Queen’s Speech — House of Lords, 2015-06-04
Topic: Macroeconomics
Karan Bilimoria (Crossbench, Unknown): My Lords, with just 1% of the world’s population today, the UK is the fifth largest economy in the world. Having endured the worst recession in a century, we have recovered remarkably well. We have low inflation, low interest rates, high employment rates and a growing economy. We are the envy of Europe. But as so many noble Lords, including our maiden speakers the noble Lords, Lord O’Neill of Gatley and Lord King of Lothbury, have said, raising productivity is a serious challenge. As the noble Lord, Lord Leigh of Hurley, said, we are very lucky to have Jim O’Neill in the House of Lords. I have known him for many years. He was very helpful to me when I was the founding chair of the UK India Business Council, and we both served together for many years on the UK-India Round Table, where he was instrumental in getting Teach For India off the ground. It is now hugely popular, as our very own Teach First is here. He has been tasked by the Government to create the northern powerhouse. Well, in the noble Lord, Lord O’Neill, we have a northern powerhouse in our midst, and we welcome him to the House Where is Britain going to be in 2020? Our productivity must improve, because we lag way behind others. We may be the fifth largest economy in the world, but in purchasing-power parity terms—in per capita GDP—we are 27th in the world. How do we address this? Wearing my hat as the proud chancellor of the University of Birmingham and my various roles at the University of Cambridge, I was surprised to see no mention of higher education in the gracious Speech. We have the best universities in the world, along with the United States, and we are in danger of taking this for granted, because we way underinvest in higher education compared with the US, OECD and EU averages. The Minister, the noble Baroness, Lady Neville-Rolfe, who I congratulate on her reappointment—and I look forward to working with her—was on the board of the UK India Business Council when I was the chair, and a great board member she was too. Can she please explain the glaring omission of higher education? Can she reassure us that universities are going to be a top priority and that this Government will increase funding for universities to increase our competitiveness and productivity The noble Lord, Lord King, is a great West Ham supporter. I am sorry, it is not the Prime Minister speaking; I meant Aston Villa supporter. We are so fortunate to have him in the House because he will add huge value. He talked in his great speech about innovation being one of Britain’s greatest strengths, yet when it comes to innovation and research and development, as other noble Lords have said, we invest way below the US, EU and OECD average as a percentage of GDP, and indeed way below South Korea. The coalition Government’s patent box initiative is tinkering around the edges. We need to encourage far more serious investment through our universities and business to really increase our productivity and competitiveness through innovation and R&D. Does the Minister agree We also need to encourage entrepreneurship. In India, Prime Minister Narendra Modi now has a Minister for Entrepreneurship in his Government. That is how important it is. As Secretary of State Sajid Javid has said, SMEs are the engine of our economy, and we need to have that focus on entrepreneurship, creativity and innovation. One of the reasons why the United States constantly bounces back so rapidly from any crisis is its huge strength in productivity, higher education, research and development, and innovation The Government are rightly targeting full employment as a goal. One way in which this could be achieved is by having a more balanced economy, where manufacturing is a priority. In my own business, Cobra Beer, I am first and foremost proud to be a British manufacturer. In India, Prime Minister Modi has his Make in India campaign, and has set an aim to increase the manufacturing share of GDP from 16% to 22% by 2022. Does the Minister agree that we also should set a specific target to increase manufacturing as a percentage of GDP It is not necessary for the Government to legislate that they are not going to increase certain taxes; the noble Baroness, Lady Kramer, made valid points about that. However, surely the Government should also be articulating that they will reduce certain taxes? The most important one is the 45% top rate of income tax, which should be brought down to 40%, which is where it was under both a Brown and a Blair Labour Government. Does the Minister agree One area where I fundamentally disagree with the Government is immigration. The gracious Speech mentions that immigration will be a priority to be controlled, and we all know that illegal immigration needs to be controlled and bogus colleges shut down. On the other hand, the Prime Minister, the Home Secretary and the Government continue to stick to their target of reducing immigration to the tens of thousands. However, by having no control over EU immigration this will not be possible, and continuing to include international students in net immigration figures is absolutely foolish and illogical. Even our new Universities Minister, Jo Johnson, with whom I look forward to working, has acknowledged the drastic drop in the number of students from India The negative immigration rhetoric is hampering our universities and our businesses. Sir Venki Ramakrishnan, the president-elect of the Royal Society, the pre-eminent institution for scientists in the world, is a Nobel laureate from Trinity College Cambridge and of Indian origin. The City of London would not be the number one financial centre in the world were it not for immigration. People and capital in business vote with their feet in our global world. Britain would be insignificant without immigration In terms of priorities, the Government should commit to spending 2% of our GDP on defence in this dangerous world, and it is negligent even to think of cuts to our defence or our Armed Forces today. Does the Minister agree Today, Britain is a remarkable nation, with the best of the best capabilities in every field you can imagine, whether it is advanced manufacturing, aerospace, financial services, beer, our lawyers, our accountants, our creative industries, our Oscar-winning film industry, designers and architects—I could go on. I spoke at the Milan expo recently and saw our brilliant GREAT Britain campaign in action. Our pavilion at the expo, the beehive, is by far the most impressive and creative of all pavilions from all over the world To conclude, the Government speak of aspiration. We need to be much bolder. The 200th anniversary of the Battle of Waterloo will be on 18 June. The Duke of Wellington’s motto could not be more appropriate: Virtutis Fortuna Comes—fortune favours the brave. If we as a country aspire by 2020 to be far more productive and competitive than we are today, we need that aspiration, which will lead to achievement, which will lead to inspiration, which in turn will lead to aspiration: a virtuous circle.