Business and the Economy

Debate between Ronnie Campbell and Neil Carmichael

Monday 14th May 2012 Commons Chamber

[Neil Carmichael (Stroud) (Con)]

It is a great pleasure to follow the right hon. Member for Knowsley (Mr Howarth). The Queen’s Speech is the continuation of the important narrative of dealing with the deficit and promoting economic growth.

The link between reducing the deficit and securing low interest rates is pivotal and is significant for investment, small and large firms, and householders. We attach a lot of importance to deficit reduction, which is being saluted by key worthies in the world of economics and finance and is clearly linked to interest rates. We must focus on that.

My second general point is that energy prices and commodity prices are causing our economy some difficulties, so I welcome the measures in the Queen’s Speech that address them, particularly those on energy. Thirdly, although quantitative easing is an important measure that the Government are rightly pursuing in a measured and modest way, we must ensure that the money ends up in the right place. QE is the flipside of monetarism—monetarism takes money out of the economy, whereas QE puts it in. Monetarism could be described as a blunt instrument and so could QE if we do not reform the banking sector to ensure that the money gets to the right place.

[Mr Ronnie Campbell]

Surely quantitative easing is just giving the banks money to pay off their gambling debts.

[Neil Carmichael]

That is neither correct nor appropriate to my line of argument. We must ensure that the banking sector gets into the right parts of the economy. It is not merely a question of planning our overdraft extensions; it is more a question of ensuring that we have sustainable investment and can generate the right kind of investment decisions by firms. The Secretary of State, in response to an intervention, saluted the Handelsbanken and the way it operates, because it is local and bothers to find out what is really happening. I have seen it in action in my constituency, I know it works and I know that the customers who use it benefit from that local approach. That is the sort of thing we want to see in the banking sector.

The real economy is where we will make the difference between growth and stagnation. We must get the economy going. First, we should bring engineering right up to the top. We must deal with it positively and holistically, because it has many aspects. We need the manufacturing sector to invest more in engineers and for engineers to be able to translate their products into saleable exports. We need to stitch together a policy on engineering, perhaps by creating a post of chief engineering adviser or something along those lines, so that we have some propulsion behind making improvements in that field.

Supply chains are an issue that is often flagged up in my constituency, partly because I have raised it several times including during my festival of engineering and manufacturing, which I ran over five days to promote those fields, and partly because it is a subject on which the Government are working hard. We must understand that our companies are part of supply chains in my constituency, in this country and in Europe. It is important that we recognise that exporting is part of that supply chain process and that we give the right encouragement to firms—usually small firms—that need opportunities to develop their markets in those chains. We should help them to ensure that their products are at the top of their technological, innovative and marketing capacity. Supply chains are critical.

It is also critical that we understand that the Government have a role in the energy sector and it is to provide the right framework for investment. Let me give the example of electricity and energy storage to make my point. We need to look towards creating a climate in which the business community thinks that it needs to invest in that and feels safe in doing so. The proposed energy Bill needs to give that comfort to firms that are thinking about not only existing technologies but new ones, and I am sure that it will. I think that those new technologies will be found in energy storage.

Much has been said about the green investment bank, which I welcome. The Environmental Audit Committee, of which I am a member, produced an interesting report on the subject. We were hoping for more capital early, but we recognise that there are constraints and that the Government will make informed decisions in due course. We must ensure that the people in the GIB know about the technologies, the environment and the industries involved in both, as is the case with the European Investment Bank, which draws its strength from its real expertise in the areas in which it will invest. I hope that the legislation paving the way for the green investment bank will bring that about.

Many Members have saluted the Groceries Code Adjudicator Bill and I do, too. It will be important in dealing with problems with food produce from farms and the position of supermarkets, which effectively form a cartel because of their buying power. I hope that the adjudicator will have the necessary power, and, as the Secretary of State suggested, will be given slightly more teeth if that becomes necessary—I hope that it will not, but there is a possibility that it might.

In summary, it is critical that we stand by our commitment to reduce the deficit. That is important for our interest rates. However, we must also recognise that there is still a lot to be done, that growth is the key, and that engineering is the method.