Queen’s Speech

Viscount Ridley Excerpts

Tuesday 10th June 2014 Lords Chamber

[Viscount Ridley (Con)]

My Lords, it is a pleasure to follow the noble Lord, Lord Young of Norwood Green, and what he says on apprenticeships is much appreciated. I should like to focus my remarks chiefly on the small business, enterprise and employment Bill, but I shall also touch on agriculture and the environment. In doing so, I declare my relevant interests as listed in the register, particularly on the subject of agriculture.

I begin by congratulating my noble friend Lord Livingston not only on his remarks about business in opening this debate but on what he said in Liverpool yesterday. If the press is to be believed, he said that this is,

“a creative country, a modern country, an innovative country, a country led by design”.

I welcome those remarks. He was of course talking about the revival of the economy of the north-west of England, but I hope that he will not mind if I also draw his attention to the remarkable transformation that we are beginning to see in the economy of the north-east of England. That is something that the right reverend Prelate the Bishop of Durham touched on in his excellent maiden speech, on which I congratulate him. There are more people at work in the north-east LEP area than ever before. We have seen the equivalent of six new Nissan plants in the north-east in the past 12 months. These are good jobs in software and offshore in engineering and technology. Overall, productivity in the north-east is up by 14% between 2009 and 2012, which is three times as great an increase in productivity as in the country as a whole. While mentioning productivity, I also want to congratulate the noble Lord, Lord Bamford, on his excellent maiden speech.

Turning to the UK as a whole, I probably do not need to tell my noble friend the Minister about the vital importance of innovation. That is the theme I particularly want to talk about. Two-thirds of UK growth between 1997 and 2007 was due to innovation according to NESTA—the National Endowment for Science, Technology and the Arts. There is no way that we can grow out of the debt burden that still hangs over our economy without huge amounts of innovation. We are on the brink of several innovative revolutions in technology: in personalised medicine, on which we stand a good chance of being in the forefront; in 3D printing; in self-driven vehicles; in self limiting crypto-currencies, I read in some newspapers; and in collaborative consumption, where we can each use our spare rooms to become hoteliers and our used cars to become car rental companies. The other exciting thing that is happening all over the world is peer-to-peer networks—which we are very good at in this place, obviously, but I think it means something else. I looked up some numbers and discovered that, if you bought a pair of jeans in 1982 and were on the average wage, it took an hour and 50 minutes of work to earn the price of those jeans. Today it costs 41 minutes for an equivalent pair of jeans. That is what innovation delivers. It delivers a shrinkage in the amount of time that people have to work to fulfil their needs. That, of course, enables them to fulfil more needs and provide more people with jobs.

On the subject of innovation, it is worth pointing out just how crucial the “D” rather than the “R” is in R&D. We are very good at research in this country. We have the second most Nobel Prizes in the world, but we are not so good at development. We are not so good at turning those discoveries into innovation. The perspiration that goes into starting a business and commercialising an innovation is as important, if not more so, than the inspiration that goes into the discovery. I welcome the Government’s initiatives over the past few years, such as the patent box, in particular.

However, I also want to make a specific suggestion that I hope my noble friend will be able to look at, which is to look at various options for improving incentives for entrepreneurs. We are at the moment very generous to venture capital investors in start-up businesses through the EIS and the VCT scheme. By the way, we have to be generous to investors—otherwise in this country we would spend all our money on housing—but we are not quite so generous to entrepreneurs. If someone wants entrepreneur’s relief, he has to apply for it after he has sold his business and there is not a great deal of certainty about that. On the whole, the person sitting across the table from the venture capital investor is not getting such a good deal, or certainly such a certain deal, as the investor himself. In passing, let me say that it is important to resist the temptation to put the threshold for entrepreneur’s relief up to about 25%, as has been suggested, because it is the entrepreneur who lets himself be diluted as he tries to expand his business and ends up well below that figure. He is the one who is taking the greatest risk.

It is also worth noting that the one purchase that we all make that has not become smaller in the time it takes to earn is government. Government costs the average person more than food, fuel, clothing and housing put together, according to the Taxpayers’ Alliance. I am sure that I am not alone in noticing that there has been a lack of urgency in the public sector over many years to try to reduce the amount of time that it takes for people to fulfil their needs when being dealt with by government. There is a tendency to say that it does not matter how long it takes to get planning permission, to get the right regime for a new development, to answer queries about tax planning or to build a nuclear power station. But time is surely of the essence for many businesses. We need a relentless pursuit of productivity in the public sector. Therefore, I especially welcome, as the noble Lord, Lord Bourne of Aberystwyth, said, the provisions in the small business, enterprise and employment Bill to help small businesses to access public procurement.

Finally, I turn to one of the greatest obstacles to innovation—the pessimism enshrined in law at the European level in the form of the precautionary principle. This means that potential risks are weighed in advance but potential benefits are not. The precautionary principle, essentially, asks us to measure the risk of innovating but not the risk of not innovating. George Freeman MP has produced an especially hard-hitting report making the argument that the European Union’s precautionary approach to biotechnology, both in agriculture and in medicine, is greatly harming innovation and condemning Europe to a back seat in the biotechnology revolution. In his report he says:

“Just as the genomic revolution is beginning to offer untold opportunities across medicine and agriculture to help us generate huge economic, social and political dividends for mankind by helping to liberate billions from the scourge of insufficient food, medicine and energy, the EU is developing an increasingly hostile regulatory framework which risks undermining Europe as a hub of biotechnology”.

That is an especially acute problem in agriculture. We now can see very clearly that the ban on genetically modified food over the past 15 to 20 years was a mistake in terms of both environmental and economic problems because it has greatly increased Europe’s reliance on pesticides.

I hope that innovation and dismantling the barriers to innovation will run through everything the Government do, and will continue to do so.