Trade, Exports, Innovation and Productivity

Michelle Thomson Excerpts

Wednesday 13th January 2016 Commons Chamber

[Michelle Thomson (Edinburgh West) (Ind)]

Thank you, Madam Deputy Speaker, for giving me the opportunity to be the final speaker before the debate is summed up. I must say that I have enjoyed it immensely. The quality of speeches by Members on both sides of the House has been fantastic.

I have a little warning for the hon. Member for Gloucester (Richard Graham) on the use of the term “doom”. In Scotland, we say that facts are chiels that winna ding. The facts brought out by my hon. Friend the Member for Dundee East (Stewart Hosie) at the start of the debate stand and are very important. Such a reality check about some of the serious issues in the UK economy must be acknowledged.

Let us turn to the issue of balance. The Chancellor commented in a lecture in 2010:

We have to move away from an economic model that was based on unsustainable private and public debt. And we have to move to a new model of economic growth that is rooted in more investment, more savings and higher exports.”

How did that work out?

Such a sentiment does not extend to the present Government. During an open Business, Innovation and Skills Committee sitting, I questioned the Minister for Small Business, Industry and Enterprise about whether she regretted successive UK Governments lack of a cohesive industrial strategy. I make that point because SNP Members sometimes sit listening to the biff-boff from either side of the Chamber, but I think there has been a lack of strategy year on year, regardless of whether it has been under the Tories or Labour. One of the significant benefits in Scotland of constantly having an SNP Government, which I hope will be re-elected, is that we can see the signs of a strategy that has been put in place and acted on, and of the resulting commensurate benefits.

[Lucy Frazer]

Does the hon. Lady accept that, according to figures from UKTI, a Government body, there was a small fall in the number of inward investment projects in Scotland in 2014-15, while the number rose in England and Wales?

[Michelle Thomson]

Yes. As I said at the start, facts are chiels that winna ding, but there is a much bigger picture.

My hon. Friend the Member for Dundee East said that the downsizing in manufacturing has been going on for decades, not just for a small snapshot in time. I do not propose to go through the figures that have been quoted extensively in this debate, but I will quote an apt point that was made by the well-known economic journalist who writes in the Scottish newspaper, The National, and who, for the benefit of the House, is also known as the hon. Member for East Lothian (George Kerevan). He has referred to the issues with manufacturing as

“a full generation of stagnation.”

I want to pick up on a few comments. The first was about infrastructure. I gently point out in respect of HS2, which apparently will now cost roughly £42 billion, although I am not sure that is correct, that Scotland will pay its population share of that. We will pay roughly £4 billion, for which we will get no benefit. Indeed, a couple of years ago, Aberdeen chamber of commerce pointed out that it might cost its local industry money.

It is fair to say that probably no one in this Chamber is as focused on the importance of business in growing our economy as I am. There are still significant issues that I will personally address in the lifetime of this Parliament in the ability of businesses to get started, access capital, which is critical, and grow to a significant size. The Mittelstand model would be a good fit, but such companies are promptly sold. We need to do much more on that front.

John Longworth, director general of the British Chambers of Commerce, has made significant comments on consumer debt:

“It’s time to get real. The UK has been too reliant on consumer spending”.

That is an external body making that point. The household debt to income ratio could reach 172% by 2020. I am worried that with increased austerity and more uncertain prospects, more and more people are turning to credit as the only accessible way to plug the gap. Interest rate rises are a when, not an if, and I have grave concerns about how they will affect people who are already struggling.

[Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)]

Given what has been said about household debt, does the hon. Lady agree that it is extremely important that children receive financial education at school that includes budgeting and planning?

[Michelle Thomson]

Absolutely. We can probably all agree that we should look to do better on that.

Productivity has been discussed at length. A solution to the so-called productivity puzzle remains as elusive as ever. We know that the component parts are complex. Not only does the UK perform badly when compared with the G7, but it does even worse when compared with what I call the M8—the top performing medium-sized countries such as Norway, where productivity is 77% ahead of the UK. In Sweden, the figure is 18% and in Denmark, it is 26%.

The National Institute of Economic and Social Research considered that puzzle and noted that

“analyses of the panel reveal that workplaces that experienced an increase in union density between 2004 and 2011 also improved their performance relative to the industry average”.

That is an important point. I would suggest that it is not just union density that influences productivity, but mature workplace relationships based on mutual respect and consideration, and the routine representation of workers on boards, which we see elsewhere. My view is that the rest of the UK is slipping backwards in that respect, particularly given the dangerous trade union proposals.

I will consider export performance before I finish. Rather than going through the facts, I had a quick conversation with the owner of Witherby Publishing, which is a successful Scottish SME whose exports account for about 80% of its business. I asked what she considers to be the primary inhibitor of UK companies exporting. Her answer was succinct. She said it was attitude, it was ambition, it was looking outwards. The practical considerations of cost distribution, differing tax structures, VAT and so on were secondary. The UK must be very careful in the message it sends out to the world as it grapples with the debate about Europe. Is the UK open for business or not? I’ll tell you what: Scotland is open for business.

Finally, let me reiterate what was said by my hon. Friend the Member for Kirkcaldy and Cowdenbeath (Roger Mullin) because I have serious concerns about plans to replace grants with loans. I challenged the Minister and asked about the rationale behind that move, and the response was:

“A number of businesses that I meet would be quite happy to have a loan rather than just a grant because they get that that would mean they would have to pay it back.”

I am sorry, but we need to do better than that. This is a competitive world, and that response is beyond complacent. We must compete, invest, and support research and development. Given all the factors that I have mentioned, the report card for the long-term economic plan is poor. It is not working, it is stifling growth, and it will affect us all going forward. Quite simply, this Tory Government cannot be trusted to deliver on the economy.