(8 years, 5 months ago)
Commons ChamberThat gives me a chance to congratulate my hon. Friend on his leadership as deputy Mayor of the MedCity initiative in London. The life sciences sector is growing fast. Last year, we hit a 17-year financing high, with more than £1.7 billion raised for early-stage companies. The challenge now is to make sure that those emerging businesses grow into substantial global companies, which is where my focus lies.
I welcome National Apprenticeship Week, which gives us a great opportunity to praise all apprentices, and to promote apprenticeships as a means of securing training skills and jobs for the future.
In a statement on apprentices last Thursday, the Minister of State said:
“We do not expect all companies that pay the levy to use up all the money in their digital accounts”.—[Official Report, 10 March 2016; Vol. 607, c. 454.]
What does that mean in practice? Can large and small companies take up any unspent levy? What estimate have the Government made of the number of companies involved, and of the proportion and value of the levy that will not be used by larger firms?
(8 years, 9 months ago)
Westminster HallWestminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
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I am coming to that. I have been very generous in giving way. Perhaps I should crack on and then I could answer the points that I keep being asked.
In consultations on the Green Investment Bank in May 2012, Greenpeace said:
“If it’s going to be more than an empty gesture, the bank’s got to have the borrowing powers necessary to support the green shoots of the UK’s renewables industry.”
It recognised that the sector is moving fast.
On the freedom to borrow and to raise capital, by giving the bank access to private funding, we will enable it to grow in accordance with its ambitious green business plan, giving it access to a much greater volume of capital than if it remained in public ownership. I commend that plan to any Members who have not looked at it, as it is a legal document that investors are investing in and will be the subject of all the legal constraints of a company sale. Crucially, it will give the bank much greater freedom to operate, removing a number of constraints that apply to it because it is a Government-owned enterprise, and enabling it to borrow freely on the capital markets without impacting on public sector debt. Hon. Members who take a view that public sector debt is not a national priority or issue will not find that argument compelling. Those of us who believe that that debt is an issue will find it compelling. That is firmly the view of the Conservative party.
In Government ownership, the bank must compete for funding along with all other Government expenditure needs, in a necessarily tight public spending round. We do not want to constrain it because of that. For all those reasons it makes sense for the Green Investment Bank’s investment activity to be funded by private capital where possible and to minimise the need for public funding, which fits with our original strategic policy aim of getting the market to work in tackling green policy challenges. Part of the coalition’s strategic intention was to try to generate, support and de-risk that early green investment market here and globally. As a number of Members have mentioned, the bank has been very successful in that first phase.
I want to touch on the need for repeal of the legislation, which a number of hon. Members have talked about. The reason that we need to repeal the legislation on the bank contained in the Enterprise and Regulatory Reform Act 2013 is so that the company can be reclassified to the private sector rather than remain as a public sector body. That is essential to achieving the benefits of private ownership, including the aim that the bank should be free to borrow and raise capital without affecting public sector debt. It has become apparent that, unless we repeal that legislation, there is a major and uncarryable risk that the bank would remain classified to the public sector, even after a sale, because the legislation will be likely to constitute a continued public sector control over the company’s business. The hon. Member for Cardiff West asked whether this was wise in terms of the drafting of the original legislation that set up the bank. I cannot comment on that because I was not involved in it. Our advice now is very clear. If we want the bank to be able to operate in the way that we do, that piece of legislation needs to be repealed. While the decision was not arrived at lightly in any way, we are clear that it is a necessary step if we are to achieve our aims.
This is a really important point. Given the Government’s determination to move the bank off the public books, does the Minister accept that there are no safeguards whatever to ensure that a privatised Green Investment Bank will continue with the green purposes that are currently enshrined in that legislative lock in the Enterprise and Regulatory Reform Act?
I am trying to remember the beginning of the hon. Gentleman’s question. Will I confirm that there are no safeguards? No, I will not confirm that. It will not be set out in legislation in the way that it is at the moment, but there will be a whole series. The shareholder agreement has not been drawn up yet. Despite the earlier comments of the hon. Member for East Lothian (George Kerevan) about articles of association, the funding and raising of subscription moneys for companies like this is a major legal undertaking. The business plan will be a material document in that process. The bank has set out what it is raising money to invest in. That has to be done when money is being raised. That is all subject to incredible legal scrutiny. The investors who are investing in the company have to sign warranties and give undertakings to their own investors that they are investing in what they say they are. Although they will not be set out in legislation, there are a number of safeguards to ensure that the bank will continue to operate in the green investment space.
The hon. Gentleman makes an important point about the devolution settlement. I will come to that. I am not ducking it; it is an important point that I will come to.
On the protection of the bank’s green mission and green values, the Government recognise that people will rightly be concerned about whether repealing the legislation means that the bank’s focus on green investment is in any way diluted. Let me be very clear. As the Secretary of State has sought to make clear in his written statements on the matter, the Government’s intention is that, following a sale, the Green Investment Bank should continue to focus on green sectors, mobilising more private capital and further accelerating the transition to a green economy. As somebody said earlier, the clue is in the name on the tin. Green investment is what the Green Investment Bank does and where its value lies, and that will be the basis of its offering and the offer it makes to investors. It is clear from preliminary feedback that potential investors are interested in the Green Investment Bank precisely because of its unique green specialism, business plan and investment track record. We fully expect that potential investors will wish to maintain that focus and will be bound by the prospectus and green business plan that the bank is putting at the heart of that subscription.
As a key part of any sale discussions, potential investors will be asked to confirm their commitment to those values and the plan, and they will be asked to set out how they propose to protect them. The Government envisage that that will involve new shareholders agreeing to retain the specific green objectives in the bank’s articles of association and to ensure that the bank continues to be required to invest in a way that achieves a positive green impact.
The Government also expect that new shareholders will maintain the bank’s existing standards for reporting on its green investment performance and will continue to provide for independent assurance of that reporting. We fully expect that approach to be effective in securing the outcome we want, which is that new shareholders readily commit to maintaining the Green Investment Bank’s green mission and values.
That cannot be reconciled with the Government’s intention to get the Green Investment Bank off the national accounts. The Office for National Statistics has criteria for determining whether an entity is on balance sheet or off balance sheet, and those criteria will include a Government right to control via contractual agreements and via regulation such that a unit cannot diversify its activities. The Minister can say that the Government intend, wish and hope, but does he accept that they are impotent on the future operations of the Green Investment Bank?
The hon. Gentleman and I are in violent agreement. Let me make it clear that we will not put in legislation or in regulation—
Let me answer the question. We will not put a binding contract in regulation or legislation, but we will ensure—here is the point—that when the Green Investment Bank goes to raise funds in a subscription round, the subscription agreement and all the legal documentation will be based on the bank’s current mission to be a green investment bank. The bank’s green business plan will be a material document in the context of that funding round, and investors will be investing in that mission, that plan and those values. As I have said, we will build in a series of protections to ensure that the vehicle in which they are investing is clearly committed to that green mission.
I want Members to understand that we have taken legal advice, and in order to comply with state aid and Treasury rules on public sector financing, and in order to give the bank the freedom that we want to give it, it is essential that we do not bind it with statutory, legislative and regulatory instruction but ensure that, in its offering to the market, the intention of the bank is clear. That is the right mechanism for us to ensure the bank’s green mission.
My hon. Friend makes a good point, and I know he has raised it with my right hon. Friend, the Secretary of State for Business, Innovation and Skills. It flows from everything I have said that we are determined to ensure that the Green Investment Bank is able to continue being a green investment bank. Given the constraints under which we are operating, we need to be creative in exploring every option. I am open to my hon. Friend’s suggestions about how we might be able to do that in a way that does not compromise the bank’s ability to operate in the way we want.
To clarify, I was not suggesting that we have a round table on the subject; I was merely extending an open offer to anybody who has any suggestions, in addition to the safeguards that I have explained, about ways to ensure that we deliver what I set out as the Government’s clear objective, which is to ensure that if the bank is put out for subscription, the subscription makes it clear that the bank exists to deliver its mission. We are all ears, but it must be within the context of the Government’s strategic policy intention of liberating the bank from the constraints of being defined as a public sector asset, and thus liable to Treasury lending requirements.
The Minister talked about agreements. What will be the legal status of the agreements with potential new shareholders of the Green Investment Bank?
For any investor entering into a subscription agreement, the parties will be the current owners, the operating company, the bank and the other investors, so the shareholder agreement will be crucial. It is binding in law and if anyone has ever seen a subscription agreement pack, they will know that it is lever-arch files-worth of papers. However, the central point is that all the parties in that agreement come together to agree what they are investing in, and what the objectives and aims of the company are, and that is set out in the articles of association and in the subscription agreement.
We hope that there will be a substantial range of serious investors who are committed to this space and to subscribing investment moneys into the bank’s green investment plan. They are not investing in a casino or any of the things that conspiracy theorists might imagine this thing could go on to be, including a “zombie” handing out money. They are investing in a specific commercial venture, and the directors of the company will have to put a prospectus out to the market, and they will have to warrant it legally themselves, personally as well as in the usual way. So, the subscription process, in and of itself, affords significant protections to us all, as shareholders and parliamentarians.
The issue of the Government’s ambition of retaining a stake in the bank was raised; I am trying, Mr Percy, to deal with all the points that were raised this afternoon. We will consider all options for a sale and we will be guided by the ultimate test of what achieves best value for the UK taxpayer, and what best fits with the strategic intention of allowing the bank to continue to be a leader in the green investment market and to pull in private finance. I am not in a position to commit this afternoon to a particular level or stake; I do not suppose that anyone would expect me to do so. We need the flexibility to do what best achieves that value for money and the best outcome for the bank.
It is important to note that, in any event, the Government’s retaining a stake while also securing declassification would not give Her Majesty’s Government the power to exercise control over the company; it would merely provide a stake in the company. Before anyone asks, the advice we have had has been very clear that retaining special shareholder rights that would enable the Government to veto corporate policy decisions would effectively amount to state control, and would bring us back to the problem that we are trying to get around. The Government could only have the same rights as any other shareholder in the company.
Here come the tickertape answers to some of the questions that have been put. The hon. Member for Cardiff West asked if I could comment on whether the off-balance sheet treatment is the only reason for the repeal of the legislation. It is the central reason why we need to do it; it is a necessary technical step to liberate the company from the constraints that would otherwise apply. The reason for wanting the bank to be able to operate in the private market is broader than that; we want it to access private capital and to be freer to develop in that growing market.
The hon. Gentleman also asked how much we would expect to raise from a sale. He will not be surprised to learn that I am not in a position to tell him today what that figure would be.
(9 years, 5 months ago)
Commons ChamberMy hon. Friend is absolutely right, and I pay tribute to his doughty campaigning on this issue throughout this Parliament. It is part of £460 billion package, with £12 billion in city deals and local growth funds and £1 billion in broadband. As he says, this is alongside our investment in vocational training and apprenticeships in engineering to put our economy back on its feet.
The Minister mentioned the CBI, and Katja Hall of the CBI has said:
“The vast majority of businesses back the creation of an independent body to assess the UK’s long-term infrastructure needs”
as a means of finding
“a new way to agree upon and then consistently deliver the improvements we’ll need over the next fifty years—not just the next five.”
EEF has said that
“good infrastructure is an essential building block for the UK’s long-term competitiveness and growth”,
and has called for a permanent infrastructure body to act as a “game changer”. This is not, as the Minister said in an earlier reply, “bureaucracy”, so will he respond to the question of my hon. Friend the Member for Kingston upon Hull North (Diana Johnson)? In the light of overwhelming business support and to stop decisions on our country’s long-term future prosperity being kicked into the long grass, will the Minister back British companies and support Labour’s plan to set up an independent national infrastructure commission?
This is a bit rich from a party that neglected our infrastructure for 13 years and left us with gridlock Britain. Let me repeat: £460 billion-worth of investment amounts to the biggest infrastructure programme since Victorian times—and it has been welcomed. As I said, the CBI’s John Cridland said that businesses in the north would be “encouraged”. We have set up the National Infrastructure Advisory Board and we do not need another commission. What we need is to continue with the progress of investments. Let me quote Simon Walker from the Institute of Directors:
“The Chancellor was right to resist the temptation of politicised giveaways, and focus instead on long-term investment in infrastructure, science and efforts”.
We are making progress.
(11 years, 9 months ago)
Commons ChamberThis has been an important, passionate and, dare I say it, industrious debate. I thank the Backbench Business Committee for choosing the topic, which is very much in the long-term economic interests of our country and I particularly thank my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) and the hon. Member for Warwick and Leamington (Chris White) for the manner in which they advanced their arguments. I look forward to hearing the hon. Member for Burnley (Gordon Birtwistle).
I pay tribute to the excellent maiden speech that we heard today from my hon. Friend the Member for Corby (Andrew Sawford), as one by-election victor to another. I have known him for a very long time and he has always been passionate about manufacturing, industry and his local area. He was extremely gracious to his predecessor, as the whole House will have recognised. He mentioned his passion for co-operatives and co-operation. That is a necessary value in an industrial strategy. Industrial policy is often simplified or dismissed as picking winners, but it is fair to say that in my hon. Friend the people of Corby have definitely picked a winner.
I will be as quick as I can, because there is an awful lot to get through after such an important debate. It is clear from this afternoon that there is a welcome consensus about the need for an industrial strategy with manufacturing at its heart. We in the north-east know all about the importance of manufacturing. Both advanced and emerging nations are repositioning or developing their industrial and manufacturing capabilities—we have just heard from the hon. Member for Stroud (Neil Carmichael) about Leipzig—with the aim of enhancing comparative advantage for their key sectors and maximising opportunities for growth.
We should not blindly follow our competitors into the latest economic fashion. We cannot replicate off the shelf the German model, still less the Singapore model, but it is clear that in the 21st-century global economy, business and Governments are working together to ensure that potential is realised. We can exploit our values, our tradition and heritage and our current sectoral strengths to create a bespoke one-nation industrial strategy, helping all regions achieve their potential.
As the CBI stated only this month:
“Rebalancing the UK economy must consist of boosting our productive potential, which means reviving business investment and trade as key drivers of growth. The debate is no longer over whether the UK needs an industrial strategy, but about what form this should take.”
We would all agree with that. The message from today’s debate is clear: we need to see clear leadership on an industrial strategy. I therefore fully applaud what Lord Heseltine said in his review when he stated:
“The Government must have a clear blueprint for the future to support wealth creation. This approach should then be applied without exception across the whole of government.”
I support the TUC when it said:
“If we are to move forward, government, industry and unions must agree between them what a renaissance for manufacturing actually means. . . a strong manufacturing sector, across a variety of high skill, high value industries, is both achievable and desirable”.
The CBI said this month that we should
“adopt a shared vision . . . for the UK economy, with the government reporting back regularly on how this vision is being delivered”.
We would all agree.
We hear warm words from this Government. They often talk a good game, but their actions fail to match their rhetoric, and this country’s industrial potential suffers as a result. So I welcome the Secretary of State’s 16 speeches on the need for an industrial strategy; I just wish he would implement one. I fully support what the Prime Minister said in 2010 in his CBI conference speech—that the Government should be
“getting behind those industries where Britain already enjoys competitive advantage. All over the world governments are identifying dynamic sectors in their economy and working strategically to strengthen them”.
He said something similar only this week at the 2012 CBI conference:
“Government gets it…To have a proper industrial strategy to get behind the growth engines of the future.”
I fully agree. Yet in response to the speech the director general was forced to ask, “Where’s the beef?”
I welcome the honest appraisal by the Secretary of State in his leaked letter of February 2012 in which he said that the Government do not have
“a compelling vision of where the country is heading…and a clear and confident message about how we will earn our living in the future”.
However, I remain anxious that only last month Lord Heseltine felt the need to say in his report:
“The message I keep hearing is that the UK does not have a strategy for growth and wealth creation.”
Earlier this month, the CBI stated the position even more bluntly than that.
No, if the hon. Gentleman will forgive me, because I have a lot to get through.
The CBI said that
“the current hands-off approach to growth is failing to provide the confidence necessary for businesses to compete for the biggest opportunities out there”.
Most concerning was the verdict of Sir John Parker, one of Britain’s pre-eminent industrialists as chairman of Anglo American and president of the Royal Academy of Engineering, when he said last month:
“It has been two years since this Government came to power but it still has not set out a vision for Britain’s industrial future. There has been no leadership from the top—and by that I mean David Cameron—which has given a signal to society that Britain values industrial activity.”
No. I hope that the hon. Gentleman will forgive me, but I am keen to make progress.
Business is unconvinced that the Government’s warm words have materialised into firm leadership and tangible action. People want to see action and a sense of urgency, but they have not seen that. Will the Minister at least acknowledge this and outline his plans to do something about it?
I am extremely grateful; I will be very brief. This time last year, the Prime Minister announced the strategy for the life sciences, which was warmly welcomed across industry—not least by GlaxoSmithKline, which then announced a £500 million investment in advanced manufacturing in the north-west—and has been lauded internationally. Does the hon. Gentleman accept that at least in that sector the Prime Minister personally and this Government, including the Secretary of State, have set out exactly the leadership that he is asking for?
The hon. Gentleman raises an important point about consensus. If we are to have an industrial strategy, we must ensure that it has a long-term strategic focus. Political and business cycles are not aligned—we often have a four or five-year cycle while businesses, certainly in the manufacturing industries, tend to have a 30-year or 40-year cycle—and it would be good to have as much consensus and policy certainty as possible. I hope that this debate has demonstrated that.
Manufacturers’ organisation the EEF has called for
“An industrial strategy”
that
“needs to endure beyond the latest political fad or any one political party. All our politicians need to recognise the value of having a clear vision, gearing the whole of government to delivering that vision, and setting clear accountability arrangements.”
I fully agree.
In certain sectors, there has been a degree of continuity of policy. The previous Labour Government set up the Automotive Council UK. The current Government have continued with that, and we have seen substantial investments in the automotive industry as a result. We fully recognise and welcome that approach. I have said to the Minister of State, Department for Business, Innovation and Skills, the right hon. Member for Sevenoaks (Michael Fallon), who is now in his place, that his formation of the Aerospace Growth Partnership is very welcome, and I would like a future Labour Government to pledge to continue to provide certainty for that key industrial sector. We have seen success in close relationships between Government and business in a number of sectors; the hon. Member for Mid Norfolk (George Freeman) mentioned life sciences. Will the Minister say whether the Government plan to replicate that across other key industrial sectors such as chemicals, the construction industry and pharmaceuticals?
There is concern about long-term policy certainty, which investors in manufacturing require. Energy policy has rightly been mentioned a lot in this debate. In the summer, the CBI said in its report on maximising the potential of green business that
“while business wants to keep up the pace, they are equally clear that the government’s current approach is missing the mark, with policy uncertainty, complexity and the lack of a holistic strategy damaging investment prospects.”
Will the Minister acknowledge that such policy reversals are damaging to business investment, especially for manufacturing? What is he going to do to make sure that he can put arrangements in place within Whitehall to minimise the policy reversals and procrastinations in decision making that are damaging to our long-term industrial prospects?
In the remaining time that I have, I will focus on two important points. The first is that the key to the implementation of a long-term industrial strategy must be an emphasis on business policy across Government; it must not reside just in the Department for Business, Innovation and Skills. Other Departments cannot wash their hands of growth.
As we have heard, energy policy has profound implications for our manufacturing base. The manner in which the carbon floor price is implemented will have significant repercussions on our industrial competitiveness. Our aviation and transport policies also have an impact on our competitiveness. Local government can be a driver of economic regeneration and development. The Ministry of Defence should be working closely with the Department for Business, Innovation and Skills to ensure that we have a defence industrial strategy. Of particular relevance to the Minister is the close link, which we have heard about today, between an industrial strategy, skills and what is being taught in schools. I recall that the hon. Member for Burnley made an intervention on careers advice. We must see clearer signs that there is proper co-ordination on business and industry across Whitehall. What is the Minister doing to implement the Heseltine recommendations on creating better co-ordination, accountability and commitment across Whitehall on wealth creation?
My second point relates to procurement. The Government intervene in the markets by buying things every single day, and yet Government procurement does not maximise Britain’s industrial capability or enhance the UK supply chain. What else will the Minister do to push for smarter procurement across Government to help British industry, and to encourage innovation and create jobs in this country?
We believe that there is a need for an intelligent industrial strategy. This debate has shown that our industrial and manufacturing sectors have huge potential in the 21st century, but that to flourish, they require active co-operation. The whole House seems to have supported that today. I hope that the Minister will pledge similar support.