Emerging Economies

Iain Wright Excerpts

Monday 14th June 2010 Commons Chamber

[Mr Browne]

An interesting evolution in the power balance in the world is taking place, with these huge emerging countries. Although China’s GDP is slightly greater than ours, it is worth reminding ourselves that their population is 25 times higher, so their GDP per capita is very much smaller than ours. Hundreds of millions of people in China have yet to benefit from the huge advances that that country has made over the past decade or two. At the moment, we have this slightly strange situation whereby many of the emerging economies are the new powerhouses and yet still have millions of people living in absolute poverty. I think that there will be an evolutionary period in which they are apparently two slightly contradictory things simultaneously: they will require aid and assistance while becoming increasingly significant economic and political players. Over time, that balance needs to be reflected in the contributions that we make in aid.

[Mr Iain Wright (Hartlepool) (Lab)]

I welcome the hon. Gentleman to his post; I think that he will make a very fine Minister.

Developing the argument somewhat, in the next 20 years or so we will see growth in the middle classes across the emerging economies the like of which we have never seen before, with huge untapped potential that British companies can access in selling goods and services to them. What steps will the Government take to ensure that British companies can access those future market opportunities?

[Mr Browne]

I am grateful to the hon. Gentleman not only for his flattering comments but for his intervention. I will deal with that point as I proceed through my speech.

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[Mr Browne]

That is a matter that I may wish to bring to the attention of Home Office colleagues. I am sure that they will take my hon. Friend’s wider point seriously, and I want to deal with it in the remainder of my speech. It relates to the importance of not just Government-to-Government or even business-to-business relations, but of engaging on a person-to-person basis with many countries.

The economic shifts that we are witnessing are no less significant politically. I have already said that after the second world war we had a political settlement, which was essentially the cold war settlement based on Europe and north America. That is emphatically no longer the case. Of course, we must be careful about getting ahead of ourselves. The United States is still the dominant power in the world and likely to remain so for a considerable time. Gross domestic product per capita in the EU is still vastly higher than in China or India. However, the direction of travel is obvious.

Britain can and should be confident in our ability to succeed in the new order. We remain a respected global player. We are at the core of international decision making: we are a major player in the EU, the Commonwealth, the United Nations and NATO. We have a network of diplomatic and other missions that reaches into every corner of the globe, while maintaining the ability to exercise hard power when necessary.

Along with Britain's economic and political assets, our so-called soft power can also play an important role in ensuring that we retain our influence and prosperity in future. We are globally influential in subjects ranging from architecture to science and popular culture. We have global sporting connections, including the world’s most followed football league. The UK will be at the centre of world sport when the Olympics come to London in 2012 and the Commonwealth games to Glasgow in 2014. We have a unique asset in the BBC World Service, while the British Council connects millions across the globe to Britain’s culture and education.

The changing world order should not be seen just in terms of a GDP league table. As important, if we are to win the debate on important matters such as climate change and human rights, is our ability to lead on ideas. Just as we must lead in that competition of ideas, we must likewise provide leadership in the debate on fundamental values.

I have spoken in meetings with Foreign Ministers from around the world about not only our economic interests but the balance between the role of the state and the individual, and argued that economic growth was not the only measure of human well-being, but that civil rights were central, too.

[Mr Iain Wright]

rose—

[Mr Browne]

I will take the hon. Gentleman’s intervention, but I may be less generous afterwards.

[Mr Wright]

I thank the Minister for giving way; he is being most generous. Before he moves from economic power to soft power, let me say that resource constraints are an inherent risk in the movement eastwards of the world’s economy. I am concerned that the 21st-century equivalent of the scramble for Africa, in which emerging economies lock in trade deals with African nations to get commodities such as iron ore and oil, will compromise our ability to compete as a nation. What steps will the British Government take to ensure that British companies have access to hard-pressed resources and commodities in future?

[Mr Browne]

The hon. Gentleman makes another excellent point, about how we ensure that there is a global architecture of decision making and responsibility, which means that resource allocation and other political decisions are made in a framework of law and consensus. That is our foreign policy objective and why our foreign policy has to evolve to match reality. We cannot sit, King Canute-like, and try to cling on to the G8 and European-north American-centric architecture. We need a decision-making framework, which reflects the change in the status of different countries and allows us to make decisions in concert with them as we proceed with economic growth and political decision making in the decades ahead.

Much of the analysis that I have shared with the House is widely accepted if under-appreciated by some in our national discussion. We must now ask how we respond to that and what the consequences are for our policy making. Let me suggest three overlapping subjects as a framework for our debate in the next hour and a half or so. First and perhaps most important, we must make the case—and win the argument—for keeping global markets open to foreign trade and investment. A resurgence of protectionism in any of the markets about which I have spoken would be a far greater risk to the UK economy than the rise of those markets. We must also have a dynamic, outward-looking economy—this point was made by my hon. Friend the Member for Bermondsey and Old Southward (Simon Hughes)—that is not burdened by unsustainable levels of Government debt.

Secondly, we will significantly increase our cross-Whitehall effort to engage not only with the obvious, big emerging economies, but with the medium-sized emerging economies. We must also build on our solid co-operation with Japan, which remains the second-largest economy in the world. All of that will mean working with business to reap the opportunities in countries and regions whose cultures and languages may be less familiar to many of us, and getting the official dialogue right, including through more structured relationships at Government level with many such countries.

Thirdly, we must continue to invest in our political as well as our economic effort. The rise of emerging economies will make the world a more prosperous place, but it will also make it more complicated. A more multilateral world will require us to engage on key security issues with a wider cast of global actors, which will put an even higher premium on ensuring that we are all bound by the same international rules-based system. Upholding that will be the key task of our diplomacy in its widest sense in the years ahead.

That places a heavy burden of responsibility on the Foreign and Commonwealth Office. One FCO priority will therefore be to look at how we can best use our diplomatic network and shape our resources to ensure that we have the capability to make the most of the new world that is being brought about by the emerging economies. We are already being innovative in our representation overseas. I do not claim that such innovation started magically a month ago—it has been undertaken for a period of time—but I hope that we will accelerate it and give it extra momentum. We are using regional networks of experts and so-called laptop diplomats, among other innovative measures. In a difficult resource climate, we must ensure that our language training, including in Mandarin, Spanish and Arabic, is focused where we need it most. We will look at how to resource stronger UK engagement with the Governments, peoples and societies of emerging economies in the forthcoming spending round.

If we are to retain our influence in the new global, economic and political world, we will need to change and adapt. Our diplomatic effort will be focused where it is needed and adapted to the new realities, but our efforts must go beyond discussions between diplomats in capital cities. We must inspire business and community leaders throughout Britain to build relationships with their counterparts in the emerging powers. That task is not only for the FCO and the Government: I am emphatic in my view that that task is for our country as a whole and all the people who live in it. Everybody in our country needs to step back for a moment and ask themselves, “Are we able to think and act globally in a way that reflects the new realities of the world? Are we seeking better to understand and engage with the emerging global players? How does the UK media cover the rest of the world? How does our educational curriculum meet our global needs? How well can our major businesses reach out beyond our borders to the markets of the future?” The Government should and will provide leadership, but our national outlook needs to adjust to the rapidly changing global landscape.

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[Chris Bryant]

Strictly speaking, that is not statistically right. Yes, when Burberry tried to close its factory in my constituency, I fought hard to ensure that the business would not be taken to India or China. I do not think that most people would want to buy a high-quality Burberry product that purported to be British if it had not been made in the UK. Unfortunately, we lost that battle. However, we export a lot more than just financial services. For example, a lot of our exports relate to extractive mineral industries, which I shall come to in a moment—[Interruption.] I sense that Hartlepool is springing to its feet.

[Mr Iain Wright (Hartlepool) (Lab)]

I welcome my hon. Friend to the Opposition Benches, and I hope that he will apologise for the appalling nature of the gags. May I first take up the point made by the hon. Member for Burnley (Gordon Birtwistle)? I disagree with him, because the UK is still the sixth largest manufacturing nation on earth. We have moved along the value chain, in that we now provide high value-added manufacturing, such as that produced in Hartlepool by Heerema and by JDR Cable Systems. May I also press my hon. Friend on a point that he was starting to make? A UK growth strategy is sadly lacking in the new Government. The prospects for growth in relation to supporting and nurturing higher education and to higher value-added manufacturing are lacking. What does he think the Government could do to remedy that?

[Chris Bryant]

I am a bit distressed that my hon. Friend has just welcomed me to the Opposition Benches, but there it is. We came into the House at roughly the same time, and I will take that matter up with him later. He also made a good point about a growth strategy, which I will come to in a moment. First, I will give way to the slightly older Member.

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[Kwasi Kwarteng]

I am happy to take them.

[Mr Iain Wright]

The hon. Gentleman is right about ensuring that more people take foreign languages such as Mandarin and Spanish. However, does he not think it is counter-productive to end the fourth phase of the diploma programme, particularly for languages, which would encourage enthusiasm for modern languages in emerging markets?

[Kwasi Kwarteng]

I was making a broad point about 13 years of Labour failure, which is central to the debate. If we are serious about competing with China and India, we must have much more rigour and a little more discipline and focus in our education system. Those are obvious facts, but Labour Members seem to ignore them completely.