Economy: Enterprise and Innovation — Debate

Part of the debate – in the House of Lords at 2:25 pm on 4 February 2010.

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Photo of Lord Davies of Abersoch Lord Davies of Abersoch Minister of State, Foreign and Commonwealth Office, Minister of State, Department for Business, Innovation and Skills, Minister of State (Department for Business, Innovation and Skills) (Trade, Investment and Small Business) (also in the Foreign and Commonwealth Office), Minister of State (Foreign and Commonwealth Office) (UK Trade and Investment) (also in the Department for Business, Innovation and Skills) 2:25, 4 February 2010

I have already referred to the fact that when you look at the ease of doing business in the UK, the OECD ranks us very highly. When you look at entrepreneurship and foreign direct investment into the UK, the reality is that this is a continuous challenge for all Governments, but we are continuing to attract foreign direct investment into the UK and people are still starting new businesses. There is no doubt that the world is getting more complex. It is a challenge for all countries, which is why we have given this a huge focus, in the same way that we have given focus to public sector procurement. A number of noble Lords have mentioned that we need an efficient public sector procurement. The public sector spends around £220 billion per year on goods and services. We are committed to seeing more SMEs bidding for and winning a fairer share of contracts. That is why we are working to implement the Glover report.

Another issue was mentioned by a number of noble Lords. The noble Baroness, Lady Byford, mentioned digital requirements. We need the right infrastructure. Infrastructure UK, which is a new body, provides strategic focus in the Government across the full range of infrastructure sectors. It raises the bar on how infrastructure investment is planned, prioritised, financed and delivered. I hosted a breakfast this morning with Infrastructure UK and a range of financial institutions to look at how we might get more investment into this sector. It is clear that we need to be a digital economy. That is why the Digital Economy Bill is so important and is why we are committed to two megabits universal broadband throughout the UK. Infrastructure investment is a challenge right across major nations. That is why Infrastructure UK has been created and why we are giving it the right type of focus.

My last couple of points are on the right tax environment. The UK has the most competitive corporation and capital gains tax rates in major developed nations. The main rate of corporation tax at 28 per cent is the lowest ever rate and the lowest in the G7. Strong public finances are necessary for the long-term health of the economy and for jobs in the long term. We need a competitive tax environment for small firms.

Finally, we need the right support for innovation. We can all quote from different tables, but the one that I would like to quote from is that the OECD ranks the UK second only to the US in research excellence. As my noble friend Lord Giddens highlighted, we have and should continue to build on a successful partnership between universities and business, particularly in the area of research. The Technology Strategy Board has £1 billion to invest in this spending review. It is also important that a number of these projects have been in partnership with the EU.

We talk about innovation and enterprise. If I had been closing this debate in 1989, there would not have been an internet. There were very few mobile phones and the Berlin Wall was still up. The past 20 years have seen huge scientific and economic progress around the world. Britain has the strength, innovation and creativity to be a key participant in the growth of the world economy in years to come. The Government's focus is on supporting enterprise, fostering knowledge and helping young people to develop the skills and capabilities to reach their personal and economic potential. We are investing in infrastructure, ensuring open and competitive markets, building on our industrial strengths and, in particular, providing active and strategic government. Enterprise and innovation are at the heart of a successful economy. That is why we are backing them so strongly. I thank the noble Lord, Lord Sanderson, and I will respond to him in writing on cashmere sweaters and nuclear power.