Budget Resolutions

Kevin Hollinrake Excerpts

1st reading: House of Commons
Tuesday 28th November 2017 Commons Chamber

[Greg Clark]

Let me make some progress now, because I am about to come on to the points that hon. Members are raising.

Last week’s Budget outlined the biggest increase in public research and development investment for 40 years. It is growing as a share of GDP and contributing to our commitment to invest 2.4% of GDP in research and development by 2027, rising to 3% in the long term. One aspect of this increased funding is a strength in places fund, which will grow our research and innovation strengths in every part of the United Kingdom, recognising that there are strengths in all parts of the country, not just in London and the south-east.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

Rebalancing the economy is a key part of the industrial strategy, and one of the reasons why London gets a much better deal on investment is its ability to attract private sector investment, which the north has very little capability to do. Has my right hon. Friend any plans to try to resolve that issue, so that we can attract more private sector funding for infrastructure investment in the north?

[Greg Clark]

I have indeed, and I will come on to that in a moment, if my hon. Friend will bear with me.

Let me say something about skills. We are creating new job opportunities, but I say to the hon. Member for Na h-Eileanan an Iar (Angus Brendan MacNeil), who raised a point about robots, that if jobs change, we need to ensure that people have the ability to train and develop the skills they will need for the jobs that are being created. The consultation on the industrial strategy established what every Member knows: job opportunities, especially in companies in the technical sectors, require education and training, particularly in maths, digital skills and other aspects of our technical education. There are skills shortages around the country, and great careers would be available to young people and to those who are changing career if only they had that educational base. The significant investment in maths, digital and technical education that was announced in the Budget is therefore important, as is the national retraining scheme, which will work with employers and trade unions, beginning with digital and construction training.

On infrastructure, I can tell the hon. Member for Gedling (Vernon Coaker) that the Chancellor has announced an £8 billion increase in the national productivity investment fund, taking it to £31 billion, and extended it to 2022-23. That will enable us to invest in our physical infrastructure and also, as my hon. Friend the Member for Henley (John Howell) said, in our digital infrastructure as we develop the next generation of full-fibre networks, trial the use of 5G and boost mobile communication on our railways. That, too, is important right across the country. We will also support electric vehicles through the charging infrastructure fund. If we are going to manufacture those new vehicles, we have to be the place in the world in which they can be deployed most effectively.

--- Later in debate ---

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I will focus my remarks on chapter 4 of the Budget, which is on productivity, because as it says in the Red Book, that is how we boost wages, improve living standards and improve overall prosperity across the nation. Incredibly, if we could close the productivity gap with Germany, we would increase our GDP by 33%. Competition is the key to improving productivity, and the Red Book states that boosting productivity makes businesses “more efficient”. I began my own experience in business at a time when most of my competitors were closing down. It was a few years later, when new competition came into the market, that we really raised our game and became more competitive, efficient and effective. The key to more competition is ensuring that we have a level playing field.

The first thing we need to deal with is access to finance, and the Budget deals with a number of different issues for people who cannot borrow from the high street lenders. Increasing productivity is about unlocking £20 billion of patient capital; doubling the enterprise investment scheme allowance, which certainly provides more capital for those early-stage and higher-risk businesses; and providing more support for challenger banks. Those measures tackle the issues of people who cannot borrow, but the reality is that many people in business will not borrow because they do not trust the high street banks.

We have seen some issues over the past few years, with scandals at the Royal Bank of Scotland Global Restructuring Group and other banks meaning that assets were often taken away from small businesses totally inappropriately, and those businesses have no recourse. We need an independent financial services tribunal, along the lines of employment tribunals. It is not just about the money; it is about the human cost of a life’s work being taken away. A tribunal would provide an independent means of redress for such businesses.

The Chancellor also mentioned the VAT threshold in his speech. He has not tackled that yet, but we do need to tackle it. Anecdotal evidence suggests that this is a barrier to productivity and expansion, and that has been supported by a report from the Office for Tax Simplification, which says that there is a bunching effect around the VAT threshold.

Finally, rebalancing the economy means more investment across the nation. There is too much focus on London. It is not just the Treasury doing this—in fact, it is not the Treasury. It is about access to private sector capital, and we need to find ways for the north also to access that private sector investment.