Monday 15th June 2015

(9 years ago)

Lords Chamber
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Lord Leigh of Hurley Portrait Lord Leigh of Hurley (Con)
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My Lords, I welcome the chance to speak in this debate today and, in doing so, refer your Lordships to my registered business interests, which include advising companies on direct investment from overseas.

I join the congratulations to my noble friend Lord Maude of Horsham. He and I first worked together in 1995, when I served on the tax group sub-committee of the DTI Deregulation Task Force. Sadly the Deregulation Task Force was abolished by Labour in 1997. We then worked together when he was chairman of the Conservative Party—a post it has not abolished—and thereafter I watched in admiration his work in the Cabinet Office, where he saved the taxpayer not just millions or billions but tens of billions of pounds. The country is lucky that he has chosen to dedicate the next stage of his career to public service, following, as has been said, in his father’s footsteps. He will be a great asset to the House.

I want to talk about how we should be building on our legacy and to answer the oft asked question: what should Britain’s place be in this world? At least one part of the answer is: as an open trading nation, exporting the world over and attracting investors into the UK. We have history. In 1596, when Captain Benjamin Wood set sail, it was the first attempt by Britain to find trade routes to China, a land thought to contain untold riches and wonder. He was, I am sorry to report, never heard from again. Fortunately, his successors fared better and, in 1637, a Captain Weddell landed in Canton and our trade relationship with China began in earnest. As many will know, we enjoyed similar successes elsewhere in the globe and became the world’s pre-eminent trading nation, a capital of a newly globalised world.

Coming to the present day, we should start by showcasing the incredible story unfolding in foreign direct investment. While much emphasis is often placed on the importance of exports, we also need to encourage FDI. This should not be criticised as “selling off the family silver” but rather the reverse. In FDI we have consolidated our leading position and, once again, remain the number one country in Europe, as the Minister told us. This is a position we have held for four years in a row and we are second in the world to the United States.

The UKTI 2013-14 report shows there were 1,773 individual projects with UKTI involvement, and the majority of these took place. We look forward to the Minister’s report next month on the years 2014 to 2015. These projects have helped to create and safeguard 111,000 jobs. These are not just any old jobs but future-facing jobs, with 37,000 of them coming from an advanced manufacturing base.

The investment is coming from all over the world, too, and not only the obvious places. As the noble Lord, Lord Bilimoria, has pointed out, it is coming from growing markets such as India. We all continue to hope that the rest of the European economy will soon be as fast growing as ours.

There are many reasons why our economy is growing like it is and these reasons resonate with overseas investors. Chinese investment into the UK is growing at an astonishing 85% per annum. I was privileged to be part of the largest trade mission to China, assembled during the previous Parliament, in which the Prime Minister conceived the programme Partnership for Growth. That trade mission was full of SME businessmen and women seeking to do business in China. So, while the EU will always be a key trading market for the UK, we are leaving nothing to chance in the rest of the world—hence the mission to China, which is already bearing fruit. Exports to China have doubled in the past five years.

Whereas generally exports are improving, there is still more to do. The trade deficit has been mentioned. This is significantly down as an average of GDP to less than 2%, as opposed to 2.5% under the last Labour Government. However, I am sure the Minister will agree that there is often too much focus on the headline number. The latest figures for the most recent month, April, which have just been published, show that the UK deficit was £1.2 billion. In fact, looking behind those numbers, it comprises an £8.6 billion deficit on goods and a surplus of £7.4 billion on services, which is a dramatic difference—well done the services sector, including of course, the legal services championed by the noble Lord, Lord Clement-Jones.

Turning to my industry, the financial services industry, I note that in his 2013 Budget, the Chancellor announced the establishment of the Financial Services Trade and Investment Board, now headed by Sue Langley, and this and other UKTI initiatives are clearly having an effect. But perhaps my noble friend can explain how much of UKTI’s resources will, hereon in under his watch, go directly to exporters rather than to internal initiatives. I am aware of the medium-sized initiative, the MSI, but remain concerned that in the UK only one in seven medium-sized businesses export outside the EU, whereas in Italy one in three medium-sized businesses export outside the EU. We are behind the curve in respect of SMEs.

The UK’s reputation as an economic powerhouse has been steadily restored over the last five years. Businesses are investing here, helping to create more jobs and in turn opening up new markets for export. Brand Britain is as strong as it has ever been, respected by consumers and businesses the world over. As my noble friend Lord Risby has pointed out, one reason for this is the transformation of the Foreign Office, mainly under William Hague, which has become a pro-business, helpful resource to the UK economy, dramatically better than its previous indifferent approach to something that it regarded as mere trade. In the last Parliament, we also saw much-needed stability in the corporation tax road map—a clear sign to businesses and investors of the direction in which the Government want to take the economy.

I would, though, make just one point, and that is on the role of the FCA, which is relevant to trade and exports. Sometimes, through its overzealous enforcement of its own rules, and sometimes its opacity and inefficiency when it comes to approval, firms that want to find overseas investors, even where FCA-regulated business is only a tiny part of their revenues, require FCA approval. I have seen with my own eyes businesses with turnovers of £30 million or £40 million, which happen through their websites to offer customers consumer credit—or opportunities to buy goods under a consumer credit licence, which may be for as little as £10,000—have to apply to the FCA for approval, which can take at least a month and frequently six weeks. It is, of course, important that firms operating here are properly regulated, but we need to consider a more streamlined approach and perhaps a de minimis level to better enable more foreign direct investment, not just in financial services but in trading companies.

On the core subject of this debate, I am worried that the idea that trade deals are somehow bad for the countries involved is gaining credence. This is of course pure economic illiteracy, but look at President Obama in the US being potentially denied his trade promotion authority, which would allow him to fast-track agreements, or the trade unions here in the UK criticising the Transatlantic Trade and Investment Partnership. This would in fact boost growth and create jobs, not just here but right across Europe—and heaven knows the eurozone needs all the help it can get as our biggest single export market continues to flail, hurting our exports. Trade deals ultimately make the world a richer place by breaking down artificial barriers that only increase inefficiency and waste. It is incumbent on us who understand the benefits for the UK to do a better job of explaining how this is the case, because I certainly believe that the more agreements we can make with key trading partners, the better off the whole of the UK will be.

I will point to just one example, South Korea. Since the agreement was signed, exports to South Korea have doubled—up 50% excluding oil—and we now have a substantial trade surplus with South Korea. We need more trade deals and I am sure that we will learn of some soon from my noble friend. Those who oppose such deals are hurting the UK and we need to drown them out with the simple truth that they are good for the whole of Britain. I am sure that my noble friend, with his huge experience of government, will want to ensure that the proper message is delivered to the public about the importance of trade.

I commend the last Government, in particular my noble friend Lord Livingston and UKTI, for continuing to bang the drum for the UK to bring in that inward investment we need and boost our exports to reduce the trade deficit still further. That, combined with more trade promotion and agreements with key partners across the globe, will ensure that the UK continues to lead the world out of crisis and into more prosperous times. The world is very keen to do business with us. It likes our products and services, our rule of law, our quality of product and our efficiencies, and it likes our business-like approach.

The new business-friendly Government, whether in or out of the EU, will give confidence to many that this is the time to come here to the UK for business. Our future is enshrined in our past. Just as we sent ships into uncharted waters in search of new markets 400 years ago, I look forward to hearing how my noble friend will chart the course for us. I am delighted that we are proverbially doing so again.