International Investment Summit

Kevin Hollinrake Excerpts

Thursday 17th October 2024 Commons Chamber

[Emma Reynolds]

I will not have a cross-Chamber discussion with the hon. Gentleman. I am sure he will make a contribution to the debate.

This Government are determined to increase the number of good, well-skilled jobs, to embrace the opportunities of technology and innovation, and to improve productivity across the country. At the international investment summit, we demonstrated that the UK has tremendous strengths. We have a dynamic, ambitious and globally connected economy that has long been at the forefront of global exploration, invention and innovation. We have a global language, a central time zone and a renowned legal system. We have a high-spending consumer market that benefits from an open economy. We have trade deals with over 70 countries, and we have world-class talent supported by our globally recognised higher education system, with four of the world’s top 10 universities.

One of my favourite moments of the summit was a panel chaired by our fantastic Secretary of State for Culture, Media and Sport on the creative industries and sport. I was delighted to have a photograph with Gareth Southgate, which I showed to my boys when I got home. In all seriousness, Gareth Southgate talked about how the Premier League was once just an idea and how it has been built and marketed into a world leader, creating great investment into our economy. I am sure the whole House will support that sentiment—

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

Hear, hear.

[Emma Reynolds]

The shadow Secretary of State is demonstrating that from a sedentary position—it is the first time I have said that in a debate for some time.

When we took over from the last Government, we recognised that there were issues we needed to address to improve the UK’s competitiveness. That is why we have already announced a series of steps to improve our business environment, such as driving through planning reform to get Britain building, removing the ban on onshore wind farms and giving the green light to key solar and data centre projects. We are also undertaking a pensions investment review, which the Chancellor has asked me to lead, to harness the potential of our £2 trillion pension industry to unlock new capital for our innovative businesses, to drive growth and to improve outcomes for future pensioners.

We have launched Skills England to boost the nation’s skills and fill job vacancies by bringing together businesses, trade unions, mayors, universities, colleges and training providers. We are also resetting our relationship with our closest partners in the European Union.

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

May I welcome the Minister back to this place and to her new position? I assure her that I am very happy to work with her to further the best interests of the United Kingdom.

I very much welcome what happened on Monday. Having 300 investors come to this country is very welcome; this country is clearly open for business. We are keen to help the Government to succeed, because it is in everybody’s interests. I speak not only as a constituency MP, but as a former businessperson.

I was also pleased to hear the Prime Minister talk about cutting red tape and regulation. We would all welcome that, although I have some questions. We know that there is a bottleneck in our economy, particularly in planning and infrastructure, so we will welcome any changes that the Government can successfully make to accelerate the projects that have been held up by problems.

We also welcome the work—for which I understand the Minister is responsible in her other role as Minister for pensions—on the Mansion House compact and the Mansion House reforms, which could liberate £75 billion of capital into our productive economy. That is much needed: only 3% or 4% is invested today in equities, compared with 50% a couple of decades ago, so it is very important that we continue the reforms started by the last Government.

We were pleased to see all the positivity on Monday, despite the gloom and doom that we have heard from Government Members in recent weeks. It is good to hear investors saying that now is the right time to invest in the UK. We can see why. [Laughter.] No, it is not necessarily because there is a Labour Government. It is because inflation is running at below 2%, whereas it was running at 11% only two years ago. In this country we have only 4% unemployment, our economy is growing as fast as any other in the G7 and our deficit stands at 4.4%. That is what we handed over to the Minister’s Government. The deficit was higher than we would have liked, but in 2010, by comparison, it stood at more than 10%.

We constantly hear from Labour Members the refrain that they inherited the worst economic situation in history, but that is simply not the case. I am happy to take an intervention from the Minister, or any other Government Member, on that point. If they can name a single metric that is worse today than in 2010, I will be happy to hear it.

[Liam Byrne]

rose—

[Kevin Hollinrake]

The Chair of the Business and Trade Committee is going to give us one.

[Liam Byrne]

The hon. Gentleman gives way with characteristic generosity. The truth is that the International Monetary Fund forecast growth for this year at about 0.5%, that families were about £1,200 worse off on average at the last election than in 2019, and that since 2010 the national debt has more than doubled, to £2.3 trillion. I suggest that those three metrics represent not a good inheritance, but a bad one.

[Kevin Hollinrake]

There is no doubt that we have been through a difficult time, given the effect of covid and the cost of living crisis on a services economy, but the right hon. Gentleman will acknowledge that back in 2010 the deficit was more than 10%, whereas today it is only 4%. In real terms, adjusted for inflation, that is a difference of about £160 billion, the equivalent of the health budget. The inheritance left for the present Government is much better than the one we received in 2010.

[Emma Reynolds]

The shadow Secretary of State is being generous to a point. I suggest kindly that in 2010 the outgoing Labour Government did not leave a £22 billion in-year hole in the public finances, as the Conservative Government bequeathed to us.

[Kevin Hollinrake]

The Minister is a very sensible person with experience both in the private sector and in politics, so I am surprised that she mentions that figure. Of the £22 billion, £9 billion was a result of her Government’s actions in lifting public sector pay without any commensurate productivity improvements and in scrapping the Rwanda scheme. It is fake news to say that there is a £22 billion black hole, I am afraid, and the Minister absolutely knows it.

There is no doubt that there are tough spending decisions and tough choices to be made, but it is very disappointing that one of the Government’s tough choices has been to scrap the winter fuel allowance. Let us see what their other choices will be.

[Laurence Turner (Birmingham Northfield) (Lab)]

Does the shadow Secretary of State acknowledge that the cost of Government borrowing that this Government have inherited is roughly double what it was in 2010? That is, in part, a direct result of the disastrous Liz Truss mini-Budget.

[Kevin Hollinrake]

That is simply not true—just read what the Bank of England said about that time. All the numbers went back to normal within a month of that fiscal event. The hon. Gentleman can choose his opinions, but he cannot choose his facts.

Let us look at some facts. Of course we welcome the £63 billion that has been announced, but as the Minister and her Government stand on a platform of honesty and transparency, let us put some honesty and transparency around the numbers. The Amazon £8 billion was announced on 20 March this year. The Blackstone investment of £10 billion in a data centre was announced on 23 April this year. Of the £63 billion announced, £36 billion was announced prior to the investment summit or initiated via things like auctions by the previous Government. Only 20% of what was announced was not already in the pipeline before the investment summit. The reality is that much of it was already baked in. There is bound to be an overlap when a new Government come in, but let us have some transparency and honesty around the numbers.

[Yuan Yang (Earley and Woodley) (Lab)]

By spring this year, financial markets had already priced in the fact that they expected a large Labour victory, and that was what gave businesses and the markets so much confidence in the future stability of our economy. Will the shadow Secretary of State explain why?

[Kevin Hollinrake]

I will come on to confidence in a second, if I may.

The reality is that the UK has always been a good place for foreign investors. For the past three years, it has been No. 3 in the world for foreign direct investment; the only countries ahead of us have been the US and China.

The Minister referred to the wonderful event at the Guildhall. We have wonderful places to host international events, and we support what they do to show the best of Britain to our international investors. I was pleased, but perhaps surprised, to see Elton John entertaining the audience; I was expecting Taylor Swift. Was that ever on the agenda? There is obviously a very strong relationship there. But when I thought about it, and when I heard about the reversal of position on the DP World investment, I thought, “Well, it’s obvious why they’ve done that: they’ve asked Elton and the Transport Secretary to join in a duet of ‘Sorry Seems to Be the Hardest Word’.” Interestingly, a No.10 press release on this mentioned a rogue operator—I was not sure whether that meant the Secretary of State or the company—so I am not sure where that all landed in the end, or whether that was just a rogue comment by the Secretary of State.

None the less, we welcome the investment and we will absolutely support any successes that the Government can achieve, but, as the Opposition, it is right that we challenge where challenge is due. We have many concerns about some of the things to which the Minister refers. She is absolutely right to say that stability is the key. It breeds confidence in investors, which breeds investment. That is why we are particularly concerned about the changes to business taxation. Some were floated months ago and have been left hanging in the air. We know that this is now affecting investment, particularly around capital gains tax and around business relief—it used to be called business property relief—which is very close to my heart.

Business relief gives private businesses and businesses listed on AIM the ability to pass on their assets to the next generation without inheritance tax. There are a number of questions around whether that relief will be continued. It is hugely important that the Government do continue it, because it affects some of this country’s fantastic family businesses, which generate around £200 billion of tax receipts every single year and employ nearly 14 million people. That business relief is there for a reason. It is not a tax loophole; it is an incentive for family and intergenerational businesses to pass on their assets from one generation to the next. Similarly, that happens with agricultural property relief.

We are also concerned about the Government’s unwillingness to confirm that there will be no rise in national insurance for employers. Members on both sides of the House have described that as a jobs tax, and that is exactly what it is. All the uncertainty around business taxation will mean a suspension of investment and a reduction in the amount of hiring, particularly when it is seen in conjunction with the potential workplace changes that the Government are making, which we will debate in the House on Monday and about which we have great concerns. In particular, those relating to union powers could take this country back to the 1970s. I know that many Members in this place will not remember the 1970s, but I do and it was not a good place to be.

In the Prime Minister’s statement, he talked about cutting red tape. If, as currently drafted, the 28 new regulations—particularly those for small and medium-sized enterprises—are added to the Employment Rights Bill, it would seriously damage growth, investment and SMEs. But the Minister does not need to take my word for that. Let me read out some of the comments about the changes that the Government are thinking of making that will damage investment. The Federation of Small Businesses said that its members are viewing the measures coming down the line with “trepidation”. Tina McKenzie described them as

“clumsy, chaotic and poorly planned.”

She said:

“There are already 65,000 fewer payroll jobs since Labour took power, and the new Government is sending out troubling signals to businesses and investors.”

Those are her words, not mine.

The Institute of Directors said that confidence is fizzling out. Its index in relation to investor appetite has gone from plus 30% in June 2024 to minus 7% in October 2024. That is in just four months. The CBI said that 62% of employers say that the UK will be a less attractive place in which to invest. Ernst & Young said that

“60% of asset management (private equity) clients have asked them to start work on moving abroad.”

[Mr Richard Quigley (Isle of Wight West) (Lab)]

Does the hon. Member agree that he is now guilty of talking down the entrepreneurial spirit and the ability of UK companies to cope with an exciting new Government?

[Kevin Hollinrake]

I am very keen not to do that. That is my point. It is gloom and doom from the Opposition —sorry, I mean the Government; I have to stop doing that—and it is brought on by these significant changes. These are not my comments, but the comments of sensible business representative organisations, which are representing their members. We should listen to the voices of business in this context. Even Richard Walker of Iceland Food, one of the Government’s supporters, says that the changes must happen slowly to avoid a “disastrous impact”.

I realise that we have a lot to get used to these days. I have to get used to calling those on the Labour Benches “the Government”, and I also have to get used to being a backseat driver. It is even more frustrating being a backseat driver when the learner driver in the driving seat does not know the difference between the brake and the accelerator.

Importantly, stability is one of the key levers that the Government have at their disposal. Winston Churchill once said that some people see “private enterprise as a predatory tiger to be shot. Some see it as a cow that they can milk. Few people see it for what it really is—the strong horse that pulls the whole cart”. It is hugely important that we get behind private enterprise in this country. It is hugely important that we get that stability in tax policy, workplace policy and the employment relationship. It is hugely important that we continue to level up this country. I note that levelling-up seems to have disappeared as a departmental aim, but that is still hugely important to all parts of this country, not least to the part of the country that I represent. It is also hugely important that we control energy costs. We know that that is a key concern to many businesses around the UK. Another key concern is that we cut the red tape for our larger companies.

The area that I focused most on as a business Minister was SMEs, which are the backbone of our economy. The No. 1 area that they struggle with is access to finance. I would really like to see some different measures in that area.

[Tom Hayes (Bournemouth East) (Lab)]

On that point about finance, I was pleased to see that JP Morgan, which has its headquarters in my constituency, joined other big banks in the world to back the push to invest in the UK ahead of the summit. Does the hon. Member agree with JP Morgan and those banks that we should be optimistic about the future of the British economy following the election?

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[Kevin Hollinrake]

I would not necessarily say “following the election”, but, generally, we should be very positive about our economy. I set out earlier some of the economic conditions that would make it conducive to invest in the UK, and we should be proud of that situation. I welcome the Minister’s comments about the change of priorities of the British Business Bank, specifically in relation to the pathfinder initiative. That piece of work was started by my hon. Friend the Member for Grantham and Bourne (Gareth Davies) when he was in the Treasury. Again, that will help to ease the flow of finance into our SMEs.

As I look, with a mixture of sadness and joy, at the now redundant Conservative party manifesto, I can see that there were some really positive ideas in there about easing finance for SMEs. In particular, I am referring to things such as regional mutual banks, which is a policy that the Labour Government should adopt, and the open finance and smart data revolution for our economy, which could transform the opportunities of SME finance, making it much easier for SMEs to shop around. However, the key thing that I would reiterate to the Minister and her team is that they need to make sure that we have stability in terms of not just work, but business taxation, capital gains tax, and business relief. I say no to a jobs tax, but, yes to stability and business taxes. I say no to taking us back to the 1970s, by giving unions more power, no to doom and gloom, and yes to a positive and optimistic view of the UK’s future in the world.

[Madam Deputy Speaker (Judith Cummins)]

I call Jade Botterill to make her maiden speech.

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[Peter Fortune (Bromley and Biggin Hill) (Con)]

I pay tribute to those who have made their maiden speeches today. I think we all felt the passion and emotion in the beautiful speech by the hon. Member for Congleton (Mrs Russell). She has given me an idea: when I am out in Keston this weekend, I might recommend to the residents that we get ourselves a village bear—although I can hear my daughter recommending that we get ourselves a village Harry Styles; that would probably be preferred. The hon. Member for Ossett and Denby Dale (Jade Botterill) spoke passionately about representing the place that she called home. The idea of “Pie Hard” is what I am looking forward to—a Bruce Willis remake in the rolling hills of Yorkshire would be most enjoyable. I congratulate both Members on their maiden speeches.

I will continue being nice to the Opposition—

[Kevin Hollinrake]

The Government!

[Peter Fortune]

Yes, the Government—I have picked up that habit from my hon. Friend and I do apologise.

I am impressed by what has been achieved at the international investment summit. Within weeks of allegedly receiving the worst economic inheritance of any incoming Government since the second world war, Labour has supposedly secured billions of pounds of investment. That is frankly unbelievable, and not because I doubt our country’s ability to attract investment. Britain is a tremendous place to invest, as a wealthy, free, fair and talented nation where people can do business and thrive. That is why Britain’s foreign direct investment stock grew to more than £2 trillion throughout successive Conservative Governments—more than France, Germany and Italy combined. My scepticism is about the idea that the Government, who appointed a Minister for Investment only four days before the summit, secured every penny of the investment. As anyone in business will tell us, the devil is in the details, and a quick inspection will confirm that most of the investment was in progress thanks to the last Conservative Government.

Let us look at clean energy, for example. Britain secured much of the investment that the Government claim credit for thanks to a Conservative policy: contracts for difference. Without that market mechanism, under which investors bid for a guaranteed price, we would not have secured as much investment as cheaply for bill payers. It is why we have the world’s four largest offshore wind farms off our coast, why renewables generate 44% of our electricity today compared with 7% in 2010, and why the UK was able to close its last coal-fired power plant this year. That is a Conservative record, as much as Labour might envy it.

The Government have done the easy bit in tallying the figures and taking credit for someone else’s work. Admittedly, that is a harder task when No. 10 is in such disarray and the Minister had only two days to prepare for the summit. In fairness, only time will tell if the summit was a success and the relationships built there lead to more investment beyond what was already on its way. But that is the hard bit, because to secure more investment and compete globally, Britain needs to be light on regulation and low in taxes. Although the Prime Minister talked about removing “needless regulation” and being “open for business,” his Government’s actions say otherwise. Despite Labour’s explicit manifesto pledge not to increase national insurance, the Chancellor is drawing up plans to hike the tax for employers. Make no mistake: that would be a tax on jobs, and would make it more expensive for firms to hire, which would impact on businesses big and small, including in my constituency—from Bombardier in Biggin Hill to pubs and cafés in Hayes and the Churchill theatre in Bromley.

The tax hike may fall on employers, but working people will pay the price as job opportunities shrink and pay rises are limited. The hands of businesses will be tied further by what the Government themselves brand the biggest increase in employment regulation in a generation. While the Government plan to tax jobs and pass French-style union laws, a Cabinet Minister took a more explicit anti-business approach. The Transport Secretary admitted that she has been boycotting a ferry company for two and a half years, and encouraged others to do the same. While the Prime Minister glad-handed investors— promising less red tape and openness to business, and was careful to mention tax only once—his Government are delivering exactly the opposite.

Britain faces a more significant problem: keeping up as technology advances. Leading on artificial intelligence, quantum, engineering biology or semiconductors is vital to our future prosperity and security, but we face considerable challenges in doing so. For example, Britain is home to the largest number of foundational models and generative Al start-ups in Europe, but we lack the compute power that we need to build and run Al models. The previous Conservative Government recognised that problem and planned to build a new supercomputer in Edinburgh 50 times more powerful than our current top-end system, but Labour has now cancelled that £800 million investment. That is yet another example of Labour’s actions not matching its rhetoric.

The Government cannot be in favour of growth while cancelling investment. They cannot cut regulations while planning huge increases in red tape for employment. They cannot support jobs while preparing to tax their creation. And they cannot claim to have the worst economic inheritance while copying and championing the work of their Conservative predecessors. If the Government do not get their story straight, investors will almost certainly stay away.

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[Sarah Jones]

I am always happy to meet and to talk about what more we can do in our next 100 days, and indeed—we hope—our next five to 10 years in government.

Some Conservative Members have questioned whether some of these investments were teed up under the last Government. They know perfectly well that business confidence can rapidly change investment decisions. All the announcements included are of new, firm commitments being made by companies to invest in the UK either when final investment decisions have been taken or when announcements have been accelerated or unlocked because of actions taken and support provided by this Government.

I am sure that Conservative Members will have seen the letter, published in The Times at the start of the week, from five of the world’s biggest banks, joined by private equity firms, insurers and tech giants, saying that it was

“time to invest in Britain”,

and that Britain’s “greater stability” had increased its attractiveness to investment, which was of course a reference to Labour’s decisions when we took office. They concluded:

“We are optimistic about the future of the economy, and believe it is time to invest in Britain.”

The fact that scores of investors attended our summit on Monday, with tens of billions of pounds being firmly committed to new projects, shows that under this Labour Government, business and investors have a great deal of confidence in our growth mission.

[Kevin Hollinrake]

The Minister is talking about confidence, but if confidence is rising, can she explain why the Institute of Directors has stated that confidence has gone from plus 30 in June to minus 7 today?

[Sarah Jones]

The shadow Minister knows that we are working very closely with businesses, business organisations and others to ensure that the changes we bring in grow our economy. We have huge confidence from a raft of people. For every quote the hon. Gentleman can find, I can find 10 that say the opposite. He can pick on one if he wants to, but I suggest that £63 billion does not lie. Let us not forget that our summit on Monday was organised in a matter of weeks. The Conservative party had two years between their investment summits, yet we secured double the amount of investment compared with its summit last year.

To respond to a couple of other points, the Lib Dem spokesperson, the hon. Member for St Albans (Daisy Cooper), rightly mentioned business rates. We are looking at that and will deliver on the commitments in our manifesto. She was right to raise skills, which are a huge challenge for us. We see huge opportunities for growth across the entire country but we must ensure that we have the skills landscape, which is why we are setting up Skills England. She also talked about the national wealth fund and its ability to crowd in funding for the green sector and green technologies; it absolutely will do that.

To summarise, across the House we are united in the belief that Britain needs to facilitate growth. Let us face it, we have been severely starved of it. Only through growth can we keep taxes lower for working people, invest in our public services and create secure, well-paid, high-skilled jobs. Of course, this is against a backdrop of the poor economic inheritance left by the Conservative party, who lurched repeatedly from Prime Minister to Prime Minister, gave us seven growth plans in 14 years, made millions of people pay the price of a Trussonomics Budget and saddled the people of Britain with a low-growth, low-productivity, low-investment economy. The steps that this Labour Government have taken in just 100 days show that we are overturning the Conservatives’ legacy of inaction, stagnation and deterioration, and creating a country of stability, innovation and prosperity.

Question put and agreed to.

Resolved,

That this House has considered the International Investment Summit.