Business and the Economy

Nigel Evans Excerpts

Monday 14th May 2012 Commons Chamber

[Mr John Redwood (Wokingham) (Con)]

I remind the House that I offer business advice to a global engineering business and a small investor management business.

We meet today with the winds of danger blowing once again from the euro area. We meet to discuss measures in the Queen’s Speech to make Britain more competitive, to equip Britain better, and to produce more jobs and deliver more goods and services around the world. No one in this House would disagree with the aim. All the main parties agree that we need more economic growth. I think they all agree it is easier to get a deficit down when we are creating more jobs, getting people who are out of work into those jobs, and generating more income and activity, than when we are not. There is no disagreement across the Floor of the House about the aim.

However, when debating how we are going to get that growth and give the best possible support to the companies and individuals who create the jobs and make things happen, we must also recognise that there is a very threatening and menacing problem on our doorsteps. As we meet here today, we know that the Greek political parties may not be able to form a Government at all, or they may not be able to form a Government that can put through the necessary measures to meet the requirements of the EU and IMF loans in Greece. They may decide on new elections in some weeks’ time, creating a dangerous hiatus; and those elections may produce a Government who fully reflect the view of the Greek people, as expressed in the last election to a considerable extent, that they do not wish to co-operate any longer with the lethal mixture of policies that the euroland senior politicians have put forward.

That matters to the United Kingdom, not only because some of our exports and services are sold within euroland, but because, as members of the European Union, we will participate in some of the meetings about what kind of growth strategy Europe as a whole can develop, and we will be a party to some of the decisions that will determine the future of the euro. If the Greek tragedy unfolds such that the Greek state cannot meet the requirements, the European Union has to decide either to give in yet again and come up with another compromise, or that there has to be an early exit of Greece from the euro. It would be better for the British economy and for the future of euroland if an early exit of Greece from the euro were organised quickly, and in confidence up to the point when the necessary announcements must be made. I would not expect the British Government to confirm that that is their aim, but I hope that Ministers are working closely together, representing the greatest financial centre in western Europe and perhaps the world, with that in mind. The sooner the Greek problem is solved, the sooner we can get on with sorting out some of the wider problems in the European economy.

If it is decided to cobble together another compromise, massive headwinds against growth and prosperity in our continent will continue to blow forcefully. Will an early Greek exit be easy to handle? No, of course not. Will it be pleasant? No, of course not. But the Greek people have got to the point where they cannot take any more years of austerity, and in some way or another Greece has to be made competitive. If is it is completely impossible, as it seems to be, in a democracy to slash wages by the amount the German side of the argument seems to say the Greeks should slash wages by, other means have to be used: having a devaluation and having a new currency.

The United Kingdom has one big advantage in the crisis: we have our own currency, it is freely floating,and we are much closer to having competitive prices than Greece, Italy or Spain can possibly be within the euro. Any measures that my right hon. Friends can take to improve our competitiveness in order to create more export jobs, the better. How right Ministers are to see that there has to be a huge reorientation of British exports towards the emerging markets—to the faster-growing territories of Asia, Latin America and parts of Africa—because Europe is making such a comprehensive mess of its economy and its prospects. It is destroying hope and jobs on such a massive scale that our only hope as a country is to support and orient our businesses to where the growth is and where the opportunities are to be found.

That means taking urgent action to mend our banks and to establish more competitive banking, with more money to lend to our companies, because they are going to need working capital and investment capital. They are going to need to gear up for the 2.5 billion Indian and Chinese who want to come to the world party, many of whom, I am pleased to say, will come to the world party and will be the market that replaces the European market, which is failing so visibly.

We also need competitive energy. Surely the Secretary of State would agree, at least in private, that if we wish to lead an industrial revival in this country or anywhere else, we need cheap and competitive energy in plentiful supply. We should not be saying, “Let’s make everything in China, so it does not score against our carbon dioxide totals.” Let us make things here. If we have cheap energy, we will have more chance. Modern manufacturing creates lots of jobs in marketing, legal work and promotion. It does not create many jobs on the shop floor because it is automated, which requires access to lots of cheap energy. That is what I want this Queen’s Speech to address: cheap energy, less intensive regulations—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I remind hon. Members that there is a six-minute limit on speeches.

--- Later in debate ---

[Nicholas Soames]

I hope that the hon. Gentleman will forgive me, but I have only six minutes, and I have a few points to make.

I support and endorse the Queen’s Speech. Much in it deserves and commands support at this very difficult time. The Government are right in their determination to drive the economy forward, to bring the UK’s productivity and growth up to world standard—they are not at that standard at the moment—and to focus on getting the big things right and resolving the stubborn, difficult and often politically very unappealing challenges that have long kept the UK’s economy from fulfilling its true potential. Our national problems are serious. Many of the causes of Britain’s plight cannot justly be blamed on Greece, Brussels, or even the banks. There is the dire state of too many of our schools and thus, through no fault of their own, the poor skills of too many young people; there is the decline in size of our manufacturing industry—an industry that the Germans sustain so well—and there is the plight of small businesses, which are still groaning under oppressive bureaucracy and employment law. We really need to get on and fix those problems. This country remains, on its good days, a wonderfully civilised place, but there is no contradiction in recognising that our traditional national values will not suffice to support us through this century unless they are allied to harder work, vastly improved skills, and a drastic reality check about the standard of living that we have for so long taken for granted.

I wholly endorse the views that my right hon. Friend the Foreign Secretary expressed yesterday in a really interesting, punchy interview in The Sunday Telegraph. He set out clearly the great opportunities for British trade and the great efforts being made to secure them through our outstanding commercial diplomacy. The success of our economy locally, nationally and globally will depend on how we build our economic growth around a tapestry of skills, with science, finance and sound regulation working together. In many ways, the Queen’s Speech sets out a way forward on that. It is worth remembering that growth, as a public policy, can achieve a great deal. It can create jobs and it reduces welfare dependency, but it is not an end in itself.

I am trying to develop an idea that takes advantage of the south of England’s local geography and opportunities. Starting with the south of my constituency, I want to develop an international technology hub between Burgess Hill and Brighton, and between Brighton and Southampton. The work required to deliver improvements to the A27 must happen, and I do not see why that should not be carried out by a public-private partnership of some sort. We need to get on and develop the sort of creative clusters that are essential for economic growth, making the most of the university of Sussex and the brilliant Brighton university, through to Portsmouth and Southampton—an area with ample office space and housing. The advantage of such a scheme is that it contains all the conceptual ideas that begin with the creation of jobs and extend to kick-start a knowledge-based economy. One of the points that the Gracious Speech makes—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Time is up.

--- Later in debate ---

[David Rutley (Macclesfield) (Con)]

Contrary to what the hon. Member for Dundee East (Stewart Hosie) said, the economy is central to the Government’s agenda. They have already taken much-needed action to ensure lower-cost Government borrowing by working to create the most cost-effective business tax system in the G7 and by pushing forward supply-side reforms that are needed to tackle the burden of bureaucracy facing British businesses, much of which was put in place by Labour when it was in power. Real progress is being made, and I support the Government in their efforts to show that Britain is open for business once again.

The Queen’s Speech sets out proposals that will build on those achievements. The enterprise and regulatory reform Bill will promote enterprise and fair markets through a new competition and markets authority, the creation of the green investment bank, and much-needed reform of employment tribunals. The Queen’s Speech also contained the Groceries Code Adjudicator Bill, which has been welcomed by farmers in Macclesfield, the National Farmers Union, and small food producers more widely. By establishing an independent adjudicator that will enforce the groceries supply code of practice, the Government will ensure that supermarkets deal more fairly with their suppliers and that we have a much more effective supply chain for the food industry.

The Queen’s Speech includes important measures on financial services. The banking reform Bill will create a ring fence around vital banking services and introduce depositor preference, in line with the recommendations of the Vickers Independent Commission on Banking. After the Northern Rock experience, with the first run on the banks in over a century, it was clear that much needed to be done to protect the pensioners, families and small businesses who rely on our banks and financial services and that the failed framework of the previous Government had to be replaced. After the general election, the Government rightly focused on putting back in place a financially stable mechanism to ensure that we had a solid foundation, and they commissioned Vickers to take forward a bold approach to financial regulation and propose the ring fence for retail banks. That must be put in place to make certain that we do not see further failures such as Northern Rock and the Royal Bank of Scotland. This highlights the importance of going beyond Basel III and the minimum capital requirements that it proposes to ensure that there is real stability for the UK financial services system. I am pleased that the recommendations of the Vickers commission are now being taken forward by the Government in the banking reform Bill.

The Financial Services Bill, which I was involved in scrutinising in Committee, was the next step in the process. It puts accountability back with the Bank of England, where it needs to be, by creating a new systemic regulator—the Financial Policy Committee. The Bill is one of the carry-over Bills that will continue its progress in this parliamentary Session, and it is vital that it does so.

It is a concern that the aims of these reforms, whether banking reform or the Financial Services Bill, might be undermined by plans being suggested by Brussels. There are worrying signs that a significant number of EU regulations in the pipeline could have a major effect on the Government’s new financial regulations and undermine our freedom to take the necessary steps to get our banking system into a safer, more secure position.

A huge amount is at stake for the UK economy, and it should not be forgotten that the financial services sector still accounts for 10% of UK gross domestic product. In 2010, the sector employed 1 million people, and it contributed £53 billion in taxes in the 2009-10 financial year alone.

The Chancellor is right to work hard to ensure that the single European rule book does not bind the UK to a maximum level of EU capital requirements, which the Vickers report believes is inadequate. Capital requirements directive IV threatens to tie the hands of the Financial Policy Committee. Given the importance of this decision to the British economy, our negotiators are right to use every tool in their arsenal to protect our ability to regulate UK financial services. The Treasury is right to push back on Brussels to ensure that the box-ticking culture that was all too prevalent under the previous system is not replaced by further box ticking from Brussels.

Domestic regulators require discretion to utilise the new judgment-led approach, which is welcomed by many, to cater for the changing needs of the financial services sector here at home. However, without the effective safeguards from EU regulations, the UK risks being tied into a system more suited to Germany’s regional Landesbank or Spain’s caja savings banks than one regulating the globally important City of London.

The Government are right to continue to press for the safeguards that the Prime Minister sought at the EU Council meeting, where he made his decisive veto. Tomorrow’s ECOFIN meeting offers Finance Ministers from across the EU the chance to address the eurozone’s crisis and I hope that they take note of what this Government are doing in their efforts to tackle the deficit and push forward constructive reforms in the financial—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I call Bridget Phillipson.