Economy: Government Policies

Lord Haskel Excerpts

Thursday 24th March 2011 Lords Chamber

[Lord Haskel]

My Lords, I, too, thank the noble Lord, Lord Lawson, for giving us the opportunity for an early debate on the Budget. The noble Lord urged the Chancellor to make a virtue out of unpopularity. His noble friends on the Lib Dem Benches must be confused, because they have the unpopularity without the virtue. As usual, we will have to wait for some time to see if the Chancellor's aspirations contribute to growth, and what will be the impact of the small print.

I will deal with one small aspect of the Budget, for the results of which we will not have to wait. Before I do, I congratulate the noble Lord, Lord Hussain. I am sorry that he is not in his place, because I see him as a kindred spirit. I, too, am an immigrant who built up a business. Mine was in Yorkshire rather than Rochdale. I, too, passed the Alan Sugar test: I put my house on the line. I say to the noble Lord, Lord King—I am sorry that he has just gone out—that I, like my noble friend Lord McFall, see business and industry as part of society. That is why I am on these Benches, not on those. The separation of business and society concerns me. I have never known a time when the two were more divided. Sadly, this is a time of hostility between them.

The cause is not difficult to find. We have seen extravagant pay deals, not only for bankers but for other executives. The noble Lord, Lord Oakeshott, spoke of tax avoidance. Businessmen move their businesses around the world to pay less tax. Martin Sorrell of WPP said on the radio this morning that now that he has got his way, he will move his business back. All this gives the impression that a business is just a money-making machine for a few lucky people—so much for the idea that we are all in this together and are all sharing the pain. Andrew Whitty, the chief executive of GlaxoSmithKline, one of our major corporations, strongly warned against this last week. I say, good for him.

However, the Budget seems to indicate that the separation of business and society is what the Government want. Does it matter? It does, because in today's business world it is from this interface that much growth and innovation come. We see this in the new ways in which we communicate with each other—and there is a lot more to come. There are new ways of keeping healthier, new and better ways of learning, new and imaginative ways of living a greener lifestyle, and new ways of harnessing our experiences as we go through life. Venture capitalists in America call this the experience economy. The Government are looking for innovative ways in which business can deliver public services—cutting back the state, as the noble Lord, Lord Lawson, put it. Surely it is from this interface between business and society that the new ideas will come, yet the Government's actions are going in the opposite direction.

Perhaps I may give a couple of examples. One is apprenticeships. Youth unemployment is a social problem crying out to be tackled and it is one where business can play an important part. The noble Lords, Lord Renton and Lord Griffiths, spoke about this. The Prime Minister said that we want to make all young people,

“feel more part of our country”.—[Official Report, Commons, 23/3/11; col. 947].

So why are the Government not doing something for all young unemployed people instead of speaking about 40,000 or 50,000 apprenticeships? Only one firm in 10 offers apprenticeships. Yes, we are told that there will be new technical colleges, but society is going to have to carry the pain of the resentment of the many who are left out.

Many noble Lords have welcomed the fact that planning restrictions are to be eased. This is the very procedure that protects society but the Government have chosen to listen to the special pleading of business. The problem with planning is the inefficient way in which it is managed. Yes, that could well be improved by localising it but councils have been told in this Budget to come down firmly on the side of business. How they may deal with this apparent contradiction in terms is a mystery to me, but it only reinforces the divisions.

The Budget is going to reduce red tape. Wonderful. Every Government in every Budget have promised to do that. However, the purpose of regulation is also to protect society, to ensure that we have clean water, clean air, safe food, safe transport, and protection for our children and old people. The way to cut regulation is not just to listen to the special pleading of business about the things that they find burdensome but to remove the regulations which no longer serve society. There are plenty of those. Until this attitude is changed to one that combines the interests of business and society, the promised bonfire of regulations will continue to be a damp squib.

We are told that our public servants stand in the way of innovation and that our deficit is caused by a bloated public sector. Yes, our Civil Service probably does need restructuring and modernising, but why is this not done by showing dynamic leadership and by modernising the way that the public service works with new structures, new equipment and new models? Then, those involved will want to make it happen. But no. The Government choose to demotivate and demoralise the very people who are going to have to implement their new policies and the result is yet more division.

Given the limited things that the Government can do, why are they cutting off this promising area of jobs and growth, or can this just be left to the market? Certainly in the past 20 years standards of living have risen and businesses have grown. Perhaps much of that was based on the credit boom, on the devaluation of sterling, and on North Sea oil, which the Government are milking again, but at least business and society shared the benefits. However, now that has come to an end and it cannot be repeated. The world has moved on to a place where innovation, new jobs and new businesses have as much of a social ingredient as a technical and scientific one. Surely sensitive and sensible involvement from the Government and regulators will help to speed up this kind of innovation and growth, moving it along. However, I am afraid that I see no signs of that in the Budget or, indeed, elsewhere in the economic policies of this Government.