a transitional period is vital to avoid a cliff-edge for the UK economy.

The Government have still failed to set out a coherent international trade strategy for when the UK has formally left the EU. We have called on them to publish an international trade White Paper. The UK needs clarity on this issue as never before. It is unacceptable to take the country into an uncertain future that includes our exiting the EU without a comprehensive plan on international trade. Such a plan must be presented to and properly scrutinised by the British people and their elected representatives in Parliament.

A White Paper must set out what the Government’s plans are for future international trade, outlining negotiating principles and trade policy objectives, including which industry sectors will be prioritised and which will not. Clarification of what was meant in the Lancaster House speech by hybrid customs arrangements needs to be set out. The Government say that they intend to pursue closer trade links with Commonwealth partners to make up for any lost trade with the EU, which currently accounts for 44% of our exports. However, none of the UK’s top 10 export partners is a Commonwealth country.

The spring Budget statement revealed that this Government are out of ideas when it comes to boosting exports and tackling the productivity slump forecast by the Office for Budget Responsibility. This is a Government who talk big on trade and Brexit, but who have failed to provide the support for British businesses wishing to export and grow into new markets.

The latest Office for National Statistics figures show that the UK’s trade in goods deficit has increased by £2.6 billion. Our imports are on the rise while our exports are failing to catch up. Despite the Government’s bombastic talk of Britain leading the world as a trading nation, our trade performance on their watch has been weak.

British small and medium-sized enterprises and trade bodies have repeatedly called on the Government to do more to deliver real support to potential exporters. The Government have ignored them, focusing instead on the big corporations and on arms sales. They have systematically delayed SME funding for overseas trade shows and have, over the years, decreased the budget for such funding. They should be maintaining the tradeshow access programme and, crucially, delivering it on time—not delaying it by four months as has just happened.

The Government need to maximise support for those wishing to export and make it clear what their mission is and what their vision of trade is. They need to bring forward the White Paper and say what their view is of transitional arrangements, how they will deliver frictionless trade outside the EU with the EU and, above all, to put forward the priority of jobs and British businesses first.

Oral Answers to Questions

Bill Esterson Excerpts

Thursday 23rd March 2017 Commons Chamber

[Bill Esterson (Sefton Central) (Lab)]

May I associate myself and my colleagues with the Secretary of State’s remarks about yesterday’s terror attacks?

The Federation of Small Businesses reports its members’ concerns that there should not be a cliff edge when we leave the European Union. Smaller businesses want to continue with tariff-free access and to minimise non-tariff barriers. What is the Minister’s Department doing to support small businesses and allay their concerns?

[Mark Garnier]

The Department for International Trade absolutely shares those desires for a disruption-free exit from the European Union. We are certainly representing those interests to the Department for Exiting the European Union, which is tasked specifically with the objectives described by the hon. Gentleman.

Oral Answers to Questions

Bill Esterson Excerpts

Thursday 9th February 2017 Commons Chamber

[Greg Hands]

I am very sympathetic to Glasgow maintaining its exports and capability in smart cities. The UK and the Department for International Trade follow a whole-UK approach, often working with key partners such as Scotland Development International. However, I would point out to the hon. Lady that Scotland remaining in the United Kingdom is more important. Some four times as much Scottish produce and capability is exported within the United Kingdom than to the European Union.

[Bill Esterson (Sefton Central) (Lab)]

British tech firms have been unable to go to two US trade shows, and look unlikely to be able to attend a top conference and exhibition in Singapore, owing to extensive delays by the Minister’s Department in announcing trade access partnership funding. Will he go back to the Department and confirm the funding, so that British businesses can attend trade shows and play their part in boosting our exports and economy?

[Greg Hands]

The Department continually reviews its products and services to ensure that it meets its customer needs and represents good value for the taxpayer. Business planning will be completed very shortly, so we will be confirming events shortly.

Oral Answers to Questions

Bill Esterson Excerpts

Thursday 15th December 2016 Commons Chamber

[Mark Garnier]

Let me say that my hon. Friend, given that his constituency is Cardiff North, is the engine-room of the Cardiff economy. The Department for International Trade works for the whole of the UK, but I stress that my right hon. Friend the Secretary of State has already visited Wales, and I am working with the Wales Office to see what more we can do. We also support the Welsh Government by offering them support in posts overseas. We see the opportunities presented by Wales as very exciting.

[Bill Esterson (Sefton Central) (Lab)]

Today we are told that it could take up to 10 years to reach a trade agreement with the EU after we leave, while research from the National Institute of Economic and Social Research suggests a drop in trade of up to 60% if we are outside the customs union. Foreign investors are vital for the British economy, so will the Minister give those investors some of the certainty they so desperately need—and that we need, as well? Will he tell them whether he wants Britain to be inside the customs union and whether he wants tariff-free access to the single market or not?

[Mark Garnier]

It has been made very clear that the Government are not going to give a running commentary on what we are proposing to do. I also stress that the comments of Ivan Rogers are opinions and words taken from interlocutors and do not necessarily define how long it will take to create a trade deal. It is worth bearing in mind, if we look at various trade deals around the world, that while the Trans-Pacific Partnership has taken potentially eight years, the US-Jordan trade deal took just four months. It is very difficult to establish exactly how long any trade deal will take.