Oral Answers to Questions

Debate between Vince Cable and John Denham

Thursday 26th June 2014 Commons Chamber

[Mr John Denham (Southampton, Itchen) (Lab)]

T1. If he will make a statement on his departmental responsibilities.

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

My Department plays a key role in supporting the rebalancing of the economy through business to deliver growth while increasing skills and learning.

[Mr Denham]

In September, the Portsmouth warship yard, where many of my constituents work, will shut. That will leave the Government without a plan B for warships if the referendum goes the wrong way. The work force will be dispersed before there is an alternative user and the shipyard’s role in providing manufacturing apprenticeships across southern England will be lost. Will the Secretary of State look to delay the closure until the referendum is over, until there is a new user and until there is a credible plan for training manufacturing and engineering apprentices in southern Hampshire?

[Vince Cable]

The maritime industries are, of course, crucial in Portsmouth, as they are in the right hon. Gentleman’s Southampton constituency. On the approach we are adopting, a Government group led by the Minister of State, my right hon. Friend the Member for Sevenoaks (Michael Fallon) is as rapidly as possible finding alternative commercial users, working with the Ministry of Defence. I welcome in particular the very exciting Ben Ainslie project and my colleague is working closely with Rear-Admiral Stevens to develop the Solent maritime industries.

Oral Answers to Questions

Debate between Vince Cable and John Denham

Thursday 8th December 2011 Commons Chamber

[Mr John Denham (Southampton, Itchen) (Lab)]

May I draw the Secretary of State’s attention to the £150 million worth of entirely private investment that Associated British Ports wants to spend now to equip Southampton for the next generation of container ships? Instead of creating and supporting 2,000 or more jobs, this project is mired in red tape in the Department for Environment, Food and Rural Affairs and its agencies. Will he speak to his colleagues to try to get this vital project under way?

[Vince Cable]

Yes, I will certainly do that—that seems a very helpful intervention. As the right hon. Gentleman knows, logistics, including ports, were a major part of our work in the growth review. A lot is now happening to open up British ports and invest in them, and I will certainly pursue his inquiry.

Oral Answers to Questions

Debate between Vince Cable and John Denham

Thursday 14th July 2011 Commons Chamber

[Vince Cable]

The hon. Lady is absolutely right about the procurement rules. As I said, we are taking an initiative to try to address an anomaly whereby Britain appears to be uniquely open in relation to other European countries. Regarding the work force who are, sadly, affected by these redundancies, I have already announced the launching of a taskforce in Derby led by a former senior executive of Rolls-Royce to try to mobilise assistance.

[Mr John Denham (Southampton, Itchen) (Lab)]

At the previous Business, Innovation and Skills questions, the House united to welcome the confidence shown by Japanese, German and Indian companies in UK manufacturing through their investment in Nissan, BMW and Jaguar Land Rover, so is it not a tragedy that in the past few weeks this British Government have put their confidence in German manufacturing to provide our Thameslink trains? Will the Minister confirm Network Rail’s estimate that in addition to Crossrail, between 12% and 25% of the 12,000 trains in Britain will need replacing over the next 10 years? What is the Secretary of State doing to ensure that there is a UK manufacturer capable of designing, building and winning orders for those trains?

[Vince Cable]

I am surprised that the shadow Secretary of State keeps returning to this theme. I have to repeat the point that my colleague, the Secretary of State for Transport, inherited a tendering process defined in law, which, if abused, is open to judicial review and which made it absolutely imperative for him to conduct the order in the way he did. If it had been cast differently, there could have been a different outcome. We must learn from that experience. The shadow Secretary of State is absolutely right that it is in the British national interest that we have a capacity to produce locomotive equipment in this country. There will of course be a significant increase in that capacity in the north-east with the Hitachi project, but we must also ensure that future tenders for the contracts that he describes are properly constructed, which they were not in 2008.

[Mr Denham]

That was not a strategy for the future of the UK rail manufacturing industry. Does the Secretary of State not know that the factory in the north-east is there purely and simply because Labour Ministers were prepared to challenge a procurement process and get the right deal for UK manufacturing? Will he confirm that the Department for Transport could have run a separate funding competition? Will he confirm that Siemens still does not have a proven energy efficient bogie system for the new trains, while Bombardier does? Is it not the truth that these and other issues could have been used to get the best deal for UK manufacturing? Does he realise that it is not good enough just to blame the last lot and do nothing when it is his responsibility to ensure that we have a UK rail manufacturing industry to win orders?

[Vince Cable]

rose—

Oral Answers to Questions

Debate between Vince Cable and John Denham

Thursday 9th June 2011 Commons Chamber

[Mr John Denham (Southampton, Itchen) (Lab)]

I welcome the good news from Nissan and BMW, which, despite the Secretary of State’s curmudgeonly response, built on Labour’s support for those companies’ investment in the UK. In 2006, he was very clear when he said:

“The DTI, and its army of Sir Humphreys, should be scrapped.”

Then he was offered the job of running it, and said that it would be the Department for growth. How is the Department for growth getting on?

[Vince Cable]

The Department for growth is getting on extremely well. The right hon. Gentleman seems to have forgotten that a change took place after 2006, and that my Department was amalgamated with the one that he used to run. He might want to speculate as to why we took it under our wing. Certainly, growth is taking place. There is rapid growth now beginning to take place in manufacturing and exports. That is a consequence of this Government’s determination simultaneously to get on top of the fiscal deficit and to rebalance the economy, and that is happening.

[Mr Denham]

Actually, the old DTI was merged with my Department. The truth is that in the past year the Office for Budget Responsibility has lowered its growth forecast three times, long-term unemployment has been at its highest since 1997, retail sales are down, construction is in the doldrums and consumer confidence has been at record lows. Is it not the truth that the Business Secretary has wrecked support for the regions, cut consumer protection when prices are rising ahead of wages, talked tough and delivered nothing on bank lending, bungled higher education and produced a growth plan so unconvincing that it is being rewritten as we speak? The Business Secretary is wrong, is he not, to think that his Department cannot make a difference. It could. It is not just the Chancellor who needs a plan B, is it?

[Vince Cable]

The right hon. Gentleman has a short memory. He does not seem to appreciate that the failed model of growth that we inherited was not simply a question of the budget deficit, as we had a massive problem with consumer debt, which inhibits consumption; we had a massive property bubble, which collapsed; and we had a banking system, the largest in the developed world, that collapsed on us—and we are having to dig our way out. A major rebalancing of the economy is having to take place. It is difficult, it is painful, but as I said in response to the earlier question, that rebalancing is now occurring through the growth of manufacturing and exports and through business investment, which is where it needs to be.

Green Investment Bank

Debate between Vince Cable and John Denham

Tuesday 24th May 2011 Commons Chamber

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

Today I am publishing detailed plans for a green investment bank, building on the announcements that the Deputy Prime Minister made yesterday. Copies of the document will be placed in the Libraries and will be available to download from the BIS website. I would like to take the opportunity from inform the House of these proposals.

The UK will be the first country in the world to create a bank dedicated to the greening of the economy. This Government are committed to ensuring that the UK makes a successful transition to a low-carbon economy. This will be a big challenge. The UK is committed by law to a 50% reduction in carbon emissions by 2025. Over the coming decades, much of the UK’s energy, transport and waste infrastructure will have to be revolutionised or even rebuilt in order to achieve the ambition of decarbonised electricity, low-emission cars and an end to landfill. This transition will involve considerable costs, but also considerable benefits if new enterprise can seize the opportunities presented by the green economy. The task for our Government is to ensure that these benefits exceed the costs.

Vital to achieving a successful transition is the development of well-designed, long-term and stable policies. They are needed to provide the incentive for businesses to invest in new green infrastructure, which by its very nature repays the investment only over many years. To this end the Government have introduced a carbon price floor, proposals on electricity market reform, the green deal for energy efficiency in buildings, a major waste policy review and new initiatives to encourage the roll-out of electric vehicles.

However, the lack of available finance could be a limiting factor. Detailed research and market analysis have established the need for an institution to address market failures that are constraining the flow of finance. The proposals published today set out a vision for a new and enduring institution—the world’s first dedicated national green investment bank—to complement the existing policy landscape.

The green investment bank’s mission will be to accelerate private sector investment, with an initial remit to focus on relatively high-risk projects that are otherwise likely to proceed slowly or not at all. It will work to a “double bottom line” of both achieving significant environmental impact and making financial returns delivering value for money. It will also operate independently and at arm’s length from Government, who will agree its strategic long-term priorities. Initial market analysis suggests that the early contenders to be priority sectors for the bank are offshore wind, industrial energy efficiency and waste, but a wider range of energy and other activities could become relevant over time.

The new institution will need to comply with state aid rules. Therefore, the proposals that I am publishing today will need to be approved by the European Commission before we can establish the bank. The time to act is now, so in order to make rapid progress, from April 2012, my department will start to make direct, state aid-compliant investments in green infrastructure projects. Investments could be in the form of equity, subordinated debt or senior debt on a pari passu basis. In due course, we will transfer these investments to the new institution.

I am also creating a green bank advisory group, comprising independent finance experts, who will advise Government on the setting up and strategic direction of the new institution. Sir Adrian Montague has very kindly agreed to chair this advisory group.

As the Chancellor set out in the Budget this year, the initial capitalisation of the GIB will be £3 billion and the bank will invest with and through the private sector and tackle risks that the private sector cannot adequately finance. In this way, the bank will mobilise projects significantly in excess of the Government’s contribution. With the funding provided in this Parliament the GIB could mobilise an extra £15 billion of private investment. We do not envisage that this level of activity will require a large institution—an estimated 50 to 100 professional staff during this Parliament. Proposals have been made to locate the headquarters in, among others, London, Edinburgh and Bristol, and a decision will be taken in due course based on their ability to deliver the aims of the bank.

The Government will enable the GIB to have borrowing powers from 2015-16 and once debt is falling as a percentage of GDP, which will allow it to scale up its operations significantly at a time when the financing need is greatest. We are not seeking at this stage to be prescriptive about which form borrowing should take or, more generally, about the bank’s products or structure. Once state aid approval is achieved, we will move to enshrine the institution’s enduring status in legislation.

In conclusion, setting up a bank of this kind is a major undertaking. There is much work to be done to build and grow the green investment bank, and the Government look forward to updating the House on further milestones in future.

[Mr John Denham (Southampton, Itchen) (Lab)]

I thank the Secretary of State for his statement, but although the Deputy Prime Minister announced this policy yesterday and the statement was timed for 12.30 pm today, I had not received a copy by 10 minutes to 1, and did not receive it until five minutes to 1.

A successful green investment bank can make a significant contribution to developing low-carbon technologies and enabling British companies to succeed in the low-carbon green technology markets of the future. That is why the green investment bank was in Labour’s manifesto. Will the Business Secretary confirm that it has taken a year of infighting to get to this stage? Is it not true that the Government are at odds over green policy, and will he confirm that only a month ago he tried to block the adoption of the carbon emissions targets announced this week? So much for “the greenest Government ever”!

Progress is welcome, but have the Government not already taken a series of decisions that have damaged investment in green technologies and activities? Did they not set feed-in tariffs that encouraged many investors into green energy and then suddenly change the rules, leaving investors high and dry and deeply cynical about the Government’s commitment to green technology? Is the Business Secretary aware that the target for zero-carbon homes by 2016 was encouraging new and innovative business approaches to architecture, building technology, skills training and offset technologies? It was already encouraging a supply chain to make our homes greener. Now that has been changed by the flip-flops of Government decision making. Is it not true that when the Severn barrage was abandoned the Government ruled out any tidal investment for five years, so that when this country turns to tidal power we will end up relying on foreign technology?

Despite all the talk of private investment, where is the evidence for it? Is it not damning that the Pew Environment Group’s report in March stated that investment in renewable technology in the UK crashed from £11 billion in 2009 to £3.3 billion in 2010—due, it says, to political uncertainty. That saw the UK drop from sixth to 13th in the ranking of countries encouraging green investment—another example of the Tories letting go Labour’s green legacy.

As with the green deal and the electricity market reforms, green businesses know enough about the green investment bank to be excited, but not enough to start planning investments and changing business models. Does the Business Secretary not accept that the bank will not work without much greater consistency, certainty and clarity about Government policies for green energy and the low-carbon economy than we have seen to date?

When will the green investment bank legislation be brought forward? Will he publish draft legislation so that all those interested can help shape it and ensure that the bank truly does become a long-term part of the infrastructure? How will the bank be staffed, and will he ensure that it is not an offshoot of the Treasury or his Department? Will he learn the lessons of Labour’s technology strategy board, where private sector leadership and real operational independence have helped to contribute to its considerable success? Given non-governmental organisations’ role in shaping all parties’ policies on this issue, will the Secretary of State at least consider allowing an NGO representative to join in the work of the advisory board that he proposes to set up?

Will the Secretary of State tell the House why the bank will be barred from raising its own finance until 2015 at the earliest? What does he say to the CBI, which made it clear at the time of the Budget that the investment

“is welcome, but the bank should have powers to borrow from the outset to give investors confidence.”

Has the Treasury imposed this rule? If so, is that not another case of the Government allowing their preferred reckless approach to deficit reduction to take priority over the investment in jobs and growth that would make it easier to get the deficit down?

Can the Secretary of State confirm that, as of today, he does not even know whether the activities of the green investment bank will be on or off the public balance sheet? And is it not essential that that is clarified at the earlier possible opportunity? Does he not recognise that denying early investment in fledgling green industries will hinder their ability to create and expand into new markets? Does he agree that, above all, the UK needs long-term investment in the innovative, entrepreneurial companies that have the potential to become the pace setters and global market leaders of the future?

Does the Secretary of State recognise the risk that the available funds could easily be absorbed by major energy supply companies—companies that, relatively speaking at least, have access to capital—which would invest largely in the installation of established technologies, often supplied by overseas companies? Does he recognise that that risk could prevent UK-based innovators and suppliers from winning market share and developing the established technologies of the future? What assurances can be given that the bank will focus not only on the areas of activity named by the Deputy Prime Minister yesterday, but on the less mature technologies that remain unmentioned, such as solar and marine energy?

There is clearly a balance to be struck between major infrastructure investment and all the activities of innovative companies, but will the Secretary of State tell us how he intends to ensure, in the legislation that will set out the green investment bank’s remit, that he will strike the right balance between those activities?

Finally, given the huge uncertainty and inconsistency that the Government have shown over the past year, can the Business Secretary set out how he intends to create greater confidence in green industry companies about the future direction of Government policy? There was precious little about that in the Government’s growth plan, but without that market confidence none of the high hopes that we all share for the green investment bank will come to fruition.

[Mr Speaker]

Order. Before I ask the Secretary of State to reply, I make the point that I allowed the right hon. Member for Southampton, Itchen (Mr Denham) to reach his conclusion because I saw that he was getting towards it, but we cannot again have a situation in which the response to a statement is longer than the statement.

Oral Answers to Questions

Debate between Vince Cable and John Denham

Thursday 31st March 2011 Commons Chamber

[Mr John Denham (Southampton, Itchen) (Lab)]

We would not have destroyed regional development agencies in the chaotic and Maoist manner that the Secretary of State has described, but as a constructive Opposition, we have proposed that RDA assets be transferred to local economic partnerships to promote growth and jobs. Will he confirm that many RDAs, including those in the north-west, the east midlands, the south-west, Yorkshire and Humberside and the south-east have also proposed that assets be transferred to local authorities in LEP areas, which will pay for them as jobs and growth are created? Why has he blocked those transfers?

[Vince Cable]

In our Dengist phase, the LEPs are doing extremely well in constructing business-led leadership at local level. The process by which RDA assets are allocated is set out in the White Paper. As the right hon. Gentleman will know, some of the RDAs have negative net worth, so the issue of asset distribution does not apply. There will be different allocations, and my departmental officials are working through the RDAs’ legacy carefully.

[Mr Denham]

The Secretary of State does not seem to know what is on his own website, which makes it very clear that he has blocked the transfer of those assets to local authorities. Will he confirm that the assets of RDAs that will now be sold will be worth more than the investment in enterprise zones? Is not the Conservative leader of Fareham council, who heads the Solent LEP, right when he says:

“Selling them at this time in the economic cycle is the worst possible solution. Treasury is looking for quick wins but that will undermine the growth agenda. We are meant to be focusing on growth but that will undermine the growth agenda”?

Why does the Secretary of State believe that Whitehall knows best, or has he been overruled yet again by the Treasury, who are the people who really run his Department?

[Vince Cable]

The right hon. Gentleman seems to have forgotten that those are taxpayers’ assets, the disposal of which should be done in a way that produces best value for money for the taxpayer. Some will be disposed of and sold, and some will be transferred when that will produce a good outcome. The process is being carefully worked through at departmental level, and it will produce a sensible outcome that remains supportive of local initiatives through the local enterprise partnerships.

Trade and Investment for Growth White Paper

Debate between Vince Cable and John Denham

Wednesday 9th February 2011 Commons Chamber

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

Today I turn to one of the main building blocks of economic recovery—achieving growth through international trade and by attracting inward investment. Britain makes up just 4% of the global economy, and without aligning ourselves to faster growth elsewhere, we cannot hope to prosper. But to do that, we have to do better than in the past. In the past few decades, we have consumed too much and exported too little. While our competitors were sending manufactures across the globe, we were building a property bubble. Now, with Germany exporting more than three times as much as the UK, it is vital to turn the situation round.

We have done better in attracting inward investment. We are one of the top three recipients of foreign investment in the world, and we are home to more European headquarters of overseas companies than all other European countries put together. Inward investors provide not just jobs but 30% of our research and development, but there is no room for complacency in an environment that is increasingly competitive.

The trade and investment for growth White Paper therefore sets out a strategy for creating opportunities, providing the conditions for the private sector growth through trade and investment that will help to rebalance our economy, and securing the benefits of trade and investment openness for the world’s poorest people.

The Government want to focus on small and medium-sized enterprises, which are much less engaged in trade than bigger companies. They have told us that they want to take advantage of the opportunities that exist especially in emerging markets but cannot always access the trade credit insurance or finance needed to take the risk. They have also told us that since the economic crisis, they feel that it has become much harder to get cover from private credit insurers at reasonable rates. The Government will therefore create several new schemes and extend one existing scheme, which will be launched in the coming months.

First, the Department for Business, Innovation and Skills will launch an export enterprise finance guarantee scheme offering export finance valued at up to £1 million for SMEs. The Export Credits Guarantee Department will launch several schemes, including: an export working capital scheme for those who are ineligible for the EEFG scheme, offering export finance of more than £1 million; a bond support scheme under which the Government will share risk with lending banks on the issue of contract bonds; and a foreign exchange credit support scheme, which will support banks offering foreign exchange hedging contracts to SMEs by sharing credit risk. The ECGD will also extend its short-term credit insurance scheme to cover a broader range of exporters, including SMEs. In addition, UK Trade & Investment will increase its focus on emerging markets and on helping SMEs, and launch a new online service offering access to sales leads around the world.

All Ministers have been asked to support our trade diplomacy. I have led, or supported the Prime Minister in, high-level delegations to Brazil, India, China and Russia with business representatives, promoting exports and seeking inward investment. We will be doing more of the same this year and beyond.

However, half our exports are to the EU, and consequently we have a strong interest in ensuring that the EU grows. That makes the completion of the European single market even more vital. Recent analysis suggests that trade between the UK and other EU member states could be as much as 45% below potential, largely because of significant non-tariff barriers. Completion of the single market could translate into 7% additional income per head per UK household. We therefore strongly support efforts to remove barriers to trade, particularly for SMEs, in fields such as e-commerce and low-carbon products, and in professional and business services, for which there are currently an estimated 3,000 regulatory requirements. We will also press for energy and agriculture liberalisation.

At the international level, completing the Doha round is one of our top objectives. Finishing those trade negotiations could deliver a £110 billion boost per year to the global economy. We have spent 10 years negotiating and now need urgent action to agree the key elements of the Doha deal this year, so I am glad that momentum towards a deal seems to be building again. Britain will do its utmost to get the World Trade Organisation past the finishing line this year. Doha is the top priority, but we will also pursue an ambitious programme of EU free trade agreements with our main trading partners, including India, Canada, Singapore and the south American Mercosur countries and, I hope, with Japan following the recent agreement with South Korea.

Finally, the UK is committed to assisting poor countries to take advantage of the opportunities presented by an open global trading system. International trade is one of the most important tools in the fight against poverty and research evidence shows that per capita incomes grow three times faster in countries without trade barriers than in other developing countries. We will therefore ensure that trade is a central theme across our bilateral aid programme, and promote regional integration, notably in Africa through our Africa free trade initiative. Helping the developing world in that way is the right thing to do on moral grounds, and it is in Britain’s economic national interest.

This White Paper sets out an ambitious direction for the UK and will guide the Government’s work on trade and investment. We will implement it vigorously and actively, and I urge British business to seize the opportunities that it will present. In that way, we will all benefit from the vision it sets out: an open trading system and a competitive British economy, driving jobs and growth.

[Mr John Denham (Southampton, Itchen) (Lab)]

I thank the Secretary of State for sending me a copy of the White Paper earlier today and for notice of his statement. I welcome the broad thrust of the statement so far as it goes, but may I remind him that exports alone will not deliver without a credible plan for growth across our economy? Putting new tyres on the car will not make it perform better if the engine has not been fixed.

We welcome the importance given to exports and export support, and support the increased focus on the major emerging markets such as Brazil, China and India, without neglecting our longer-established markets. We also welcome the commitment to opposing protectionism and promoting free trade. Subject to the detail, we will support the particular measures that the Secretary of State proposes to develop export support for SMEs, although I hope he can give us a timetable for their implementation. I hope the Secretary of State acknowledges that all those measures build on work done by the previous Labour Government.

Like the previous Government, this Government are committed to the completion of the Doha round of global free trade talks. Given the difficulties that those talks have had in the past, can the Secretary of State tell the House what specific new initiatives he will take in the coming year to ensure that talks are completed successfully? His predecessor and my right hon. Friend the former Prime Minister played an active and engaged role in trying to move the WTO towards agreement. What personal role has the Secretary of State played and what commitment has he gained from the Prime Minister about his personal involvement in securing an agreement this year?

Does the Secretary of State accept that the Doha round must foster development, and will he respect and build on the work of his Department and the Department for International Development under the previous Government to ensure that trade agreements support poorer, developing countries?

The White Paper recognises the potential benefits of completing European free trade agreements. What specific new initiatives will the Secretary of State take within the Council of Ministers to get things moving forward? Finally on Europe, what specific measures will he take to broaden and deepen the single market, as the White Paper puts it?

There appear to be some significant problems underlying the White Paper. Can the Secretary of State assure me that the cap of £25 million does not create a gap in export support for mid-range companies? Will he confirm that the UKTI budget will be cut by 19.5% in real terms? Given the expansion of activities in the White Paper, where and how will cuts be made without damaging support for exporters? What role will the science and innovation network play in supporting the export strategy?

Does the Secretary of State recognise that a successful export drive depends fundamentally on having goods and services to sell, and on having the companies that can provide and sell those goods and services? Does he therefore also recognise that the Government’s reckless approach to deficit reduction is damaging the prospects for growth and jobs? Can he tell the House why the strategy for growth has still not been published when he promised it in October? Does he acknowledge that the new director-general of the CBI has now joined the previous director-general in criticising the Government for having no plan for growth? Without a clear vision for the economy and a plan for growth, we will not have enough companies to export or the products to sell.

Will the Secretary of State confirm that pharmaceuticals and the life sciences are one of the knowledge-based industries by which we can hope to earn our way in the world? Last week, Pfizer announced the closure of its Sandwich plant. Is it not a chilling message that one of the world’s leading pharmaceutical companies looked at its global activities and decided that it no longer needed to be in the UK, and that it could afford to the leave the UK outside its global research strategy? How much more investment will we lose before this complacent Government produce a credible plan for growth?

The White Paper says that the Government will invest in UK infrastructure. Will the Secretary of State confirm that the introduction of universal broadband has been delayed by three years, and that there is no credible plan for fast broadband? Does he accept that those failings make the UK a less attractive place for investment by companies that support the digital economy?

Does the Secretary of State recognise that a recent report by Experian and the National Endowment for Science, Technology and the Arts concluded that there are companies with the potential to grow and export in every region of the country and in many different sectors of the economy? Does he recognise that regional development agencies often worked with UKTI to support exporters? He has abolished RDAs, but can he explain why the White Paper contains only one passing mention of regional support for exporters and support for exporters in the regions? How will he ensure that potential exporters get the right support in every part of the country?

The White Paper praises higher education as a gross export earner of £5.3 billion, so why has the Secretary of State supported changes to student visa policies that will do real harm to the country’s seventh biggest export earner and undermine our long-term trade and development interests? The White Paper speaks of investing in science, but does the Secretary of State recognise that with science investment cut in real terms and other countries increasing their science investment, we are in danger of losing world leadership in this area?

I welcome the recent performance of manufacturing exports, which have taken advantage of a competitive pound. Will the Secretary of State confirm that the strength of the manufacturing sector has been supported by the previous Government’s support for science, research and development tax credits and capital allowances, and that—in the worst of the global recession—the scrappage scheme, time to pay and flexible tax credits all helped manufacturers to retain more of their work force? Does he recognise that we now have a unique opportunity to use manufacturing exports to strengthen the supply chain companies and develop the next generation of world-beating export products? What is he doing to ensure that we take advantage of that opportunity?

There is much common sense and continuity in the White Paper and no need for artificial arguments about it, but the Secretary of State must recognise that its impact will be limited without a credible plan for growth.

[Vince Cable]

First, may I respond to the right hon. Gentleman’s positive comments? He is right that, compared with, say, the United States or France, there is a significant degree of consensus about trade policy. Probably one of the best statements on the relationship between trade and globalisation was set out by Clare Short, a few years ago when she was Secretary of State. There is a lot of common ground.

The right hon. Gentleman asked about Pfizer. As it happens, I chaired the task force this morning, which—with the leader of Kent county council and the Minister for Universities and Science—is seeking actively to try to save as many jobs as we can on that site and to mobilise other pharmaceutical companies. Its work is coming along well, but these are early days.

The right hon. Gentleman asked specifically what I have been doing in relation to international trade initiatives. In each of the major BRIC—Brazil, Russia, India and China—countries that I have visited, I have engaged with the Trade Ministers, especially the key ones in India and China, which are critical to the success of the Doha round, and tried to persuade them of the importance of making good offers. We have had useful discussions about that. I have had several meetings with Mr Barnier about how we can progress the single market, and only a week ago I was in extensive discussions with my opposite number from India about the European Union free trade agreement. These are works in progress, but progress is undoubtedly being made.

The right hon. Gentleman asked about some of the concrete measures on trade promotion and resources. He appreciates that export credit guarantees are underwriting bank lending—they are not a cash contribution and there is no resource implication. He asked about timetables, and these schemes will be introduced in the next two to three months on a pilot basis. They are, in fact, imminent.

The right hon. Gentleman rightly mentioned the fact that there is some reduction in the UKTI budget, but he should recall that, under the RDA system that he extols, there was a ludicrous duplication of resources. We had British trade ambassadors from each of the RDAs posted in overseas countries, competing with each other and wasting resources. We will get more from less when it comes to trade promotion.

On the wider issue of the state of the economy, we earlier had an extraordinary display of amnesia from the shadow Chancellor, who forgot his role in the last Government. The shadow Secretary of State now tells us about the decline in manufacturing. He may have forgotten the debate last week when we had to point out to him that the decline in the manufacturing sector in the UK economy from 20% to 12% of GDP was far in excess of any other developed country, and that is the rebalancing problem that we are now trying to address. Of course, trade by itself will not solve the problem—it is 30% of GDP—but it is important, especially for some areas such as the north-east of England. Rebalancing is about manufacturing, exports and private sector investment.

Department for Business, Innovation and Skills (Performance)

Debate between Vince Cable and John Denham

Wednesday 2nd February 2011 Commons Chamber

[Vince Cable]

I seem to remember that an independent report established very firmly that responsibility lay with Ministers.

[Mr Denham]

I am grateful to the Secretary of State for giving way, because he referred to me personally in this connection. I think that he is missing the point. Part of the business of being a Minister, or a Secretary of State, is sorting out problems that arise—[Interruption.] Let me tell Members that things will go wrong for this Government, as they occasionally went wrong for our Government. It is part of a Secretary of State’s job to sort those things out, but this Secretary of State is using that as an excuse for having done nothing about the really big challenges involved in promoting growth. It is no good his telling the House, “We couldn’t do anything about growth because I was sorting out the Student Loans Company.” That is a ridiculous argument.

[Vince Cable]

I am glad to hear it acknowledged that we began by having to sort out a mess. That is a good starting point for discussion.

Let me now deal with the further education sector, in which I became engaged, with the Minister for Further Education, Skills and Lifelong Learning. We began visiting further education colleges, many of which were utterly demoralised and unable to fulfil their function because their capital work had been stopped as a result of a process of utter incompetence. They had been authorised to spend nine times the amount that was actually available.

Let us examine the underlying trends, to which the motion refers. In the last five years of the Labour Government, adult learning—involving people over 19—fell by 1.1 million to 3.5 million. At a time when Government money was being thrown at problems, the Government’s priorities were such that a key area was neglected and declined. We have sought to refocus that energy on apprenticeships, with the consequences that I have already described.

Oral Answers to Questions

Debate between Vince Cable and John Denham

Thursday 13th January 2011 Commons Chamber

[Vince Cable]

I hope that the LEP will take this matter seriously. My hon. Friend is right to say that the regional growth fund has a limit of £1 million, which precludes small businesses from applying directly. None the less, the company he mentioned and others do have access to, for example, the enterprise finance guarantee scheme. I think that 37 companies in his constituency have already drawn £4 million from that source.

[Mr John Denham (Southampton, Itchen) (Lab)]

In September the Secretary of State said:

“If banks are saying to us they have got lots of money to spread out on bonuses…at a time when they are constricting credit to small and medium enterprises, then the government may have to use some form of taxation to change their behaviour”.

The whole House knows, and has already heard this morning, that small businesses are still finding credit too hard to get and too expensive when they do get it. The Government have given up on bonuses. The chief executive of Lloyds is purported to be getting £2 million after he has left his job, so why is taxation on the banks being cut?

[Vince Cable]

The right hon. Gentleman was present on Tuesday when the Chancellor gave a very clear statement of our current position in dealing with the banks, and made it very clear that nothing was off the table. However, the right hon. Gentleman is quite right: there is an issue for small-scale business in relation to credit supply as well as lack of demand. We are trying to remedy that through the discussions that we are having.

[Mr Denham]

The truth is that, for all his hollow rhetoric, the Secretary of State has failed small businesses. He promised that the banks would be taxed more if they did not lend. They are not lending, yet taxes are being cut. He has damaged small businesses with the chaotic abolition of regional development agencies, he has excluded small businesses from the regional growth fund, and he promised to publish a growth plan, but could not do so because his civil servants said there was nothing to put in it. The Minister of State, Department for Business, Innovation and Skills, the hon. Member for Hertford and Stortford (Mr Prisk) is reduced to telling Members of Parliament that they will have to write to the banks to help their small businesses, and now the Secretary of State has lost the part of his Department that supports small businesses in the digital economy for no other reason than that he is not a fit and proper person to take the biggest competition policy decision we will see for years. Everyone knows that he is hanging on to his job by a thread, waiting for the Prime Minister to cut it.

[Vince Cable]

The right hon. Gentleman has obviously been trying to polish that intervention for the past three weeks; it is getting a bit stale. The simple truth is that if he had read the latest small business survey, he would have seen that rapid growth is taking place and more jobs are being undertaken—300,000 in the past six months, almost all of which are in the small business sector. That is the sector that will drive the British economy forward and achieve the recovery that this Government have achieved.

Higher Education Fees

Debate between Vince Cable and John Denham

Thursday 9th December 2010 Commons Chamber

[Vince Cable]

I will finish my point.

As the right hon. Gentleman knows, the Government, like the previous Government, are not making average, across-the-board cuts of 11% in every Department. We have chosen, as did the previous Government, to have some protected Departments—health, schools, pensions and aid. The logical consequence of that is much higher cuts in unprotected Departments. I am sure that he remembers the IFS analysis that told us, in the wake of the March Budget, that a Labour Government were planning to cut unprotected Departments by 25.4%.

[Mr John Denham (Southampton, Itchen) (Lab)]

The right hon. Gentleman has been good enough to refer to my letter. He knows full well that the IFS analysis carried out after the Budget does not stand up to scrutiny, and reflects neither the decisions taken by the Chancellor in the comprehensive spending review nor the speech made by my right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson) setting out our approach. However, will the Secretary of State help the House by identifying which other major spending programmes have been cut by 80%?

[Vince Cable]

The 80% fact—and it is a fact—derives from the following: most major Departments have had to take spending reductions of about 25%, as they would have done under a Labour Government. I wish to take the right hon. Gentleman and his colleagues in opposition through what that has meant for the teaching grant to universities and university funding in general.

Tuition Fees

Debate between Vince Cable and John Denham

Tuesday 30th November 2010 Commons Chamber

[Vince Cable]

In the context in which we are now operating—an extreme financial crisis—I am introducing a policy that is a great deal more progressive than the one Labour left behind.

There is a problem, and before I move to the specifics, I shall deal with where the Opposition are coming from, particularly their new leader. Last week, he told the press that he was “tempted” to join the student demonstrations. He has had three days praying in the wilderness, dealing with the devil and deciding whether he wants to succumb to temptation. I do not know whether he has, but if he does, and if he addresses the students, I have been trying to imagine what he will tell them. I think the narrative would go something like this: “We feel your pain. We feel your sense of betrayal by the Government and the Liberal Democrats. We have applied our socialist principles, and we are going to produce a fairer system and lead you to the promised land. What are we offering you? What is our policy? Our policy is delay.” The policy is delay—procrastination. There is a new mantra for the National Union of Students executive: “What do we want?” “Delay.” “When do we want it?” “Well, maybe next year—probably.” That is the alternative on offer.

I shall now deal with the core issue—the right hon. Member for Southampton, Itchen himself identified it: how do we finance higher education? The last line of his motion is the only one with any substance; it relates to money and the 80% cut in the tuition grant. That is a serious issue, so let us try to deal with it.

The right hon. Gentleman was an education Minister so he knows perfectly well that there are three separate funding streams for higher education: student support, research and tuition. When we look at the picture as a whole, we see that at the end of the Labour Government about 60% of all student funding came from the state and the other 40% came from the private sector, from graduates and overseas students. As a result of the changes we propose, approximately 60:40 will become 40:60. It is a mixed economy and the state contribution is being reduced.

The question is whether that number is right. Should it be more or should it be less? If the state is to contribute, where should the money come from? The issue we all have to face is this: when we came into government, and I came into this job, I knew that my predecessors were going to cut the Department that I lead by between 20% and 25%. That was the Institute for Fiscal Studies’ analysis, which has never been denied. It is clear from the logic of not having protected Departments that that would have happened. That was in a Department, 70% of whose funding goes to universities. If the Labour Government were not going to cut the tuition grant for universities, we have to ask where the money would have come from.

I shall set out the range of alternatives. A 50% cut in further education was one possibility; another was a 40% cut in science and another was a 45% cut in the innovation and enterprise budget. We know that the previous Government would not have gone down several of those routes; they committed themselves to increasing the science budget by even more than us. I think the Labour spokesman on science made that very clear at our Question Time last week. The Opposition were not happy that we had maintained the science budget; they want to go even further. At BIS questions, they constantly raise the issue of regional development agency funding—they want to spend more money on that. Where will the money come from? Is it from the cuts they were committed to?

There is a choice. We understand that. What could have happened, although the Opposition have been very quiet on the subject, is that instead of raiding the universities, they could have made drastic cuts in the further education budget. That was the real choice: the further education budget for vocational training for young people who do not go to university. It is almost certain—indeed, it was being put in place when I joined the Department—that cuts in further education were already in train. The right hon. Member for Southampton, Itchen has quite properly spoken of the substantial increase in funding for universities under his Government, but he did not point out that the further education budget did not increase at all. I think it actually fell in real terms. That reflects Labour’s priorities.

[Mr Denham]

That last point is wrong. Does the right hon. Gentleman accept that this whole argument is a farrago of nonsense because it is based on a premise about the level of the BIS budget that is wrong, as has been set out clearly by my right hon. Friend the shadow Chancellor—[Interruption.] I do not want to prolong the intervention. The problem is that the coalition Government insist on denying what they are constantly told. The vote on fees will be a vote not on the policy of the Opposition but on his policy. Why will he not answer the questions that I properly put this evening? Why is he spending all his time doing anything other than answering the questions that I put?

[Vince Cable]

I will explain in a few minutes why I do not think delay is the sensible option. The right hon. Gentleman acknowledges, and his Opposition motion states, that this is essentially an issue about money and priorities. That is why I am persisting with the question.

It is possible that the Labour Government were not intending to cut further education. There were other options available. They could have cut universities without cutting the tuition grant. How could they have done that? They could have done so by drastically reducing the number of students, a course of action that, I believe, the National Union of Students prefers. But clearly it would be wrong, and the right hon. Gentleman knows perfectly well from experience and research that increasing the number of university students is one of the best ways of promoting social mobility. So I assume that that is an option that the previous Government would not have taken.

We are left with one other basic option. What we could have done—it would have been an easy way out and we would have avoided many of the difficulties that we are having politically—is to have taken the money out of the budget and let the universities get on with it, not raised the cap. The student representatives might well have applauded that. We would have avoided all the difficulties that we are discussing tonight, but the effect would, of course, have been to starve the universities of funding, and our world-class universities would have been undermined.

Given the funding constraints, which the right hon. Gentleman faced as well, we had no alternative but to ask well-paid graduates to make a contribution later in life to the cost of university education.

--- Later in debate ---

[Vince Cable]

No, I am not giving way again.

The report also suggested that caps should be lifted without appropriate conditions for universities, but we are going to introduce those conditions. Let me explain them. We have responded in the circumstances that I have described to the need to make financial decisions; we have produced an outcome that a Labour Government would almost certainly have followed in very similar terms; and we have produced a policy that is more progressive than the one we inherited and better than the Browne report.

The right hon. Gentleman poses a question about delay. What are the merits of delay as opposed to proceeding immediately? There are several reasons why it is desirable to make progress. First, the Browne commission was itself an extensive consultative process, and the right hon. Gentleman knows because he helped to set it up. There was substantial discussion and public hearings, and he probably deserves some credit for having established an extended process that was so open. Many of those debates have already been had, therefore, and the evidence is available on which to make decisions.

The second point is a practical one, which I am sure that the right hon. Gentleman understands. If the cap is going to be introduced for the academic year 2012-13, it has to be introduced quickly. There is a practical reason, and that is why we have to proceed, but there are a series of issues—he has listed some—on which we clearly need to consult and reflect further. He quite rightly says that we need more detail on the national scholarship scheme, and we have suggested that an arrangement could be used to benefit students from low-income families by providing free tuition through, let us say, the first year of their university career.

There are different ways of approaching the problem, and we would like to talk to the National Union of Students and to university bodies about the best way of giving incentives through the scholarship scheme to low-income families. The current arrangements do not work well, as the right hon. Gentleman knows because he presided over the policy for some years. We have not achieved the level of participation in higher education by families from that background that we should have. After his period in office, 57% of all pupils in higher education came from advantaged areas, and only 19% came from disadvantaged areas. Surely, after the failure of programmes such as the bursary scheme, it is right that we reflect on and consider the best way of using Government money to achieve higher participation.

The right hon. Gentleman asks also about the access conditions, and again it is surely right that we consider all the evidence available. I will write to the regulator about how the situation can be improved, but, if the right hon. Gentleman’s party has anything to tell us from its experience in government, I shall be very interested to hear it, because his Government set up the regulator six years ago, I think. As a result of that experience, the relative position of low-income students trying to get into the top third of universities has deteriorated. Their conditions of access failed as a matter of policy. Surely it is right that we consider further how we can make the policy work, and we shall do so.

[Mr Denham]

Before the right hon. Gentleman moves further beyond the Browne report, I must note that he referred to one issue that was at the core of the report: the uprating of the threshold. He and the Minister for Universities and Science have not yet said whether Browne’s proposal to uprate the threshold every five years in line with earnings will be made a statutory commitment. The Secretary of State has published figures that, he claims, show the system to be progressive—based on uprating by earnings every five years. Will he now tell the House whether that will be a statutory commitment?

[Vince Cable]

I can confirm that it is our firm intention to do exactly that. Whether the measure requires embedding in a statutory instrument is a matter on which we will seek advice, but I am very confident and very happy to have that commitment—the uprating by earnings of the threshold—made firm by law. How it is done—through a statutory instrument or subsequently—is a matter on which we clearly need advice. The right hon. Gentleman is quite right to ask the question, but he should perhaps remind Labour Members that he had an opportunity to uprate thresholds and never did so when in government, despite the fact that his Government’s financial position was more comfortable than the current one.

Local Growth White Paper

Debate between Vince Cable and John Denham

Thursday 28th October 2010 Commons Chamber

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

This Government's economic ambition is to build a more balanced economy, driven by private sector growth. Today I am announcing the publication of the Government's local growth White Paper, which sets out what that means for locally driven growth, job creation and the Government's role in supporting that.

The previous Government's policy sought to close the gap between the greater south-east and the rest of England through centrally led, unaccountable development agencies whose boundaries often bore no relation to the real economic geography. Ten years, and £19 billion later, the economy is still as regionally unbalanced as before, if not more so.

It is clear that that policy failed. Our new approach to sub-national growth therefore focuses on three key themes. The first is shifting power to local communities and businesses. Local communities and businesses are in the best position to understand the opportunities and needs of their own economies. Therefore, the Secretary of State for Communities and Local Government and I have asked business and civic leaders to come together with other partners, such as universities and the social and voluntary sectors, to form local enterprise partnerships which reflect natural economic areas.

We received 62 proposals and I am pleased to say that today we are asking 24 partnerships to progress and set up their boards. The list of those partnerships is in annex A of the White Paper, which will be laid in the House today. Together, those 24 partnerships represent more than 60% of the economy of England outside London and cover almost all our major cities. Many of the remaining proposals are well developed and we will welcome further proposals when they are ready. We are undertaking separate discussions with the Mayor and London boroughs on local enterprise partnerships in London.

The White Paper sets out a diverse range of roles which LEPs could take on, such as working with Government to set out key investment priorities, including transport infrastructure and supporting or co-ordinating project delivery; co-ordinating proposals or bidding directly for the regional growth fund; supporting high-growth business, for example through bringing together and supporting consortiums to run new growth hubs; and making representations on the development of national planning policy and ensuring that business is involved in the development and consideration of strategic planning applications.

We will reinforce that at national level by transforming the national Business Link website and establishing a national contact centre. We will provide support to businesses with high growth potential through a network of growth hubs and bring together venture capital and loan funds at the national level. We will support key industry sectors and innovation at national level, including through a network of technology and innovation centres.

UK Trade & Investment will have responsibility for promoting the UK overseas and helping exporters. LEPs will want to help investors to find sites and provide other support such as planning, infrastructure and support for skills.

We are committed to an orderly transition from the regional development agencies to the new delivery arrangements, and we will aim to ensure that all staff are treated fairly. RDA assets and liabilities will be transferred to other bodies through a clear and transparent process that is aimed at ensuring the best possible outcomes for regions and is consistent with achieving value for the public purse. Assets will be transferred with associated liabilities wherever possible. We expect the RDAs to manage down existing financial commitments within the funding envelope agreed in the spending review.

The second key theme is focused intervention. Today we are launching the regional growth fund, which will achieve strong growth and create sustainable private sector jobs. The first bidding round is now open to bids from private bodies and public private partnerships, and first-round bids will be submitted by 21 January 2011.

Some £1.4 billion is being made available over the next three years to encourage private sector investment across England by providing support for projects with significant potential for private sector-led economic growth and sustainable employment. Support will be provided in particular for bids from those English communities that currently are dependent on the public sector to help them to make the transition to sustainable, private sector-led growth. The advisory panel, chaired by Lord Heseltine, will provide an independent strategic view to Ministers on how the fund should be deployed to achieve its objectives. As with all major business investments undertaken under industrial development legislation, interventions will be subject to advice from the Industrial Development Advisory Board. That will ensure the highest possible level of commercial challenge through the process. Final decisions will be made jointly by a ministerial group under the chairmanship of the Deputy Prime Minister. The White Paper sets all this out in detail.

Thirdly, there has to be confidence to invest. An efficient and effective planning system is crucial in enabling growth. My right hon. Friend the Secretary of State for Communities and Local Government will soon bring forward policy and legislation to deliver that. In them, the Government will introduce a new duty to co-operate on local authorities, statutory undertakers and infrastructure providers, to ensure that the right people and groups share information and work together to make the best possible decisions for their area.

We will reform the planning system so that it is driven by communities and introduce a presumption in favour of sustainable economic development. We will fundamentally reform and simplify planning policy and guidance, presenting to Parliament a simple national planning framework that will cover all forms of development. This framework will establish economic growth as a Government priority for planning, and will lift many of the complex bureaucratic burdens that have slowed down decision making. The review of framework will be carried out in parallel with the localism Bill.

The Government are also committed to introduce a framework of effective incentives through the local government finance system to help to drive economic and housing growth at the local level. The Government’s new homes bonus will be the cornerstone of the new framework for incentivising growth in housing supply, creating a simple, transparent and permanent incentive that will be more effective than the failed top-down regional targets.

We have also looked at the incentives for business growth and decided that more can be done to give a strong and predictable incentive. We have considered ways of enabling councils to retain locally raised business rates. That means many local councils will be set free from dependency on central funding and it will represent a radical departure from the way in which the existing local government finance system operates. In considering this option, the Government are clear that businesses should not be subject to locally imposed increases in the burden of taxation that they do not support. We have already made it clear that businesses would have the right to hold a binding vote on any local authority proposals to introduce a local supplement on business rates. That is a principle to which we remain firmly committed. Equally, we will ensure that all councils have adequate resources to meet the needs of their local community. Rewarding growth is also about fairness in the local government finance system. Local business rate retention will be considered within the local government resource review, which the Government intend to launch in January after a period of consultation on the proposals in the White Paper.

To support renewable energy, we will be introducing a renewable energy bonus, which will mean that local authorities can keep the business rates from renewable energy projects. Finally, we will bring forward proposals for tax increment financing to allow local authorities to borrow against future increases in business rate revenues to pay for upfront infrastructure and development costs.

The measures set out in the White Paper complement the other measures the Government are taking to support growth and job creation through infrastructure investment; support for education and skills; improvements in competition; and support for research and innovation. This needs to be joined up with locally led action to improve the environment for business, and we are today putting in place the tools for this to happen.

[Mr John Denham (Southampton, Itchen) (Lab)]

I thank the Secretary of State for his statement, and of course I look forward to reading the White Paper when it is made available to the House.

Growth and jobs are of critical importance to every family and every region of the country. They are the best way to cut the deficit and the best way to offer hope to young people. The coalition Government will slash 500,000 public jobs and put 500,000 private sector workers out of work through their reckless cuts, but they claim they will create 2.5 million new private sector jobs over the next four years. There is no sign today that they can live up to that claim.

I do not suppose that the Business Secretary has ever used hair-restoring lotion, but if he had he would have discovered that just because it says “Promotes Growth” on the bottle it does not mean that growth will happen. It is very much the same with his Department and this White Paper. He calls it the Department for growth, but the comprehensive spending review led to its funding being cut by more than that of almost any other Department. Is it not true that just when growth is most important and business needs to be able to invest with certainty and confidence, this statement confirms deep cuts in growth funding, a shambles of local development organisations that will last for years, broken promises to the English regions, a planning system that will not work and delays in key investments?

This statement cuts the resources for regional development by at least two thirds. RDAs will receive about £1.4 billion this year, but the regional growth fund will have £1.4 billion over three years. Will the Business Secretary admit that the tiny regional growth fund will now have to pay for many activities that RDAs did not have to fund? The Minister for Housing and Local Government says it must pay for housing renewal. The Transport Secretary says it must pay for transport. It will invite national applications as well as those from local and regional schemes. Will the Business Secretary confirm that he expects the money to run out after one round of bids?

The Chancellor of the Exchequer once accused Lord Mandelson of writing cheques before the election, but what happened when the coalition set out to cancel them? They found that the investments made by Labour ensured that Nissan would develop electric vehicles, Ford would produce new engines and Vauxhall would maintain car production, and enabled Airbus to design and develop the A350, secured the next generation of offshore wind blades and supported the video games industry and start-up biotech companies. I am pleased Labour’s investments finally went ahead, but is not the truth that the coalition has now completely hamstrung itself in respect of making such investments in the future?

The regional growth fund is a pathetic fig leaf to cover absence of any growth strategy. It is not regional—all the decisions will be taken by two semi-retired politicians in London—and it is not much of a growth fund. As Sir Ian Wrigglesworth, deputy chair of the growth fund, said:

“One billion pounds over two years is not a lot of money and the amount you can do with it is limited.”

Will the Business Secretary admit that the Government’s reckless cuts mean that growth will be underfunded? Will he admit that if the coalition had adopted the responsible and measured approach to deficit reduction set out by the shadow Chancellor, public spending would have been cut by £30 billion less, allowing us to focus on growth?

Support for growth is not just about the level of public spending; it is about creating business confidence and certainty. What happened to the Business Secretary’s promise to the Yorkshire Post:

“What we have said is where RDAs are doing a good job and where the partners recognise they are doing a good job, they can continue in a similar form to what they have at the moment”?

Where is the evidence that business wants what he has announced today? Is not the director general of the CBI right to say that local economic partnerships

“have got off to a pretty ropy start. So far it’s been a bit of a shambles”?

Is not the Institute of Directors right to say that if local economic partnerships do not have money

“they’ll be little more than a toothless talking shop”?

Will the Business Secretary confirm that the local economic partnerships will have no start-up funding, no core funding, no guaranteed access to the regional growth fund, no new legal powers and no promises of money—for example, from the Department for Work and Pensions—to replace the future jobs fund? Will he confirm press reports that key areas such as the south-west and Lancashire will be left without a local economic partnership? Will he confirm that of places such as Hull, which is 11th in the deprivation index, Blackpool, which is 12th, Blackburn, which is 14th, and Burnley, which is 24th, none will have even a feeble local economic partnership, which other areas will enjoy? Will he confirm that RDA redundancy payments will cost nearly £500 million? Will he confirm that for the next two years, when growth is crucial, most businesses will have no coherent local development agency to talk to about key investments, key infrastructure decisions and major planning decisions? Is it not true that Wales and Scotland will enjoy coherent and focused business support and England will not?

The world outside cares little about the petty power battles between the Business Secretary and the Communities Secretary, but they, together, owed it to business and to the country to provide certainty, clarity, confidence and coherence for the future, and between them they have failed. Will the Business Secretary confirm that in so many other areas the coalition is failing to produce the conditions for growth? There is no plan for growth. How will cutting hundreds of thousands of training opportunities for adults help employers with the skills they need? What has happened to Labour’s plans to transfer responsibility for skills to employer-led organisations? At a time when every other OECD country apart from Romania is increasing higher education funding, how will cutting such funding produce the graduates we need?

More than 70 councils have started to withdraw or delay planning applications since regional strategies were scrapped. How does that give the construction industry the certainty it needs? The scheme for retaining business rates seems to build on Labour’s business rate supplement, but how much does the Business Secretary expect it to raise? Will it compensate for the 30% cut in local government funding? Does he believe that all councils will benefit equally, or will those facing the greatest challenges get less money from his new policy? Why are green industries laying off workers because of uncertainty about renewable energy policy? When the Government announced eight nuclear power stations, why did they not make the loan to Sheffield Forgemasters which would have made sure that specialist steel was made in Britain, not in Korea or Japan? The Government have turned off the tap on the drivers of growth and jobs. There is no plan for growth. They have given up on growth.

[Vince Cable]

Many of the specific questions about policy, the role of the local enterprise partnerships, the numbers, those that have been approved and the process of approval are dealt with in the White Paper, which is available at the Vote Office.

The whole premise of the right hon. Gentleman’s central arguments is that Government performance is measured by how much money is put in, not by what we get out of it. I will come to the performance of the regional development agencies in a moment. He repeats the argument, which he has done on several occasions, of how much money we should be spending on higher education, further education and regional development, and I have thrown the same question back at him in all our exchanges. We know that the outgoing Government were planning to cut the budget of this Department by 20 to 25%, but he has never explained where the money was going to come from. Was it from HE, FE, regional development or science? We have never had an answer and until we have one we cannot engage in a serious debate on priorities.

The RDAs were the focus of much of the right hon. Gentleman’s response. As I say, the issue is not how much the Government spend, but what they get out of it. The RDAs absorbed £19 billion over a decade, but what did they achieve? Their objective was to achieve a narrowing of the gap in growth between the north and the west midlands, on the one hand, and the south-east, on the other. If one studies the figures, one finds that in fact a widening divergence took place during the decade. The role of the RDAs in stemming that process was utterly ineffective. As the right hon. Gentleman said, the RDAs did, of course, have teeth, but they also had an enormous appetite and they consumed an enormous amount of resource with very little output. What the LEPs will have is the word “partnership”; the partnership will be between local communities and business, and this will be instead of the top-down Government-dictated approach to development.

The right hon. Gentleman asked about planning and the planning system. Let me review some of the legacy. The level of approvals for office, retail and industrial development, in a decade of relatively high growth, actually declined, while the rate of refusals increased. We have a system where every year £750 million is spent on consultancy fees and legal fees by people trying to get through the planning process. It is no wonder that very little happens. The system of planning guidance and advice that we inherited involves 7,000 pages of Government documentation; it is almost as complicated as the tax system that we inherited and it is equally dysfunctional.

The right hon. Gentleman mentioned, in passing, the key issue of housing, which is crucial not only to our population, but to local development on the ground. What is remarkable is that even in the highest boom year of 2008, fewer houses were built in Britain than at the depths of the recession of the early 1990s. In 2009, there were 118,000 housing completions, which can be set against an estimated growth in the number of households of 250,000. The system of planning and the support that the previous Government put in place failed utterly in this central task of development.

My final point is that we inherited a system of local government finance and decision making that was the most centralised in Europe. The only country in Europe that has a higher percentage of central Government funding for local government is Malta. We believe that the previous Government wanted to organise fact-finding missions to Malta to find out how they could improve by having that extra bit of centralised decision making. Our Government are trying to move to more decentralised decision making, based on local communities and a genuine partnership with business, and that is what will produce local growth.

Oral Answers to Questions

Debate between Vince Cable and John Denham

Thursday 14th October 2010 Commons Chamber

[Vince Cable]

That is a constructive suggestion. I am happy to do exactly what my right hon. Friend has said. To reinforce the point, yesterday the principal—the vice-chancellor equivalent—of Glasgow university, where I know my right hon. Friend is a rector and with which I have an association, said in relation to the growing funding crisis in Scottish universities:

“I believe we need to adopt a graduate contribution model that is properly designed, progressive and one which requires those who earn more during their lifetime to pay back more to society in order to fund higher education.”

That is exactly what we are doing.

[Mr John Denham (Southampton, Itchen) (Lab)]

On Tuesday, the Social Market Foundation published an analysis of how the Business Secretary’s £7,000 a year minimum fee will hit different graduates. It shows that the hardest hit will be graduates who earn £27,000 a year, while students who get help from the bank of mum and dad to pay off early will get a £12,000 discount on the cost of their degree. Is that fair?

[Vince Cable]

It would not be fair, if that were the outcome. That particular analysis does not properly consider the true present value of the payments that people will have to make. There has been some excellent research on the operation of different interest rates in order to produce a genuinely fair and progressive outcome, which Government Members want and which I hope the right hon. Gentleman still wants.

[Mr Denham]

When my building society starts asking me to pay my mortgage in net present value, I will do so. Until then, I will talk pounds and pence like everybody else.

Does the Business Secretary recognise that if he allows universities such as Oxford and Cambridge to charge £10,000 or £12,000 a year, the gap between the few and the many will get wider? The Higher Education Minister has said that it is not possible to stop people paying their fees up front. Will that not create the unfair situation in which those born into privilege, such as the Prime Minister and the Chancellor of the Exchequer to pick two at random, can get a huge discount for paying up front, while the bright child from a poor background who makes it to Oxford or Cambridge will pay even more? How is that fair?

[Vince Cable]

We are anxious to ensure a fairer solution than the existing graduate contribution system that we inherited. The right hon. Gentleman has used the analogy of mortgage payments, which is interesting. No building society or bank that I am aware of would exempt people from any payments until they were earning £21,000 a year, which is the progressive element that we are trying to introduce. He has rightly referred to the difficulties that would arise if certain Russell group institutions were allowed to charge very large variable contributions. That is why I made no commitment on Tuesday on how we would deal with that problem, on which we need to reflect further. He is right that there is an issue of fairness, which we will address.

Higher Education and Student Finance

Debate between Vince Cable and John Denham

Tuesday 12th October 2010 Commons Chamber

[Vince Cable]

I do believe, moreover, that we need to look beyond the graduate population. Some 55% of young people do not go to university. We must not perpetuate the idea, encouraged by the pursuit of a misguided 50% participation target, that the only valued option for an 18-year-old is a three-year academic course at university. Vocational training, including apprenticeships, can be just as valuable as a degree, if not more so.

Finally, there is a challenge to us all to promote a long-term sustainable future for higher education. This has been a difficult issue for all parties in the House. Those on the Opposition Benches have ranged between early advocates of a graduate contribution, such as the right hon. Member for Sheffield, Brightside and Hillsborough (Mr Blunkett) and the new shadow Chancellor, through to those implacably opposed to change and to the current Labour leadership, who have apparently embraced a graduate tax. The Conservatives initially campaigned against graduate contributions, but reversed their position. My own party consistently opposed graduate contributions, but in the current economic climate we accept that the policy is simply no longer feasible. That is why I intend, on behalf of the coalition, to put specific proposals to the House to implement radical and progressive reforms of higher education along the lines of the Browne report.

[Mr John Denham (Southampton, Itchen) (Lab)]

May I thank the Business Secretary for his statement and for giving me advance notice of it? Is it not the truth that the coalition has decided to put the responsibility for reducing the deficit on to the personal bank accounts of this country’s most ambitious and able young people, saddling them with debts that many will never pay off, when the Government should be opening doors for them to make the most of their ability?

Labour Members believe that higher education is important not just for individual graduates but for growth, prosperity, job creation and our ability to succeed in a competitive world. That is why, a few years ago, we took the tough decision to introduce fees, and it is why we invited Lord Browne to undertake his inquiry. We should thank him for his work. I welcome the raising of the threshold, the equitable treatment of part-time students and the emphasis on better guidance in schools and improved information on quality. Those were issues on which we asked Lord Browne to advise, to build on work that we had already begun. The £350 increase in the maintenance grant will of course be offset by the abolition of the £329 bursary for poorest students. In the spirit of cross-party co-operation, will the Business Secretary promise today to make available to the House and the wider public the economic models used by Lord Browne?

It is clear that Lord Browne’s report has been crucially shaped by the assumptions that he has had to make about coalition policy. Will the Secretary of State confirm that Lord Browne’s report assumes that the teaching grant for higher education will be cut by 80%? That would effectively end the public funding of most courses, and place the responsibility for paying for higher education on to students alone. Will he also confirm that some universities could lose more than 90% of their public funding? Is not the row within the coalition conveniently obscuring the biggest cuts to a publicly funded university system that we have ever seen? Tough decisions have to be made to cut the deficit, but even in its plans for reckless, deep and rapid cuts the coalition is planning cuts of only 25%, so why is it singling out higher education for such a massive and disproportionate cut? Our competitors around the world are investing in higher education because universities are a key driver of growth and new jobs. Why is the coalition turning its back on growth?

The Business Secretary says that some universities might charge less than £7,000. Does he accept that an average fee of £6,000 would cut university funding by £300 million? He says that he is considering a £7,000 basic fee. On 28 April this year, the leader of the Liberal Democrats—now the Deputy Prime Minister—said:

“If fees rise to £7,000 a year…within five years some students will be leaving university up to £44,000 in debt. That would be a disaster. If we have learnt one thing from the economic crisis, it is that you can’t build a future on debt.”

So what exactly is the difference—[Interruption.] That was the Deputy Prime Minister’s conclusion. What exactly is the difference between the £7,000 a year fees that he believed would be a disaster and the £7,000 a year fees that his Business Secretary now proposes? Promises were made by the Business Secretary and the Deputy Prime Minister at the last election that should not be lightly thrown away. The trust of politicians is a matter not just for the Liberal Democrats but of the integrity of this House as a whole.

Is it not true that Lord Browne’s report makes proposals that would leave many graduates paying off their debts when their own children start university? Is it not true that, while the average graduate today pays off their loan in 11 years, under these proposals the majority of students would not throw off the burden of debt for 30 years? Is it not true that the middle-income graduates—the teachers, police officers, engineers and middle managers, who are often the same people losing their child benefit—will pay more than their fair share? They will pay longer and pay more interest than the higher earners, who can pay off their loans more quickly. Is it not true that women will be in debt longer than men and pay more interest on their loans?

Will the Business Secretary be more explicit? Does he support the ending of the fee cap? A student taking a course costing £12,000 per annum will leave with a total debt, including maintenance, of £47,250, compared with the £32,000 debt that the Business Secretary says is the basic one. Can we not all recognise that, in the real world, too many able students will turn their backs on the university and the course best suited to them and be forced to shop around for the cheapest option? Will the Secretary of State accept that the Browne proposals on access to the most selective universities lack any teeth or any strength?

The Secretary of State once advocated a graduate tax because he believed that it could produce a manifestly fair and progressive system, with those who can most afford it making the greater contribution. Now, he has been told that he does not support a graduate tax. Given the promises he and his colleagues made at the election, does he not agree that we all have the right to demand that any proposals meet the same tests of fairness that he used to support?

[Vince Cable]

May I welcome the right hon. Gentleman to his new post? He was a much respected Minister in the previous Parliament and was regarded as a man of considerable integrity, mainly because of his resigning from the Blair Government over the Iraq war. Whatever our differences, he will be respected for that decision.

I should be interested to find any quotation marks indicating that I have ever advocated a pure graduate tax. In the South Bank university speech, I advocated a progressive graduate contribution. That is what this statement is all about.

The thrust of the right hon. Gentleman’s comments related to deficit reduction—a problem on an enormous scale that we inherited from him and his colleagues. May I remind him that according to the analysis conducted by the Institute for Fiscal Studies, my Department—the one that he shadows—was, under a Labour Government, confronting cuts of 20% to 25%. About 70% of that budget is for higher education. He and his colleagues have already said that they do not accept the cuts in regional development agencies and they do not accept cuts in science. They were therefore planning to make massive cuts in the university teaching budget. It is just sheer hypocrisy to stand up here and tell us—[Interruption.]