International Trade and Geopolitics

Debate between Richard Fuller and Andy McDonald

Thursday 20th April 2023 Commons Chamber

[Richard Fuller]

The hon. Gentleman reinforces my point. He is suggesting that if a company chooses to use its shareholders’ money to drive down a road that runs out, somehow taxpayers should pay for the extension of the road. The whole point of capitalist markets is that it is a business’s responsibility if it makes incorrect allocations of capital and its shareholders lose money. It is the job of business and business leadership to have the insight to understand how best to create value for shareholders in the long term.

Businesses are now coming to smart Labour Members—who are desperate to show that after years of hating business the Labour party now thinks prawn cocktails are a nice idea—and saying, “Can you spare us a few bob, mate? We’d like to support your party and we’ve got this really sexy thing we want to do, but frankly we don’t want to use our own capital because we know that the Labour party in government will be suckers enough to use taxpayers’ money to pay for it.”

[Andy McDonald]

I hope that the hon. Gentleman, as a former member of our Select Committee, will take this point in good heart. Just last week, we visited HYBRIT in Sweden, which has made some incredible advances in creating sponge iron and is on the road to creating green steel. One of its major partners in that enterprise, without which it would not have been possible, is the state-owned utility company Vattenfall. I ask the hon. Gentleman to consider that point.

This country’s version is to plough hundreds of millions of pounds of taxpayers’ money into the South Tees Development Corporation, transferring those assets to private individuals in return for options for land—for buttons—leaving the state on the hook for the environmental remediations. There could be no bigger contrast with more intelligent responses to industrial challenges. I trust that the hon. Gentleman will take that point in good heart and look at the differences in practice between the United Kingdom and Sweden.

[Richard Fuller]

Actually, the hon. Gentleman is exactly right. He and I share a concern for the defence of taxpayers’ money: if it is going to be spent, it should be spent wisely. If a strategy is not working, that is fine, but the point that I raised at the start of my speech was that we hold different points of view on whether industrial strategy per se will be an answer to the problems. My general position is that leaving the market and businesses to themselves and allowing the free allocation of capital in open and competitive markets has proven time, time and time again to be the best way to achieve progress, with better living standards for households in this country and around the free world. That is why the developed nations are the developed nations: because we have supported that approach.

--- Later in debate ---

[Richard Fuller]

The Chair of the Select Committee nods. It is nice to have an area of agreement.

Let me move on to the second area about which the hon. Gentleman spoke: the Inflation Reduction Act and the associated EU measures. As he well knows, that Act represents a $370 billion commitment of US federal funds, or their equivalent in tax credits. It followed the Infrastructure Investment and Jobs Act of 2021, which meant $1 trillion of investment, not only in infrastructure but in green energy. By purchasing power parity, the US economy is approximately six times the size of the UK’s. An equivalent response, which is what the hon. Gentleman says we need, would essentially require writing a cheque for £40 billion, £50 billion or £60 billion. If industrial strategy is not about expenditure, what are we supposed to be doing to compete, other than putting in that amount of money? There seems to be a part missing.

The hon. Gentleman also spoke about inward investment and said that we should be sharpening up our act. He is absolutely right. In countries such as Germany, which he mentioned, the package on offer to those who are interested in investing is not just a financial package, but a coherent one. When someone looks into making an inward investment, there are people to sort out all the Government intricacies for them at a single point on day one. That is how the UK did it when Margaret Thatcher was leading efforts with Lord Young, but over the intervening years we have made things a little too complicated and we have not found our way. I would be interested to hear the Minister address that point; it may not be directly in her remit, but it would be interesting for all hon. Members present to know the Government’s view. What are the Government doing to make sure people know that the UK can take a foreign company from thinking it wants to invest in this country to actually getting going and investing in this country, whether that involves, say, bricks and mortar or servers? What can we do to make that easier?

I know this sounds as though I am picking the hon. Gentleman’s speech apart. I am not picking it apart but asking questions about it, and I trust he is happy with that. He talked about economic security and collaboration. I think the short-term version of that is called friendshoring, which essentially means saying, “Let us conduct a geopolitical review of important strategic supply chains, and then let us be smart and make sure we are doing business with countries that are our allies.” That is a massive change, because there is no clarity about what the extent of friendshoring areas should be. Does this apply only to strategic industries determined by the United Kingdom, or is it imposed on the United Kingdom because other friends think we should be doing business with someone else? Are we prepared as a country to outsource the way in which British companies do business to the Government of the United States?

[Andy McDonald]

The hon. Gentleman is making an interesting point, but does he not agree that when it comes to critical areas of our economy such as energy security and the opportunities presented by carbon capture, utilisation and storage, it makes consummate sense to have strong relationships with those neighbouring countries with which we are aligned? As we face the spectre of Putin, who has caused so much damage to our energy security of late, would it not be infinitely more sensible to look to the new technologies and look to those neighbours to work together in that domain for our mutual economic benefit? Surely that makes sense.

[Richard Fuller]

There are two parts to what the hon. Gentleman has said. Is it sensible for us to ensure that our national security is itself sensible, along with some of the elements that are important for national security? I do not think there are too many concerns about that; the issue is, should we be focusing our policy on the issue of only going with our allies, or at least making that the primary consideration?

I think this will be a problem if it becomes part of the international discourse. The Chair of the Select Committee seemed to be talking about unbundling the existing international organisation, paying it respect but recognising the “reality” of what is happening, but then looking at ways in which we can make side arrangements with our friends. I fear that that will mean pooling the understanding of what is a friend and what is not among others, which is a substantial change in the way in which this country seeks to run its economy. My view is that the United Kingdom should be an open society, an open trading economy, and that we should lean primarily towards openness.

[Andy McDonald]

With Russia? With China?

[Richard Fuller]

Obviously not with Russia. We have already imposed substantial trade sanctions on Russia, and I think there is consensus in the House about what our response should be when one country invades another. However, to conflate Russia with China, which has not, as far as I know, invaded another country, is to move into a different area. My point is philosophical: the United Kingdom’s history of success has been as an open trading nation, and the current push, in this country and others, for us to engage in friendshoring strikes me as a significant change from the way in which, historically, we have created wealth.