Industrial Strategy

Lord Cavendish of Furness Excerpts

Monday 8th January 2018 Lords Chamber

[Lord Cavendish of Furness (Con)]

My Lords, what a pleasure to follow the noble Lord, Lord Bird, whose own generosity of spirit has borne fruit wonderfully.

I now see that I am not alone in having had a sinking heart when talk of a new industrial strategy first entered the realm of public discussion. “Here we go again,” I thought, “another exercise in picking winners, shielding inefficient business and offering grand promises to those who prosper least in our society”. I was wrong, or at least I am persuaded that my cynicism was misplaced. I heartily congratulate the Government on their industrial strategy White Paper, and I thank with equal enthusiasm my noble friend Lord Henley on his excellent speech that opened this important debate. Under consideration is a hugely ambitious set of proposals. I asked myself if perhaps it was too ambitious and indeed unrealistic in its scope. On reflection, I concluded that past failures by Governments seeking to improve economic performance stemmed in part from too little ambition rather than too much, and from a narrowness of scope that resulted in flawed delivery.

I found the White Paper an exciting read, if not a page turner. It is unusually thoughtful and has an especially winning feature from my point of view: everyone can feel justified in feeling that their particular circumstance is being taken into account. We are invited, in effect, to participate in something intended to improve the lot of each one of us in every part of the UK. Although I always listen to my noble friend Lord Howell with the greatest respect, I take issue with his rather gloomy outlook here. Both the nation’s children and its ageing population are discussed, as are town and country, while the devolved Administrations and large and small businesses all get a hearing. It is pleasing to read in a document about industrial strategy that the environment and the fascinating concept of “natural capital” find a place. It anticipates Britain’s departure from the EU but it is not at the expense of anything else.

The comprehensive nature of this White Paper is really encouraging. I first got wind of the fact that thought and vision had found their way into a government White Paper when I read the debate in another place following the Statement on 27 November in vol. 632 of Hansard. It was delivered by Mr Greg Clark and I join other noble Lords in being extremely pleased that he remains in office. With very few exceptions, the Statement was well received in the other place and constructively debated. It is fair to say that the same could be said of the press coverage that followed the announcement, and I feel that the same has happened here in this debate. The House should be extremely grateful to the noble Lord, Lord Mandelson, for the even-handedness of his introduction and its tone, which was impressive as well as authoritative. I particularly hope we will come back to his anxiety that institutionally this country has great difficulty in thinking in the very long term—or what in business we would just call “the long term”—because that does great damage.

As a Conservative, it comes naturally to me to challenge any and all extensions of government interference in such areas of industry. Indeed, the White Paper commendably acknowledges that risks are attached to the Government’s approach. There are risks, and one would need to be a great optimist to expect all these great ideas to materialise as planned. We should take to heart my noble friend Lord Heseltine’s warnings in that respect. Broadly speaking, though, there has been a great deal of consultation leading up to the publication of the White Paper, and the very fact of continuing devolution suggests to me that the Government of the day need in reality to be an active participant in the nation’s economic development. The Government’s dominant role in providing such areas as health, welfare and education lead me to exactly the same conclusion.

If I understand it right, the paper suggests that the delivery of these proposals will rely heavily on partnership. I applaud that aspiration, with the proviso that the partnership has to be genuine and mechanisms will need to be in place—through, I suppose, the independent commission—to ensure that it does not become one-sided. One should never underestimate the capacity of Governments to bully when they feel they hold all the cards. I was especially pleased to read of the Government’s intention to ensure that 60% of contracts for major projects will be awarded to the SME sector. Living as I do alongside very dominant tier 1 companies, I am very familiar with supply-chain promises that fail utterly to materialise in practice. I urge the Government to make a reality of this pledge and take seriously my noble friend Lord Maude’s remarks about supply chains.

I do not think I have ever risen to speak in your Lordships’ House unless I have felt that at least most of what I had to say stemmed from personal experience. When a debate of this nature is listed I try also to consult local friends and acquaintances engaged in entrepreneurial activity. Perhaps I should declare my own interests as listed in the register of Members’ interests. In a word, after 10 years of international trading, my work has been in a highly varied family business based in Cumbria, with some 200 souls on the payroll.

The White Paper leaves me in no doubt that cities and areas of the UK that conform to modern best practice in terms of governance are and will be ahead in the queue to benefit from the proposals that we are discussing. It is not clear to me that the county that the Minister and I have the privilege of living in has quite got up to speed in this regard. I remember a senior civil servant telling me in exasperation, “Your trouble in Cumbria is that you are overgoverned and underled”. Again and again the White Paper lays stress on the importance of local leadership if its proposals are to bear fruit. I hope we in Cumbria will take note of that and will be given time for amendment of life. I wonder whether the Minister has any thoughts not just on our lovely county but on other places that need rather a different approach if the people who live there can expect to benefit from the really exciting prospects that the White Paper lays before us. It is, in essence, the same question that my noble friend Lord Heseltine asked the Minister.

While I understand that the Government wish to demonstrate ownership of this thoughtful White Paper, I confess to being a little surprised by how little the private sector is involved financially. In a recent debate I drew attention to a CapX article by Mr George Trefgarne suggesting that infrastructure projects could be financed privately through the means of what in Victorian times were called project bonds. A faintly related idea subsequently surfaced in the patient capital review, and tucked away in the White Paper is mention of the possibility of pension funds being enabled to enjoy slightly greater investment flexibility. Huge sums of money are stashed away in this country—or so I am told—looking for a home, a point made by my noble friend Lord Griffiths. I am at a loss to understand the apparent reluctance of the Government to encourage private sector participation in infrastructure projects. I wonder again if the Minister might be in a position to comment on that.

I turn to a paragraph in the paper that suggests that UK taxation levels are “competitive”. I am sure that statement, whatever it is meant to mean, is capable of being defended. I merely make the point that even if headline rates appear reasonable, taxation is still very high overall, and damagingly so. There may be good reasons why relatively high levels of taxation exist as part of repairing the country’s finances. However, as I have said before in your Lordships’ House, burdensome regulation, high taxation and an enduring perception that the Government and their agencies are hostile combine to be a serious disincentive to investment, especially regarding the impact on the SME sector. It is because of these disincentives—I say this with great sadness—that my own family business has recently deferred, perhaps indefinitely, what amounts to a very substantial investment for a small company. It is very difficult to measure what I would describe as public sector hostility. I have encountered it with planning authorities, a wide range of regulators, quangos and, on occasion, even the police. In recent months, I may have detected some improvement in public sector culture. Indeed, I am much encouraged by the collaborative tone of the White Paper, which suggests that maybe some lessons have been learned.

A close neighbour of mine in Cumbria has built up a small business in his backyard that manufactures subsea acoustic navigational equipment for military customers and search-and-rescue divers. This splendid pioneering young man acknowledges gratefully the help that he receives, especially R&D incentives and the measures that protect his intellectual property. However, he writes:

“UK manufacturers are bombarded by European compliance legislation that is applied with very little thought to type or quantity produced. Some of this legislation such as CE marking (Conformité Européenne) and WEEE (Waste Electrical and Electronic Equipment) compliance are extremely difficult and onerous to achieve and are very effectively pricing us out of the market. In theory, if we were asked to design and manufacture just one small batch of product it would need to conform to all the same red tape put in place for mass manufacturers”.


My talented friend suffers also from tier 1 neighbours who breed huge salary competition, creating skills vacuums for smaller enterprises. What he has yet to encounter, as I have, is the grotesque practice by some big companies which lobby EU officials to add burdens to compliance and thus disadvantage their agile, small competitors.

These serious imperfections in the current business climate facing SMEs need to be addressed, and I hope that they will be, but that is not to suggest that they diminish in any way the opportunities outlined in the visionary White Paper. My hope is that the strategy will take account of inherited flaws in the present system.

The White Paper touches everybody and seeks to better the lives of all of us. It captures the new mood that free trade is a moral as well as an economic imperative. It equips our country with the means to prosper in a global market, free from resort to protectionism. It speaks of innovation and advanced technology not in terms of profit and balance sheets alone; it speaks with rather unusual warmth and humanity of how we and those who follow us might live happier, more fulfilled and contented lives.