Business: International Competitiveness

Lord Borwick Excerpts

Thursday 16th January 2014 Grand Committee

[Lord Borwick (Con)]

My Lords, I am grateful for the opportunity provided by my noble friend Lady Neville-Rolfe to make a few points about the international competitiveness of British business. The noble Baroness has had a tremendously successful career running an enormous British business employing thousands of people to satisfy millions of customers.

My experience is rather more mixed and modest, but I have started several engineering businesses, and at one time I could say that I was the first person to start an automotive production line in Coventry since the war, to make a new electric delivery vehicle to sell to companies such as Tesco. The noble Lord, Lord Paul, once drove it with me. Unfortunately, we were pioneering too early and in a dreadful recession, and I had to shut that business down. The business was indeed helped by BIS, but that was not what broke it. The reason why we started such a pioneering business in the Midlands was the depth of skills there and the enthusiasm of local businesses to help a small manufacturing start-up.

I am not sure that my experience is general, but I believe that making things is fun. I have had the privilege of running the company making the London taxi and I got a kick out of seeing taxi drivers doing business in my product, making themselves money. The noble Lord, Lord Bhattacharyya, may remember helping us, as he has helped so many Midlands-based manufacturing businesses. Indeed, he trained most of the engineers in most of the businesses in the Midlands.

When I saw the new electric van in Tesco livery, it was a thrill. It was not government encouragement or help that made us want to start the business. I believe that the most important thing that the Government can do to help British business is to reduce tax. The way in which entrepreneurs want help is by cutting the costs of doing business, the regulations on health and safety and the regulations on human resources that sap the little energy left in the mind of an entrepreneur after he has concentrated on satisfying his customers. Reducing tax is exactly what this Government are doing, and it is exactly the right thing to do. They may be doing so of necessity, because in this age of international trade it really is impossible to identify exactly where a profit is made and therefore where tax should be levied. Is it made by exploiting the patent or capitalising on the brand? It is quite reasonable to have a dozen different opinions on the implications of the same facts.

The best solution is to lower the tax rate to the point where it is not economic for the taxpayer to argue. I am not sure that 21% is low enough, but it is certainly a start and every little helps. We often underestimate just how beneficial tax cuts can be. There were encouraging signs of progress on this at the Autumn Statement 2013, with some preliminary work done on the dynamic modelling of corporation tax cuts. They were much more beneficial than static calculations had suggested. The Treasury and HMRC should be commended for finally undertaking this task. The model should now be published in full so that improvements can be made.

When I was a struggling entrepreneur, my wish was for smaller government, not better or more frequent free advice. My wish was for simpler tax laws, and now that I have the enormous fun of joining your Lordships’ House I am sure that tax legislation would be improved immensely if it were subject to the wisdom that is endemic here. The advantage to British business of your Lordships’ scrutiny of tax laws would be immense. If someone could actually read them before they were legislated, that would be an enormous advantage. The noble Baroness has called for debate on the direct measures that the Government are taking to promote entrepreneurship. The best single measures are to reduce Government expenditure and to reduce and simplify taxes.