All 4 Debates between Jeremy Quin and Michelle Thomson

The Government’s Productivity Plan

Debate between Jeremy Quin and Michelle Thomson
Tuesday 28th February 2017

(7 years, 8 months ago)

Commons Chamber
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Jeremy Quin Portrait Jeremy Quin
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Indeed.

Michelle Thomson Portrait Michelle Thomson
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I hope we can agree that it is due to the successful joint working of the BEIS Committee and the Work and Pensions Committee that this afternoon we have seen Sir Philip Green agree to pay £363 billion into the pension scheme.

Jeremy Quin Portrait Jeremy Quin
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I also heard the figure of £363 million. I, too, hope that it may be a tribute to the work of the Committee and, in particular, the joint Chairs of the inquiry. However, having taken part in that investigation, I take nothing at face value. I hope the hon. Lady will forgive me if I do some proper research before saying how happy I am. I hope there will be grounds for happiness, particularly for the pensioners involved.

In his introduction, the hon. Member for Hartlepool quoted Paul Krugman:

“Productivity isn’t everything, but in the long run it is almost everything.”

It is rare that I concur with the éminence grise of economists on the Opposition Benches, but on this—uniquely, perhaps—I think the hon. Gentleman is right. I hasten to add that there are two clauses to that sentence. The first is, “Productivity isn’t everything”. I agreed with the interventions made, which I will dwell on for a minute, by my right hon. Friend the Member for Wokingham (John Redwood) and my hon. Friend the Member for Newark (Robert Jenrick) regarding employment. We have to start with the realisation that where we come from economically could be a lot worse.

Many of us will recall vividly the impact of the dreadful recessions of the ’80s and ’90s in which homes were repossessed, factories were laid waste and there was mass unemployment. It has been bad enough this time around. We are still facing the challenge of rebalancing our fiscal position, but coming through the 2008 financial crisis—the worse since the 1930s—we have had some stellar successes. We have grown the economy since 2010 faster than any country in the G7 other than the United States. We enjoy the highest rate of employment on record; households with no workers are at the lowest level for 30 years. Youth unemployment for those who have left education stands at less than 6%.

It seems strange that I am saying this but, yes, I greatly admire the French and French productivity. We have much to learn and do, but I would rather be here debating a plan for improving our long-term productivity than standing in the Assemblée Nationale trying to defend high rates of youth unemployment. A distinguished economist and a distinguished statistician—even if he cannot count up to 57—are both in the Chamber, and I hope they will forgive me for saying that whenever something is referred to as a “long-term problem” by an economist, it normally means that they find it hard to measure in the short term.

Great trends in productivity are easy to spot, especially after the event. Instantaneous judgments are still worse, and forecasting is less easy. Before tackling what we should be doing better, we should keep an eye on where we are currently. This recession was very different from its predecessors. Although it was not always adhered to—there are some ghastly, scandalous examples, some of which have been highlighted by the hon. Member for East Lothian (George Kerevan—there was, by and large, a policy at the top levels of banks to practise forbearance, and by Her Majesty’s Revenue and Customs on troubled businesses. This, combined with base rates at low levels, provided the lifeline through the recession for many firms.

This also went with the grain of how businesses wanted to operate. Businesses could remember how frustrating it was in the ’80s and ’90s to fire highly trained, experienced and loyal employees, only desperately to try to re-recruit the same individuals two or three years later. They wanted to avoid those problems this time. It is a tribute to employees and unions that there was a recognition that constrained wage growth would enable more people to stay employed through the recession. The legacy is clear. We have not had the increase in unemployment that has helped to flatter the productivity growth of many of our competitors. I am glad of it because a labour force that has retained its skills and its practices is a vital asset.

High rates of employment are a boost to the UK while being negative for our productivity. We are not, of course, alone in having high rates of employment. The hon. Member for Hartlepool referred to the German economy, which is some 20% more productive than ours, despite similar rates of employment. My only note of caution about Germany’s incredibly impressive productivity performance is that we are talking about two very different economies.

Germany’s economy has an unrivalled capacity to produce capital goods that are hugely in demand from emerging markets going through a strong growth period, underpinning already firm foundations in that economy. But there is a caveat. My hon. Friend the Member for Warwick and Leamington (Chris White) also mentioned the German economy. I spoke regularly in my prior employment to German businesses and opinion formers, who were acutely aware that, although they were producing hugely sought after assets of huge value at the current phase of economic expansion, they looked to our economy and our ability to deliver on services and tech, as potentially the drivers of the next phase of economic development.

I do not for one second suggest that we should rest on our laurels, especially as the two most productive sectors in the UK—financial services and, looking at the hon. Member for Aberdeen North (Kirsty Blackman), North sea oil—have suffered most in the past decade. It goes without saying that we need to broaden and drive the overall success of the economy, but we should not dismiss too readily the strength of the platform from which we start.

The Government’s productivity plan is a solid document that has been made even more solid by the 10 pillars of wisdom in the industrial strategy that was published earlier this year. I will pick up three broad themes within it: infrastructure, people and finance. As the House will be aware, we have one of the most congested road networks of anywhere in the G7. I welcome the targeted investment announced by the Government in the autumn statement. Infrastructure spend has two benefits. The practical one is shifting goods from A to B, but there is also a psychological benefit on people’s ability and interest in spending and investing in the private sector. In both contexts, I welcome the decision on the third runway at Heathrow, and the ongoing delivery of Crossrail, which each have a psychological benefit way ahead of the immense direct practical benefit.

It may sound strange that, as a Member of Parliament proud to represent a Sussex seat, I also endorse what the Government are doing on the northern powerhouse. Anyone who has taken more than a slight look at the extraordinary extra housing numbers required in Mid Sussex and focused on their implications, and anyone who has endured the congestion on Southern rail—when it is running—or tried the M23, would know why support for a balanced growth in the economy is a general point right the way across the UK.

Our people are our country’s most important asset, just as they are any company’s. A fair point that was picked up in the Business, Energy and Industrial Strategy Committee report is the importance of parity of esteem between university students and those who choose more vocational routes. I am delighted that the institute for apprenticeships will be up and running in a few weeks, providing vigour and scrutiny to the courses being rolled out as part of the apprenticeship levy. Alongside that, I welcome the Government’s continuing commitment to the Catapults, and their boost to research and development—both new ventures. Assisting in the key phase between product development and launch is to be welcomed. It is the biggest boost to R and D at any stage since 1979—a good year. This is the right point in the cycle to be making that investment. However, in the long term, Government investment to support economic growth, proportionate and appropriate though it is, should not be seen as an end in itself. It can be dwarfed by the available capital in corporate coffers looking for a home. Government investment can oil the wheels and improve tax efficiency, as it is doing, on R and D.

Patient capital, which is incredibly important—I look forward to the report—must be encouraged, but it is to the private sector that we must really look to take up the challenge and invest. The sector knows that it will be doing so with a Government who are on a path to long-term fiscal sustainability, who are driving up education and training standards and, as they have shown with Heathrow, are prepared to take difficult decisions to boost our infrastructure.

Now is the time to invest in the UK economy. Nissan, Facebook, SoftBank and Google are all showing the way. UK companies should continue to take up the gauntlet. We have a good economic platform. Now is the time to invest; it will not only be our productivity growth rates that benefit.

BHS

Debate between Jeremy Quin and Michelle Thomson
Thursday 20th October 2016

(8 years, 1 month ago)

Commons Chamber
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Jeremy Quin Portrait Jeremy Quin
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The hon. Gentleman, as so often, reads my mind. If he is a little patient, he will hear me make a similar point later in my speech.

On the period during which very generous dividends were paid, directors cannot be expected to have the gift of prophecy, but they can be expected to understand the fundamental trends driving the underlying profitability and sustainability of their business. I am far from convinced that that was the case in this situation. The most serious questions, as raised by the hon. Members for Hartlepool and for Torfaen (Nick Thomas-Symonds), are about the corporate governance of large private companies with millions of employees and pensioners.

Unlike my feisty friend, my hon. Friend the Member for Bedford (Richard Fuller), I intended not to refer to the individuals directly concerned in the sad demise of BHS, but to focus on the more general lessons to be learned. I am afraid that I have been drawn back to the circumstances of BHS after reading the joint legal opinion produced for Taveta Investments Ltd by learned counsel last night. As the right hon. Member for Birkenhead said, the two lead QCs make a point of saying that they are friends of the chairman of TIL. I hope that their report, which is considerably longer than the report of the joint Committees that it analyses, was not unduly costly. The report basically starts by saying, “Let’s pretend this is not a parliamentary inquiry, but some other kind of inquiry. Would that type of inquiry be set aside by the courts?” Having set up an irrelevant question, the opinion produces an irrelevant answer.

Michelle Thomson Portrait Michelle Thomson (Edinburgh West) (Ind)
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Does the hon. Gentleman agree that it is somewhat ironic for Sir Philip, who has complained bitterly about an outcome with which he does not agree, to be able to pay handsomely for an 81-page report from two eminent QCs, given that I imagine the pensioners and employees are not, unfortunately, able to resort to such a tactic?

Jeremy Quin Portrait Jeremy Quin
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I suppose the answer depends on the quality of the report. Frankly, having read it, I find that it contains a series of straw men that have been set up for demolition. In my view, it does not help Members, the pensioners or anyone to understand the circumstances of the demise of BHS.

To put at rest the minds of learned counsel, the joint Committees did not object to a dowry being provided on the sale of BHS, and certainly did not question its legality. However, we questioned the sufficiency of the cash and the choice of partner in the circumstances that BHS faced. We did not question the concept of a company being sold for £1. Clearly, that is a matter for Taveta Investments (No. 2) Ltd, the selling company, which received the £1. It is unfortunate that TIL2, which is ultimately controlled by Lady Green, is still paying back to Lady Green the £200 million consideration for its acquisition of BHS in 2009. This consideration was satisfied by £200 million of loan stock provided to three overseas companies controlled by Lady Green, with a coupon of 8%.

We would need a much longer debate—I am very mindful that other Members wish to participate—to draw out all the straw men contained in the joint opinion of learned counsel, but several others are produced in the context of corporate governance. A rare point on which the joint Committees’ perspective seems to be shared by learned counsel is on the—in our view, lax—governance of the sale, as was so eloquently described by my hon. Friend the Member for Bedford. However, learned counsel state that that is an irrelevance, because the shareholders in TIL could in any event provide a direction, so the directors were in no position to prevent the sale of BHS to any party. That may be true legally, but it should raise questions for this House. Learned counsel tell us that TIL is 88%-owned by Taveta Ltd, a company registered in Jersey, and 12% by six minority shareholders. We are informed that the ultimate beneficial owner of the Jersey company is Lady Green, and that under the articles, Lady Green, acting with any one of the minority shareholders, could have directed the sale of BHS at any time and on any terms.

The right to own and dispose of property under English law is absolutely fundamental, and Parliament would be wise to tread very softly, but I am concerned in this context about checks and balances—not only on the sale, but more generally. What is the value of a section 172 provision, telling directors to have regard to other stakeholders, in these circumstances? What is the role and purpose of non-executive directors, especially when the 88% shareholder is not present around the boardroom table?

To my mind, it is not appropriate for directors serving private companies to decide that they can take an approach different from what is good corporate governance, purely because they can ultimately be directed. That would make it more important, especially on major or related transactions and on honouring commitments to pensioners, that they should bend over backwards to adhere to strong and demanding codes and be prepared to call out owners if they feel actions are taken that do not have sufficient regard to other stakeholders. There are thousands of very successful large and medium-sized private companies employing millions, and for those millions, ownership should be as transparent as good corporate governance.

There are other issues, from which I fear I have been sidetracked by the legal opinion, that the House should consider. As the hon. Member for Hartlepool mentioned, corporate governance codes should be applied not only to listed companies, but to those owned privately. On related party transactions, independent valuations or independent opinions are important when such transactions exceed de minimis levels. There is the issue of the utility of the requirement to have regard to other stakeholders in section 172 and how directors can be expected to do so when they owe responsibility elsewhere. There is the question of the appropriateness of dividend payments above certain thresholds, particularly if a pension scheme is in serious deficit. I was challenged on that point by the hon. Member for Ross, Skye and Lochaber (Ian Blackford).

There is the issue of the requirement for courts to be cognisant of pension deficits, as well as of creditors, when considering applications for corporate restructurings and capital reductions. In private mergers and acquisitions, where pension problems may be less transparent than in the listed market, consideration should be given to compulsory engagement with the Pensions Regulator and with the trustees. For both directors and advisers engaged in sale processes in respect of a company in which the Pensions Regulator has already expressed concern and a sale is not being pre-cleared by the Pensions Regulator, all parties should be very aware of the actuality of the counterparty to whom they are selling. English law requires no due diligence to be done on the buyer—nor, in my mind, should it do so—but common sense suggests a certain wariness to be wise.

In conclusion, there are lessons to be learned from this sad story. Above all, however, we are all focused on the loss of a well-loved icon, the employees who have been made redundant and the pensioners who are rightly worried, but whose plight may yet be mitigated by Sir Philip. Such an act would, indeed, be honourable and very welcome. I understand from the radio this morning that he is, not for the first time, planning to meet the regulators in the next few days. Time will tell whether pensioners have been waiting for a result or have been made to endure a particularly poorly directed “Waiting for Godot”.

Budget Resolutions and Economic Situation

Debate between Jeremy Quin and Michelle Thomson
Tuesday 14th July 2015

(9 years, 4 months ago)

Commons Chamber
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Michelle Thomson Portrait Michelle Thomson
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I thank my hon. Friend for his intervention, and I thank the House of Commons Library for some excellent work on GDP per capita and GDP per hours worked, including in relation to Ireland. I shall come on to that.

Where the UK stands in relation to Germany, France, Italy, the USA, Canada and so on provides some useful benchmarks for relative economic performance. The fact that the UK lags behind its peers on so many key indicators is another, all too sad, story. Last out of the recession, lowest productivity, and lowest GDP per capita growth rates—a record that does not tally with the UK Government’s “back in business” narrative.

Although the G7 provides a useful comparison for the UK, its relevance to Scotland is less apparent. We do not aspire to be one of the largest economies in the world, to strut faded imperial grandeur on the world stage or to maintain the pretence of exerting some kind of global influence, 100 years after the height of the British empire. Our ambitions are different—more modest, some would say; more enlightened, others would call it. In business there is a saying, “Turnover is vanity, profit is sanity.” To be big is not always to be beautiful. Scotland seeks fairness and prosperity for those who live there.

Jeremy Quin Portrait Jeremy Quin (Horsham) (Con)
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Given what the hon. Lady said about financial services in this country and how they should be funded, how would she propose to deal with the situation of RBS?

Michelle Thomson Portrait Michelle Thomson
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We know that at its heart the sell-off of RBS is an attempt to balance the books, but the issue that I pointed out earlier is that banks such as RBS are still not lending enough to small businesses. That is vital. I referred to challenger banks. I come from a business background and speak to many people. That is what I hear from them about what they consider to be a critical issue.

For us, the G7 has more limited relevance. What we need to know is how we are performing as a medium-sized north-west European nation. Are we doing well, or are there opportunities for improvement? Thankfully, there is no shortage of comparable countries—our very own G7 equivalents, nations with characteristics similar to those of Scotland, but in most cases with far fewer natural resources. Whether we look north to Scandinavia, east to central Europe, south to the low countries or west to our Celtic cousins, comparisons abound among nations of similar size to Scotland. They are medium-sized in global terms, sitting in the middle third of global population rankings, not too big, not too small—the Goldilocks nations. Let us call them the M8, and I do not mean the boring motorway that runs between our two great cities. Those are countries with diverse histories, a range of memberships of international organisations and monetary systems, and varying levels of natural resources, physical geographies and cultures, but in their diversity all providing useful comparisons for Scotland. So how does the UK line up against them?

The M8 countries are among the wealthiest nations in the world. In terms of GDP per head their average has consistently outperformed that of both the G7 and the European 28. In terms of GDP per hour worked, which it is so vital to improve as a measure of productivity, their average also beats that of the G7 and Euro28. M8 countries are all richer than the UK by 25% on average, and the M8 countries are 9% richer per capita than the G7 as well—not a bad place to start, given our ambitions. Our aspiration as a nation is to be the best we can be, not to accept the poor performance and failed austerity agenda of the UK Government, but to look to what can be achieved when we set our sights a bit higher. Perhaps it is time we used the M8, rather than the G7, to frame our aspirations.

Productivity

Debate between Jeremy Quin and Michelle Thomson
Wednesday 17th June 2015

(9 years, 5 months ago)

Commons Chamber
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Michelle Thomson Portrait Michelle Thomson (Edinburgh West) (SNP)
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I commend the Chief Secretary for his speech. He has clearly been reading the SNP manifesto, given his comments on female participation in the workplace and the gravitational pull of London. I hope that he enjoyed reading it.

Productivity in the UK is indeed low, and it has shrunk by 0.7% over the past seven years. It is now 17% lower than the average in the G7 economies, and that has had an associated impact on living standards. Growth in the EU has been 5% over the same period. The United Kingdom’s GDP is only now returning to pre-crash levels, a point that most of our European competitors reached many years ago. Our downturn in the UK was steeper and lasted longer than those of our neighbours, and recovery has also taken longer.

Jeremy Quin Portrait Jeremy Quin (Horsham) (Con)
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Does the hon. Lady not recognise that during that period we were more dependent on the financial services sector than any other country in the G7, and also in the EU? That undoubtedly had an impact on our productivity.

Michelle Thomson Portrait Michelle Thomson
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I am going to address that point.

The much-vaunted recent growth has brought us back only to a certain point. When judged against nations smaller in population size—those with between 3 million and 10 million people—the sluggishness of UK plc is laid bare for all to see. Sweden’s productivity is 18% higher than that of the UK; Denmark’s is 26% higher and Norway’s an incredible 77% higher. Even poor Finland, which has no oil, no fisheries and no substantive premium food and drink industry—in fact, it has none of the inherent advantages and natural resources that Scotland enjoys—delivers a productivity performance some 8% higher than that of the UK. The phenomenon is not limited to Scandinavia. In central Europe, Austria’s productivity is 13% higher, and Switzerland’s 23% higher, than that of the UK.