The Government’s Productivity Plan

Debate between Michelle Thomson and George Kerevan

Tuesday 28th February 2017 Commons Chamber

[Michelle Thomson (Edinburgh West) (Ind)]

It is a pleasure to take part in this debate. I commend the hon. Member for Hartlepool (Mr Wright) for his contribution and for his leadership of the Select Committee. I reiterate a point that he made: the productivity plan, “Fixing the foundations”, was published in July 2015. We should step back and think about the radical changes we have seen since then, because it is ever a moving target. We have a new Department for Business, Energy and Industrial Strategy, a new Prime Minister, a new Cabinet, an industrial strategy Green Paper and, fundamentally, a new relationship with the EU. In terms of the estimates, it is indeed a moving target. There is a real challenge in the macro relationships of how we get policy provision to guide us going forward among all that shifting.

Obviously the most important of those changes is Brexit, and how the Government respond to it will be crucial for the future of any industrial strategy or productivity plan. Prime Ministers come and go and Departments get renamed, but leaving the EU is the sort of event that is going to take massive energy to achieve anything positive. Worryingly, the rhetoric I have heard so far does not fill me with a great deal of faith. We are undermining some of the noble intentions of the productivity plan and industrial strategy. Putting up barriers will have an impact on productivity. I am in no way convinced by some of the grandiose sentiments along the lines of, “If everything doesn’t work out, we can always revert to World Trade Organisation rules”—most people do not seem to be aware that the fundamental work of revising and agreeing schedules is a massive amount of work in itself.

It is probably not a surprise to my colleagues here that I will focus briefly on Scotland, as is my wont in every BEIS Committee as well. A good job has been done with productivity in Scotland. We are now at the point where our output per hour is much the same as the UK average, and that has happened over the past 10 years. We have managed to close the large gap, but, as has been commented on previously, we are, frankly nowhere in terms of the wider UK. I managed to dig out the statistics that I quoted last year and the research that I had done in the House of Commons Library, which showed that Norway’s productivity was 77% ahead of the UK, and that continues to shock me.

The analysis paper of the respected think-tank, the Fraser of Allander Institute, on the impact of Brexit suggests that Scottish productivity will be negatively affected by leaving the European Union. To me, that is absolutely fundamental. Ending the free movement of people and thus reducing labour mobility is a fundamental issue for us in Scotland, and it cannot be overstated. One impact could be reduced inward investment, which could affect higher productivity.

Commitment 55 in the productivity plan report calls for a continuation of

“the long term decarbonisation of the UK’s energy sector through a framework that supports cost effective low carbon investment.”

The industrial strategy Green Paper then adds to that by calling for an upgrade in infrastructure and a delivery of affordable energy and clean growth. However, from my point of view, this Government are actively undermining these laudable aims by selling off the Green Investment Bank with undue haste. I understand in principle why one might want to capital raise, but I remind the Minister that the Green Investment Bank is quite clear that it does not need to capital raise until 2018. Furthermore, in terms of the nature and the type of projects that have been selected to address market failure, I now have a concern that there will continue to be a gap. Yes, market failure has been affected, and even blocked, by the introduction of the Green Investment Bank in some areas, but it has yet to be addressed in other areas.

[George Kerevan]

Is my hon. Friend aware that Macquarie Bank wants to buy the Green Investment Bank for the brand name, so that it can exclude competitors from taking part in local authority environmental investment schemes? Selling the bank will mean less competition in environmental investment, which in turn means reduced productivity in the long run.

[Michelle Thomson]

I am aware of that, and I have had conversations with the Minister, Macquarie and the Green Investment Bank. The fundamental concern is that, potentially, Scotland risks losing an asset in terms of the headquarters in Edinburgh. Despite the assurances of the preferred bidder—let us call it Macquarie—I will be watching this matter very carefully, because there is a risk that we will lose head office functions and the board. Going back to my hon. Friend’s point, it is building an infrastructure that enables productivity and these kind of things to succeed. If we put in public capital investment and we then do not get the value from it, that seems to me to be short-sighted and misguided. Equally, without the firm commitment to maintaining jobs in Scotland, all the productivity plans and industrial strategies in the world will not address the regional disparities that we see in Scotland, especially if we promptly roll away all these things.

On carbon capture and storage, we have spent £100 million on two competitions to try to kick start this new technology. We heard yesterday on a BEIS Committee day trip to Edinburgh that that is very difficult, and I accept that. As my hon. Friend the Member for Kirkcaldy and Cowdenbeath (Roger Mullin) commented, we must be prepared to take risks to drive things forward for future gain. We accept that £100 million has been spent, but if we do not press ahead with some of these proposed projects, our country could once again lose its competitive advantage, and we cannot rule that out and forget about it.

I am most concerned by some of the narrow-minded views that have been exhibited in some of the debates around Brexit. They have a pervasive narrative that sounds isolationist and deeply disappointing when it comes to the wealth of opportunities of renewable energy. For example, a new interconnector between Scotland and Norway will soon allow the transfer of wind power and hydro power between the two nations, allowing them both to cut their emissions. This is not the time for retrenching and retreating. Construction has also started on a new 1 GW interconnector to France, further demonstrating our inter-dependence with our European neighbours.

Let me move away from energy and quickly dwell on some of the other issues that have been most affected by Brexit in the productivity plan. The first is the issue of international students. In the BEIS report on the productivity plan we said:

“We recommend the Government does not allow migration pressures to influence student or post-study visa decisions. It is illogical to educate foreign students to one of the highest standards in the world only for them to leave before they have had an opportunity to contribute to the UK economy.”

I have a story from my constituency of Edinburgh West. A remarkable young man, Mr Olubenga Ibikunle, won a substantial sum of money to do a PhD in civil and coastal engineering. As soon as he completed his course, he was turfed out. The level of his ground-breaking research, commitment and dedication to self-improvement means that he is exactly the sort of person that we would like to keep in Scotland.

The Prime Minister refused to consider removing students from net migration targets when she was in front of the Liaison Committee. I hope that she will reconsider her position, because international student numbers are already beginning to fall as evidenced by the latest immigration statistics. We cannot allow our position as a world leader for international students to be eroded by a dogmatic fixation on an arbitrary target of tens of thousands of migrants.