Business and the Economy

Mark Pawsey Excerpts

Monday 14th May 2012 Commons Chamber

[Vince Cable]

That sounds like the basis of a speech in the debate. The hon. Gentleman will know that we are pursuing forceful policies in respect of innovation, including the establishment of the catapults across the country—something entirely new and positive in the innovation sphere—without the need for legislative approval.

[Mark Pawsey (Rugby) (Con)]

In recognising the needs of small businesses in respect of parental leave, will the Secretary of State consider the matter of employees giving as much notice as possible to those businesses in order that they can make allowances for when staff are not going to be present?

[Vince Cable]

That suggestion sounds eminently sensible. I do not know the extent to which it is required to be incorporated in the law, but it seems eminently sensible to pursue it in guidance.

--- Later in debate ---

[Mark Pawsey (Rugby) (Con)]

I was pleased to see that the very first sentence of the Queen’s Speech referred explicitly to economic growth, the second sentence referred to the need to reduce the deficit, and the third sentence referred to the need to reduce the burden on business caused by regulation. All those things together show clearly that the Government’s No. 1 priority is to get our economy growing once again, and right now nothing is more important. I recognise that the Government have been in power for two years, and I understand the concern of people out in the country that the economic position remains difficult. However, it is important to remember the magnitude of the task that was faced by this Government when they took office in 2010 and the situation that the previous Government left us with. They had taken Britain to the brink of bankruptcy, with a structural deficit seven years before the recession began—the largest deficit in the developed world. [Interruption.] I know that we have heard all this before, but it is very important that people understand that the severe state of the public finances meant that it was not possible to sort out these problems overnight.

Looking further back, the decade starting in 1999 saw growth coming from the public sector. The public sector alone grew under the previous Government. The downside was that that led to an imbalance in the economy between the public and private sectors, creating a problem. The CBI says that the growth in the public sector in that period led to a crowding out of the private sector as the public sector accounted for a larger share of economic activity and resources. In order to rebalance our economy, it is important to look to the private sector, particularly the manufacturing sector.

As a Member of Parliament based in the west midlands, where there is a tradition of manufacturing, I say that we must recognise just how crucial the manufacturing sector is to our economy. It is worth £120 billion a year to our economy; 55% of the UK’s exports are in manufacturing; and in that sector there are more than 2.5 million jobs. But over a number of years there has been a steady decline in manufacturing.

Manufacturing as a proportion of the economy has almost halved, from 22% in 1997 to 12% in 2011. A key priority of this Government must be to redress that balance. How will we do that through the private sector? First, we must reduce levels of taxation, because doing so provides incentives, as people and businesses work harder to regain a greater proportion of their earnings. The UK will have the lowest rate of corporation tax in the G7 and the fourth lowest in the G20. On personal taxation, my view before the Budget was that now was not the right time to reduce the top rates of tax, and I retain that view, but it is clear that reducing the top rate of tax provides an incentive to high earners to base themselves and their businesses in the UK.

The second method of achieving growth through the private sector is getting rid of red tape. Unnecessary bureaucracy stifles our businesses and distracts business owners from the key tasks in hand: looking after customers, finding better ways of doing things and supporting their employees to do a good job. As someone who ran a business for 25 years before arriving here, I am pleased that the Queen’s Speech will reduce the regulatory burden.

It is true that the Government cannot create growth themselves, but they can create an environment in which businesses can thrive. A key part of the Government’s role will therefore be creating confidence. There is evidence that many companies, both large and small, have on their balance sheets the funds to expand, but are not doing so because right now they do not see a return.

In addition to maintaining consistently low interest rates, the Government can support business in respect of exports. In my business, if we were struggling in one area geographically and we found a market sector that was not doing so well, we looked elsewhere. If the UK economy and businesses are not going to grow because the UK market is flat or our partners in the eurozone are having difficulty, we need to address other markets and look to those that are growing, where often there is great respect for Britain as a brand. The Government can make it easier to export by helping to reduce the risks that companies, particularly small ones, face when trading in overseas markets. In my small business, when I was trading, we would not have given a thought to exporting. We need to change that mindset. There is some evidence that that is already happening; I have heard about that when talking to small businesses in my constituency.

UK Trade & Investment has done some great work. It supported an event on documentation run by the chamber of commerce in my constituency, bringing together advisers, bankers, linguists and others.

I have one concern, which my hon. Friend the hon. Member for Salisbury (John Glen) mentioned, about a measure that may hold back growth: the Bill to give flexibility to parents with newborn children. That is welcome for families, but such provisions can be a real headache for small business owners, because when an employee is absent, the job still needs to be done. Temporary staff are expensive, often lack knowledge about the way that a company works and may not have the right skills. I do not want to give the impression that I am against the rights of mums and dads to take much-needed time off with their newborn children, but we must have some regard to the disruption caused to small businesses.

In conclusion, the importance of the private sector, including the manufacturing sector, must not be downplayed. We need to reward success and create confidence, so that the businesses in our country can drive our economy forward.

[Sir Stuart Bell (Middlesbrough) (Lab)]

I am grateful, Madam Deputy Speaker, to be able to speak on the Gracious Speech and to follow the hon. Member for Rugby (Mark Pawsey), who made great play about private sector workers, as opposed to public sector workers. The public sector worker, of course, contributes to our society as a consumer and facilitates the private sector. I have never understood why Government Members make a distinction between those who work in the public and private sectors.

[Mark Pawsey]

I was not referring to workers. I was talking about the sectors in the economy as a whole and the need to rebalance the public and private sectors. I made no comment about public sector workers.

[Sir Stuart Bell]

I am grateful to the hon. Gentleman. It would be a fine thing if someone working in the public sector was able to move out of it into the private sector. Unfortunately, under the Government’s policies towards the public sector, 500,000 people will be made unemployed and put on the dole.

The right hon. Member for Mid Sussex (Nicholas Soames) wished to see an intellectual technology hub in the south-east. My right hon. Friend the Member for Birkenhead (Mr Field) wanted the same in the north-west. Middlesbrough has a leading business driver, DigitalCity Tees Valley, in the heart of the town. It has a games company, a web design company and a digital education company. Young people have embarked on such digital careers enthusiastically. Many of those young people are from far away places such as Canada and France, but some were home educated at Teesside university. That is a great credit to our university. Those people are creating one of the United Kingdom’s most vibrant digital hubs, which includes digital media, digital technology and creative businesses. I, along with others, will do all that I can to encourage and facilitate DigitalCity Business to ensure that it remains a success.

The hon. Member for Stroud (Neil Carmichael) referred to the business community. Middlesbrough is working to create a business improvement district in the heart of the town, following another 126 other towns and cities that have opted for such a district. We need the votes of the business community. If those votes come, they will provide the town with a stronger retail centre, and with a more vibrant and exciting centre that will attract people from outside the area.

Two weeks ago, the £35-million radiotherapy unit at the James Cook university hospital was opened by Princess Alexandra. The hospital is now described as one of the finest in Europe and is among Europe’s premier cancer treatment institutions.

I am glad to see the hon. Member for Redcar (Ian Swales) in his place because, as he will know, the first vessel has now been loaded up with steel from SSI UK’s Redcar plant for shipment to Thailand, a month after the blast furnace was reopened. The first shipment from Teesside consisted of 48,000 tonnes of steel slabs with a value of £18.5 million.

I am also glad to see my hon. Friend the Member for Hartlepool (Mr Wright) in his place, because Tata Steel has been awarded a major contract worth more than £100 million for its 42-inch mill, to provide gas pipelines for the gulf of Mexico. The pipelines will be manufactured and delivered in the second half of the year. Tata Steel employs more than 700 people in Hartlepool and across Teesside it has about 1,500 employees. My hon. Friend the Member for Llanelli (Nia Griffith) referred to what Tata is doing in her constituency. The company has invested £13 million in its Teesside site this year.

I will move on to the points in the Gracious Speech that relate to the European Union and the eurozone. The right hon. Member for Wokingham (Mr Redwood) made an eloquent and passionate speech on the future of the European Union, the eurozone and the euro, which seems like it was a long time ago. I was reminded of a phrase in the play “Julius Caesar”:

“men may construe things after their fashion,

Clean from the purpose of the things themselves.”

With all the dire talk today about the European Union, the eurozone and Greece, we will have to see what happens. The right hon. Gentleman put forward the novel view that a Minister—in this case the Secretary of State for Business, Innovation and Skills—can say something privately that he will not say publicly. I doubt whether that is the case with the Secretary of State or with any Minister.

The hon. Members for Solihull (Lorely Burt), for Stone (Mr Cash), and for Stroud and my hon. Friend the Member for Blyth Valley (Mr Campbell), who is no longer in his place, but who entertained the House and will entertain in tomorrow’s Hansard with his language from the north-east, talked about the European Union. The challenge for the European Union is how it can reduce deficits, create growth, and carry democracy with it. Those three elements are extraordinarily difficult.

I raised with the Prime Minister the other day the fact that on 23 May there will be a conference of all the European Union leaders. On the table at that informal conference will be a growth compact to go alongside the fiscal compact. It will be interesting to see whether the Prime Minister signs up to the growth compact, having not signed up to the fiscal compact.

The new President of France, who will be put into his new job tomorrow, talks of job creation and won his election on a programme of growth rather than austerity. It is an interesting thesis, and we will see how it develops in our own country. The EU is based on the stability and growth pact, and there will be a growth compact to go along with the fiscal compact. My prediction is that the EU and the eurozone will survive. The Greeks must make up their own minds—the sphinx must solve its own riddle, and so must the Greeks.