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Let me turn to the issue of business support. A year ago, the Government announced their intention to reduce 3,000 business support schemes to a mere 100.
Let us stop and think about that for a moment. The very fact that the Government imagine that a quantum leap can be made from 3,000 to 100 is a vivid illustration of the absurdity of the present regime. There are 3,000 schemes, and most people simply do not understand how they work. The Government are spending perhaps £12 billion on these schemes, and can provide no measurable evidence of the effect of that expenditure.
Only 15 per cent. of small businesses have had any contact with the schemes. Instead of a clear structure for support, there are roughly 3,000 schemes administered by around 2,000 public bodies. That is absurd. The system needs vigorous and urgent rationalisation, a proper assessment of its effectiveness, and an explanation from the Secretary of State of how he expects it to work in the future. The chief executive of the Small Business Service has described it as
“an incredibly complex system... an inaccessible business support system for customers that is inefficient and ineffective for Government”.
That takes us to a issue on which deep thought is needed: the issue of regional development agencies, on which the Government spend the second largest amount in the DTI budget. Each of the nine RDAs has a budget of anything between approximately £250 million and £450 million, and for a long time there has been no convincing explanation or analysis from the Government of what good they actually do.
As we all know, over the years Governments of different colours have wrestled with the best model for enhancing the economic development of our regions, and with the task of releasing pockets of poverty from economic inactivity. Where previously we had the development corporation model, involving some fantastically effective and evident flagship schemes in derelict docklands, we now have a lot of jam spread very thinly throughout the country. It is not clear whether that is to do with regional policy or with economic development. We do not know, for instance, whether the RDAs’ remit includes a demand that they should invigorate an enterprise culture in areas dominated by the public sector, such as the north-east.
Mr. Philip Dunne (Ludlow) (Con): Does my hon. Friend agree that as a consequence of the devolution of technical expertise from the DTI down to the regions through the regional development agencies, the country has lost what was for a long time one of the DTI’s strongest attributes—individual civil servants with sector expertise? An exporter seeking to extend his business to overseas markets can no longer turn to anyone in the DTI with that expertise.
Alan Duncan: I largely agree with my hon. Friend. Serious, preferably cross-party, debate could be had on the issue. It is no good the hon. Member for Burnley (Kitty Ussher) shaking her head. She is welcome to intervene and say why my hon. Friend is wrong, or to speak later, but this is exactly the complaint that we hear wherever we go in the country.
Miss Kirkbride:
Talking of issues that might well be subject to party political agreement, when the Trade and Industry Committee has travelled abroad one of the main criticisms of RDAs that we have heard relates
to the competition between them. Most people in India, China and Brazil, for example, think that England—or the United Kingdom, for that matter—is a small country stuck in the middle of the Atlantic. They do not know the difference between the west midlands and Tyneside, and they find that competition between the RDAs that turn up for the trade fairs trying to sell the wares of one particular region gets in the way of money coming to the UK.
Alan Duncan: I am going to come on to that in more detail in a minute, but essentially I agree with my hon. Friend. Regional development agencies opening offices abroad has become an absurdity. The Trade and Industry Committee has today published a report criticising the proliferation of those offices abroad. What is the point of having nine regional development agencies possibly competing with each other on the streets of Shanghai for business? That business needs to come to Britain if it possibly can, regardless of which region it goes to. It has become nutty. The Secretary of State needs to address that problem urgently.
I cannot see the logic of having RDA offices abroad to the point where we are simply exporting competition among ourselves into foreign markets that we would like to win for Britain. That means that our efforts abroad have become incoherent. I will come on to that, but it illustrates further the irrational and fragmented structure and activities of RDAs.
With some RDAs, I talk to people locally and they say, “We like them.” For example, they may have promoted the region effectively with advertising and branding, as One NorthEast has done. However, if one scratches a bit further, one discovers deep frustration among the business community about a wealth of resource ineffectively spent. It tends to be a spoonful of jam here and a spoonful of jam there, with a little joint venture in skills, a little joint venture in a building project and a little joint venture in some training project. That means that the RDA builds up an entire client base in its region and that, whenever there is a threat to abolish it, there will be people in the region who say, “That is half my project down the spout. The RDA should stay.”
The question we should ask is not whether RDAs should have all those partnerships with people that somehow justify their existence, at least cosmetically, but whether the RDAs are having a genuine effect and changing the culture of enterprise and the economic prospects of the region.
Jeremy Wright (Rugby and Kenilworth) (Con): Does my hon. Friend agree that, although it is true, as my hon. Friend the Member for Bromsgrove (Miss Kirkbride) said, that regional development agencies are too small to compete internationally, in many ways they are too big to deal effectively with the diverse problems of a particular region? If we take the west midlands, it is difficult for a regional development agency to come up with a strategy that is equally applicable for Warwickshire and for Wolverhampton, which the hon. Member for Wolverhampton, South-West (Rob Marris) represents. That is part of the problem that RDAs face.
Alan Duncan:
My hon. Friend has a good point. It means that the focus of the RDAs’ activity gets
averaged out. Do they think that they should provide the bricks and mortar, restore derelict areas and clean up sites so that they are fit for further occupation? Do they think that they should be champions of infrastructure by asking that the A1, for example, be widened as it heads north past Newcastle? Should they be the ones that encourage enterprise and arrange for school leavers aged 16 or 17 to acquire the skills to get jobs that can give real added value? The RDAs do not really know what they are about. They are a bit of this and a bit of that. The danger is that in the end they are a lot of nothing. Therefore, I encourage a rigorous debate on the future of RDAs, with a clear picture, in policy and in purpose, of what they are there to do.
Let me move on to the allied issue of trade promotion. The biggest gripe one regularly hears is that UK Trade and Investment is an ineffective body for the promotion of British trade overseas. It is thought that inward investment increasingly means buying British companies, rather than bringing new investment into the UK. It is thought that UKTI’s efforts abroad are utterly fragmented and never cohere. It has concentrated on China, India and Brazil but its structure of offices does not seem to have much rhyme or reason. Although I accept that under Andrew Cahn much work has been done to sharpen up its act, under this Government we have completely lost the brand image of Britain abroad that we used to have. That is down to there being a multiplicity of offices, and to UKTI having lost its vim and vigour. That is destructive to the reputation and interests of British industry in other countries. I am also critical of the fact that DTI Ministers have made inadequate numbers of visits abroad to promote British interests.
Peter Luff (Mid-Worcestershire) (Con): It is only fair to record that it is the view of the Trade and Industry Committee that UKTI staff working at overseas posts are of exceptionally high calibre, but in a report published this morning we express reservations. There are morale and management problems at the centre of UKTI, and the Government must address them.
Alan Duncan: My hon. Friend is the Chairman of the Select Committee and I am sure that Ministers will read his report fully. From what I have heard about it today, it sounds as if it matches the conclusions that I and my Front-Bench team have reached over the past few months about UKTI and RDAs.
I wish to make a plea to the Secretary of State and his Ministers—or, perhaps, to his and their successors. Personal visits abroad matter, but over the past 10 years DTI Ministers have paid very few visits to much of the middle east. Some of our closest allies have received no trade visits at all. I understand that the Secretary of State will soon visit the United Arab Emirates, which is to be welcomed. However, there is at present a lot of money in the middle east and despite the Iraq war there is deep affection for Britain. People in the middle east understand that Britain is a good place to put their hundreds of millions—or even billions. We have neglected countries such as Oman and Kuwait. The last trade Minister to go to Yemen was Anthony Nelson in 1996, and he— [Interruption.] Yes, he joined the Labour party—but at least he was right to go to Yemen.
It is a serious point. It causes deep insult to people who instinctively have affection for us that our
governmental apparatus appears to neglect them and that we send only Defence Ministers to their countries. That must be remedied. I can honestly say that I believe that I personally, and at my own expense, have been to more such countries than have the Secretary of State and his entire team over the past 10 years. I urge the Secretary of State to appreciate that this is a severe deficiency in the practices of his Department.
The Rover inquiry has cost a lot of money. [Interruption.] Yes, millions of pounds. However, we must remember that the problems that we faced in respect of Rover were made far worse by the ill-judged interference and intervention of one of the current Secretary of State’s predecessors in that post, the right hon. Member for North Tyneside (Mr. Byers). Two offers were on the table for Rover, and he took the one that he thought would save him votes. That accelerated the demise of the company. It cost people their pensions and pay-outs, and eventually their jobs. That is a stain on the reputation of the right hon. Gentleman.
The Government have also delayed the publication of legislation on construction for more than a year. The amount of manufacturing jobs is shrinking. Business investment is at a record low. Research and development spending has fallen by 9 per cent. as a proportion of GDP since 1997. Many of the figures that matter most in making up our competitive position are pointing in the wrong direction.
Within three weeks, we will know the fate of the DTI. My party is against its abolition, as that would be reckless and there must be a voice for business at the Cabinet table. On balance, we would favour the Department being enhanced. However, it is essential above all, regardless of the structure of the Department, that its culture is changed so that there is a stronger voice for enterprise and business in the UK. The DTI—or whatever the Department is called—must be what it has not been over the past few years: a voice for business around the Cabinet table, and a voice for Britain in the world.
4.59 pm
The Secretary of State for Trade and Industry (Mr. Alistair Darling): I beg to move, To leave out from “House” to the end of the Question, and to add instead thereof:
‘acknowledges the outstanding performance of the economy under this Government with the longest unbroken economic expansion on record, in contrast to the boom and bust of the previous Government, with inflation and interest rates both on average half of the previous 18 years and over 29 million people in work for the first time; notes that the UK is recognised as one of the best places in the world to do business; supports the Government’s approach to better regulation and a 25 per cent. reduction in administrative burdens by 2010; praises the balanced approach to protecting working families through measures such as the national minimum wage and flexible working, while achieving the highest level of employment; commends the Government’s unprecedented commitment to a national post office network with clear access criteria and the financial support to underpin it; applauds the more than doubling in real terms of science funding after decades of under-investment; welcomes the Government’s leadership in tackling the challenges of climate change and energy security; endorses the commitment to reduce the number of business
support schemes across Government to under 100 by 2010 after the Department of Trade and Industry’s successful simplification of its own programmes to under 10; recognises the increasing contribution of regional development agencies to regional prosperity and jobs; approves the new strategy of UK Trade and Investment which has received widespread business support; and calls on the Government to build on its achievements to secure the country’s growing economic prosperity.’.
I have to congratulate the hon. Member for Rutland and Melton (Alan Duncan), who spoke for nearly three quarters of an hour and said very little, although he said it very well. We are no further forward in knowing what the Conservative party’s policies are, except on one matter. He now tells us that, having stood on a Tory platform of abolishing the Department of Trade and Industry, it would be completely reckless to do so. I am sure that all those who follow the development of Conservative party policy—be it on grammar schools or the DTI—will follow this one with great interest. I presume that the grammar school compromise is that it should not be abolished but enhanced. We will have to wait and see what the Tory definition of “enhancement” is.
The House will understand that, for obvious reasons, I do not propose to say anything further about the DTI itself, except for one thing. During our exchanges across the Floor of the House, it is important that we record the fact that within the DTI, as within the rest of Whitehall, there are many dedicated and effective men and women who have served this Government—many have also served previous Governments—in an exemplary manner. Much that they do will continue to be necessary, however Whitehall is organised in future. However, it is important to record that many people have contributed greatly to policy development and, therefore, to the development of the economy.
I shall deal with many of the points that the hon. Gentleman raised, but I want also to speak to the amendment, which sets out our record over the past 10 years. I am very happy to debate for the rest of our time today and on many future occasions the contrast between what has happened in the past 10 years and what happened in the previous 18. Indeed, as my starting point, I could do no better than quote the report of the very committee that was chaired by the right hon. Member for Wokingham (Mr. Redwood), which the hon. Member for Rutland and Melton said would be published shortly. I look forward to that. My understanding is that it was ready last December, so it must be really good if it has been kept back. It says, among other things, the following:
“The UK starts from a strong economic position. It is the fourth largest economy in the world and it has the highest employment rate in the G7 group of industrialised nations.”
That is quite a good tribute to the British economy and does not fit easily with the Conservatives’ motion.
Mr. Darling: Of course I give way to the right hon. Gentleman.
Mr. Redwood: I am delighted that the Secretary of State has given way. He is of course quoting from advice into the committee, not from the committee’s report. Why have we lost 1 million manufacturing jobs in the last 10 years, and why should we believe that the next few years will be any better?
Mr. Darling: Whether or not it is advice into the committee, it is extraordinarily good advice and I commend the right hon. Gentleman on having given it. He well knows that there have been major structural changes in our economy over the last 10—indeed, 20—years, as I shall discuss shortly. Despite the fact that the services economy has grown rapidly—I was surprised that the hon. Member for Rutland and Melton did not say anything about that—we still have a very strong manufacturing sector, particularly in pharmaceuticals and aviation, for example; I shall return to that issue shortly. The key for us, especially in today’s global economy, is to make sure that the United Kingdom economy is a good place to do business—we have that—so that as these changes take place, we get the new jobs and industries and the new research and development that will ensure our future prosperity.
When any objective observer looks at our economy, they will see that we have had the longest period of sustained growth on record. We have low inflation—it is about half what it was between 1979 and 1997—interest rates are half what they were when the Conservatives were in power, and employment has reached a record high of more than 29 million. That is 2.5 million people more than in 1997, and contrasts with the position for much of the 18 years in which the Conservatives were in power. People forget about that, but it should be remembered that whole generations lost the opportunity to get on and to do the best that they could for their families, because, at a time of massive change, no help was given to them when they needed it most.
Mr. Darling: The right hon. Gentleman is at least making a fist of defending the previous Government—something that his colleagues singularly failed to do.
Mr. Redwood: I am grateful for that praise from the Secretary of State. Can he explain why 5.4 million people of working age are on benefit and have no realistic chance of a job today? Is that not a shameful record? What he is talking about is creating jobs for migrants, who are doing good things for our economy, at the expense of those who are already here.
Mr. Darling: I do not agree with the right hon. Gentleman. Since 1997, through the new deal and other measures, this Government have done more than any other to help people who were previously workless to get back into work. Many of the measures that we introduced were opposed—indeed, the Conservatives and the Liberals opposed the very funding of that programme—but they have made a difference. The right hon. Gentleman is right in that there are still people who would be capable of work, with the right support, and we want to ensure that they get into work, especially at a time when the economy continues to grow. It is right both economically and socially that we do everything we can possibly do to achieve that.
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