Inequalities - Motion to Take Note

Part of the debate – in the House of Lords at 3:30 pm on 30 November 2017.

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Photo of Lord Monks Lord Monks Labour 3:30, 30 November 2017

My Lords, I, too, thank my noble friend Lord Liddle for his initiative today in launching this debate on a subject which is very important for the future of our country. His initiative coincides—I guess it is a coincidence—with the social mobility report to which he and other noble Lords have referred. It graphically shows the imbalances in our country today. The picture is of a far from united kingdom. It is a nation where children’s life chances, the results they can expect at school and the pay they can expect to earn are shaped by where they are born. The uncomfortable truth is that London and the south-east begin to look like a separate country, distinct from the rest of the nation, despite pockets of intense and profound deprivation in the capital, of which we are only too aware. We have growing wealth and growing poverty side by side in our country today. That is the nature of the challenge we face. I saw some remarkable figures the other day. I have not had a chance to check whether they are absolutely accurate, but they show that in downtown Blackpool a man’s average life expectancy is 67.5 years whereas in Westminster it is now approaching 90 years. That is the difference in health and wealth, and those two things go together to a large extent.

We have been developing more and more in an unbalanced way with the emphasis on London and on an overmighty financial services sector, with short-term shareholder value becoming the leitmotif of private companies on a very wide scale, as the noble Lord, Lord Shipley, said, and inadequate attention to patient investment, skills building and genuine entrepreneurship of the building-business kind and to partnership working with employees and—yes—trade unions. One day there will perhaps have to be a monument to all the household-name companies that died in the post-war period, such as ICI, British Leyland, Lucas and many more. It will need to be a pretty big monument. This country led the world with the first Industrial Revolution, and sadly we have been leading the world with the de-industrial revolution. The staple industries on which particular towns and cities depended have shrunk or disappeared and, just as importantly, banks migrated away from their local and regional bases into amalgamations based in London. As other noble Lords have said, infrastructure investment has been low, and had it not been for the public sector and nationally agreed pay rates applying to employees of the public sector, shops, leisure providers and the arts would have struggled in the provinces even more than they have.

Productivity is in the news this week, and I hope it will be there not just for this week but constantly. We know that our performance outside the south-east is dismal. In the league table of European regions, many of our regions come very low down. Some of that is caused by global factors which we cannot do much about, but other countries have not lost as much as we have. France and Italy are now larger manufacturers than we are, which is an astonishing turnaround over the past 50 years.

Some of this has been caused by public policy failures, an absence of long-term thinking and, particularly perhaps, consistency in areas. Contributors to this debate have mentioned the different initiatives taken over the years that have been changed after a change of Government or of Minister. I acknowledge that some of our problems are caused by adversarial industrial relations which produce a lack of confidence in change and limit action to repair the deficit in the skills of the workforce. However, from long experience with many of the country’s leading employers, I sincerely believe that at the heart of the nation’s problem is entrepreneurial failure. Too many companies became sclerotic and vulnerable to being sliced and diced by smart financial interests and being left anorexic. Old products, technology and premises are not replaced, and low skills and motivation and inefficiency have been all too common. The uncomfortable fact is that many of our very welcome success stories—and fortunately there are many, and the car industry is a spectacular example—rest on foreign entrepreneurship attracted by the UK being part of the single market of the EU. We hold our breath about how these companies will react to Brexit and to life outside the single market and the customs union.

I join those who welcome the Government’s conversion to an industrial strategy. In a sense, we have been doing it without calling it an industrial strategy. The noble Lord, Lord Heseltine, in particular, has played a very distinguished part in that work in Docklands, Liverpool, Manchester after the IRA bomb, the Humber and the Wirral. The document No Stone Unturned: In Pursuit of Growth still has many lessons which are highly relevant to where we need to go. Like the noble Lord, Lord Shipley, I served on the regional growth fund advisory committee, which did some useful work under the coalition Government in particular, but I have to admit that we were sometimes short of strong candidates in the poorer regions to whom to give money. It was not easy to find the best-deserving cases. I understand that some of the Labour Government’s regional development agencies had a similar problem, and it is good to see my noble friend Lord Prescott, who was the engine behind their development, taking part in this debate. I hoped they would have the time to evolve into regional banks and would restore the sense of banks being close to business on the ground that we had in the 19th century, but they never got the chance. The “not invented here” syndrome, to which my noble friend Lord Liddle referred, applied, and they were abolished. Will the Minister outline the regional implications of the industrial strategy and how the Government think they are going to embrace the regional side of all this? What steps are being taken to improve business leadership?

I declare an interest as I was a visiting professor at Manchester Business School, which is a centre of excellence in very many ways. When I was giving a lecture there to an MBA class, I found it sobering when I asked them where they expected to work and nine out of 10 of the Brits said they expected to work in financial services. One smart alec, who got a laugh from the class at my expense, said that a long-term investment is a short-term investment gone wrong. That shows the mentality of many of the kids—they were mainly kids—who were studying in that class.

What are we going to do to ask business schools to contribute to the industrial strategy? Do they just carry on in their own world under the guise of academic freedom or could they not become staff colleges for a new generation of entrepreneurs building firms for the long term, building a range of skills in the workforce and building their own skills, not just in finance but in technical innovation and people management as well? It is very rare to find British managers who are good at those three things. Most of them are good at one, mostly finance, some are good at two, but very few are good at the technical side of the business, the people side of the business and the money. This last point is crucial. We need business leaders who are technically innovative, financially literate and capable of working with the workforce. The role of unions is extremely important in this process, so do not forget the trade union contribution, which can be extremely positive.