Industrial Strategy Consultation

Kelvin Hopkins Excerpts

Monday 23rd January 2017 Commons Chamber

[Greg Clark]

I am keen that we should be agile and fleet of foot. It is important that land and premises are available, not least for businesses that are expanding, or those that are being founded or located for the first time. My right hon. Friend the Communities Secretary has that very much in mind as part of his reforms to the planning system.

[Kelvin Hopkins (Luton North) (Lab)]

UK manufacturing and exports are benefiting greatly from the more sensible and appropriate parity of sterling, but much more needs to be done to rebuild Britain’s industrial strength. Will the Secretary of State therefore give serious consideration to re-establishing the National Economic Development Council to provide a forum for employers, trade unions and Government to consult and advise on how British industry may be promoted for the future?

[Greg Clark]

I am interested in the hon. Gentleman’s proposal. I had not thought of reviving a body that I think was associated with a different type of industrial strategy. The council was about the big employers sitting down with Government. As some of my hon. Friends have pointed out, the approach that we want to take is more about creating conditions in which insurgents, new businesses and challengers to existing businesses have a central place. I am not sure that his suggestion would be the right approach, but I would be interested in hearing from him about it.

Backbench Business

Kelvin Hopkins Excerpts

Thursday 17th November 2016 Westminster Hall

[Kelvin Hopkins (Luton North) (Lab)]

I beg to move,

That this House has considered the future of the Post Office.

It is a pleasure to serve under your chairmanship, Mr Wilson. I am pleased to secure this important debate on the crisis in the Post Office. First, I must declare an interest: my constituency Labour party has a formal agreement with the Communication Workers Union, which provides financial support, and I am a member of the union.

The Post Office is inflicting severe cuts. Its cost-cutting measures are affecting both its employees and the public it serves. Some 59 post offices are being closed or franchised, and the Post Office’s defined-benefit pension scheme is being terminated. That has all come about as a direct consequence of the separation of the Post Office from Royal Mail when Royal Mail was privatised. Cuts to Post Office funding followed, and the Government failed to deliver on their 2010 promise to turn it into a

“genuine Front Office for Government”

and to grow its financial services.

This is a matter of serious concern. Trends in the Post Office’s traditional work and the lack of a proper strategy for growing new revenue mean it will not have a secure long-term future, or possibly a long-term future at all. It cannot survive simply by imposing cuts and going through further cost-cutting regimes. The Government must stop the cuts—particularly the proposed closures and franchising—and bring together stakeholders, including the Post Office itself, trade unions, and industry and customer representatives to develop a meaningful and convincing plan for the future.

[Mary Creagh (Wakefield) (Lab)]

My hon. Friend is making an excellent speech. WHSmith is now operating more than 100 post office branches. Does he agree that the franchising operation means that the Post Office is losing experienced staff, providing poorer service and offering a smaller range of services? For example, the closure of the Crown post office in my constituency means that the biometric enrolment service is no longer offered.

[Kelvin Hopkins]

I thank my hon. Friend for her intervention. In fact, later in my speech I am going to say more or less what she just said. I thank her for reinforcing that point.

[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

I congratulate the hon. Gentleman on securing this really important debate. Does he agree that, as a result of its decoupling from Royal Mail in 2013, the Post Office has lacked an overall strategy? It should now be rethinking its whole enterprise, which should be one of growth, rather than one of contraction.

[Kelvin Hopkins]

I agree with the hon. Gentleman. What is happening is the opposite of that, so I want the Government to put their weight behind the Post Office to enlarge, expand and improve it.

[Albert Owen (Ynys Môn) (Lab)]

I concur with everything the hon. Member for The Cotswolds (Geoffrey Clifton-Brown) said. Many communities across the country—particularly rural communities—are suffering bank closures and financial seclusion in addition to the closure of Crown offices, which are the backbone of the Post Office. We need expansion, and we need it now.

[Kelvin Hopkins]

I agree. It is vital that rural communities, in particular, have public services, sometimes on a smaller scale, to ensure that people living in more dispersed communities have proper access to those services.

[Anna Turley (Redcar) (Lab/Co-op)]

My hon. Friend is being extremely generous in giving way so early in his speech. I want to follow up the point that my hon. Friend the Member for Ynys Môn (Albert Owen) made about financial services. The post office in France set up La Banque Postale, which has made £1 billion of profit, and the CWU is campaigning for our Post Office to emulate it. It should look at expanding into financial services as a means of increasing value.

[Kelvin Hopkins]

My hon. Friend, too, has anticipated something I am going to say in my speech. That just reinforces what I am going to say, so I am pleased about that.

The Government, bending to pressure and concerns from inside and outside Parliament, have just launched a consultation document, but it must lead to genuine action. It must not simply be a token exercise that does not change thinking in the Government and the Post Office. We need effective action to promote a long-term and successful future for the Post Office.

The Post Office’s current funding package runs out in March 2018 and must be replaced by an effective strategy and support for the future. The negotiations between the Government and the Post Office must not be simply a ritual seeking in reality just to manage decline. For customers, the most significant measures taken this year are the two announced tranches of Crown office closures and franchises, which followed an earlier programme affecting 50 Crown post offices in 2014-15.

My hon. Friend the Member for Wakefield (Mary Creagh) mentioned franchising. Independent research carried out in the past five years found that franchises left to WHSmith in 2007 and 2008 perform poorly—worse than Crown post offices in queue times, service times, customer service and advice, disabled access and the number of counter positions. That brings to mind the failure by railway franchises to measure up to the five-year record of success when the east coast main line was returned temporarily to the public sector. Franchises have also seen losses of experienced staff, fewer specialised staff and less space.

[Mr David Winnick (Walsall North) (Lab)]

The Post Office made an attempt to close Willenhall Crown post office in my constituency, but there was a successful campaign against the closure and it decided after a while to drop its plans. It is now going to start all over again. The closure will have a most adverse effect on the local community, in which the Post Office has so far shown absolutely no interest. It is obviously tremendously disappointing. I am very pleased indeed that my hon. Friend has initiated this debate.

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[Kelvin Hopkins]

My hon. Friend demonstrates the point: we need to put pressure on the Government and the Post Office at both a national level and in local campaigns if we are going to save the Post Office for our communities and its staff.

For employees, good jobs have been replaced by insecure employment. In 2014-15, only 10 out of 400 staff from former Crown offices were TUPE-ed over to new retailers. Public money was used to pay off long-term staff so the franchisees could employ more low-paid, less experienced staff with less job security—effectively, a taxpayer subsidy to the private franchises. All that amounts to a failed strategy for the Post Office.

[Mary Creagh]

On that point, if a member of staff is TUPE-ed over, they could end up managed by somebody on the minimum wage in a WHSmith, even if they are on a significantly higher salary. That creates difficulties and tensions in the workforce in the new environment.

[Kelvin Hopkins]

My hon. Friend makes a good point. The union and I support the idea of having proper pay for all staff so that sort of discrimination and inequality does not occur. All staff should be TUPE-ed over as they wish. They should not just be bought off with public money to enable WHSmith to make more profit.

[Neil Coyle (Bermondsey and Old Southwark) (Lab)]

I thank my hon. Friend for securing this important debate. This is a big issue in my constituency, in which Blackfriars Road and Walworth Road Crown post offices are set to be franchised. Does he think that the fact that the incomes and pensions of the current staff are being put at risk completely undermines the commitment that the Prime Minister made at the Conservative conference to a more responsible capitalism?

[Kelvin Hopkins]

I will come on to talk about the fact that the Post Office is abandoning its defined-benefit pension scheme. That should be resisted and opposed.

The Government said that they would keep the Post Office in public ownership when they privatised the profitable Royal Mail, but franchising to private retailers is not public ownership. The public interest has been put at risk while Royal Mail is paying out more than £220 million a year in dividends. The Post Office’s revenues are falling, the “Front Office for Government” plan never actually got off the ground and Government funding is reducing.

I have a number of suggestions for the way forward. First, discussions about the Post Office’s future must be subject to parliamentary scrutiny and approval. Secondly, the Post Office must commit to making no threats of compulsory redundancy. Thirdly, the Government must deliver on their pledge to make the Post Office a “Front Office for Government” and set up a UK Post Office bank. Fourthly, the Government should stop using public money to subsidise the outsourcing of Post Office services to retailers. Fifthly, the plan to close the defined-benefit pension scheme should be abandoned; the scheme has a surplus of £130 million at the moment. Sixthly, the Post Office must be required to use the remaining Crown post offices to drive the growth of the new services and to give a secure future for the whole post office network.

The Post Office must remain as a vital public service and a community resource for the long term, with secure jobs and good terms and conditions for all its employees. My own preference is that a future Labour Government should bring Royal Mail back into public ownership and create a comprehensive integrated postal industry using internal cross-subsidies where necessary and appropriate. I imagine that may be expecting too much of the present Tory Government, but it would undoubtedly be massively popular with the public and serve us all well for the long term.

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[Geoffrey Clifton-Brown]

I am grateful to the hon. Gentleman for bringing that to the attention of the House. I have not heard those rumours; I will simply respond with a line from later in my speech. If the Post Office were Tesco, it would be thinking not about closing profitable branches but about how to make those branches more profitable by providing a more attractive service for the customer. That is what I would like my hon. Friend the Minister to take away from this debate today. Let us see how we can make the Post Office work better for its customers.

What the Post Office needs is a proper business model for the future, which, above all, needs to consider how much of the business should be commercially profitable and which bits of it the Government, through the taxpayer, are prepared to subsidise. Although I do not agree with the hon. Member for Luton North that it should be wholly brought back into public ownership, there is no doubt, given the number of small suburban and rural branches, that it will inevitably need some form of public subsidy in future. That public subsidy should be clearly defined. The bits that can be profitable, such as the Crown post offices, should be made to operate as efficiently as possible.

[Kelvin Hopkins]

An internal cross-subsidy is appropriate where there is a public service component. When we had the Royal Mail and post offices effectively in one industry, cross-subsidy was possible. I think we should return to that principle of cross-subsidy.

[Geoffrey Clifton-Brown]

The hon. Gentleman and I are largely in agreement. I have clearly said that there will continue to be a need for an element of taxpayer-funded subsidy for areas that can never be profitable, such as some of the smaller rural and suburban branches, so there will inevitably be a mixture of the commercial, which needs to be exploited to the maximum, and an element of public subsidy.

The hon. Member for Ynys Môn (Albert Owen) mentioned the issue of banks closing. I have two important branches closing in small rural towns: Lloyds in Fairford and HSBC in Moreton-in-Marsh. Many of the services that those banks currently provide, such as depositing cheques and drawing benefits, pensions and so on, will be provided in future by the post office. If the post office then closes in those communities, my constituents in those communities will be left with a severe disadvantage.

[Geoffrey Clifton-Brown]

I entirely agree with the hon. Gentleman. I need to make progress now or I shall be reprimanded by the Chair for taking too long. There is so much to discuss in this debate and I have a little section in my speech about some of the innovative services that have been mentioned.

People view post office premises as dingy and out-of-date places that they do not want to visit. Clearly, the Post Office as a commercial organisation needs to do something about that. Branches needs to be attractive places that the public want to visit. The franchise model is not the nirvana that everybody thinks it is. Pizza Express, for example—I say this to my hon. Friend the Minister—was at one point 100% franchised, but the offering was so variable that the franchises were brought back into central management and it is now a highly profitable enterprise. If the likes of Pizza Express take the view that they do not want franchisees and they want to manage it themselves, I am surprised that the Post Office is not going down that path.

[Kelvin Hopkins]

Will the hon. Gentleman give way?

[Geoffrey Clifton-Brown]

I will give way one more time to the hon. Gentleman.

[Kelvin Hopkins]

I thank the hon. Gentleman for giving way; I will try to be brief. In many parts of industry now, insourcing is the buzz word rather than outsourcing. There may be a strong case for that across public services as well as in the private sector.

[Geoffrey Clifton-Brown]

I think it comes back to the Post Office maximising the opportunities that it has got. I want to come on to that a little later in my speech, but the hon. Gentleman is right. The Post Office needs to consider very carefully how it operates in today’s world.

When the Post Office decoupled from the profitable Royal Mail business in 2012, little was done to create a coherent strategy for the future. Now, in 2016, with the change in retail banking behaviour and the closure of more than 1,700 branches across the UK in five years, small businesses need a post office bank even more. Currently, the Post Office provides access to business accounts for some of the bigger high street banks rather than its own service. However, this is limited, slower and inconsistent in terms of provisions across the network.

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[Tom Tugendhat (Tonbridge and Malling) (Con)]

I pay tribute to the hon. Member for Luton North (Kelvin Hopkins), with whom, unusually, I found myself agreeing quite a lot. It is a pleasure to be here in the interests of the community I have the privilege to represent. Just over a month ago, the Post Office told me it was opening a short consultation on the proposed closure of a Crown post office in Tonbridge. That is a post office that many people rely on. I wrote to the Post Office on 14 October asking for details and the reasons for the closure. I wanted to know exactly which services it was to discontinue and which it was to carry on providing in a nearby stationer’s. After a month, they had not responded, and when I finally did get a response it did not answer the questions I had asked.

That was particularly disappointing because the Tonbridge Crown post office, like many around the country, as we have heard—indeed, as far afield as Northern Ireland and the Cotswolds—is essential to the community, just as post offices are across our land. They are, of course, the very beginning of our true national identity, when the Post Office really did tie the nation together, with the penny post, linking it through the train network and creating one truly United Kingdom.

For too many, that idea has gone. That is wrong, because the post office sits as an important part of our newly refurbished high street in Tonbridge. It is not just important for the elderly; it is particularly important for those with accessibility needs. My community is privileged to have a post office that is near to disabled parking bays and which has good accessibility, appropriate seating and wide enough aisles. It is therefore suitable for people with accessibility issues. In the proposal, such services would not be offered and the narrower corridors and seating would cause problems.

[Kelvin Hopkins]

I strongly agree with the hon. Gentleman. The survey I mentioned in my speech about WHSmith franchises said that they do not provide for people with disabilities in the same way as Crown post offices.

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[Kelvin Hopkins]

I thank the Minister for giving way. I have very little time, but thank you for chairing the debate this afternoon, Mr Wilson. I also thank all the hon. Members who made such fine, compelling and passionate speeches this afternoon. We are all speaking with one voice. There is a serious threat to the Post Office and to its future, and it has to be rescued now by stopping the cuts. May I ask the Minister that we have a meeting to discuss these things in more depth, with the Front-Bench representatives from each of the Opposition parties and myself, to try to iron out some approach for the future? I have to say that I am rather disappointed with the Minister’s response, because she constantly talked about post offices as though they were businesses rather than public services and community assets. If they are to be made more commercially viable, the Government have got to make—

Nissan: Sunderland

Kelvin Hopkins Excerpts

Monday 31st October 2016 Commons Chamber

[Greg Clark]

We have been discussing a fantastic new investment that not only will safeguard jobs in Nissan and across the country, through the supply chain, but will, no doubt—especially with more of the supply chain coming to locate in the United Kingdom—create new opportunities. Those opportunities will be for young people right across the country. There will be apprenticeships, traineeships and careers available that would not have happened if we had not secured this investment, so the hon. Gentleman should welcome it.

[Kelvin Hopkins (Luton North) (Lab)]

Nissan’s decision is brilliant news not only for the north-east, but for the whole UK. May I suggest to the Secretary of State that the exchange rate is a major and crucial factor in Britain’s competitiveness, and that maintaining an appropriate exchange rate is fundamental to future manufacturing success and investment? Will the Government be taking steps to make sure that the welcome depreciation of sterling since 23 June is maintained?

[Greg Clark]

As the hon. Gentleman knows, we have not targeted an exchange rate for some time. That policy is, first, not my remit and, secondly, not the way we approach the economy. However, it is true that there are many contributors to the competitiveness of the economy. What I need to do, and what I will do, is to take those things over which I do have influence and make them work for Britain.

Draft Contracts for Difference (Allocation) (Amendment) Regulations 2016

Kelvin Hopkins Excerpts

Monday 24th October 2016 General Committees

[Kelvin Hopkins (Luton North) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Brady. I do not normally speak on statutory instruments, but I have a particular interest in energy. I defer to my hon. Friend the Member for Southampton, Test, who is a real expert in these matters, while I definitely am not. However, I assume that this is essentially about Government subsidy for renewable energy, to make up the difference, one way or another, between the price that companies want to charge and the price that consumers are expected to pay. I suggest that if this were taking place in the public sector, we would not have these complications, but it happens to be in the private sector. I have a particular view of the world that may not square with the Government’s.

I was very disappointed when the Government cut back on feed-in tariffs for solar photovoltaics. I have installed solar PV in my own home, but I am comfortably off and can afford the capital costs; for others, feed-in tariffs can make the difference between installing it and not installing it. If every home and building in Britain had solar PV, it might not be as economical as generating electricity through gas, but it would be a massive step forward. I hope that one day we will see solar PV and other forms of renewable energy providing the bulk of our electricity and energy needs, even though we understand that the baseload has to be provided in a controllable, generable form.

I ask the Minister whether I have got the message right—I hope he will say yes—that the policy applies only to renewables. I know that there are parallel ideas about subsidising the future of nuclear, but this is not about nuclear but about renewables—at least, I hope so. I am very unhappy about nuclear, but that is a story for another day. These are simple questions from a person with a simple mind.

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[Jesse Norman]

Unfortunately, there is an ambiguity in the phrase “new applicants”. The position is that £730 million is available under auctions. That money will be paid per year under the auctions. The first auction is £290 million; each contract period is 15 years long. I do not have the numbers to hand, but one can run the numbers out as to the total amount of money, in constant pounds, that will be paid out over those contracts in total and as they are announced individually. That is the position.

The hon. Gentleman asked whether there was some overspend under the levy control framework. The levy control framework, as he said, runs until 2020 and the Government are considering whether and how that framework will be extended. At that point, it will become appropriate to ask whether or not there could be any overspend. His third question was about what is included. The included technologies are offshore wind, wave and tidal stream, advanced conversion technologies— gasification and the like—anaerobic digestion, and biomass for combined heat and power. Those are the less established technologies.

Finally, I turn to the question from the hon. Member for Luton North. I am afraid he was telling such a beguiling story about the installation of solar PVs on his own property that I missed the central thrust of the question. I think he was asking whether the regulations were really focused on renewables, and I assure him that they are. There is an entirely separate framework, also known as a contract for difference, that applies to nuclear supply in the case of Hinkley. That is under a completely different scheme and is not the subject of the legislation today.

[Kelvin Hopkins]

To explain, I should say that I was expressing some disappointment that the Government had chosen to cut back on feed-in tariff support for domestic solar PV. It does not affect me, but it may have affected others and dissuaded them from investing in solar PV, which would be very disappointing.

[Jesse Norman]

I understand. I am glad that has not affected the hon. Gentleman, but he is certainly right that it has affected other people. This technology is rapidly falling in price and the sector is continuing to show its resilience in the face of the changes, so we must hope and expect that it continues to do so. The fact remains that it is separate from the subject of this debate, because it comes under the feed-in tariff regime and not under the contracts for difference regime, although I am happy to take the hon. Gentleman’s point. The key thrust of what is being said today is that the regulations are about renewables contracts for difference in these so-called “Pot 2” less established technologies, and not in nuclear.

Question put and agreed to.

Industrial Strategy

Kelvin Hopkins Excerpts

Thursday 20th October 2016 Commons Chamber

[Stephen Hammond (Wimbledon) (Con)]

It is a pleasure to follow the Chair of the Select Committee, the hon. Member for Hartlepool (Mr Wright). For a long time, the words “industrial strategy” struck fear into the heart, and raised the hackles, of many on the right of the political spectrum. Those words called to mind the era of excessive government intervention and anti-market philosophy, with the Government picking winners—usually winners that were declining—deciding on nationally strategic industries, and pursuing anti-competitive practices and industrial relations policies that stifled competition.

[Kelvin Hopkins (Luton North) (Lab)]

When it comes to industry, the most interventionist Government in Europe is Germany. It is also the most successful economy in Europe.

[Stephen Hammond]

That very much depends on how we define intervention; we might come on to that later in the debate.

To meet the challenges of the 21st century, especially in post-Brexit Britain, industrial strategy should be about four things: the Government creating the ecosystem or the environment in which industry can succeed and in which national productivity—a huge challenge—can be increased; ensuring that our country has the skills that it needs; ensuring access to finance; and boosting and promoting industries of competitive and comparative advantage.

When we talk about the ecosystem or environment, we almost inevitably talk about infrastructure. One of the achievements of the previous Government was that even in a time when we had to pay down the deficit, infrastructure was reckoned to be the key factor for economic growth. Public sector support has, rightly, been provided for all sorts of developments over the past few years, most notably in transport, energy, housing and broadband communications. The National Infrastructure Commission, which made it possible to look across sectors and move away from the previous silo approach, has had a great impact.

As the hon. Member for Hartlepool pointed out, an urgent priority for the Government has to be a consideration of not only how we strategically assess, but how we deliver. That is partly about smart procurement and making the Government an intelligent client. Our inability over the years to specify design has meant that costs have inevitably increased, so the cost base and project management costs have been much higher than they would otherwise have been. The Treasury optimism bias or risk quotient, depending on what one calls it, has had to be increased throughout. By driving into the Infrastructure and Projects Authority some of the skills needed for the delivery of smart procurement, we will be able to reduce costs and make projects more attractive and fundable.

We need to get the private sector much more involved than it has been so far. If we travel anywhere else in the world, we will use roads and bridges that are privately owned and run, and the fact that they are privately owned and run does not make them any less useful. A commitment to infrastructure must be a cornerstone of any modern industrial strategy, so I gently say to the Minister that I hope he will push his colleagues for the appointment of a new Minister for infrastructure, preferably with some responsibility for industrial strategy, and preferably a Member of this House rather than the other place.

Our departure from the European Union will give us a couple of fortuitous possibilities in what some of us think will be a difficult time. The EU procurement rules are some of the most onerous and bureaucratic anywhere in the world. Getting rid of them from our procurement system will undoubtedly help small industry and the supply chain. State aid has been a way of thwarting, as well as supporting, a lot of investment, and we will no longer have to abide by all the state aid rules. I hope that the Minister will say later that he accepts that challenge.

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[Joseph Johnson]

Our export performance is one of the features of our economy that we are seeking to improve through our industrial strategy, and I am looking forward to explaining a bit more about how we will do that.

The UK has the second lowest productivity in the G7, a fifth below the G7 average, and closing just half that gap would add £250 billion to the economy by 2025. A proper industrial strategy can play a key role in that, by delivering real benefits to the work and lives of businesses, consumers and employees.

[Kelvin Hopkins]

I, too, am concerned about our low productivity. Does the Minister not accept that a factor in that is cheap labour? If wages are low, that does not encourage companies to invest and become more efficient. We have a history of driving down wages or keeping them too low.

[Joseph Johnson]

Wages by and large correspond to the value added per hour worked that a company is willing to pay for. What is important is that we increase the average skills level in our workforce, so that we have a skills base that is globally competitive and able to command the wages in a market economy that we want people to have.

When Governments fail to look ahead and make the right long-term decisions on fundamentals such as tax, infrastructure, research, education and skills, they are abdicating responsibility. Such plans require us to take not a partisan approach but one that seeks to establish common ground. I am delighted that so many Members from all parts of the House have participated in the debate today, and I thank them for doing so.

I want to say a bit more about the principles guiding our approach to industrial strategy. The first thing to say is that developing a proper strategy takes time. It is not something that we can drop out overnight. We need to engage with a wide range of organisations and people to design and deliver a strategy that can have a real and lasting impact. That means engaging with Members, including through the Business, Energy and Industrial Strategy Committee’s welcome inquiry on industrial strategy. It also means spending time over the coming months engaging with businesses of all sizes and sectors, investors, local leaders and consumers, so that we can reflect their views and build on their knowledge and experience.

Our industrial strategy will necessarily be wide ranging, but that should not be at the expense of clear focus, so I would like to say a few words about where we will be concentrating our efforts. First, building on proven strengths is a cornerstone of good strategy, and as many Members have observed, this country has no shortage of them. For a start, let us acknowledge our powerful record on science and innovation. Only America, with a population nearly five times our own, has more of the world’s top universities, Nobel prizes and registered patents. The UK has the most productive science base in the G7 and has overtaken the US to rank first among comparable major research nations for field-weighted citation impact, a key measure of research quality. This is hugely important. Science, research and innovation are essential to our future and must be at the core of any effective strategy for the long term.

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[Joseph Johnson]

The hon. Gentleman might recall that there was a point during the last Parliament—I think, in 2013—when this country became a net exporter of cars for the first time since 1975, when the then Labour Government nationalised British Leyland. It is the automotive policies of this Government and our predecessor coalition Government that have taken the car industry to the heights that it currently enjoys and that have not been seen since the early 1970s.

[Kelvin Hopkins]

Like the Minister, I think that the British motor industry has a brilliant future—provided that our currency remains relatively competitive. Does he accept that we do well in export markets outside the EU but poorly inside in the EU because of the uncompetitive exchange rate? I think that we still import four times as many cars from Germany as we export to Germany. It is our trade outside that makes the difference.

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[Kelvin Hopkins (Luton North) (Lab)]

I am pleased to participate in this important debate, and I congratulate the hon. Member for Warwick and Leamington (Chris White), not only on securing it, but on what he said, which was excellent.

British industry has suffered for too long from neglect and diminution, and I am pleased that the Prime Minister has chosen to reintroduce the term “industrial strategy”, one that I cannot recall being advanced by our political leaders for a very long time. She has also suggested that the state must have a role in promoting and managing our economy, and ensuring that it is healthy and strong and will serve the citizens well. The state cannot simply stand idly by and let the markets do their worst, and I am pleased that an era when that was too often the case now seems to be coming to an end.

I have differences with the hon. Member for Wycombe (Mr Baker), whom I admire and like in many ways, as I am a statist and he is not. Some 18 years ago, I tried to press the new Labour Government to intervene—to consider intervention—but my plea fell on deaf ears and I was told by a humorous Back-Bench comrade that that sounded too much like socialism. Governments of all colours since the 1970s have allowed much of our manufacturing sector to wither and reduce. We still have some fine manufacturing, as the Minister has said, but the whole sector is too small and cannot produce enough to bring any kind of sensible and sustainable balance to our economy. We have allowed an enormous trade deficit to emerge, above all in manufacturing, and primarily with the European Union. The pound has been grossly and persistently overvalued, above all against the euro, and has been a prime cause of our manufacturing weakness. We now, at last, have some relief, with the depreciation of sterling since the referendum, and already the economy is beginning to benefit. I look forward to renewed growth in our manufacturing industries and to our trade deficit reducing.

Lord Mervyn King, the former Governor of the Bank of England, said this month that Britain was borrowing 5% to 6% of GDP a year simply to buy imports and live beyond its means—this prosperity was an illusion borrowed from the future, fine for people who wanted to buy a Mercedes-Benz or have a holiday in Spain, but doing nothing for British industry. Professor Ashoka Mody, the former deputy director for Europe at the International Monetary Fund, has said:

“The idea that Britain is in crisis or is on its knees before the exchange rate vigilantes is ludicrous”.

He also said:

“The UK economy is rebalancing amazingly well.”

We should all welcome more of that.

Manufacturing based in Britain has bright prospects, provided the exchange rate is kept at a sensible level; exports will rise and import substitution will see domestic sales of UK products booming. There will probably be a J-curve effect at first, until goods already committed diminish and quantitative effects take hold, but that will not be long in coming. I have already suggested to some of our motor manufacturers that they would now do well to expand their supply chains in Britain and reduce their proportion of imported components. I am convinced that the motoring sector will be doing brilliantly in future years if they do that. We should not forget that Britain is a massive market, to which our own producers should be supplying more.

I want, however, to press the Government further in a virtuous direction regarding our industries. I urge the Government to give serious thought to recreating the National Economic Development Council—Neddy—and the little Neddies for the various industrial sectors. That was an agent of what was then called “indicative planning”, bringing together representatives of business, Government and trade unions. The NEDC was hardly socialism, set up as it was by Edward Heath’s Government, but it did valuable work and could do so again.

There is much more we need to do to make our industrial strategy a long-term success, but an appropriate exchange rate is a vital if not sufficient condition for success. On that score, let me say just one more thing: the euro is proving to be a disaster, particularly for southern Europe. Its future is, thank goodness, now in serious doubt, with Italy in crisis, along with Greece and others. I believe the euro is actually the Deutschmark in disguise, with a number of weaker currencies bolted to it, holding down its value at a falsely low level. That is not only crippling for those weaker economies, but disadvantageous for us. It will be better for those European economies, as well as ourselves, when national currencies are re-established and are allowed to move to appropriate parities. The end of the euro would be good news for us all and, especially, for Britain’s industries.

Finally, let me say that outside the EU we will be free to use smart procurement to benefit British industries and to use state aids as we see fit. If that is protection, I welcome it.

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[Hannah Bardell (Livingston) (SNP)]

It is somewhat ironic that we discuss industrial strategy following a debate on the scandal and tragedy of the collapse of BHS, especially given that one of the Government’s emerging pillars for their industrial strategy is:

“New corporate governance structures, including consumer and employee representation on boards, and greater transparency around executive pay”.

It is a shame that the Government’s industrial strategy was not in place before Philip Green got his grubby mitts on BHS.

The Government’s plans for a strategy come as we face a post-Brexit prospect of being out of Europe and out of the single market. The uncertainty caused by the UK’s decision to leave the EU and the Tories’ lack of a Brexit plan seriously damage the long-term planning capacity of firms and the UK’s trade outlook.

When one tries to ascertain what exactly the UK Government’s industrial strategy is, it appears that one needs to be a sleuth, as even the Library research team were challenged. Its debate pack, which is excellent as usual, states:

“This note brings together the limited information that has been published since Theresa May became Prime Minister which provides clues as to the how the Government’s industrial strategy will operate.”

We have limited information and only a few clues, but I am sure that between us we can cobble something together!

We know of some of the terrible failings of the Prime Minister’s predecessor. He and his Cabinet presided over a complete failure of long-term strategic planning, which has only perpetuated the productivity slump in the UK economy and low wage growth, and increased social, regional and gender inequalities. On an output per worker basis, UK productivity is 20% below the average of the other G7 countries, as the Minister mentioned. UK workers have suffered the biggest fall in real wages among leading OECD countries between 2007 and 2015, with their wages dropping by a shocking 10.4%. That is a terrifying statistic, given that our workers’ rights and conditions are under threat as we leave the EU.

We have seen the carbon capture project scrapped, feed-in tariffs for renewable energy schemes cut, and innovation grants turned to loans, and that is all before the UK faces losing access to the valuable Horizon 2020 EU research funding. The UK Government say they are taking back control—

[Kelvin Hopkins]

The hon. Lady and many other hon. Members talk of losing EU funding, but if we simply replace EU funding with British funding, we still make a £10 billion profit by not paying into the budget.

[Hannah Bardell]

If only it were as simple as that; the arrangement might be somewhat more complex.

The steel sector in England and Wales has been crying out for support, yet the Government were flat-footed in their response. In contrast, the SNP-led Scottish Government worked tirelessly to find a new operator for the Dalzell and Clydebridge plants. Our First Minister said she would leave no stone unturned and that is exactly what she, her Government and the Scottish steel taskforce did.

What next for industrial strategy? We are all wondering and waiting with bated breath. When the Prime Minister created the new Department for Business, Energy and Industrial Strategy she brought together two of the most significant Government Departments. It is good to see a sharper focus on industrial strategy, even if only in name. As we all know, this Government are expert in meaningless rebranding. Of course, there are two areas missing from the departmental name—innovation and skills. The Minister touched on those aspects and it is vital that we continue to focus on them.

We see as key to a successful strategy sustainable and inclusive growth which closes the gender gap and ensures that women and people of all backgrounds across our society are welcomed and included in our workforce. We need to be seriously more ambitious about a diverse workforce. In March this year the Equality and Human Rights Commission published a damning report which said that women were being held back by the old boys’ network. It stated, as the BBC reported, that

“nearly a third of the UK’s biggest companies largely rely on personal networks to identify new board members”,

and that

“most roles are not advertised”.

An EHRC commissioner was quoted as saying:

“‘Our top boards still remain blatantly male and white’”.

The study, which looked at appointment practices in the UK’s largest 350 firms, which make up the FTSE 100 and FTSE 250, found that more than 60% had not met a voluntary target of 25% female board members.

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[Roger Mullin]

I wish the hon. Gentleman would not mince his words—he should say it as he really feels it.

Where Smith has some relevance is in his argument that critical to growth was the division of labour in society, with specialisation—what we might call today the importance of having the education and skills that allow us to promote innovation and change. That is what spurs longer-term growth, and on that he was absolutely correct. That important need to drive forward with new technologies and new thinking is why it is utter madness that the Government pulled out of one of the biggest world-leading research projects, the carbon capture project in the north-east of Scotland. If ever there was an indicator of their turning their mind away from what is fundamental to long-term economic growth, it is that decision.

The other thing Adam Smith said that I completely approve of is that there is a role for state intervention. In particular, it is to ensure the kind of education that supports society economically as well as socially. We cannot leave education and skills to the marketplace. We have to make sure they are taken care of.

I was interested by the way in which Members talked about the importance of technology. It strikes me that historically, one of the problems we have had with funding is that we have plenty of people in our universities and the like who are able to come up with great technological ideas and innovations, but those innovations take many years to reach the marketplace. Private sector investment seems best when it is either at or near the marketplace. The problem, very often, has been the gap between the idea and bringing it to fruition. That is where the need for the role of the Scottish Investment Bank comes in, and I think that is what my hon. Friend the Member for East Lothian was hinting at when he talked about the valuable work of the Catapult centres. They can attract different forms of funding in a competitive way for things that may take time to reach the marketplace.

I was interested in the remarks made about the challenge that we face because of Brexit. The Government’s response, chaotic as it is, is driving down confidence. My hon. Friend the Member for Edinburgh West talked about the importance of confidence. That reminded me of what Keynes argued, which was that the principal determinant of the level of private investment is not the rate of interest nor even the level of aggregate demand, but the state of business confidence.

[Kelvin Hopkins]

I am listening with great interest to the hon. Gentleman. I always enjoy his speeches, I have to say. When it comes to the EU, however, does he not accept that confidence has been driven down by those who lost the argument and the vote, who are constantly saying that it will be terribly damaging and an economic disaster? In fact, as Ashoka Mody has said, it is actually proving to be quite beneficial.

[Roger Mullin]

I would take issue with the latter part of the hon. Gentleman’s observations. We were on the opposite side of the argument, but surely he would agree that the Government’s response to the vote has been utterly chaotic? We are no further forward four months later than we were at the time as to what the Government mean by Brexit and how they are going to take us there. That is doing nothing other than driving down confidence in business.

I do not want to take up too much time, but let me come on to one further important issue that was raised, which is in the general sphere of education. That is the importance of the post-study work visa. I would add to that the tier 1 entrepreneur visa. We need to encourage people from overseas to come to this country to help us drive up business investment and innovative ideas. I read an essay by a friend of mine, Professor David Simpson, a few weeks’ ago. He pointed out that one third of successful business start-ups in California between 1980 and 2000 were by people who had come from either India or China. At a time when we need, not least in Scotland, to attract the best minds to help to drive forward the economy, setting our face against that cannot be in anyone’s interest. It certainly cannot be in the interest of anything we might call an industrial strategy.

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[Chris White]

I am pleased to follow the shadow Minister. I was enjoying her speech, until it all seemed to go a bit wrong towards the end. Where I finished listening was where she said that she welcomed the Government’s initiative to have an industrial strategy. I am grateful to the Backbench Business Committee for providing time for the debate and to everyone who has had the opportunity to speak.

I take from the hon. Member for Aberdeen North (Kirsty Blackman) what she said at the beginning of her speech, which was that, basically, everyone had a different interpretation of what industrial strategy was all about. I do not think there is anything wrong with that. That is the purpose of this debate: to provide an opportunity for everyone in the Chamber who indicated a wish to speak to give their take on an industrial strategy.

I would go back one step further. I look forward to reading the book by the hon. Member for East Lothian (George Kerevan) when it finally comes out—I am sure that it will be selling round the corners. Until that time, I recommend anyone to read the book by Lawrence Freedman, “Strategy: a History”. It is important for us all to return to the definition of strategy. The shortest, most precise definition that I have come across is to get the furthest with the most. I do not think that is a bad foundation for this debate.

I would like to refer to my very good friend, my hon. Friend the Member for Bedford (Richard Fuller). I am sure that the House would agree that he was enjoying his speech far too much. He put a spanner in the works of otherwise consensual and positive debate with his desire to hold to the philosophy of a free-for-all—everything is for the best in the best possible world. I hope that he will come around to welcoming the pragmatic opportunities provided by the initiative that, through the Minister, is being formed. Discussion papers are being written. We are again going to be able to have our say, I hope. This matter will come back to the House for further debate. None the less, I imagine that all Members would agree that it is better to have this debate now.

[Kelvin Hopkins]

I much enjoyed the hon. Gentleman’s speech and agree with what he is saying, but the point that has not been answered is my point: low wages and flooding the market with cheap labour does not help investment. It keeps productivity at low levels. If we are going to see high investment in modern technology, we need to raise wages and stop flooding the market with cheap labour.

[Chris White]

I thank the hon. Gentleman for that intervention, but I suggest that a proper and full industrial strategy that looks at issues such as productivity would take those issues into account.

I thank all hon. Members on both sides of the House for their contributions, and I express my appreciation to the Chair of the Business, Energy and Industrial Strategy Committee for the work that it is doing on the issue.

Question put and agreed to.

Resolved,

That this House has considered industrial strategy.

Intelligence and Security Committee

Ordered,

That Richard Benyon and Mr David Hanson be appointed to the Intelligence and Security Committee of Parliament under section 1 of the Justice and Security Act 2013 in place of Sir Alan Duncan who ceased in accordance with paragraph 1(2)(b) of Schedule 1 to that Act to be a member of the Committee when he became a Minister of the Crown and Mr George Howarth who has resigned as a member of the Committee in accordance with paragraph 1(3)(a) of Schedule 1 to that Act.—(Michael Ellis.)