Budget Statement — House of Lords, 2015-03-25
Topic: Macroeconomics
Julian Charles Roland Hunt (Labour, Centre-left): My Lords, it is a pleasure to follow the noble Lord, Lord Bilimoria. I slightly wonder what country he was talking about, given all the things he referred to, such as worker participation in companies, which the British helped to introduce in Germany after World War II This debate should be an opportunity to talk about the economic policy and future prosperity of the UK. I declare my interests in one or two companies. As other noble Lords have said, the speech’s historical analysis seems slightly deficient. There was clearly an enormous crisis, which was not made in the UK. After the crisis, countries responded to it in different ways. Some, such as the United States, immediately stimulated their economy, while others, including the UK, were flat. If you compare the process of coming out of a slump or a crisis to walking up a mountain, there are two ways of doing it. One is to find a nice gentle slope to the top of the mountain, which America did, and the other is to go absolutely flat and then find the steepest place to climb. Obviously, while you are climbing up the steep slope you are climbing more metres per second than those on the gentle slope and then, as the Government keep saying, for one year you do better than other countries. It is a strange kind of geometrical definition The important point is that, for most countries, the fundamental aspect of the economy—nobody has really talked about this—is the ownership of the country’s main businesses and the economic relationships with other countries. Neither was really mentioned in the Minister’s speech or, indeed, in the Chancellor’s speech. Financiers in the public and private sectors in the UK do not seem to regard the ownership issue as important. Indeed, the City and the Treasury relish every opportunity to sell off what remains of the UK’s large industrial businesses. We read articles saying that this is a bad month because we not selling off any industry. We have seen this with more and more of our major industries in the UK. In aerospace, Airbus is taking more control. In trains, we have now sold off the Channel Tunnel, where we had a successful public sector. I was talking to a significant manager in the nuclear industry, who said that all nuclear work here is now owned by foreign countries. We have a nuclear programme, which is very welcome, but it is all owned by other countries. We had major world industries in motor cars, electrical engineering and chemical engineering. The noble Lord, Lord Taverne, raised this question: if we lose ownership of all these companies and lose the entire strategic planning of this country, how can we possibly become a world-class country working around the world UK engineers and scientists—I declare that I am an engineer and an honorary fellow of the Institution of Civil Engineers, which is where I have had these conversations—recognise that if the countries which own these industries are abroad, that is where the important, interesting design is taking place, such as Hitachi’s nice train which will arrive here. Who did the design? It was done in Japan. Are we going to build them? Yes, but all the design was done in Japan. Of course, there is one way—I have debated this with the Minister before—which is for us sometimes to have a golden share, and then of course we have control, as with Rolls Royce. Why is there only one company with a golden share? We want lots of golden shares, and then we would operate around the world This year, of course, we had the near catastrophe of losing AstraZeneca, a major pharmaceutical company. I am glad to say that now, with the help of other European countries, that remains in the UK and will provide a tremendous opportunity for research and development here, and indeed for operating round the world Where, then, is the mentality? One Minister, in a very excitable debate—I will not say who it was, as he might be embarrassed—got more and more excited and said, "The thing about this country is that we want to be the corner shop of the world!". I think he made a Freudian error there. But that is exactly the point: the Government do think this is the corner shop of the world, not the workshop of the world, and that is the problem. It is about internal vision. The Treasury simply does not mind at all, as far as I can see. However, the Government do not seem to realise that if you do not own any industry, you do not control what you make and what you do. That is a logical point that other countries, such as France, Germany and America, understand Equally depressing in the Chancellor’s speech—and, I am afraid, in the speech of the noble Lord, Lord Deighton—was the absence of vision about the importance of the UK continuing to be at the heart of development of the European economy. The inwardness and short-sightedness of the Budget speech was breathtaking in that respect. However, two evenings ago I was fortunate enough to hear the vision of the new Commissioner for Science in the European Commission, Mr Moedas, an engineer from Portugal. He called for the continuing role of the UK, with its extraordinary science and technology, in Europe, but he was too polite to mention that the UK is not in the lead in R&D investment as a proportion of GDP. Therefore, it is very important that we remain in Europe; perhaps the Minister might refer to that in his wind-up My final point is on the Government’s support for small and regional industry. I welcome the emphasis on working in the regions and the greater development of the regions. It was of course not mentioned in the Government’s speech that after they came to power in 2010 they got rid of the regional development agencies. After some havering, they have now introduced the local enterprise boards. From a major speech last week by the leader of the Labour Party, we know that there will be no going back when the next Labour Government come to power. They will continue with the local enterprise partnerships, unlike their predecessor, who gave the bad example of immediately throwing that up However, I give credit to the present Government, who kept on with the Technology Strategy Board; they have now changed its name to Innovate UK, but that is fine. I am afraid, however, that there is no indication that the UK understands that it will not have its own world-class industrial companies unless there is significant investment in the UK ownership of those companies. Maybe the only way to do that is with the famous golden share, in which case we need more of those. Finally, it is important, as the noble Lord, Lord Taverne, said, that this should be the way we have a strong export sector, because at the moment the balance of trade and productivity problems are rather severe.