Queen’s Speech - Debate (3rd Day) (Continued)

Part of the debate – in the House of Lords at 9:07 pm on 26th June 2017.

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Photo of Baroness Wheatcroft Baroness Wheatcroft Conservative 9:07 pm, 26th June 2017

The gracious Speech told us that Ministers will “strengthen the economy”—an admirable aim. However, while investing in autonomous driving vehicles and space travel might benefit the economy, some of us fear that the Government could make moves in a different direction, which would be a massive blow.

On 24 January, the Secretary of State for Exiting the European Union said:

“What we have come up with … is the idea of a comprehensive free trade agreement and a comprehensive customs agreement that will deliver the exact same benefits as we have, but also enable my right hon. Friend the Secretary of State for International Trade to go and form trade deals with the rest of the world, which is the real upside of leaving the European Union”.—[Official Report, Commons, 24/1/17; col. 169.]

That is a cunning plan that could be very beneficial to the economy, but the 27 countries gathered on the other side of the negotiating table do not seem to share the same vision of the UK being allowed to resign from the club while holding on to all the benefits. They seem to take the view that, if one eats the gateau, one no longer has it. Already, the Secretary of State for Exiting the European Union sounds less confident that the wizard idea he came up with can be delivered.

Without membership of the single market, it certainly will be crucial that companies become better at exporting to non-EU members. The UK’s share of the Chinese market, for instance, has fallen to around 1% over the last decade, lagging behind France, Italy and Germany, which do not seem to have been overly constrained by membership of the European Union.

The UK has some great exporting businesses but the challenge is to turn more of our smaller businesses into exporters. This is something which successive Governments have tried to tackle but with very limited success. In 2014, only 17% of medium-sized businesses—those with a turnover of between £25 million and £250 million —were exporters. The then Government launched a concerted effort to grow that, appointing trade experts to provide local support to medium-sized businesses. Ironically, they said at the time that English companies would become eligible to apply for up to £100 million in additional export support from the European structural and investment funds. I hope some did.

The gracious Speech referred to support for the export effort, and a more generous export credit regime would help. However, might we achieve more dramatic results if we could persuade big companies to each take a smaller one under their wing? It could be from an allied sector, rather than a potential competitor. The big companies have market knowledge, departments dedicated to export documentation and contacts. They know the ropes and they could, with little effort, help turn domestic businesses into global ones. Everybody would benefit from that. That would also boost productivity, which remains an issue for the UK. In his Autumn Statement, my right honourable friend the Chancellor of the Exchequer pointed out that it takes a British worker five days to make what a German produces in four. We lag behind the United States by 30%, France by 20% and Italy by 8%.

Investing heavily in innovation and infrastructure, as we are promised the Government will, should eventually lead to productivity gains. However, extensive research done by the productivity leadership group, led by Sir Charlie Mayfield, the chairman of the John Lewis Partnership, came to one overriding conclusion. Too many businesses simply were not focusing sufficiently on productivity. Put less politely, poor management may be the root of the problem. The much-talked-about skills shortage may extend to the boardroom. The productivity leadership group is aiming to change that by promoting best practice, but it will be effective only if owners of businesses, in both the private and quoted arenas, keep emphasising the importance of productivity. Sir Charlie Mayfield reckons that getting it right could add as much as £130 billion to the economy every year. Can the Minister confirm that the Government will continue to support the productivity leadership group with the very limited funding requirement that it has?