Business, Energy and Industrial Strategy: Departmental Spending

Debate between Darren Jones and Mark Tami

Tuesday 7th July 2020 Commons Chamber

[Darren Jones (Bristol North West) (Lab)]

It is a pleasure to open this debate, and I will try to keep my remarks short as possible to give time for colleagues in the House to contribute. Before I begin my substantive remarks, I pay particular tribute to the right hon. Member for Tunbridge Wells (Greg Clark) , who chairs the Science and Technology Committee, and the right hon. Member for Ludlow (Philip Dunne), who chairs the Environmental Audit Committee, for their support. I note that the right hon. Member for Ludlow is unable to take part today because of the lack of virtual proceedings, but he had intended to do so.

The Department for Business, Energy and Industrial Strategy is at the heart of Britain’s recovery. If we are to recover from the economic costs of the pandemic and tackle the climate crisis, it is imperative that we build back better for Britain, with a more inclusive, productive and sustainable economy that provides opportunity, security and resilience for families in every part of the United Kingdom.

That means good jobs for every generation in every part of the country; it means investing in key sectors in order to increase British manufacturing and British exports; it means Government partnering with business to bring forward investments in digitisation and technology transformation to improve productivity, with a specific focus on small and medium-sized enterprises; and it means recognising the importance of a fiscal stimulus in people as well as infrastructure, in the knowledge that an investment in every worker’s skills is an investment in the interests of the British economy. In each of those priorities, embedded in every single spending commitment, the Government must set out how they will accelerate our transition to net zero. Tackling climate change should no longer be a standalone policy; it should be at the heart of every Government decision.

I am confident that across Britain, in every part of our great country, from students and workers to business leaders, entrepreneurs and innovators, we have the capacity to rise to the patriotic challenge before us—that together, we can get Britain back on its feet. That is why, at this turning point for Britain, as we leave the European Union and reset our role in a world quickly changing around us, the Government have an opportunity to rise to the challenge and create a modern, dynamic and aspirational Britain that is fit and ready for the future.

The breadth of interest in this debate is a function of the gamut of responsibilities and policy areas contained in the BEIS brief—an important brief for us to hold to account. The pandemic has given the Government, and BEIS most of all, an overriding and immediate task: to save as many jobs, businesses and livelihoods as possible. Covid has seen day-to-day departmental spending increase eightfold in the space of a year, from £2.1 billion in 2019-20 to £15.9 billion in 2020-21, with a significant majority of it concentrated on delivering emergency loans to the hundreds of thousands of businesses that have required help.

[Mark Tami (Alyn and Deeside) (Lab)]

Obviously, the aerospace industry is not going to come back any time soon, so we must look at how we will invest to keep those jobs and skills in the medium and longer term. In particular, we have seen the sort of support that has come from the German and French Governments; we really must look at least to mirror that in this country.

[Darren Jones]

I thank my right hon. Friend for his intervention. He and I have shared constituency interests in that important industry, which I will touch on later in my remarks.

It has been entirely right that the Government have acted quickly, but the scale of the expansion underlines the need for Parliament to scrutinise the effectiveness of its delivery, the extent of the future liabilities to which it exposes Government, and the plan for how support will be provided to the many businesses that are not yet out of the woods and will emerge from this crisis newly indebted—in short, what comes next.

The first key test for the Department must be to ensure that businesses large and small get the help they need in respect of both liquidity and debt management. In the course of our inquiry into the impact of coronavirus on businesses and workers, my Committee has seen evidence of employers doing the right things, but also of businesses and employers doing the wrong things. Conditionality on future support, in respect of both corporate behaviour and embedding the net zero transition and worker training, should become the new normal.

The Department should also take the opportunity to learn lessons from the initial phases of support. For example, my Committee heard consistent evidence of frustration at grindingly slow approval processes for Government-backed coronavirus business interruption loans and a reluctance to lend on the basis of the Government’s 80% loan guarantee, in addition to a widespread perception that eligibility requirements were not being applied consistently.

I wrote to the Secretary of State following the publication of the main estimates to seek an update on whether approval and take-up rates under the interruption loan schemes ever actually increased, particularly following the roll-out of bounce-back loans. It will be vital for my Committee and the House to understand the complete picture in that respect. Equally, although I recognise the trade-offs that exist when providing support at pace, I am conscious that Ministers have since notified the House of a contingent liability of £27 billion. That figure was not included in the estimates and, needless to say, it could dramatically increase.

Today is not the right occasion for a full analysis, but it is more than conceivable that if the Government had been willing to reform the initial loans frameworks and supplement them with targeted help for the worst-hit sectors, they could have provided materially more support earlier in the day at a lower eventual cost to the Exchequer. As Britain emerges from lockdown into a state-sponsored recovery, it is vital that the Department learns the lessons of the past few months in making the strategic interventions necessary to get businesses back on their feet, while balancing the fiscal risks of significant borrowing against value for money and potential future increases in interest rates. We must spend the money we are borrowing wisely. I therefore ask the Minister, in his summing up, to set out for the House what lessons have been learnt about the effectiveness and value for money of the initial support packages, and which lessons will be taken forward in the design and delivery of future support.

Evidence taken by my Committee from sectors in the most immediate need has also underscored the urgency of strategic sector-specific support packages and the high cost of failing to act. As the Member of Parliament for Bristol North West, I see that especially in the hospitality and aerospace sectors, and, while the hospitality sector can start to slowly reopen, the aerospace sector cannot. The aerospace sector should command a bespoke package of support, bringing forward decarbonisation targets for new aircraft and developing the technologies of tomorrow, not just to protect vital jobs and skills, but to maintain our international competitiveness in this important sector. However, the Government seem unwilling to take a coherent sectoral approach. I appreciate that the Minister cannot make any announcements in advance of the statement tomorrow, but I wonder whether he might tell us if he thinks his Department will move from a one-size-fits-all approach to a more sophisticated sectoral approach in the months ahead.

Those decisions should be underpinned by the industrial strategy, a key long-term metric for the Department’s success. In its annual report earlier this year, the Industrial Strategy Council identified key areas for improvement. One was in relation to the Department’s multi-agency research and development spending, principally through UK Research and Innovation. In their letter to me last week, the Secretary of State and the innovation Minister, the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Derby North (Amanda Solloway), undertook to engage and consult on the Department’s research and development roadmap ahead of the autumn spending review. I hope it will include a clear commitment to seeking third-country membership of Horizon Europe, which would contribute about £2 billion of value to British research, regardless of the outcome of trade talks. That would send a much more valuable signal about the Government’s seriousness in ensuring that science and innovation in Britain are supported for the long haul and that the ambitious spending targets identified in the industrial strategy are met.

Of equal importance to the Department’s role in shaping the post-pandemic recovery is the Industrial Strategy Council’s call last month for a clearer overreaching vision for UK skills, with a strategic overhaul and expansion of training policies and institutions. It identifies a median scenario whereby 7 million current UK workers will have seen their jobs automated by 2030 in the absence of sustained investment in reskilling in our workforce. As OECD analysis has shown, the employees most at risk from automation are often the least likely to participate in training. The pandemic only compounds the latent injustices, with the rise of remote working and learning making investment in digital access and digital skills even more important.

I am an advocate of the acceleration of automation and technology adoption, but it must be coupled with economic stabilisers from the state for training and jobs transition for workers and it must tackle inequalities and have a clear view of modern competition. It must also be coupled with consumer and workplace health and safety regulations that protect workers and it must prevent monopolisation and overbearing corporate power from the owners of data technology and digital services. Yet we seem to be in a twilight zone where the Government have an industrial strategy but often seem to lack reference to it, or indeed ignore it, making spending decisions—for example into the OneWeb satellite company—that seem to bear no resemblance to the published strategy while intervening in the market in an often incoherent and opaque manner. That cannot continue and the Government must set out the framework in which they will operate in the years to come, so that the market can understand what rules will be followed and on what basis.

Those of us content with the idea that the state plays a role in the economy would recognise such interventions from the Government in the past few months as an industrial strategy, so it would be useful in summing up today if the Minister could set out what the Government’s industrial strategy actually is and how it will be used in the decisions for post-pandemic growth. This, to be clear, should not be about picking winners. It should be about working with business to deliver on economy-wide objectives. If the Government are going to truly level up the economy, they need to trust, empower and properly finance local decision-making in a real partnership between the functions of the state and business and trade union leaders.

Turning lastly to climate change, as I said at the beginning of my speech, I do not see climate change as standalone policy, but one that is embedded in every decision. I hope the Government will set out how every decision, through the billions of pounds that they spend, helps us to reach our net zero target.

At a time of shifting global power, we should take these opportunities to not only re-emphasise the importance of multilateralism and the rules-based international order in terms of climate and trade, but also evidence why it is in all our interests to work together. The Government have a rare opportunity right before them to create a more inclusive, productive and sustainable economy that delivers good jobs, good pay and security for families at home here in the United Kingdom, while using our soft powers to show the world what we can all achieve together. That goal will be the defining test for this Government.