Thames Valley Technology Sector
Debate between Iain Wright and Lord Vaizey of DidcotWestminster 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.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Mr Iain Wright (Hartlepool) (Lab)
It is a pleasure to serve under your chairmanship, Sir Edward. I wish you and other hon. Members a happy St Patrick’s day.
I enjoyed the contribution of the hon. Member for Windsor (Adam Afriyie). He hinted, far too modestly, at his considerable knowledge and experience of the technology sector, having been an entrepreneur in the field before coming to the House. He has demonstrated that passion and knowledge admirably. I praise him for his great work as chairman of the all-party parliamentary group on space. It is a leading technology not only in Britain but for the rest of the world. Britain is well placed to be a leading player in the space industry of the future. I agree with the ambition to secure 10% of the global space market, which represents £40 billion, by 2030. It is incredibly admirable how he advocates for the space industry in this House and throughout the Houses of Parliament.
I welcome the Minister for Culture and the Digital Economy, the hon. Member for Wantage (Mr Vaizey). His constituency covers a large part of the area discussed by the hon. Member for Windsor. On the space industry, the Minister will be aware that Harwell in his constituency is the nucleus of a great and exciting emerging space industry cluster; that must continue in future.
It is clear from the contribution of the hon. Member for Windsor that the Thames valley has considerable strengths in the technology sector. As he mentioned, the area boasts the European and global headquarters of more than 200 Fortune 500 companies, such as Microsoft, Oracle, Vodafone, Fujitsu, Johnson & Johnson and Honda. Huawei, one of the fastest-growing telecoms companies in the world, recently moved its European headquarters to Reading.
One structural weakness of the British economy is the widening productivity gap between us and the rest of our economic rivals, but the technology sector shows that we in Britain can resolve that. It has demonstrated the highest productivity of any sector in the UK economy, and has powered ahead in the past 10 years.
This sector has enormous potential. TechUK estimates that the internet of things will reach a global market value of $7.3 trillion by 2017. The hon. Member for Windsor mentioned big data. Big data and data analytics will have a global market value of $32.4 billion by 2017. And wearable technology will be worth $70 billion by 2024. The world is changing fast, but it is clear that the Thames valley can develop and evolve its comparative advantages in this important sector, and create more jobs and wealth, not only for itself but for the rest of the United Kingdom. However, in order to achieve that potential, the area needs to address several elements, as we heard time and time again during the hon. Gentleman’s remarks.
The first point that I will address is skills. The UK Digital Skills Taskforce, led by Maggie Philbin, has stated that we face a growing shortage of digital skills. The Science Council has stated that the information and communications technology work force will grow by 39% by 2030, and O2 concluded in 2013 that around 745,000 additional workers with digital skills would be needed just to match existing demand between 2013 and 2017. Baroness Lane-Fox has gone further, saying that a million new tech jobs will be needed by 2020.
The Thames valley is well-placed to take advantage of this growth, but skills shortages remain a problem for the area. I want to avoid engaging in partisan hectoring and criticism, but how are the Government addressing this problem? In order to have a long-term industrial strategic approach, it is necessary, with the full co-operation and indeed leadership of industry, to marry up business policy with education and skills policy, and to ensure that they are aligned. The hon. Gentleman talked about coding and computing being part of the curriculum, which is a very welcome step, but how will we in this country ensure that we gain the digital skills that we need by making sure that, from the earliest possible age at primary school, the curriculum is developed through, so that the workers of the future will be well-placed to get well-paid, fulfilling tech jobs?
It is important to link different parts of business policy with other aspects of Government. So, does the Minister think that the Government’s immigration policy addresses this issue? I am not suggesting for one moment that we have an open-doors policy, but ensuring that the UK is a great destination, both for inward investment and global talent, is incredibly important. Has the Minister considered several points made by techUK about the field of immigration, such as reinstating the two-year post-study work visa and extending the tier 1 exceptional talent visa beyond start-ups to scale-ups, which I will come on to in a moment? How are we making sure that immigration policy is geared up towards fulfilling the potential of the technology sector?
One of the problems regarding skills could be exacerbated by the magnet of London’s Tech City pulling talent away from the Thames valley and other regions. Richard Devall, a partner at the law firm Pitmans, has recently been quoted as saying:
“We have become an established tech region at the expense of home-grown start-ups. Local and even global talent is going to places like London because it is perceived as ‘where it’s at’. People still don't know what the Thames Valley offers. The pull of London’s east end Tech City is immense for a young techie and the Thames Valley is losing out, certainly on global talent.”
The Thames valley area is often seen as a destination for large and mature companies in the tech space. There is nothing wrong with that whatsoever, as large companies provide great employment and can nurture a wide cluster or ecosystem of companies through their supply chain. Nevertheless, this issue has been identified as a challenge for the Thames valley, not only by Richard Devall but by Louize Clarke, co-founder of ConnectTVT, a new accelerator community in Reading. She said:
“It appears we have decided as a region that we are going to be mature, and not do anything to attract the next generation of technology start-ups. We are just not looking at that community locally, and they are going elsewhere. Yet, if you support a start-up community it will help improve local talent, because not all start-ups succeed, and people within them learn, then go into other local businesses.”
I fully accept that this sector is not the sole responsibility of Government, but what are they doing? Are they working together with the local enterprise partnerships to ensure that start-ups, scale-ups and the whole cluster or ecosystem that the hon. Gentleman for Windsor mentioned is actually being developed in the Thames valley?
As part of that wider cluster, procurement can be used to stimulate growth and scale-up in smaller firms. The Government have a target to ensure that 25% of central Government spending on procurement is being awarded to small and medium-sized businesses. Given that we are now in 2015, when the target was meant to be met, could the Minister update the House as to how the Government are progressing towards achievement of that target? Also, given the strength of the tech sector in the Thames Valley, how does that area fare when it comes to winning contracts from both central and local Government?
More emphasis should also be given to scale-up companies. An excellent report last year by Sherry Coutu, who is herself a prominent tech entrepreneur, stated that if we closed the gap of scale-up between ourselves and the US and other leading economies, in the short term—within three years—an additional 238,000 jobs and £38 billion in additional turnover would be possible, and in the longer term—by 2034—150,000 net additional jobs and £225 billion additional gross value added in the economy could be provided.
That excellent scale-up report from last year, with its ambitious but achievable recommendations, does not seem to have progressed with Government. Can the Minister give the House an update as to how the Government are taking forward the recommendations in the report? Can we expect to see a detailed Government response before Dissolution? How will the Government ensure that local decision-makers—particularly LEPs, which are mentioned a lot in the report and which are very relevant to the Thames valley—are included in the planning for the report’s implementation and delivery?
We have heard from a number of hon. Gentlemen today—both the hon. Member for Windsor and the hon. Member for Newbury (Richard Benyon), who is no longer in his place—about how infrastructure is vital if the Thames valley area is to achieve its vision of prosperity. From a northerner’s point of view, the tech sector in the Thames valley is often seen as being the M4 growth corridor, which gives an indication of the importance of the road network. However, the importance of rail has also been mentioned in the debate today.
In addition, will the Minister accept that in order to attract global talent and inward investment, a co-ordinated aviation strategy is also needed? In the debate today, we have only heard about aviation in passing. However, discussion of Heathrow’s future is important. What should the Government be doing with regard to a swift implementation of the recommendations of the Davies airport commission, to ensure that our international competitiveness is not compromised and that linkages with the growth hubs of the world are developed?
On the subject of infrastructure, the Minister will recall that about a week ago we had a debate in Westminster Hall on broadband; he will remember because, to be honest, he was quite grumpy, with respect to the success of the broadband roll-out.
Mr Iain Wright
Broadband has again been referred to a number of times in today’s debate. The hon. Member for Windsor mentioned how broadband can be not only about fiddling late at night but about ensuring that broadband connections are the arteries of economic growth in the future economy. How can we ensure that that is the case? And what is happening with regard to roll-out of broadband, both in the Thames valley generally and in its rural areas?
I would suggest that linked with all of this debate is an emphasis on the need for long-term policy stability and certainty that transcends Parliaments, ensuring that it is recognised that the future of this country’s prosperity is based upon embracing a knowledge-based economy and ensuring that Government can work together with industry to achieve the tech sector’s enormous potential and benefit from its comparative advantages. That being the case, the Minister will know the importance of a long-term innovation strategy in science, particularly when it comes to providing a long-term funding framework to develop science, innovation, research and development.
I am very conscious that tomorrow is the Budget and I know that the Minister will not pre-empt any announcements that the Chancellor might make. Nevertheless, could he give an indication of the Government’s position on making sure that that long-term funding framework for science and innovation, which is necessary to exploit the advantages that the tech sector can provide, is being recognised and put forward by Government?
My final point is about Europe and the EU. Europe is an important part of our marketplace and of how we will derive prosperity. The development of the European digital single market is an important part of the tech sector’s future. I agree with techUK’s firm assertion that the EU digital single market should be shaped and led by Europe’s most successful digital economy, which is the UK’s economy. We should be leading, not following. We should be shaping it according to our own interests, not sniping on the sidelines. That being so, will the Minister explain how he, and other colleagues—but particularly him, because he takes an interest in this—are shaping the European digital single market and ensuring that it is to our key advantage?
This is an important debate. The tech sector is a key part of future economic growth, prosperity and employment for this country, with a particular emphasis on a knowledge-based economy. The Thames valley is well placed to be at the forefront of that sector. However, it requires a co-ordinated, integrated industrial strategic approach that is industry-led, with join-up between central Government and local government and industries. Huge prizes are on offer with regard to the tech sector and we can achieve those with such a co-ordinated approach. I know that the Minister will want to talk about how Britain can succeed in the tech sector, both now and in future.
Introduction of a Maximum Wage
Debate between Iain Wright and Lord Vaizey of Didcot(9 years, 9 months ago)
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Mr Vaizey
I know only what I have read in the papers, so I hesitate to extrapolate too much from that case. However, if those allegations are proved correct, I hope the appropriate consequences do follow. It sometimes astonishes me that the behaviour of some companies—happily, they tend to be the exception rather than the rule—does not reflect their place in civic society.
Where and how should the Government intervene? The Government do not believe in blanket regulation of high pay through, say, a maximum wage. Companies and their shareholders need the flexibility to negotiate outcomes that work for them. However, we can force greater transparency on companies in terms of how they remunerate their top executives, and we can also give those who invest in such companies the power to demand simpler, more long-term pay structures—the long term has been mentioned in a number of contributions.
We have acknowledged that directors’ pay has gone up in recent years, while the link to companies’ performance and the wages of those who work in those companies has grown weak. I repeat that that damages the long-term interests of business, and it is right that we see that as a market failure and address it.
The Government’s reforms have been alluded to. The tone suggested that they were good first steps, but that they perhaps did not go far enough. Let me set out exactly what we have done. The new regulations came into force in October 2013. They create a more robust framework for the setting and reporting of directors’ pay. They have boosted transparency so that what people are paid is clearer and easily understood. They have also given shareholders the power to hold companies to account by calling for binding votes. We want to restore a stronger, clearer link between pay and performance and to address the culture of reward for failure.
Our reforms require companies to report the ratio of the average percentage change in employee pay to the percentage change in the chief executive’s pay. That should allow shareholders to understand whether pay increases apply proportionately to all employees or only to those at the top. Our reforms also mean that companies must report on how the pay and conditions of employees inform directors’ pay, whether companies have sought the views of their work force and, if so, how those views were sought.
We are monitoring the impact of our reforms. Most fair-minded people would agree that it is early days. Our focus is on understanding how companies have applied the regulations in the last couple of years. What trends can we see in remuneration packages? How have shareholders responded in terms of voting and engagement? We will publish the findings from that analysis shortly, and we will look to see whether we can draw any policy conclusions. When we implemented these policies, we always made it clear that we would keep them under review. What we know from the evidence available at the moment is that companies are responding to shareholder expectations. There are positive signs of restraint on the level of directors’ pay, and many companies have simplified their remuneration policy and linked it more closely to measurable performance over—crucially—a longer period of time.
Of course, the media will report rising pay. Sometimes that reflects previously agreed pay awards. What matters to the Government is the pay now being awarded under the new regime. As I mentioned earlier, the pay of the FTSE 100 CEOs has fallen significantly in the past two years. I gather also that statistics show that about a third of FTSE 100 CEOs and executive directors received no salary increase last year. It is our view that the reforms have begun to bring about a step change in transparency and that companies set out their future pay policies in much more detail than before.
Mr Iain Wright
I think that the Minister is being deliberately precise in his language when he talks about chief executives’ salaries not going up. Has he considered their total remuneration? Is he concerned that, although basic salary may be falling, executive pay is going up disproportionately through share options and vesting rights?
Mr Vaizey
The reason why we focus on salary is that often the bonus is linked to salary as a percentage; if shareholders have a say in the salary of the CEO, they in effect have a say in the bonus. Clearly, shareholders will also have views on the level of the bonus that is linked to the salary. The crucial point is that we want more transparency.
As I said earlier, I believe that shareholders are engaged more proactively in the remuneration package of CEOs. For example, Aberdeen Asset Management clarified the extent of arrangements to limit payments in lieu of notice to departing directors because shareholders were concerned about the potential for rewarding failure. Furthermore, Imperial Tobacco was forced to clarify the fact that it would not give a golden hello to a newly recruited director and capped the level of the package for that director, with reference to previous salaries and policies. [Interruption.]
UK Steel Industry
Debate between Iain Wright and Lord Vaizey of Didcot(9 years, 11 months ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
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The Minister for Culture and the Digital Economy (Mr Edward Vaizey)
It is a pleasure to see you in the Chair, Mr Davies, if a little disconcerting. I look forward to participating in the debate under your chairmanship.
I congratulate the hon. Member for Cardiff South and Penarth (Stephen Doughty) on securing the debate, which is the second one I have done on British steel. It is always reassuring to see the passion and knowledge of the Labour Members in the Chamber, who represent many different steel interests in their constituencies.
I hope that the House will not take it amiss if I also thank in person once again the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), who was kind enough in a previous debate to mention my late father’s work, “The History of British Steel”, because it is the 40th anniversary of the publication of that seminal work.
BBC Local Radio
Debate between Iain Wright and Lord Vaizey of DidcotWestminster 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.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Mr Vaizey
The hon. Gentleman has just ensured that he will get a smooth ride the next time he appears on “Newsnight”. There is a consultation and all Members have the chance to put their views to the BBC. As I have said, the director general and chairman will come to Portcullis House.
The hon. Member for Bishop Auckland has asked what I think, which is that we got a good deal for the BBC. It is important to remember—I made this point to the hon. Member for Hayes and Harlington—that the most effective lobby in relation to concern about BBC scope when I was in opposition was made by the Guardian Media Group, which was concerned that it could not monetise its website because of the scope and breadth of the BBC website. Interestingly, The Guardian employs roughly the same amount of people as BBC local radio. It is having to make significant job cuts, which it announced in June. Even The Guardian, apart from Polly Toynbee, has to live in the real world and make savings. Not a single other media group in the country has certainty of funding until 2017—that certainty is an enormous luxury—apart from S4C. I commend the deal struck only yesterday between the BBC Trust and S4C, under which an enormous amount of money will go into Welsh programming.