We face a period of more than usual uncertainty about Britain’s position in the world. As our Government start to tackle the daunting task of implementing Brexit, the world is also trying to guess how the new US Administration will play their part on the world stage when they assume power early next year. Brexit and the US presidential election have been singled out by commentators as leading to significant fluctuations in the exchange rate over recent weeks. We have heard much doom and gloom from survey firms and others, keen for a good story, on the adverse consequences for the British economy that will surely follow. All are now very excited, and this has provided opportunities for the speculators to make money.
At the simplest level, it is easy to accept the received wisdom that wild fluctuations in the exchange rate create uncertainty and will deter investment in the UK. However, I believe that for Britain a fluctuating pound is really just business as usual. Honda, Toyota and Nissan, some of our biggest overseas investors, have all reconfirmed their commitment to car manufacturing in the UK and further investment. Only this week, Google announced a further major expansion in the UK. The Prime Minister’s most recent foreign policy initiative was a trade mission to India, about which I hear good things and must congratulate her; both countries can now look forward to doing more business together.
We need to distinguish between the step changes in exchange rates caused by major world events, of which Brexit may be one—although some would argue that it was merely an event that pricked an already overinflated pound—and the background noise of daily currency fluctuations fuelled by the financial chattering classes. These should be ignored. I come from a background that means I do not think any Government in this day and age can really do anything to control exchange rates.
We should not be frightened of this change. We should reflect on the long history of this country as a trading nation and what that means. I have been involved with international trade throughout my working life, from the 1950s onwards, mainly in steel and manufacturing goods. Over that period, I have seen much change in the world economy and I know from experience that a trader thrives on change, which brings opportunity. Over the years and centuries, change has also brought many opportunities for Britain which were seized by the entrepreneurs of the day. These recent events will also bring opportunities for business and investment in the UK. If they are followed through, they will create jobs and generate tax revenues for the greater good. If I was a younger man, I would love to get involved.
We must therefore do everything we can in this House to enable British business to seize these opportunities as they arise. We need clear regulation and a certain tax regime; we need an educated and skilled workforce; we need modern infrastructure and good transport systems. These, I believe, are the things that matter to investors over the longer term, not the day-to-day noise of the currency markets. After all, if we can get all that right, we will have a strong Britain and a strong pound.
Let us look at the effect of a weaker pound on higher education. A weak pound means that studying in the UK is cheaper. Britain’s international reputation means that it is the number one destination for international students. We cannot afford to lose that status; in fact, we must strengthen it. Universities are looking for an increase in the fee income from overseas students from the present £3.7 billion to £4.8 billion in 2018-19, and a growth in home and EU students of over 10%. This is the time to really encourage overseas students to come here. Not only do they benefit from the experience but our own students benefit by interacting with people from different backgrounds. Bonds forged at university often last a lifetime and will open more doors to further trade and international collaboration in the future. However, encouraging more students is at odds with the current immigration policy, so we have to find ways to make sure that they return to their own countries when their studies end. The University of Wolverhampton, where I am chancellor, is doing all it can to promote these policies.
Let the Government do everything they can to assist our businesses and universities to build a Britain that will be as great in the future as it has been in the past. The world still retains a respect for Britain as a beacon for democracy—a reputation that has been put to the test by Brexit. Personally, I have always supported being in Europe, including joining the euro to gain all its benefits, but the people have decided. Speaking as a democrat, for that beacon of democracy to continue to shine brightly the Government must be seen to act on the wishes of the people by engaging with the EU on implementing Brexit now. Decisive actions on these issues really matter for our businesses and universities in making their investment decisions, not the daily fluctuations in the value of the pound, but this is no simple task. The Prime Minister must now be allowed to move forward with Brexit in an orderly manner, without irrelevant distractions. That in itself will reduce currency fluctuations.
]]>The outcome of the EU referendum was not the result that most in the higher education sector wanted, wished for or indeed expected. However, a decision has been made, and we must all accept the result and work constructively with the Government to support the best possible outcome for the UK during the negotiations and beyond.
Universities have a key role to play. They are a national asset that has played and will continue to play an essential part in promoting and driving economic growth, as well as ensuring that we offer and deliver a fairer society. I am certain that our British universities can thrive and prosper post exit but they must receive the right support from our Government. There is too much to lose.
The UK university sector is innovative, entrepreneurial and responsive. That is thanks largely to the autonomy of the sector—something we hope this House will seek to preserve and retain when the Higher Education and Research Bill is considered soon. We have seen positive signs of intent from the Government recently and I am very pleased to note the extension to the government guarantee for funding European Structural and Investment Funds projects. This complements similar guarantees regarding Horizon 2020 research funding.
So there are some good signs but much more needs to be done. We all understand that the Brexit negotiations will be complex, tricky and time consuming, but we must not allow our universities to be unnecessarily and unhelpfully constrained. Our approach should enable them to enhance and promote international research collaboration, with partners both in Europe and across the world; to gain access to increased levels of investment in research and innovation; and to develop workable policies to promote the UK as an attractive destination for all international students and staff, including considerate and pragmatic immigration policy reforms. Collectively, we have some 125,000 EU students and 43,000 EU staff at our universities—all adding value to our economy. We should also enable universities to foster and grow global opportunities for UK students and staff by enhancing mobility programmes, as well as create an environment that facilitates the recruitment and retention of the best available talent.
The UK university system is well respected around the world and we must not jeopardise this good standing. To do so would be detrimental on a number of levels. The figures do not lie. Last year the total value of knowledge exchange interaction between UK universities and their partners across the economy increased to £4.2 billion, and the higher education sector generates nearly £11 billion per annum in export earnings. We lead the world in return on investment from the commercialisation of research, and we match the US in our level of engagement with industry.
Universities help to create new jobs and new businesses in communities. Last year alone, more than 4,100 new start-ups were founded by UK graduates, a great many nurtured by our universities. The University of Wolverhampton has recently created the Caparo Management Suite as a forum space in which business leaders, academics and students can all come together to exchange ideas and promote new business opportunities and development. It is essential that we keep our education system international. Our universities do much for our foreign students but the UK benefits significantly in return.
At Wolverhampton, we pride ourselves on being the university of opportunity. We openly welcome foreign staff and students, who in turn contribute an awful lot in terms of talent, ability and commitment. They add value to the system and we must continue to attract and retain that talent.
]]>Most of the world has had a difficult a time in the past few years, but now the economy is doing well, not just here but in the United States, Europe and Japan. Britain is ahead of the rest of the world and it is time to look at how we can sustain that momentum.
First, I declare an interest as chancellor of two universities: the University of Wolverhampton and the University of Westminster. I know at first hand the
role that accessible quality education plays in economic regeneration. The opportunity to participate in education and gain skills must be available to all. This is what will grow the economy and ensure that we have a skilled workforce ready to meet the challenges ahead.
Other countries are accepting this challenge. The Government of India have set a target to have 40 million students in higher education by 2020, when it is forecast that India will supply 12% of the world’s graduates. China is expected to produce 29% of all higher education graduates by then. I am glad that the Prime Minister had exchanges with students from both countries on his recent visits.
Higher education is now a bigger industry in the United Kingdom than the aircraft industry, agriculture or even the pharmaceutical industry. Universities generated £59 billion of the UK’s output in 2009, during the first year after the recession, and created 670,000 jobs, either directly or indirectly. Yet the UK is still ranked by the OECD in seventh place for the skills level of the general population, which indicates that we need to provide more resources for adult learners. We know also that despite a 30% increase in participation in higher education by young people from less advantaged backgrounds, we still have some way to go to ensure that our economic recovery benefits from the creativity and entrepreneurialism of people from all walks of life.
As the only university in the Black Country, the University of Wolverhampton is committed to the regeneration of the region and providing the educational opportunities that I speak of. However, universities such as Wolverhampton are facing significant funding cuts that will affect their ability to provide these opportunities. Funding for teaching and widening participation must be protected to ensure that we maintain and grow our skills base across all parts of the population. In the Black Country alone, 80,000 more graduates are required to bring the region close to the national average. This is not unique to the Black Country. Many parts of the country have the same needs, and those future graduates ought to come from the regions that need them.
In the past, research and science budgets have been protected, while teaching and widening access funds have been cut. This needs to change. Research is not the only or the most effective way to grow an economy. Developing the workforce of today and the future is crucial to economic development, and we must enable all who can benefit from higher education to have an opportunity. This provides concentrated and embedded economic growth across the country.
The British model of higher education prepares students well for jobs. At the University of Westminster we welcome students of 150 nationalities, and we are working hard to upgrade it to world-class status. Today, the university is a world leader in photography, film and media, and is ranked 19th in the QS world rankings. It has probably the best complementary medicine department in Europe, as well as a very successful department of biomedical sciences.
London continues to attract many of the most able international students, but the challenges posed by changes to our immigration system mean that the numbers are falling in comparison with those of the
United States, India and China. This is affecting our higher education market, which is currently valued at £5 billion to the UK economy and is forecast to rise to £16.9 billion by 2025. Therefore, we must remove students from the net migration target, as most are here for only a short time.
The number of higher-level skilled jobs is set to grow over the next decade. By 2020, more than 80% of new jobs will be in occupations with high numbers of graduates. Hence students completing a UK degree will be more valued than before.
Like Andrew Witty, I believe that economic regeneration should not be an add-on to the core business of a university; it should be intrinsic in all that it does. At the heart of course development and design, and of research and development, must be the driving force of meeting the needs of our economy. But public funding, especially for teaching, needs to be protected. Only by doing so will we provide the innovation and skills base that we need to sustain and, more importantly, grow our economy.
]]>I have shared my life almost equally between two member states of the Commonwealth and have been an ardent supporter of it. At the outset, I want to
express my admiration for both the concept and the institutions of the Commonwealth. Conceptually it is unique—a voluntary association embracing a diversity and fraternity unusual in today’s world. This outreach, extending to every region of the globe and including the largest spectrum of nationalities and faiths, gives the Commonwealth a rare stature. It is an invaluable asset that can and should be more vigorously employed in contributing to the resolution of international issues.
Nowadays, international opinion is at long last beginning to have a serious influence on the behaviour of states. This is evident in the situation that prevails in the host country of next month’s meeting, Sri Lanka. That is also true of other countries hitherto impervious to world sentiment. It is now timely and appropriate for the Commonwealth as a collective to be more assertive in its diplomatic endeavours. The Commonwealth would become even more persuasive if it were to mobilise and utilise the services of its many elder statesmen whose credentials carry significant authority. I therefore urge the Government’s delegation to CHOGM to think along these lines and seek the collaboration of other nations in making the Commonwealth more effective in contributing to peace, justice and freedom.
As members of a freedom-fighting family, we were surprised and delighted when, at the time of Indian independence in 1947, India’s Prime Minister Jawaharlal Nehru took the decision for India to stay in the Commonwealth. This encouraged the notion of a multidimensional organisation, diverse in its activities and membership. Institutionally, the Commonwealth has accomplished much through its secretariat and associated groups. I am particularly encouraged by its activities in the education sector. Being actively engaged in the work of several schools and universities in India and this country, I can testify to the value of such initiatives as the Commonwealth of Learning and the Commonwealth scholarships.
However, institutions are most successful when they engage the broadest constituencies. The Commonwealth draws its life-blood from the Governments of its members, but it has been sadly lacking in connecting with ordinary citizens—in establishing wide popular support. Therefore, I hope that the institutional structure will increasingly involve the public of the member states—for instance, in supplementing English as the official language of Commonwealth communications. This can only enrich and strengthen interactions.
The Commonwealth is at an interesting moment in its evolution. To continue its mission, it must change, adapt and grow. If it does not, it will become less relevant and marginalised. That is a fate that its distinguished record does not deserve and to which I hope next month’s gathering will give some serious consideration.
To date, the position of head of the Commonwealth has been vested in the monarch of the United Kingdom. It has been admirably filled by Her Majesty the Queen, to whom we are all indebted for her wholehearted commitment and genuine interest in the Commonwealth. She has set an extraordinary precedent. Looking to the future, I think that what needs to be considered is a clear succession protocol or procedure.
]]>States and Europe to advocate military action to punish whoever in their view is responsible for recent transgressions. To witness evil and not to fight is not credible, yet to set oneself up as judge, jury and executioner over another sovereign territory is to assume an arrogance that itself cannot be condoned. The notion that those who have the military power should intervene in others’ disputes at their own discretion could have potentially dangerous consequences, especially in regions such as south Asia. The defence of human rights, if it is sincere, is commendable, but it must be authorised by proper international procedures and sustained by wide international support if it is to be credible.
In this instance, even those who do not have an in-depth knowledge of the Syrian conflict are aware that layer upon layer of sectarianism, ethnic conflicts, tribal wars and other hatreds have been unleashed. Jumping into this turmoil seems at the very least to be lacking in wisdom and failing to recall the recent lessons of both Iraq and Afghanistan. Our international reputation is not enhanced by appearing to be trigger-happy. So many other western interventions in non-western areas since the Second World War have been disasters, such as in Vietnam, Algeria, Suez, Lebanon, Libya and Egypt, to name but a few. In these days of our own internal difficulties, we do not need more. There are many other methods—from sanctions and indirect assistance to evoking international law—that can be pursued. Let the cauldron boil if it must, but let us not voluntarily get burnt by plunging into it.
People to whom I talk, particularly in the developing nations, cannot understand why we keep taking it on ourselves to intervene in other countries’ issues. We must not forget the heavy cost in terms of those in our own armed services who lose their lives or suffer terrible injuries in these conflicts and whose families are so affected. I pay tribute to all the brave service men and women who sacrifice so much.
Finally, let us remember one sad message of history. There is no such thing as a short Middle East war. Once you are in it, you are in for a long and brutal ride. The proposed conflict fills me with a deep sense of foreboding. That is why I urge the Government to practise restraint and beware of becoming an instrument of the confrontational arrogance of others.
]]>Freedom of the press is vital in maintaining democracy. Fortunately, Britain has some of the best journalists in the world who have set the benchmarks for ethical reporting. In India, we admired many British journalists, such as James Cameron and Mark Tully. Just last month, Indian journalists presented their lifetime achievement award posthumously to Sir Charles Wheeler.
However, ordinary citizens who find themselves caught in the media spotlight, often at a time of extreme crisis or loss, should reasonably expect that their personal information is not illegally accessed and published. The victims of the press have no voice and no platform. We must congratulate the Hacked Off campaigners who have taken a brave stand against an industry, some of whose members seem to regard themselves as being above the law.
When Lord Justice Leveson was preparing his report, even he could not have foreseen that a supposed hoax call by two Australian radio presenters on
This case surely must represent the pinnacle of the abuse of power by the media over the individual. With power goes responsibility. Yet again the media have failed fully to accept that responsibility. It is now time for that power to be curbed and I urge the Government to endorse fully the recommendations of Lord Justice Leveson's report, especially when it was commissioned with all-party support.
Globally, the newspaper industry is losing its market share to social media. As circulation numbers fall, advertising revenues fall. Increased pressure to retain readership causes even more sensational reporting and a further decline in ethical standards. We have already seen in the banking sector how the pressure to produce extra profits and bonuses led to a collapse in business standards and the resulting financial crisis from which we all suffer and are likely to suffer for a long time. It is sad to see that the newspaper industry is going the same way.
There is no point in discussing self-regulation, because we know it has failed in banking, in the media, and in a lot of other services. At the moment, it is difficult to find an area where it has succeeded. Another revelation in the Leveson report is the extent of corruption involving the media, especially the cosy relationship between some of the media establishment and our politicians. The level of corruption in Britain is a topic now being openly discussed here and abroad. I quote recent comments by the executive director of Transparency International, one of the UK's leading anti-corruption organisations, on the publication of its 2012 Corruption Perceptions Index in December, where the UK ranks 17th in the world. It said:
"Despite the passing of the Bribery Act, and measures to improve transparency in government, the perception of experts is that the UK continues to be more vulnerable to corruption than the political establishment is willing to admit ... The steady stream of political scandals has exposed a worrying complacency at the heart of UK politics. Until the Government acts with urgency to put a cap on party funding and introduce tougher regulation of lobbying and the revolving door, the UK will not be able to rise higher in global anti-corruption league tables".
Corruption extends well beyond simple monetary gain to the abuse of power. Leveson has revealed that our politicians and Governments have had what is at best an unhealthily close relationship with the press over many years and, at worst, something more sinister. Our leaders must recognise that others look to them as an example. Their behaviour must be, and must be seen to be, unimpeachable at all times. They set the standard for the nation to follow. There can be no deals, at any level, between the media and our politicians.
I have seen how corruption in certain countries has destroyed the fabric of society for ordinary people and lowered the prestige of those countries internationally. This House has often discussed the question of corruption in other countries; perhaps the time has come to recognise that it is also happening here and something needs to be done, and speedily.
]]>I am glad that the Chancellor has announced that the Government are taking action on the report, although he will respond formally in April. It is a happy coincidence that today's debate is timed to follow the Autumn Statement. I am glad that the Chancellor is to take some immediate action. Speed is of the essence and I urge the Government to implement the report quickly in its entirety because decentralisation of power to the regions is long overdue. However, we must be careful not to create more layers of bureaucracy, more quangos and more consultants which will produce more inertia, of which there is too much already.
We need to bring together the education and business sectors. Education has been a lifelong interest of mine and I have been active in several institutions of higher education. When I was a student at MIT, I was most impressed by the strong collaboration between business, government-sponsored projects and universities in the United States. Universities get their funding while government projects and industry benefit from first rate research and technology. We in the UK have first-class universities and we need to encourage more collaboration along those lines. I have spoken on this subject many times. Innovative technology will help to build a more dynamic economy that will attract more foreign investment than public relations exercises or cash incentives.
This report has the potential for a dramatic impact on the economic crisis so I strongly endorse it. I hope that the Government act today to pursue its implementation with the same energy, commitment and determination that has been shown by the noble Lord in producing it. I was planning to ask for this debate in my name but, true to his reputation, the noble Lord beat me to it.
]]>I thank the noble Lord, Lord Jenkin, for sponsoring this important and timely debate. He has great experience both in industry and in government. The noble Lord might recollect that as a very young entrepreneur I came to see him when he was Secretary of State, and he was most helpful.
As chairman of the Caparo Group, an industrial manufacturing company, I declare an interest. Competitiveness is vital for the future of our country's economy, and nowhere is that more significant than in manufacturing. Having been intimately engaged in that activity all my life, your Lordships will appreciate why I will focus largely on that sector. After a long while, the manufacturing segment of our GDP has shown an appreciable increase in the past three years. That is intrinsically commendable, but it is not enough. Britain is now the ninth largest manufacturer in the world, although that is a far cry from our ranking in the past. My own experience and evaluation tells me that, given the appropriate encouragement, we can substantially enhance that position.
Our manufacturers are doing almost everything they can and, encouraged by the progress made in recent years, are keen to do more. However, for Britain to get the fullest benefit of their endeavours there must be a much more supportive environment. Today, many manufacturers feel that a more positive and creative approach by the Government would help to engender the conditions that would enable them to maximise their potential.
There is considerably more that the Government can do to structure the context in which manufacturers can achieve a higher level of competitiveness, a condition that would be of great benefit to the country as a whole. We live in a world of globalised interaction, a world in which many Governments encourage and support their manufacturing industries. We need to do this, and fast, otherwise others will gobble up the gains that we have so resolutely made.
Here are a few suggestions for consideration that can be implemented in short order. Above all, there is the question of inadequate access to finance. It is now almost four years since the onset of the banking crisis, with its crippling impact on credit availability, particularly to small and medium-sized manufacturing enterprises. Despite government initiatives such as Project Merlin, the money is just not flowing, even from the institutions within its control such as Lloyds and RBS. In view of this, it is now imperative to create a new corporate institution dedicated to industrial finance, a high-powered, well-endowed industrial bank of a kind that I have been advocating in this House and elsewhere since this financial crisis began in 2008.
I have two other concerns in this financial domain. The first is the cost and time-consuming effect of red tape. Despite occasional reassurances, the bureaucratic tangles of regulatory consent and like procedures continue to escalate. Of course we must have protection, but our excessive foot binding is making it easier, cheaper and less risky to establish projects in countries where these burdens are less onerous. My second concern is the consequence of the current exceptionally low interest rates on the overhanging pension burdens on business. Two weeks ago in our debate on the economic growth strategy, I drew the House's attention to the serious impact of this looming thunder-cloud over the competitiveness of industry. This needs to be addressed and addressed fast.
If our competitiveness is to be sustained, we must rethink energy pricing policy. While I strongly endorse environmental efforts to prevent the destruction of our ecological heritage, we need a sense of balance. The competitive struggle is a tough, international battle that is hard to fight with one hand tied behind our back. There are industries in which energy is a major component of production. Try as one might, it is simply not possible to avoid or reduce this. Our energy pricing is such that our production languishes while our industrial competitors' energy costs are considerably below UK costs. Our present system of carbon taxes is basic to this problem. It is just not working. Up and down the supply chain of many remaining heavy-process industries, jobs are being lost and businesses are in trouble.
Innovation is the lifeblood of competitiveness. It can be achieved only through better skills and training and the enhancement of industrial education and research environments. There are two ways in which we can accelerate this process. Large companies already maintain their own facilities to supplement public sector education. Through appropriate tax and other incentives, we can encourage these larger corporates to mentor less well endowed mid-sized businesses to establish jointly the type of technical institutions in which innovation and creativity will flourish.
In my distant youth I was a student at the Massachusetts Institute of Technology. There I saw how the Government and the corporate sector worked with the universities to carry out industrial research for which the universities were paid. This strengthened the financial position of the universities while providing innovative ideas and product design to the corporates and to the Government. Ever since, as your Lordships know, I have strongly endorsed these synergies. We have made some progress in this but I suggest consideration of a crash programme in which government resources anchor such interconnections. With other countries increasing their research budgets, perhaps we can offset our own financial limitations through such a pooling of resources and expertise.
Industrial investment is a long-term process and industry needs a clearer sense of economic direction in order to help that investment. The biggest issue for industry at the moment is the banking crisis. This is so fundamental to our national economy that it must be investigated intensively and resolved. A resolution must avoid any political point scoring, as the whole country needs to have its faith in the financial sector restored. The LIBOR fixing has adversely affected everyone. It has hurt the reputation not only of UK financial services but the country as a whole. We cannot afford that. The Minister is, in my view, one of the best people to give advice on this subject, and I hope that the Government will seek his wise counsel, despite his being in a different department.
]]>That must now change if we are to reassure those involved in the manufacturing industry of their worth and ensure that our most able engineering graduates are not tempted away by the bright lights of the City and the financial markets. Manufacturing is still a solid activity providing stable jobs and long-term careers that can embrace the latest thinking in design and technology. Furthermore, it is vital that a country such as Britain has a strong manufacturing sector for strategic as well as economic reasons. We therefore need to keep manufacturers busy.
Two of the largest sectors of demand for UK manufactured products are the public sector and exports, particularly to the EU. The Government expect private sector export-led growth to offset public sector austerity and spearhead a recovery. Yet what has happened? Manufacturers that have worked for years to achieve world-class competitive standards for the UK now face not only a dramatically weakened eurozone, but a strong pound. Profitable exports to continental Europe are thin on the ground. By adopting policies that will increase real demand for UK manufactured products, the Government can enable UK manufacturing to play a full part in leading an economic recovery.
The cuts in the new infrastructure projects for roads, schools and hospitals of recent years cannot be quickly reversed. Recent moves to restart many of these projects, although welcome, will take too long in the planning process to be of much help in getting the economy growing again in the near term. Instead, the Government should focus on the backlog of infrastructure repairs and maintenance. This would also engage the severely depressed construction sector in a streamlined and accelerated tendering process to rapidly generate jobs with manufacturers and contractors.
A keystone of recent government strategy has been quantitative easing by the Bank of England. While it may have aided money supply problems-some people of course have questioned this-it has backfired on British business. Quantitative easing has helped to artificially depress UK government gilt yields-the rate which the Government have to pay to borrow money-and they are now at their lowest level for more than 300 years.
That may seem like a good thing, so why is it a problem for business? Indeed, it is a good thing for the wider economy. However, the problem is that the same rate is also used to calculate today's cost of future pension promises. The lower the gilt yield, the bigger the liability that is calculated. Extremely depressed gilt rates have hugely increased pension scheme liabilities and the deficits of many UK companies. According to the Government's Pension Protection Fund, more than 85% of the 6,432 private sector pension schemes in the Pension Protection Fund index were in deficit at the end of May to the tune of £312 billion. Many of those schemes are supported by manufacturers.
However, only a year ago, less than 65% of those schemes were in deficit, with a much more modest total of £25 billion. Despite assets increasing by £41 billion, liabilities have risen by a massive £329 billion over the year. This has placed UK companies under increasing pressure to fund artificial deficits at the expense of real investment in growing their business. If business cannot invest and thrive, who will be left to pay the pensions? With the way in which pension liabilities are increasing, many manufacturers cannot help wondering whether their business is a pension fund with a manufacturing company bolted on instead of the other way around-almost the story of the tail wagging the dog.
Surely that cannot have been the intended effect of the quantitative easing strategy. In any event, let us take a longer-term view on evaluation of pension liabilities that matches the longer-term nature of the pension commitment. This would allow businesses the stability to build robust plans to meet their pension obligations to the benefit of all, rather than the highly volatile and disruptive approach that currently prevails and has been a competitive drag on the UK economy for far too long.
I would, however, like to congratulate the Chancellor and the Governor of the Bank of England on their recent initiative to provide funding for business through further support for bank lending. As the Government know well, small and medium-sized businesses have suffered for far too long from a lack of adequate sources of capital, which I am sure has been a contributory factor to the decline in manufacturing in this country over the past 40 years. We have of course seen initiatives in the past which, despite good intentions, failed to help those who were targeted. This time it will succeed only if the Government ensure that industry receives the funding it needs. If the current policies and programmes fail, this country will continue to lose its place in the global economic hierarchy. That is why I urge the Government to take a more realistic approach to economic growth and the sectors that can contribute to it.
]]>The Zoroastrian community has always been a minority community in whatever country it has existed. But by its conduct and its contribution, it has without exception been a model of good citizenship, holding its members to the highest standards of ethical behaviour. At a time when grievances are often provoked and expressed by violence, this approach has been a lesson for us all. As Mahatma Gandhi said:
"An eye for an eye will make the whole world blind".
I now move to the larger implications of the noble Lord's Motion: the contribution made by minority ethnic and religious communities to the United Kingdom. Too often, minorities are viewed by significant parts of the majority as takers and not givers. Of course, this is palpably wrong, as is evident from the minority involvement in every field of endeavour: from public life to commercial enterprise, from the arts to sport, from education to government services. Minority involvement is growing and is now irreversible.
I do not need to remind your Lordships that this has been somewhat slow in coming, not because minorities were reluctant or unqualified but because barriers were placed in their way. Recent times have seen these formal and informal obstructions being dismantled. We must continue these efforts and guard against any reversal and, in doing so, open up avenues of advancement to higher positions, a situation in which recent studies have shown there is considerable inadequacy.
People are not born with discrimination in their blood. They are socialised into it, as I know well. I visit London Zoo as often I can because it is partly a memorial to my infant daughter. I well recall how, 46 years ago, her last tragic months were brightened by regular visits there and by being with other children of all communities. When London Zoo was in danger of closure in the 1990s, I was delighted to step in and help. My delight today is to see how children of various ethnic communities mingle freely and enjoy companionship without any regard to racial, religious or other backgrounds. In this camaraderie, small children have many lessons for their parents.
I have been, and am, chancellor of two British universities: the University of Wolverhampton and the University of Westminster. Both have overseas branches and consequently a sizeable student body representing a number of nationalities. It must be remembered that when these overseas students return to their countries, they continue to make a great contribution as ambassadors for Britain.
The noble Lord, Lord Bilimoria, succeeded me as chancellor of the University of West London. He will confirm that a majority of younger students is far less concerned with ethnic and religious differences than with joint activities. These are the very people who, as they grow into full adulthood, can harbour prejudices that are of much concern in this country. Responsibility for enlightenment cannot be left to the individuals alone. That is why I urge the Government to make every effort to encourage the expansion of educational curricula to include more information and analysis of minority contributions.
These are difficult days in community relations, and economic distress often makes them more difficult as retrenchment takes place that often affects minority communities first. However, whatever areas are drawn down, that should not include cuts in the minority-related programmes. Small economic gains must never be at the expense of the social fabric of the nation.
In common with the majority of Members of this House, I have over the years been pleased to serve on a number of charitable, government and non-government bodies, including the NSPCC, the Prince's Trust, the RNIB, the Royal Albert Hall and London 2012. I chaired the Indo-British Round Table-
]]>As we engage in these efforts, we should broaden our approach. The structure of the constitution and issues such as the composition of this House have become our primary focus; however, I feel that it is as important to consider reform and revision of the processes, the procedures and the operating functions that underlie the constitutional structure and make it work. These are the nuts and bolts that give the structure its strength and assure its legitimacy.
In the penumbra of larger reform, we now have an excellent opportunity to make sure that these operating procedures and the ways in which this House regulates itself will conform to the highest standards of fairness and probity. In this context, four principles need to be incorporated in our working processes. Regretfully, they have not been fully adhered to in the past and this, as your Lordships are aware, has been the source of considerable controversy.
The first principle is equality in the way the rules of this House are applied. If there are any investigations or allegations regarding Members of this House, all those concerned must be treated equally; selective application of rules against some and exculpation of others is discriminatory. When it is known that many have done what only a few are castigated for, that can only be a gross transgression of British justice.
The second principle that needs to be clearly established is the undesirability of ex post facto application of rules. Rules and requirements that are in place at the time of alleged actions should be the rules that apply to any such situations. As far as I know, retrospective violations have no status and are not recognised in the courts of law. Why, then, should they be the basis of punishment for Members of this House? It may also be appropriate to consider how committees examining allegations against Members are composed-whether it is more appropriate to select committee chairpersons from among those who belonged to the House when the alleged events were supposed to have taken place.
The third principle is that of transparency. When this House or its committees conduct investigations or examine evidence, it is essential that all relevant documents be made available. Scrupulous care should be taken that nothing is omitted or withheld.
Finally, I believe it is essential that in any proceedings against a Member of this House, that Member should be allowed some legal representation, especially if he or she is to be subject to unrestrained cross-examination by legal luminaries. Simply summoning Members and denying them the right to legal representation is something that our justice system would not tolerate and nor should we.
Your Lordships will not be surprised at my interest in these matters. Experience, after all, is the parent of insight. However, my primary concern is that we govern ourselves with the same degree of propriety that we expect from the civil institutions of government. Reform will really be reform only when it reaches all levels. Widening the scope and application of reforms of this House allows us an opportunity to do this-an opportunity it would be unwise to neglect.
]]>It is clear that economic policy is the instrument that makes or breaks a nation. When so much of the UK's destiny is at stake, we must examine the policies that will determine our economic future. There is a great deal of economic knowledge and wisdom in this House and when we discuss economic issues a good amount of debate is focused on dynamic, even glamorous, sectors of the economy such as information technology, financial services and new energy resources et cetera. That is well and good, but it sometimes underemphasises or overlooks the manufacturing sector.
Today, I focus on manufacturing because my entire life has been involved in the manufacturing industry and I am deeply concerned about the current state of it in this country. What is needed are some policy initiatives and a sustained follow-through. I shall suggest a few measures that I believe could soon create the environment in which UK industry could flourish once more.
First, reduce the administrative burden on industry. The present taxation arrangements, pension structures and human resources regulations are needlessly complicated. I congratulate the Chancellor on making an effort yesterday, and I hope that it will be successfully implemented. Secondly, there should a tax distinction between financial services businesses and industrial companies. Manufacturing cash flow requires large outlays over long periods before any money can be recovered, which surely deserves tax recognition. We also need to revise R&D tax credits to encourage investment in practical production processes. Thirdly, we need to stimulate small enterprises, which are among the most innovative businesses, by giving them special capital allowances and lowering their tax thresholds.
Initiatives like the enterprise finance guarantee scheme are supposed to put cash into the economy, with the Government providing guarantees to the lending banks. In reality, banks are still asking small business owners to provide personal guarantees against borrowing. This is why, speaking in this House on
Even the United States, the citadel of free enterprise, is talking about setting up a state-sponsored infrastructure bank because it is evident that this is one of the most effective ways to mobilize capital for national purposes. There is a shortage of engineers in manufacturing industry, partly because finance industries offer graduates better incentives. It is expensive for manufacturers to take new people and train them. Why not give capital allowances so that industry can hire people? That would solve the problem of skills shortages and give employment to university graduates, many of whom cannot find a job. There should also be incentives for larger businesses, public and private, to form closer links with universities such as my company has with Wolverhampton University, which has reviewed over 1,000 potentially commercial inventions.
We hear a lot about manufacturing success. However, in the past 30 years manufacturing's contribution to GDP has declined from 30 per cent to 11 per cent. In spite of that, manufacturing is doing well thanks to the efforts of our managers and workforce, and I congratulate them. They have performed with exceptional capability in adverse conditions. Without them there would be hardly any UK industry. Conversely, given appropriate support of the kind that I have outlined, our workers could produce world-class results.
In the mean time, other countries have seized opportunities. China, India, Brazil and other countries have focused on manufacturing. Look at the numerous visits that Western leaders now make to these emerging economies. Statesmanship is now salesmanship. This is surely the grand paradox of our age-leaders who pay obeisance to manufacturing abroad while tending to neglect it at home.
UK Governments always begin by saying that they want to help manufacturing. I do not doubt the good intentions. We in manufacturing are waiting for this Government to put into practice an effective industrial policy, but we should not have to wait much longer. If we do, we risk evolving into a "comprador" nation, simply buying and selling the manufactures of others and servicing their needs. Manufacturing is the bedrock of our independence and, with sensible policy corrections, can be a powerful source of steady employment and social mobility. In the larger sweep of history and in the lives of nations, these are things that really matter.
]]>The problem of sub-prime lending in the United States, compounded by the irresponsible lending by some of the world's biggest banks, has brought the world's financial system to the brink of collapse. In the past few months, this has spread to the wider economy and manufacturing is now facing very tough times. Most astonishing is how quickly things have changed. According to EEF, the manufacturers' organisation, the first half of 2008 was one of the best on record for manufacturing and even the third quarter looked good, if not great. However, recent indicators have demonstrated a rapid fall in confidence. The most recent official statistics report that manufacturing output was 1.9 per cent lower in the three months to September compared with the same period a year ago. Meanwhile, EEF's latest business trends survey shows that manufacturing activity has deteriorated significantly over the past three months and firms are extremely pessimistic about the outlook.
As well as the EEF figures, I have experienced this in Caparo. While I do not operate the business—I am a non-executive chairman—it is managed by my son, Angad, who is chief executive. As a father and founder of the company, I am pained to see the struggle that the Caparo family go through everyday to ensure that the company keeps its head above water and remains robust.
The results to the end of August were strong. They were helped by the relative strength of the euro. Since then, European economies have weakened and almost all customers, whether in the automotive sector or any other sector that Caparo serves, have been hit hard. The situation in the fourth quarter is almost as though all activity has stopped as people try to burn through their inventory in order to conserve cash, also without much success. Of course, there is the added struggle that companies have with the pension costs as a result of the recent fall in stock market values.
There remain some reasons for hope. First, manufacturing has been through massive change and is far more resilient these days. Secondly, the Government have provided strong and determined leadership. There is no doubt in my mind that, after a decade as Chancellor, my right honourable friend the Prime Minister has the experience, ability and passion to lead us through these difficult times. He has already shown his commitment and determination.
Moreover, business welcomes many of the measures announced in the recent Pre-Budget Report and the Queen's Speech. Governments tend to focus on the big companies and sectors, but small and medium-sized enterprises remain the economic lifeblood of this country. SMEs welcome the delay announced in the PBR to the planned rise in the small companies' rate of corporation tax, recent proposals on export credit guarantees and the small business finance scheme. However, all business will be concerned by the proposed increase in national insurance contributions.
I suggest that the help available to SMEs should be made on the basis of a company as an entity. Any company owned by a larger group but operating as a separate entity should be entitled to the same help as an independent SME. Otherwise, we are hastening the demise of those subsidiary companies, as they will not be able to compete and the tendency of any group is to close subsidiaries that cannot remain competitive.
On the Queen's Speech, one of the most pressing issues facing business is getting the banks to start lending again. Many companies have reported the withdrawal of, or changes to, their credit or overdraft facilities at very short notice. However, Caparo's experience with its main banker, Barclays, has been very good. My chief executive tells me that the bank has been helpful and understanding. I hope that no noble Lord is a director of Barclays in case it changes its mind after my speech.
I hope that the Banking Bill will end the uncertainty surrounding lending terms and conditions. However, the problem of how to ensure that we keep finance flowing to business, while allowing banks to assess risk and take commercial decisions, remains. There is no easy answer, but perhaps it is time to set up an industrial development bank with a majority of real manufacturers on its board. There is increasing difficulty in accessing credit insurance. Many companies have recently lost their cover and are ending up with stock that they cannot sell. Business needs good regulations and fewer of them to cap the burdens of red tape. While we must avoid a return to central planning or bail-out of failing industries, the Government have a role to play and it is time for them to play strongly.
To conclude, the UK still has a manufacturing base of which we can be proud. The Government have taken steps to address some of the short-term challenges that we face, but issues still remain. Manufacturing must continue to play a key role in the economic future of the United Kingdom. It is high time that the Government listened more to the people who run manufacturing industry.
]]>We have heard six excellent speeches, a variety of points of view and some statistics have been quoted. In my personal life I have always been afraid to use statistics too much so I shall try to stay clear of them. I am a member of the Economic Affairs Committee and contributed to this report. I am aware of its contents and the exchanges initiated by my noble friend Lord Peston. Let me commend the excellent chairmanship of the committee by the noble Lord, Lord Wakeham. As he said, in his time we have produced many reports. He has been a great chairman
I have also read the critique by my noble friend Lord Peston. I agree with many of his points, although I might not have made them quite so forcefully. I have immense respect for his views. My argument is that because of media manipulation those parts of the report which have got into the public domain have acquired a completely different interpretation than the one intended by most members of the committee. I believe everyone on the committee was agreed on the contribution to the workplace and the economic benefits that the immigrant community has brought to this country. As a matter of fact, Britain has been a country of immigrants for a very long time. A debate like this will always happen in any country that has an immigrant population, and will become more intense because of the unfortunate economic situation we are in at the moment. However, my experience says that in the end the British people historically have recognised the benefits of immigration, which is why they have accepted immigrants as being of great value, not only to the economy but to social and political life.
The status Britain has enjoyed through history compared with its size and population is largely due to the fact that we welcome immigrants from all over the world and have recognised their value and contribution. In my experience, immigrants bring in fresh ideas, more vigour and a greater desire for success. That is natural because to be a success in a new country one has to work at least 25 per cent harder to be counted at par. I know this from my personal experience and 40 years of hard work here. There is no bigger example of that than the victory last week of Barack Obama as President of the United States. He was not elected because he was an immigrant but because he brought new hope to the people of the United States and to the world. I started my business in this country with a loan of £5,000. Today the company of which I am founder and chairman, the Caparo Group, which is managed by my sons, has a turnover of over £1 billion and employs more than 3,000 people in Britain and another 5,000 in the United States and India.
I shall get back to the report. The committee reached some of its conclusions based on the evidence of GDP per capita. Using that as a basis to assess the benefit of immigration, however, is fundamentally flawed. I shall give you an example. One immigrant arrives with his wife and two children. Using the GDP-per-capita model, his contribution to the economy is divided by four. But my contention is that after 10 years his children grow up and his wife finds work, and then you have four people contributing to the economy, an increase by a multiple of four—not to mention the benefits that children who have received a good education here will take forward. It is a fact that children of all nationalities who learn together are better equipped for the future.
I had that experience myself almost 60 years ago when I went to study at the Massachusetts Institute of Technology. I gained as much from my fellow students who came from many other countries and their approach to life as I did from my studies. You should not calculate the potential of the immigrant family based on one individual at a particular time. It is the same thing in business: when you make a capital investment your return on capital goes down in that year but eventually you will get a much bigger return, and that is why you continue to invest. Investment in immigrant communities has to be looked at on a more long-term basis and not a short-term one to suit some short-term results, otherwise we will be in the same situation as the financial community, which has also been looking for short-term results—and look where that has got us. Short-termism, in my view, is always dangerous.
If Britain did not have an immigrant community—I know this myself from running an industrial business—we would not have a labour force, the same productivity or an economy of the size we have today. We would have lower standards of living, higher inflation and very little influence in the world, which would reduce Britain to a second-rate country. If avoiding that scenario is not a huge benefit, I really do not know what is.
I do not think that there is anything wrong with the report, merely the way in which it has been interpreted. Immigration is too complex a subject to be looked at from the narrow viewpoint of GDP per capita. As I said, I shall not go into any of the statistics because enough has been said and written. The Government's response to the report has been robust and comprehensive, and I recommend it. In the past 25 years, this country has transformed its work ethic, and for that I congratulate the noble Baroness, Lady Thatcher, on her contribution in the 1980s as well as the employers and trade unions which took the lead from that and worked together in a renewal of the industrial scene of this country. I also congratulate my right honourable friend the Prime Minister on steering the British economy, during his time as Chancellor and as Prime Minister. For 12 years, Britain has enjoyed a much stronger economy than the other G8 countries and even in today's financial crunch is playing a great role on the world stage. The world is looking to my right honourable friend for leadership. He has played a great role in making sure that the work ethic in this country remains strong and that entrepreneurship is encouraged. I am a strong believer in Britain and in what this country can achieve. I am very proud to be British, proud of the country I come from and proud to be an immigrant.
Finally, I say that globalisation, which has benefited all of us, cannot be complete without the free movement of people.
]]>What progress has been made in acquiring the land for the 2012 Olympic and Paralympic Games and for the long-term regeneration of the Lower Lea Valley.
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