Economy — House of Lords, 2015-09-10
Topic: Macroeconomics
Terence O'Neill (Conservative, Centre-right): In view of the sensitivity surrounding this topic and the fact that there are to be further discussions, I do not intend to pursue it at length. I have given the short answer which I thought I should give. However, we can follow this up in a written format My noble friend Lady Wheatcroft put a very pointed question to me about Hinkley Point. I shall say two things. I along with many others am spending a considerable amount of my time on the said topic, and decisions will be made in due course on many important factors, including the issue of value In the remaining half of my speaking time, I shall turn to the four areas I have already mentioned which I believe are particularly important to the economy beyond austerity, the first of which is of course the issue of productivity. I do not want to overelaborate or spend too much time going yet again into the details of the productivity plan. I am grateful that a number of noble Lords made reference to it in the debate, albeit that some of those references were not as favourable as I would have hoped. The important point I want to emphasise is that, as I mentioned in the debate on Tuesday, a senior Treasury official has been appointed to lead a cross-departmental group holding regular meetings to ensure that what is announced in our implementation plan is being implemented. That senior official will report back to me, thus allowing me to get directly involved as and when the need arises. I should add that I have encouraged this official, as part of her reporting back, to keep challenging me and the Government on any areas which officials believe, from their objective point of view, are being neglected or not being given sufficient attention. They should not feel shy about suggesting that we might perhaps want to reconsider them. I will not reveal the name of the person to avoid them being bombarded with the wisdom of noble Lords The second area on which a number of noble Lords commented briefly is international trade, which is of course highly important to our economic future. It is in itself part of the productivity story, but it is of sufficient importance that we need to focus on it in and of itself. It is right to recognise that the previous Government had already put a renewed focus on exports. The further support and encouragement given to UKTI has resulted in a more than doubling of the number of businesses receiving direct help on an annual basis since 2010. However, how we perform as an exporting nation is only partially determined by what we can do ourselves. It is a reality that the biggest driver of a nation’s exports is the level of domestic demand in its export markets. Over recent weeks, our friends in the media have only too willingly highlighted with their seemingly never-ending gloom that there are considerable challenges on an ongoing basis in many parts of the world, and there is not a great deal that we can do to control those developments. However, what we can do is work harder in the specific areas we have highlighted and spend more time trying to ensure that our trade performance improves in those places where domestic demand is likely—none of us ever knows—to perform most strongly I apologise that I cannot recall the noble Lord who specifically mentioned it, but China was briefly touched on. I am sure that many Members of the House are aware that, the week after next, the Chancellor will be leading a group of senior businesspeople and a number of Ministers, myself included, on an economic and financial dialogue visit to China. Given my own past and my now ministerial hat, I think that it is a particularly important trip. I should like also to point out in the context of the current excitable discussions about what is going on in China that, even in the event of the Chinese economy slowing to growth of 5% a year instead of the remarkable levels it has enjoyed for the past 30-plus years—and which, I should add, was much less than is currently believed by the consensus—that growth would equate, before the end of this decade, to the equivalent of another United Kingdom economy being created. It is a hugely important opportunity for us I am sure that a number of noble Lords are excited about and looking forward to the visit from the leadership of India later this year. Right at this moment, the country’s economy appears to be one of the few in the world that might be growing more quickly than that of China. These are the places in which, using my ministerial position, I am encouraging many different parts of government to make sustained efforts to boost our trade performance Closely related to that, a third area of great importance is, of course, investment, and, in particular, related to the international trade picture, international investment into the UK. As has been noted by a number of noble Lords, the fact that we have significant investment coming into this country, despite our shared views of the considerable challenges from many parts of the world, should not be ignored. I find it quite intriguing analytically—I noted it in the context of the interesting comments of the noble Viscount, Lord Hanworth, on the level of the pound—that, if things are as bad as many of us focus on, why the pound seems to do so well relative to a number of other currencies. That is perhaps a discussion for another day. It is certainly a consequence of a considerable number of investors around the world wanting to invest in the UK, including investing in our infrastructure and benefiting from what they perceive to be reasonably stable and attractive economic policies, including our taxation policies. As can be seen in the Budget, and as I have discussed, there remains, and will continue to remain, considerable focus on ensuring that that environment remains friendly The fourth and final area that is crucial, in the spirit of the excitement that the noble Baroness, Lady Kramer, talked about and which reflects my own focus, is the rebalancing of the economy. I say this towards the end of a week when we have received—we will hear a lot more about this, I am sure, in the coming days and weeks—a considerable number of bids from different parts of the United Kingdom, not just England, for devolution deals so that local areas can have a greater say and control over their own economic affairs, including specific asks that, one would imagine, may do something to boost their productivity and that of the nation. I have spent a considerable amount of time in the past few weeks travelling around the country, particularly to the northern powerhouse area, ahead of these bids. The number of anecdotes I have heard are highly encouraging that there may be some signs, probably not yet evident in our data, that our economic performance is becoming more diverse I repeat something that I said on Tuesday night: in the context of the ongoing debate about the appropriate stance on fiscal policy and public spending, it was frequently suggested a number of years ago that some regions of the UK would be especially vulnerable because of their dependence on government spending and would therefore suffer particularly as a result of the fiscal policy. My travels around the country, particularly the north-east, have shown me—this is quite interesting and very encouraging—that the growth in private sector job creation has more than compensated for any loss of public sector jobs. It is one of the regions that has seen the biggest rise in employment relative to its base in the past few years, and long may this continue. It will remain an area of intense focus with regard to government policy In conclusion, we have had an excellent debate; in some ways it is a shame that it could not go on for longer. I congratulate the noble Lord, Lord Haskel, on securing the debate. We all want to see the country reaping the rewards of a strong economy, and we are all committed to having in place the right policies to achieve that. Fiscal responsibility will, however, need to continue. As has been recognised, rather than simply focusing on fiscal policy, it is appropriate for more attention to focus on trying to do the right thing in order to improve our productivity performance, which will enable all our citizens to enjoy greater wealth.