Industry (Government Support)

Lord Willetts Excerpts

Wednesday 16th June 2010 Commons Chamber

[The Minister for Universities and Science (Mr David Willetts)]

I am delighted that we have had so many firsts in this debate. It is the first in which I have participated with you and other new Deputy Speakers in the Chair, Mr Deputy Speaker, and we very much welcome you. We have also heard the speeches from the new Chairs of the Select Committees that will take a close interest in our deliberations: I welcome the speeches by the hon. Members for West Bromwich West (Mr Bailey) and for Ellesmere Port and Neston (Andrew Miller).

Above all, we have had some very welcome maiden speeches in the debate, and I pay tribute to the excellent speeches from new colleagues, including my hon. Friend the Member for Bracknell (Dr Lee). He spoke as a doctor, and also with great passion for space and the importance of the space industry. That cause is also close to my heart, and I welcome him to the Chamber. I hope that we shall be able to work together on that important subject.

We also heard from the hon. Member for Bolton West (Julie Hilling), and I agree with her about the importance of unionlearn. It is an excellent and cost-effective way of spreading access to skills in the workplace. We heard from the hon. Member for Wansbeck (Ian Lavery), who spoke of the importance of the coal industry to his constituency. We also heard from the hon. Member for North West Durham (Pat Glass), who explained that her predecessor had been Hilary Armstrong, and that Hilary Armstrong’s predecessor had been Ms Armstrong’s father. We therefore welcome this radical break with the hereditary principle, and welcome the hon. Lady to the House. She also referred to socialism in her speech. We do not hear the word “socialism” in the Chamber very often, but we enjoyed her contribution all the same.

The hon. Member for Barnsley East (Michael Dugher) spoke with great passion about brass bands. Just occasionally, the meaning of the word “socialism” is a bit fuzzy when used by Labour Members, but, having heard his speech about brass bands, we now know that a socialist utopia will have been achieved when the Arts Council devotes as much money to brass bands as it does to the Royal Opera House. We very much look forward to the hon. Gentleman’s advocacy of that cause.

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

We’ll look into it.

[Mr Willetts]

I hope that all hon. Members heard that intervention.

We also had a maiden speech from the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop). That was particularly touching for those of us who were here in the last Parliament, because he referred to the sad loss of Ashok Kumar, who was held in high regard on both sides of the House.

As I was listening to those maiden speeches, I recalled a maiden speech delivered in a previous Parliament by a newly elected loyal Blairite Back Bencher who had previously been a London taxi driver. Many of us regretted that, in his new role, he would no longer be able to share his political opinions with us. However, we now have new Members who are certainly going to share their opinions with us in a most vigorous and effective way. Indeed, some newly elected Members are so vigorous and dynamic that they have already made their second speeches, which must be some kind of record. Among my intake in 1992, we had a competition to see which of us would first be referred to in the press as a senior Back Bencher, and I think that we have heard from several candidates for that title here today.

There was a paradox, however, in that many of these new Members, who are changing the character of our House, and rejuvenating and refreshing it by coming from all sides to bring fresh angles to the issues of the day, defined their political loyalties by historic disputes, especially disputes about the performance of our economy. I should like to set the record straight, especially for those Labour Members who have given such a caricature account of this country’s economic history.

In 1979—a year that clearly rankles with some Labour Members—manufacturing industry comprised 25.8% of the British economy. In 1990, when Baroness Thatcher lost office, as a result of the economic policies that Labour Members have been criticising today, manufacturing was down to 22.5 % of gross domestic product. In 1997, when we last lost office, it was 20.3% of GDP; and in 2009, it was 11.8% of GDP. So next time we have any sermons from Labour Members about what has happened to manufacturing industry, I hope that they will come to this House and be willing to accept the simple evidence from those statistics.

Perhaps I can give the House a second set of statistics on another important measure of the performance of our economy—business investment. In 1979, business investment was 13% of GDP. Business investment goes up and down, but there was a trend, and I regret to say that by 1997 that figure had fallen to 11.7% of GDP. In 2009, the last full year in which Labour was in office, business investment was 8.8% of GDP. When it comes to investing in the future of our economy and when it comes to manufacturing and the significance of the manufacturing sector, I hope that Labour Members will recognise the comprehensive failure of their years in office.

[Toby Perkins]

rose—

[Mr Willetts]

I have very little time.

Many Labour Members referred particularly to regional issues, and I have to say to them that of course we understand the concern about regional imbalances in our economy. In fact, another measure that deteriorated over the past 10 years has been the gap in GDP between different regions of our economy. If we are to tackle the problem of regional imbalances, we have to look objectively at the performance of regional development agencies. The report from the National Audit Office, published in March this year, made it clear that the NAO was

“unable to conclude that the regional wealth benefits actually generated”

by RDAs

“were as much as they could and should have been, and are therefore value for money.”

The report went on to refer to “weaknesses”, which

“in many cases, undermined the RDAs’ ability to make decisions and set priorities to maximise regional economic wealth”.

It concluded that RDAs were simply not doing the job they were supposed to do. That is why Government Members believe that RDA boundaries do not reflect functional economic areas; we wish to enable local enterprise partnerships to reflect better the natural economic geography of the areas that they serve. We are committed to replacing RDAs with local enterprise partnerships and we will invite local groups of councils and business leaders to come together to consider how they wish to form local enterprise partnerships.

[Mr Bailey]

rose—

[Mr Willetts]

I will give way to the Chairman of the Select Committee.

[Mr Bailey]

Will the right hon. Gentleman answer the query I posed in my contribution and tell us whether the money hitherto allocated to RDAs will follow through to the local economic partnerships?

[Mr Willetts]

We do believe that there are efficiencies to be made because of the very high overhead costs of RDAs. Government Members are committed to saving public money, and I have to say that one way in which we will do so is by saving money in the overhead costs of RDAs as we move to the new arrangements—and we make no apology for that.

We also believe that some roles currently carried out by RDAs can be scrapped to save money—regional spatial strategies, for example. We simply do not need them—full stop. There are other roles, including inward investment, that we believe should be led nationally and can be carried out elsewhere. We heard powerful examples from several of my hon. Friends of how individual RDAs were spending money around the world on regional offices; this type of function is better done at the national level. We believe that some RDA roles in sector leadership and taking responsibility for business support and innovation can also best be done nationally. That is the approach that we will take.

Our challenge is to rebalance the economy, to rebalance it in favour of manufacturing, to rebalance it in favour of investment and to rebalance it regionally as well. That is part of the inheritance that we take on from the previous Government.

[Esther McVey (Wirral West) (Con)]

I have listened to what has been said this evening, and I would like to raise the concerns of small business owners and family-run businesses in Wirral, Cheshire and Merseyside, as I have been part of the Merseyside Entrepreneurship Commission. What they say is drowning them is the burden and cost of regulation. Last year, in the north-west alone, it cost £8.3 billion and, since 1998, the overall figure has gone up by £11 billion a year. I want to know what we are going to do to help the small businesses across the north-west.

[Mr Willetts]

My hon. Friend is absolutely right. To indicate the challenge that we face, the previous Government introduced 20,938 new regulations. Between 1987 and 1997, 46 pieces of primary legislation affected the workplace. In the subsequent 10 years under the Labour Government, 92 pieces of legislation affected the workplace. In the Department for Business, Innovation and Skills, working with the Secretary of State, we have already identified on our forward programme 200 proposed regulations inherited from the outgoing Government that would have cost more than £5 billion to British business. Every one of those will be scrutinised, and we will roll back the burden of regulation, which is fundamental.

We believe in “rebalancing the economy”, and although those are the new words, I sometimes think that Winston Churchill, who served in the House as a member of the Liberal party and of the Conservative party, expressed it best when he said that he wanted to see finance less proud and industry more content. That is what the Government stand for. Getting a grip on the public finances is fundamental, because otherwise, as my hon. Friends the Members for West Suffolk (Matthew Hancock) and for Bromsgrove (Sajid Javid) described powerfully, interest rates will rise, which is a burden that British industry cannot be expected to bear. We need to bring down the burden of public borrowing and of the public finances.

The Government are not alone in believing in that—former Ministers who are now on the Opposition Benches signed up to such plans in government. They have failed today to give us any information about their plans to deliver the savings to which they publicly committed themselves. Let me remind them of what was in last year’s pre-Budget report with regard to the Department for Business, Innovation and Skills. It said that £300 million would be saved by reducing funding for adult skills budgets, and £600 million would be saved from higher education and science and research budgets. I agree with Labour Members about the importance of science, although it is a pity that they fought the last election on a proposal to save £600 million from higher education and science but have never informed us of exactly how they would have made those savings. We will now deliver the savings, and they are in no position to criticise the savings that they planned for but never had the guts to share with us and explain.

The Government are committed to a strategy for growth that involves an enterprise-friendly tax system, support for science, support for free trade and competition, a belief in investment in skills and training, and rolling back the burden of regulation, setting British industry free. As every contribution to the debate has revealed, there is a simple difference between the Government and Opposition. The Government believe in freedom, enterprise, initiative and competition, and the Labour party still believes in state control, higher public expenditure, more regulation, more RDAs, and more interference in the wealth-creating sector of the British economy. That is not the way we will recover from the recession in which the Labour party left the country.

The Government will commit ourselves to bringing down the burden of borrowing and managing the public finances prudently. In the Department for Business, Innovation and Skills, in which it is a privilege to work with the Secretary of State, we are determined to have a more flexible and dynamic industrial sector because of our commitment to free trade and free markets.

Question put (Standing Order No. 31(2), That the original words stand part of the Question.

The House proceeded to a Division.

[Mr Deputy Speaker]

I ask the Serjeant at Arms to investigate the delay in the Aye Lobby.