Amendment of the Law

Lord Vaizey of Didcot Excerpts

Monday 26th March 2012 Commons Chamber

[The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey)]

Your instructions have been noted, Mr Deputy Speaker.

May I begin by apologising to the House for the absence of my right hon. Friend the Secretary of State? As I am sure the House will know by now, his wife gave birth to a beautiful baby girl last week—appropriately enough, during Department for Culture, Media and Sport questions—and so he is enjoying his paternity leave. I am sure that the whole House will want to join me in passing on our good wishes to the whole family. I, for one, wish that the Secretary of State was here, because this is, I believe, the first time that DCMS, as a Department, has opened a Budget debate, and it is a testament to his skill and vision that he has put the Department at the heart of the Government’s strategy for growth. DCMS is now an important economic Department that is responsible for broadband and digital infrastructure, internet and media policy, and our world-beating creative industries. Policies pursued by this Department will contribute significantly to the growth of the UK economy.

I want to use today’s debate to remind the House of how well placed this country is to take advantage of the technology revolution. The Chancellor has set out our ambition to turn Britain into Europe’s leading technology hub, and we are well on course to achieving that. According to a Boston Consulting Group report published this month, the UK is the top internet economy in the G20; we purchase more online than Germany, the United States and South Korea. We have a huge range of successful technology companies in this country. It is worth reminding the House that BT, for example, is a global technology company with a presence in 170 countries. ARM supplies the chips for smartphones and tablets. Imagination Technology provides the graphics for Apple products. Ubiquisys in Swindon sells femtocells to the French and the Japanese. Neul, based in Cambridge, is developing new wireless network technology. In Tech City, we have a rapidly growing technology hub in the heart of London’s east end, which in just three years has grown from about 15 companies to more than 300.

My personal favourite is the motor sport industry, which is worth £5 billion a year and exports 70% of its products. I was particularly tickled by an anecdote—[Interruption.] I cannot believe that Opposition Members are groaning at an anecdote. I feel rather deflated. When a German Formula 1 company launched its German engine, branded by Mercedes-Benz, with Michael Schumacher, a German driver, I was told that it was designed and manufactured in the UK. [Hon. Members: “Hear, hear!”] I thank Government Members for approving of my anecdote.

[Andrea Leadsom (South Northamptonshire) (Con)]

I am delighted about that, because it was made in my constituency.

[Mr Vaizey]

Is it not a wonderful coincidence that I also get to suck up to one of the most important Back Benchers in the House?

Next week, a BDO report will say that telecoms, media and technology industries will be the success stories of 2012 in the UK, with software investment growing and investment last year at an all-time high. Innovations such as cloud computing are set to create more than 200,000 jobs in the UK in the next three years.

[Tristram Hunt (Stoke-on-Trent Central) (Lab)]

Is it because the Department for Culture, Media and Sport is no longer interested in art and culture that it has purged Dame Liz Forgan from the Arts Council?

[Mr Vaizey]

That gives me a chance to respond to one of the Labour party’s most important Back Benchers. If he thinks that we are not interested in art and culture, why is he never out of my office talking about art and culture and, in particular, our joint campaign to save the Wedgwood collection?

To support technology and innovation businesses we have protected the science budget and are funding new science capital projects, including £158 million for e-infrastructure. The total increase in capital funding since December 2010 is £495 million. I feel that point keenly because tomorrow is the 10th anniversary of the agreement between the previous Labour Government and the Wellcome Trust to build and site the Diamond synchrotron in my constituency. I must say, in a moment of cross-party unanimity, that the last Labour Government had two of the finest science Ministers we have seen in Lord Sainsbury of Turville and Lord Drayson. We have, of course, gone one better by appointing our own Minister for Universities and Science, who has two brains.

We will have increased the level of the small company research and development tax credit from 175% to 225% by April 2012. That is the largest programme of support for business innovation in the UK and will provide support of more than £1 billion a year. We have made it more attractive to invest in smaller high-risk companies by raising the tax relief available under the enterprise investment scheme. We have established 24 enterprise zones throughout England. We have introduced catapult centres, which will form a new elite national network to act as a bridge between academia and business. They will cover sectors such as high-value manufacturing, cell therapy and offshore renewable energy. The Technology Strategy Board is investing at least £200 million in the current spending review period to make that happen.

We need to build on that success and I am pleased to say that the Budget maintains the momentum. We are cutting taxes on patents through a 10% patent box corporation tax worth some £900 million, which will be introduced next year and phased in. We are extending enterprise zones to Scotland, Northern Ireland and Wales. We are investing £100 million, which will leverage a further £200 million, in new university research facilities. We are introducing transport systems and future cities catapult centres. In a country with the world’s second largest aerospace industry, we have announced an investment of £60 million in a new aerodynamics centre to encourage innovation in aerospace design and the commercialisation of new ideas. Those measures will ensure that our world-leading universities and innovative small businesses can come together with global companies to commercialise new technologies, ideas and inventions in a wide variety of sectors.

[Ian Lucas (Wrexham) (Lab)]

Will the hon. Gentleman tell the House where the aerodynamics centre is to be based?

[Mr Vaizey]

May I congratulate the hon. Gentleman on his iPad cover, which is the same colour as a ministerial red box? It looked like he was using his ministerial red box. That is a rather nice conceit for an ex-Minister.

[Ian Lucas]

It’s the Budget.

[Mr Vaizey]

Oh, it was the Budget book. It looked like an iPad cover. Forgive me; I keep mistaking the hon. Gentleman for somebody who is on top of new technology. We have not yet decided where the aviation centre will be sited, and it may not even be in one place. It may be sited in two or three different areas.

To become Europe’s technology hub, we need world-leading digital infrastructure. The average broadband speed in the UK is already 7.5 megabits a second. In Northern Ireland, almost all the population have superfast broadband, and in England almost two thirds of the population do. In England, Northern Ireland and Wales, roughly three quarters of the population now have broadband. UK broadband coverage is in fact almost universal, with 91% of the country having access to speeds above 2 megabits a second, putting us in the top 20 countries worldwide. We are far ahead of many countries, including Morocco, where only one in 10 of the population have access to fixed-line broadband.

We have come a long way, but we need to go further. We are already investing £530 million in rural broadband, which will deliver superfast broadband to 90% of the country by 2015, two years earlier than Labour planned. More than half of our local broadband projects have been approved, and all will be approved by the end of this year. Procurement for some projects will proceed in the next few months.

[Mrs Anne McGuire (Stirling) (Lab)]

Would the Minister like to come to the village of Balquhidder in my constituency and tell people that they might be better off living in Morocco? I see that the Chief Secretary is trying to tell him where Balquhidder is. In that village people still have dial-up, not even slow broadband, never mind fast or superfast broadband.

[Mr Vaizey]

First, that is why we are spending the money that we are, and secondly, we are working in partnership with the Scottish Government, so the right hon. Lady should have a word with them if she wants to put her constituency at the forefront of broadband roll-out in Scotland.

We will have provided universal coverage by 2015 without Labour’s telephone tax, which in any event would not have raised sufficient money to do the job. Not only do we have the most ambitious rural broadband programme, but the Chancellor announced in the Budget new measures to upgrade the coverage in our cities. The UK’s four capitals, Manchester, Birmingham, Bristol, Newcastle, Leeds and Bradford will share a £100 million pot to ensure that they are among the best-connected cities in the world.

[Jim Dowd (Lewisham West and Penge) (Lab)]

On that subject, will the Minister have a word with the London borough of Bromley—it is allegedly in London, although it is not—which is obstructing the implementation of superfast broadband simply because it is an out-of-London, Tory-controlled borough that does not know any better? Will he exhort it to wake up to the idea of tomorrow rather than living in yesterday as it always does?

[Mr Vaizey]

Without adopting the hon. Gentleman’s language—I would certainly never describe Bromley or its council as out of touch or living in the past—I accept that he makes an important point that is worth labouring. It is vital that local authorities work with broadband providers to ensure the roll-out of broadband, and we are providing the money and working with local councils. We understand why planning regulations are in place, but if they are used in a way that restricts broadband roll-out, councils will be denying their residents the opportunity to access a very important service. It is vital that local councils take a proactive approach and ask not how to apply the planning rules but how to make it as easy as possible to get broadband to as many of their residents as possible.

[Bob Blackman (Harrow East) (Con)]

Will the Minister elucidate further on the benefits to the whole of London of the roll-out of ultrafast broadband, which will happen much faster as a result of the new initiatives in the Budget?

[Mr Vaizey]

Ultrafast broadband will of course benefit London, and across the 10 cities that I mentioned, the Chancellor’s Budget means that 40,000 businesses and 200,000 households will get ultrafast broadband. London is also getting it through private sector providers, to which I will turn in a moment. It is also worth noting that Virgin Media will provide free wi-fi on the London underground during the Olympic games. Some 3 million people will be able to get access to high-speed wi-fi in the 10 best-connected cities. The Chancellor also announced in the Budget an additional £50 million, which will be available to ensure that ultrafast speeds are available to the UK’s smaller cities.

I said in reply to my hon. Friend that the private sector is doing a huge amount to speed broadband roll-out. I can announce that this week, Virgin Media, after £110 million of additional investment—investment over and above the £600 million it invests every year—will complete the upgrade of its network, so all 13 million premises covered by it, which is about half the premises in the UK, will be able to access speeds of up to 100 megabits a second. Average speeds are set to be around 40 megabits a second, which makes Virgin Media’s broadband network the fastest in the world. [Interruption.] From a sedentary position, an hon. Lady accuses Virgin Media of bribing me to say that. I am not sure she will say that outside the Chamber.

[Ian Lucas]

Virgin broadband is not available in north Wales. The problem, as the Minister will hear from Government Back Benchers, is access to universal broadband, which the Government delayed from 2012 to 2015. What will he do about increasing services to ensure that we have universal broadband, the absence of which is preventing businesses from making progress in large parts of the country?

[Mr Vaizey]

I first need to get the hon. Gentleman an iPad—[Interruption.] He has one. At last he has an iPad! We have given £10 million to north Wales to put in place superfast broadband. As he well knows, we will get superfast broadband to 90% of the country two years before the Labour Government promised. We are not going to impose Labour’s telephone tax, which would have hit consumers and businesses. We will have the best superfast broadband in Europe by 2015—[Interruption.] My colleagues are saying from sedentary positions that that sounds excellent; it is excellent.

Having praised Virgin Media, let me also say that BT is investing £2.5 billion in rolling out broadband. Indeed, it has accelerated its plans so that it will deliver fibre to two thirds of the UK by 2014, a year ahead of schedule. It has already delivered to 7 million premises, and is currently adding an additional 1 million premises—the equivalent of the number in Singapore—every three months.

[Alun Cairns (Vale of Glamorgan) (Con)]

Following the point made by the hon. Member for Wrexham (Ian Lucas), does my hon. Friend the Minister recognise the added complication because of the delays that the Welsh Government have introduced in the roll-out of superfast broadband, despite the money being made available swiftly by the UK Government?

[Mr Vaizey]

My hon. Friend makes a very good point. Because we believe in devolution and localism, the implementation of the plans is down to the Welsh and Scottish Governments. It is therefore up to them to roll them out as quickly as possible. I am sure the hon. Member for Wrexham (Ian Lucas) will send an e-mail from his iPad to the leader of the Welsh Assembly Government to tell him to pull his finger out.

Ten million premises will be covered by BT by the end of the year in one of the largest engineering projects the country has ever seen. Those areas will get speeds of up to 80 megabits a second.

Mobile broadband is becoming increasingly important, with more people purchasing smartphones. Last year, the Chancellor announced an additional £150 million to help with mobile broadband coverage. By 2015, that will extend mobile coverage to 60,000 rural homes that have no mobile connection whatever, including, perhaps, villages in the constituency of the right hon. Member for Stirling (Mrs McGuire), as well as along at least 10 key roads. We will also continue to look at how we can improve coverage on our railways.

At the end of this year, we will auction spectrum that will allow mobile companies significantly to increase their capacity, as well as offer faster speeds to their customers, and we continue to make progress on our plans to release some 500 MHz of the public sector spectrum.

World-leading digital infrastructure is the cornerstone of economic growth in the 21st century. Some estimates show that a 10% increase in broadband penetration can deliver a boost of up to 1.4% of gross domestic product. By the end of this Parliament, at least 90% of the country will have superfast broadband; our great cities will have ultrafast broadband; and 60,000 rural homes and businesses will have mobile coverage for the first time.

As the House knows, the UK has some of the most successful creative industries in the world. I know the whole House will wish to congratulate One Direction on topping the US charts with their debut album—a feat not matched by either the Rolling Stones or the Beatles. Adele’s “21” is the best-selling digital album of all time, and for the first time in 25 years, UK acts were at Nos. 1, 2 and 3 in the US charts. We have the second- biggest music exporting industry in the world, and our UK animation industry has a huge impact worldwide. In 2010, Peppa Pig’s UK licensing and merchandising sales were £200 million alone.

Last year saw the most UK film production activity ever—it grew by 7% to £1.16 billion. UK television formats dominate television schedules all across the globe, accounting for two in every five global programmes, and of course “Downton Abbey” has continued UK success at the Globes. Exports of UK television content are the second highest in the world, worth more than £1.3 billion per year, having grown by more than 20% a year for about the last decade. [Interruption.] The right hon. Member for South Shields (David Miliband) looks astounded by this success. I urge him to get out more and see what some of our successful creative industries are doing.

[David Miliband (South Shields) (Lab)]

I was actually wondering how many more pages of this drivel we had to sit through. The hon. Gentleman said that infrastructure is the seedcorn and the basis of future prosperity. How, then, does he explain the fact that 45% of the infrastructure investment that the Chancellor announced in the autumn statement will not happen until 2014-15?

[Mr Vaizey]

I have just spent two or three minutes talking about the success of the UK music, animation, film and television industries, and the right hon. Gentleman, who was meant to be the Labour leader, describes that as utter drivel. Let the message go out to the UK creative industries that one of the most senior members of the Labour party regards their success as drivel. And I make no apology for continuing to list some of those successes.

BBC Worldwide increased international sales by almost 10% last year. We are the European hub for the video games industry, with 35% of video games software sold in Europe being developed by UK studios, and almost half of the world’s top 100 development studios based in the UK, generating sales of almost £2 billion a year. The visual effects hub in Soho is home to four of the largest visual effects companies in the world. We have one of the most innovative and successful advertising industries in the world, and it is growing despite the recession. We have one of the most successful and creative fashion capitals anywhere in the world, with Burberry, a UK company, increasing its sales by a quarter. And, of course, our largest creative industry, the UK publishing sector, has a turnover of almost £20 billion.

We want to build on this success. We do not regard it as drivel. We regard it as vital to our economic success. That is why we will introduce a tax credit for our video games and animation industries and our high-end television production sector. We are confident that this will bring increased investment and growth in these sectors too.

[John Mann (Bassetlaw) (Lab)]

rose—

[Mr Vaizey]

I give way to an hon. Gentleman who normally does not spout drivel. I hope that will remain the case.

[John Mann]

I thank the Minister for generously giving way. I would not regard his speech as drivel at all. It is a superb enunciation of the successes of the last Labour Government. Given the lead time required for investment and innovation, I look forward to hearing what he predicts his legacy will be in two, three and four years. Will it be as good as that of my right hon. Friend the Member for Dulwich and West Norwood (Tessa Jowell) and her colleagues who worked in the Minister’s Department so assiduously over the past decade?

[Mr Vaizey]

They cannot make their minds up. On the one hand, the success of the UK’s creative industries is drivel; on the other, the success of Adele and her biggest-selling digital album in history is down to the Labour party. I would not claim that, but I would claim instead that we are putting in place the infrastructure for broadband investment to support high-tech innovation in this country. Through a series of initiatives, such as catapult centres, investment from the Technology Strategy Board, research and development tax credits and the patent box tax credit, we continue to support investment in our technology industries. Specifically through our tax break for video games, animation and high-end television production, we will support our creative industries and spur them on to greater success. I have already heard from some of the UK’s most successful animation companies. They are now planning to increase investment in their businesses, recruit more staff and make more programmes here in the UK. [Interruption.] Mr Deputy Speaker, there is a Labour Member standing next to you shouting at me. Could you encourage him to make a formal intervention at some point?

American studios are lining up to work with our talented production staff and amazing studios. British developers will be able to take advantage of the 8% growth in the worldwide video games industry.

[Jim Dowd]

I am not sure whether my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop)—to whom the Minister refers—wants to intervene, but if so, I am taking his slot. I do not want to make a partisan point, because although our understanding of the importance of the creative industries to this country and this economy, starting under the last Government, is well established, I congratulate the current Government on continuing that process, with the patent box and all the benefits that it will create. However, will the Minister prevail upon the Secretary of State for Business, Innovation and Skills and his colleagues to understand just how important creativeness and ingenuity are to this economy? In the light of the Hargreaves review and the role played by the Intellectual Property Office, it is not just product being made available free to consumers that is important, but ensuring that those who create and innovate get the best deal possible. That is a supreme role for this Government to perform.

[Mr Vaizey]

I thank the hon. Gentleman for that intervention—I hesitate to say that it is good to hear from somebody who knows what they are talking about, in case he makes a hostile intervention in a minute. I absolutely hear the point he makes. The protection of intellectual property is paramount. We need to bring the intellectual property regime up to date, but I for one do not want to rob Peter to pay Paul. It is absolutely right that content creators are paid for what they create.

Let me say something at which the whole House will rejoice: I am coming to the end of my remarks. However, if all those who said that they wanted to make an intervention still want to, they have a small window, as I perorate towards my conclusions.

[Sarah Newton (Truro and Falmouth) (Con)]

I am grateful for my hon. Friend’s cue. Creative industries are vital to Cornwall, but so is creating high-quality food products. There is growing concern throughout Cornwall about the possible unintended consequences of the Budget and about the undoubtedly real threat to the Cornish pasty of the pasty tax. May I seek my hon. Friend’s reassurance that the concerns of pasty makers in my constituency are being listened to and that a solution can be found?

[Mr Vaizey]

I thank my hon. Friend for that intervention, which I know the Chief Secretary to the Treasury will respond to fully when he winds up. I congratulate her county on receiving the award for being Britain’s best tourist destination for the third year, and I congratulate her on the extraordinary energy with which she represents her constituency. She and I have had many meetings to discuss various issues in her constituency. [Interruption.] You are looking at the clock, Mr Deputy Speaker, so I shall wrap up; however, let me tell my hon. Friend that I hear what she says about the Cornish pasty issue, and I am assured that the Treasury is looking at it seriously.

With a Budget that introduced the largest ever increase in personal allowances, so as to reward work, the lowest corporation tax rate in the G7, so that Britain is open for business, tax reliefs for our creative industries, increased investment in science and technology, and plans to create the best broadband network in Europe, we are well placed to realise the Chancellor’s ambition of making Britain the technology hub of the UK. I do not think that our success to date is “drivel”; I think that Britain is known around the world for its creativity and the success of its creative industries. We on this side of the House intend to ensure that we maintain and increase that success.

[Ms Harriet Harman (Camberwell and Peckham) (Lab)]

Let me begin with a double congratulation: to the Secretary of State and Lucia on the birth of their daughter, and to the shadow arts Minister and Rachel on the birth of their daughter. I congratulate both Members on their new babies, and also on taking paternity leave, which is a thoroughly good thing—mind you, I imagine that the Secretary of State feels well out of the debate today. Clearing up after a baby is much easier than clearing up after the mess of this Budget.

This is a Tory Budget, backed by the colluding Lib Dems—two parties that told us they were coming together in the national interest. How can it be in the national interest to fail on jobs, to fail on growth and to fail on fairness? Let us tell it how it really is: two parties coming together to give a tax bonanza to millionaires and a kick in the teeth to pensioners.

This is a Budget built on economic failure, with more than 1 million young people looking for work, economic growth at just half what can be seen in the US and the Government set to borrow £150 billion more than planned. What was needed was for the Government to come up with a Budget for jobs and growth, and they have failed.

It is good that today’s debate is focused on the creative industries, because they must be at the heart of economic growth in the future. We are good at them; they put Britain on the map; we are renowned for our arts and our culture, our film, TV and video games and our music, design and fashion. There is huge potential for growth there—growth in jobs, in exports and in contributions to gross domestic product. We needed the Government to come up with a plan for jobs and growth in the creative economy, but they have not.

The Government announced a tax break for high-end television, animation and video games, but these measures are strangely familiar. As my hon. Friend the Member for Bassetlaw (John Mann) said, it is something of an “homage” to the policies of the last Labour Government. It was, of course, the Labour Government who introduced the first tax breaks for the creative industries with our film tax relief, which has been hugely important for getting films made in Britain, helping our pioneering special effects industry and backing our studios such as Pinewood and Shepperton. The only original film policy this Government have come up with is axing the Film Council.

As for the tax break for video games, who first proposed this for the games industry? It was Labour.

[Mr Vaizey]

To continue the “homage” theme, it was the policy of the last Labour Government to merge the Film Council with the British Film Institute.

[Ms Harman]

But certainly not to do what this Government have done—without any consultation or any discussion at all. We certainly promoted the film industry.

To return to the tax break for video games, we first proposed a tax break for the games industry, and we put it in our Budget in 2010, but what did the Tory Chancellor say in his very first Budget? He said that

“we will not go ahead with the poorly targeted tax relief for the video games industry.”—[Official Report, 22 June 2010; Vol. 512, c. 175.]

And what did he do? He axed it. For the UK games industry, it could have been game over. He is introducing the tax relief now, but this misjudgment and delay have come at a price. Our video games industry was the third biggest in the world and has now fallen to the sixth. Many jobs have been lost, with nearly half going abroad to countries such as Canada, lured by its tax relief.

This policy, then, is not an original; it is a cover version—and like most cover versions, just not as good as the original. Although tax credits are worth while on their own, they are not enough to ensure that Britain fulfils its potential as a global hub for the creative industries. Just as this Government do not have a plan for jobs and growth in the economy, they do not have a plan for jobs and growth in the creative industries.

Where is the long-awaited communications Green Paper? The Minister did not say a word about it—not one word. Perhaps it is still waiting for some high-level policy input from a premier league Tory donor.

Where, too, is the action on protecting intellectual property? This is a fundamental issue for the creative industries—the bedrock of the knowledge economy. A tax break helps to boost investment, but more investors would be more confident if they knew that the product to which they were committing was not vulnerable to theft on an industrial scale. If an industry has been given a tax break, it makes it even less sensible to stand by and watch any of the value drain away through IP theft. The last Labour Government recognised that, which is why in 2010, we passed the Digital Economy Act with cross-party support. It needs to be implemented now. We already have the Digital Economy Act; it would be good to go with it. Professor Hargreaves has conducted another review of the same issue, but what the industry and economy are crying out for is action.