Oral Answers to Questions

Debate between Steve Baker and Kit Malthouse

Tuesday 14th December 2021 Commons Chamber

[The Minister for Crime and Policing (Kit Malthouse)]

We are working to deliver a transformed prison education service that will improve numeracy and literacy of all prisoners. Prisoners will be assessed on entry and a personal learning plan will be created to monitor and track progress against starting points and resettlement goals. This will include learning in workshops, kitchens and sports activities.

[Mr Baker]

I am glad to hear it. Should core skills not always be part of the prison regime for everybody who needs them? Will the Minister continue to take steps to make sure that people’s employability is enhanced by their stay in prison?

[Kit Malthouse]

My hon. Friend is exactly right. Education is very often the solution to so many of society’s problems. It is a stepping stone towards employment, which, in itself, reduces reoffending very significantly. He will be pleased to know that as part of our plans we will establish a literacy innovation scheme to incentivise new providers to work with us to deliver these kinds of improvement programmes. We will also introduce specific measures of progress to track how successful each prison is at improving prisoners’ English and maths, with governors held to account for poor performance. We agree with my hon. Friend that these basic building blocks of education are key to future success.

Birmingham Attacks and Extinction Rebellion Protests

Debate between Steve Baker and Kit Malthouse

Monday 7th September 2020 Commons Chamber

[Kit Malthouse]

I thought the hon. Gentleman was going to refer to Costa Rica, which is, of course far ahead of Scotland in terms of its expertise and the use of technology to solve climate change. We bow to no one in our record on climate change. The previous two Prime Ministers and this one are absolutely committed to our target of net zero emissions by 2050. We are making enormous advances: not least the hon. Gentleman will have seen the reduction in the use of coal in our power industry, which is now virtually eliminated—the first country of any major country across the world to do that. As I said during my statement, we have a record of which we can be proud. He is right that there is much more to do, but that does not mean that we have done nothing and, indeed, that we have not made significant progress.

[Mr Steve Baker (Wycombe) (Con)]

As we rise to tackle the very real environmental issues we face, does the Minister agree that what we need is reason, vigour and practicality, not alarmism and revolution?

[Kit Malthouse]

Always the voice of reason and moderation, my hon. Friend is quite right and, as usual, consistent. He is a technologist and so am I. Science has solved all of humanity’s problems over the decades, and I am sure it will solve climate change just the same.

Finance (No. 2) Bill

Debate between Steve Baker and Kit Malthouse

2nd reading: House of Commons
Tuesday 18th April 2017 Commons Chamber

[Kit Malthouse (North West Hampshire) (Con)]

It is a joy to follow my Treasury Committee colleague, the hon. Member for East Lothian (George Kerevan). That should imply not an endorsement of his views, but rather an appreciation of his passion and erudition. I rise to welcome the Finance Bill—if it goes through unmolested, and even if it does not—and to concentrate my remarks, brief as they may be, on a couple of areas.

As an aficionado of my speeches and interventions, Madam Deputy Speaker, you will be aware that I have developed something of an obsession about the future of the British economy being based on a combination of science and private capital. We are fortunate in this country in being a science superpower. In the south-east of England we have five of the world’s top 20 science universities: in King’s, UCL, Oxford, Cambridge and Imperial, we have possibly the largest agglomeration of scientific research on the planet, not just in life sciences, but in physical sciences, synthetic biology and all sorts of new exciting and interesting areas.

We are incredibly good at science. Our history of scientific endeavour points to that. There is one Cambridge college that has more Nobel prizes for science than the whole of Japan, for example. So we are good at science; what we are not so good at is turning those scientific discoveries into companies. We used to be good at that of course, back in the 19th century; much of the wealth of this country was built on the discovery and innovation of the Victorian era, put together with what was then much more adventurous private capital to create some of the monoliths—the huge companies we built over the following century and have sadly too often since sold to the rest of the world.

During that period, and particularly after the war, we were, however, lax in planting the acorns that would be required to produce the forest of oaks that we could chop down and sell to the highest bidder in the future, so our stock of these large companies has diminished. In fact, this is a European problem. Of the top 500 companies in the world, only two have been created in the past 40 years. Fortunately, those two are both British—Vodafone and Virgin—but that is not enough. If we are to continue our proud history of industrial innovation and of creating these large multinationals, we need to start planting those acorns. The operation of private capital and its dynamism in finding the ideas, the discoveries, the molecules, the therapies and the inventions are absolutely critical.

I have raised this issue again and again with the Chancellor in questions and during debates. I have asked about the complexities that are put in the way of individuals who wish to invest in innovations. The primary vehicles for investment that the Government allow private individuals to use are the enterprise investment scheme and the small enterprise investment scheme. They are welcome schemes that provide incentives for investors and some tax relief on disposal, but they are complex. Over the past eight to 10 years that the EIS has been in place—the SEIS has been in place for slightly less time—a body of case law has built up around their operation, as always happens with these things. Investors have tried to be innovative with the schemes, and investments have often been disallowed on technical bases. As a result, people are to a certain extent becoming shy of using them. Looking at the SEIS in particular, we see that the number of companies availing themselves of the scheme has levelled off. It has been broadly the same for the past three or four years.

I therefore welcome the measures in the Bill to introduce flexibility into the EIS and SEIS. If the Government really want to see a cascade of private capital into small, innovative businesses and into scientific endeavour, they need to make those schemes as flexible and easy to operate as possible. At the moment, if I want to invest a relatively small amount of money—£10,000 or £15,000—in a company, I need an accountant and a lawyer, and I need to get pre-approval from the Inland Revenue to ensure that I get my tax relief. I have to do all that in order to invest a relatively modest amount, in investment terms. So is it any wonder that the level of investment in these schemes is not enormous?

In this country at the moment, the Government are making 60% of the investments below £2 million through various schemes and funds and through the British Business Bank. That is all very welcome, but for a capitalist country, this is not right. The majority of investment should be from private capital, and it should be individuals who are making those investments. Accessing retail capital and putting it next to science to allow the two to create a powerful cocktail of wealth creation is key to the future of the British economy. I hope that, if we have another Finance Bill this year, the Government will seek to liberalise the investment regime for private investors in private businesses, particularly those that are innovative or science based.

The same applies to venture capital trusts. These were an enormously beneficial invention when they came in about a decade ago. They attracted huge amounts of capital. There was a time when people saw them as the last 100% tax shelter, but they, too, have fallen out of fashion. Their complexity and the poor returns that they produced compared with the tax relief available for them have meant that the number of VCTs has shrunk and the capital under management by VCTs has been broadly static over the past few years. These two things together—private capital investment through the EIS and SEIS and private capital coming in through VCTs—must be the twin planks underpinning the future of the British economy. We know that we cannot rely on foreign investment and that we cannot rely entirely on institutional investment. They are far too cautious for some of the innovations that need investment. So re-energising private capital and providing easy, flexible ways for individuals to invest quite small amounts of money into innovative companies will be absolutely key. I welcome some of the flexibilities in the Bill and I hope that the Government will be more ambitious over the next 12 months.

[Mr Steve Baker (Wycombe) (Con)]

My hon. Friend’s speech is an absolute treat because it is a much better version of the speech that I made on science and markets in the Vehicle Technology and Aviation Bill Committee on which we served together. Does he agree that one of the key spirits that we need to recapture from the 19th century, when we took science and innovation and turned them into big companies, is getting people who know how to do things, such as engineers, to become entrepreneurs—perhaps in the spirit of I. K. Brunel? In that way, those who know how to produce will also know how to invest and how to serve people in a commercial way.

[Kit Malthouse]

My hon. Friend makes a powerful point. This is a chicken and egg situation. If people with ideas and inventions who are thinking about starting their own business know that capital is more easily available, they will be much more likely to go out and take the risk of starting that business. It is often the paucity of capital and the difficulty of raising it that lead such people not to proceed.

Let me give the House a small anecdote. When I was deputy mayor for business and enterprise in London, I went to a life sciences fair where companies were making presentations about their inventions. I came across a group of young biochemists from Cambridge who had invented what they called an espresso machine for DNA. When people are doing primary research, they often need to manufacture DNA on which to carry out their research. The standard ways of doing that are either to send off to have it made elsewhere, which is time consuming and expensive, or to make it themselves by trial and error. This group had developed software and invented a machine to produce the necessary kind of DNA. I thought that was incredible. It was an amazing British invention. The group had won a prize at Cambridge and received a small grant. I thought that they would need £5 million or £10 million, and if I had had it, I would have given it to them. When I went up to them afterwards, I discovered that they were trying to raise only £250,000, but they were having difficulty in doing so, even though, as far as I could see, their incredible invention was going to revolutionise research. Time and again while I was doing that job, I met young, ambitious and exciting scientists who had a molecule, a therapy or an invention but who were unable to access the necessary capital and would therefore go off and become chartered accountants, like me, instead. We lose a huge amount of talent that way. My hon. Friend has made a strong point.

I lament the passing of the employee shareholder scheme, which was introduced by the previous Chancellor, under which employees could enter into an agreement to vary their employment rights in exchange for which shares in the company. Sadly, the scheme was abused. It was often not taken up for the purpose for which it had been intended. It was abused by some as a form of disguised remuneration. The Government are quite right to close the scheme down, but that nevertheless leaves us with a problem. Not enough people in the United Kingdom participate in the balance sheet of this country. The Prime Minister has often talked about having an economy that works for everyone, but such an economy surely has to be one that is largely owned by everyone. I do not mean owned in a statist or communist way; I am talking about an economy in which everyone has some kind of financial interest from a balance sheet point of view.

We spend a lot of time in this House obsessing about people’s profit/loss account. Is my income bigger than the next chap’s income? Am I earning more than the lady round the corner? We obsess about income inequality, but we rarely obsess about wealth inequality; yet intergenerational wealth is built on the balance sheet of the family. It is built on the investments, albeit small ones, made by one generation. That wealth is expanded by the next generation and built on by the third one. That was certainly the story in my family. We came from fairly lowly beginnings, yet here I am now. This has been built on the fact that my grandparents made investments and my parents started a business. Hopefully, in turn, they will pass some of that wealth to me, although not, I hope, for a long time yet. We have a collective family balance sheet. We are able to buy stocks and shares, for example, but that is denied to lots of people in this country.

The one place in which individuals should have a share of wealth is in the companies that they work for. If we are really to have an economy that works for everyone, we need an economy that is largely owned by everyone. The Government have schemes available, particularly for employee share ownership, in which companies can set up pools of capital for their shareholders. I have been looking into this for my own business, but the scheme is incredibly complicated. In dealing with relatively small amounts of money, I need lawyers and accountants and pre-approval from the Revenue. There is an incredible frictional cost involved in getting such a scheme under way.

My plea to the Government, having got rid of the employee shareholder scheme, is to think about how to facilitate that idea—how to make sure that it is in the interests of employers and business owners to involve their employees in the business in a capital sense. That will enable employees to create for themselves a balance sheet on which to begin the intergenerational wealth creation that the country needs. If we can do that, we will start to build an economy that works for everyone.

I want to talk about two other small things. I welcome the change to the allowance for investment in grassroots sport. Members may not have noticed, but the Finance Bill will make investment in grassroots sport deductible for businesses, and that will be extremely welcome to football, cricket, hockey and many other clubs. I am proud to say that my business has sponsored local children’s football clubs at schools and so on. The more we involve business with school and grassroots sport for young people, the more both parties will see each other on the same level and the more interested they will be in each other. That is a good thing.

Finally, I want to say something about the overall tenor of the Bill. It has become clear to me over the last three or four Finance Bills that we in this House will increasingly struggle to tax a changing economy. We have seen in the discussions about national insurance and business rates that because of the changing nature of business, the standard Whitehall way of taxing the world will not last that much longer. We are moving into a world of cloud computing, the gig economy, non-domiciled businesses and cashless businesses that operate from third or fourth countries. All those things will be difficult for us to tax, and one of our challenges over the next Parliament will be to think more radically about how to deal with the changing nature of our economy and how to tax it to pay for the things we need.

My personal view is that given the changing nature of our economy and the removal of a lot of cash from the business cycle, it may be time to start to look at things other than direct taxation. Corporation tax is difficult, complex and hard to collect. There is a big tax gap compared with VAT, which is relatively easy to collect and where compliance is high. If I were Chancellor, I would probably prefer to have VAT.

With international businesses transacting in the UK and extracting money, we may need to start to look at the notion of a universal sales tax. Such a sales or turnover tax would be more easily collected and might well allow us to have a lower tax rate, spread across a wider tax base, because we would catch international businesses that transacted from, say, Luxembourg or Ireland. Fundamentally, the rule should be that if the sale takes place in the UK, the tax on the sale is collected here, no matter where the company is domiciled.

We will have to think quite carefully over the next five years, after we get through the general election in the next few weeks, about the changing nature of the economy and the radical measures we need to take to keep up with it. Beyond that, we are making good progress.

Vehicle Technology and Aviation Bill (Second sitting)

Debate between Steve Baker and Kit Malthouse

Tuesday 14th March 2017 Public Bill Committees

[Kit Malthouse]

Q Yes, hovercraft are covered as a vessel.

Martin Drake: Yes. These are not in the scope of the Bill, but we have come across goalkeepers being lasered when an important penalty is to be taken, and we have heard of referees being lasered. It is a transport Bill, so it is not within the scope of that, and I know the police have powers to deal with it, but it is a growing problem.

[Mr Baker]

Q Captain Drake, you mentioned that you have got windows in your office from which you have had spectacular effects when you have shone lasers at them. For the purposes of public education, have you considered letting some videos go out there to wherever to show us what happens?

Martin Drake: We have, yes. There is some nervousness about publicising what happens because countries where that has been done have seen a spike in events. That may be a cost we have to bear: we may have to see a spike in events then to see a contraction. We could do that—it is a very sensible idea.

Vehicle Technology and Aviation Bill

Debate between Steve Baker and Kit Malthouse

2nd reading: House of Commons & Carry-over motion: House of Commons & Programme motion: House of Commons & Ways and Means resolution: House of Commons
Monday 6th March 2017 Commons Chamber

[Mr Baker]

Not only are they autonomous, but I would argue that they are even more dangerous for that very reason. However, that is by the bye and perhaps a diversion from the Bill.

As I said, I am a self-declared petrol head, but we have nothing to fear from electric vehicles. If anyone wants to check my YouTube channel, they will find a review of the Agility Saietta R electric motorcycle—a vehicle with excellent torque—and that brings me on to the idea of charging. It is not a market failure that there is diversity in the marketplace. Competition is not a failure but the way by which we make progress, so I encourage the Government not to stamp out competition and experimentation as we make progress with this new technology and in this new market.

[Kit Malthouse]

Does my hon. Friend agree that the Government should also encourage competing technologies? One issue with electric vehicles is the method of power storage and, historically, the Government and this House have put a huge amount of effort, resources and subsidy into the battery, and little comparative resource into hydrogen, as a store of power. The fuel cell is the technology of the future, and the battery is possibly a temporary technology like the fax machine. The Government should be allowing such competition, too.

[Mr Baker]

My hon. Friend is absolutely right and makes a good point. As an idea, the fuel cell’s time is still to come. He makes a wise intervention.

On the substance of the Bill, I exercise my pedantry as an Oxford-educated software engineer—not something I have been able to do recently—by saying that in clause 4, on accidents resulting from unauthorised alterations or failure to update software, subsection (1)(a) addresses

“alterations to the vehicle’s operating system”.

If there is one group of people more pedantic than software engineers, it is lawyers and courts. Should an accident arise because of a failure to update software, that definition would be tested in court.

Underneath the operating system is firmware in non-volatile memory within hardware. The operating system is loaded on to volatile memory, and on top of that is application software. A self-driven or autonomous car will probably run on that application software. If it were to be tested in court, I fear we might find problems if the Bill, as enacted, talks about a vehicle’s operating system.

I encourage the Government to consult specialists in the industry, rather than only taking the advice of an out-of-date software engineer, but it is important that the Bill uses the right terminology to ensure that the right software is updated and that, therefore, the law meets its intended purpose of ensuring that people are insured and that liability falls where it should when there has been a failure to update software.