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The hon. Member for Rutland and Melton raised other issues about our performance, but productivity has increased. We are closing the gap on France and the US, and we have overtaken Germany. Real-terms business investment has grown by almost 50 per cent.
in the past 10 years and there was a 5 per cent. increase in research and development in 2005 over the year before. There is also much research and development and innovation taking place in intangible assets—such as skills and software, which are not always captured in the statistics but are very important to the service economy—and that is making a real difference. Of course, research and development in pharmaceuticals and aerospace are bearing fruit. Our pharmaceutical industry is doing extremely well, because that industry sees Britain as a good place to do business. Indeed, some firms have relocated their activities in the UK because they see it as a good environment in which to develop.
We have a strong basis for the future, although there are of course other things that we need to do. The hon. Gentleman mentioned regulation. However, despite being invited on three occasions to name three regulations that he would repeal, he could come up with only one—the taking down of the no smoking notices. I am sure that for some firms putting up such notices might be a burden, but I would hazard a guess that even if they were all taken down again it would not make much difference to whether businesses felt free of regulation.
When one presses Conservatives—although perhaps we will not do so today—on what it is that they really do not like, it is not long before they start talking about, for example, the right to request reasonable time off to care for children. They have never been keen on the maternity and paternity leave provisions that we have introduced. Even today, they are uncomfortable when such matters are raised.
I agree that reducing the regulatory burden on industry is essential. The companies legislation, which the House debated at length last year, removed many of the regulatory requirements on companies. The unfair commercial practices directive from the EU, something that is not universally popular in this House, repeals 22 separate consumer regulations. I am clear that the DTI has to play its part in reducing the regulatory burden. We should ask ourselves whether we need to regulate, and if we do not, we should not. It is important that we change the culture. Under successive Governments, if something undesirable happens, there is a call to ensure that it does not happen again, so legislation is introduced, but sometimes the consequences are not fully thought through.
We need to ensure that we have the appropriate regulatory environment, but we also need to ensure that we have the right corporate tax environment. I am sorry that the hon. Gentleman could not acknowledge that we have reduced corporation tax. We reduced it to 30 per cent. in the early years of the Government and when it comes down to 28 per cent., it will be the lowest in the G7. Indeed, it will be lower than in all the other major economies.
Sir Robert Smith:
In his opening remarks, the Secretary of State praised the staff of the DTI. The north-east of Scotland would have much praise for staff in the DTI’s energy sector and their work with PILOT on the regulatory side of the industry. However, the weakness of the DTI as a voice in Government is exemplified by the corporation tax issue. The Government introduced a change in the tax regime during a tax year without warning when they
introduced the supplemental tax in the North sea. People in north-east Scotland felt that the DTI, for all its work with the industry, did not have the ear of Government when it mattered—which that change did, because it had an effect on the investment climate.
Mr. Darling: I do not agree. Many people in the oil industry said that they wanted stability in the North sea oil tax regime, but earlier this year when they saw the reduction in corporation tax rates in the Budget they said they would like to take advantage of them, too. I understand why they might say that, as I also understand why low gas prices, which actually benefit large sectors of our economy, might have an adverse effect on North sea investment decisions. In addition, owing to the high cost of operating in the North sea compared to other fields throughout the world, the industry has to tackle a number of issues. We are working on a number of aspects with the industry, through PILOT, with which the hon. Gentleman is familiar, and we met recently—in April. We do not expect universal agreement on everything all the time, but I think the industry itself would readily accept that over the past few years the PILOT regime has worked quite well to resolve some of the difficulties that the industry faced. As I said a couple of weeks ago when I launched the energy review, although the North sea oil field is mature, it is in all our interests to do everything we can to exploit its remaining reserves.
I said earlier that I thought it strange that the hon. Member for Rutland and Melton had not mentioned the services industry, especially as we are a world leader in the export of services. According to the International Monetary Fund, we are the world leader in financial services, so we should bear in mind how important that is to the economy— not just self-evidently in the City of London, which is the pre-eminent place in the world to do business, but in other parts of the UK, such as Edinburgh, Leeds, Manchester or Bristol. The financial services industry is very important to us, as are other parts of the service industry where we are doing extremely well.
I shall deal with the hon. Gentleman’s point about trade later, but when I visit different parts of the world, I find much interest—in China and India, for example—in Britain’s services industry. The fact that exports of services have grown by more than 120 per cent. over the past 10 years demonstrates the importance of that sector of the economy.
Despite everything the Conservatives say, when we look around the world and ask what outside commentators say, we find that the World Bank ranks the UK as the top country in Europe for ease of doing business. The Organisation for Economic Co-operation and Development says that, of all OECD countries, we are first for economic stability and second for product market regulation. Ten years ago, in the last year of the Conservative Government, the UK was bottom of the G7 in terms of gross domestic product per head, yet now it is second only to the US, overtaking France and Germany. Our economy has of course grown by more than 28 per cent. over the past 10 years. We have a strong foundation for development in the future. Of course, there are more things we need to do, but the
position now is a world away from what it was 10 years ago when we came to power.
As I said, I listened to the hon. Member for Rutland and Melton for 45 minutes, but I waited in vain to hear what the Conservative policy positions might be in some of the key areas he covered. I want to consider two in particular, because they are important. Both are long-term issues about which, for the good of the country, it would be useful to know what all the political parties think and whether they have set views—it might be too much to expect the Liberal Democrats to go that far, but it would be helpful for the rest of us. Those two big issues are energy and science and technology. The future of this country depends on our ability to invest and to get ahead of other countries.
Two weeks ago, I published an energy White Paper in which I made the point that we have two pressing issues to confront: climate change and security of supply. Even if people were in doubt about the importance of security of supply two weeks ago, a look at the newspapers of the past few days would have brought home to us the real problems we will face unless we start taking decisions now about security of supply to avoid becoming over-dependent on importing oil and gas from parts of the world where the political situation may be difficult.
Our strategy is to save energy; we want lower carbon energy. I was very sorry that BP decided it could not continue with carbon capture and storage—those of us brave enough to be facing Trade and Industry questions tomorrow will be returning to this subject—although I understand the problem caused by the cost of maintaining the Miller field. However, it is not right to suggest that after simply pressing a button, the company would be ready to go. It spent a substantial sum on preliminary work, but the project will involve not only power stations but the chemical processes to capture the carbon, in addition to transport and storage. The commitment could stretch to hundreds of millions of pounds. It would not be possible for the Government to award a contract to one company without a proper competition process.
More than half a dozen groups of companies are extremely interested in this. They realise that there is a lot of work to do on intellectual property and that contractual matters will need to be sorted out. Such preliminary work must be done. BP has told us that it would be interested in working with us in the future, albeit, unfortunately, perhaps not on the Peterhead field. CCS is important, but it is commercially untried and untested. It is not being developed anywhere else in the world. We are the first Government to say that we are willing to enter into a partnership to do that, but, given the public money involved, I must ensure that we get things right.
Mr. Weir: I understand what the Secretary of State is saying, but the White Paper makes it clear that there is a need for CCS technology, especially in developing countries. It also states that there is a need for developed countries to move ahead with the technology
“to show leadership and to prove the validity of the technology, firm up costs and reduce technical risks.”
As the Secretary of State said, a lot of money has been spent on Peterhead. The Government indicated their
support for the project some three years ago, but it now appears that we are starting from scratch again. Given the number of coal-fired power stations and other carbon-emitting developments that are being built in China and India, should we not be taking a lead and pushing ahead with the one project that was the most advanced?
Mr. Darling: I understand why the hon. Gentleman and the leader of his party believe that it would be right to enter into partnership with BP, given the base at Peterhead. However, given the amount of money we are talking about and the fact that half a dozen other groups are interested, it is not possible for the Government simply to say, “Never mind the rest of you. We’re just going with one particular company.” We would be open to substantial criticism if we were to go down that avenue.
Alan Duncan: I accept that the Secretary of State cannot offer special favours to one company. However, he can change the rules of a regime so that everyone is affected equally. I understand that if the Secretary of State had said that successful carbon capture could be included under the renewables obligation, BP would probably have kept its project going.
Mr. Darling: Whatever else carbon capture and storage is, it is not renewable—it mitigates the effect of carbon. If I were to do such a thing, it would remove all the support for renewable energy itself—wind farms, marine power and so on—because the costs of carbon capture are so great that that would clean out everything else. In passing, I should point out that the hon. Gentleman is against the renewables obligation. Under his party in government, it would not be there in the first place, so that is not a terribly good point to make.
Alan Duncan: We have never said that.
Mr. Darling: The hon. Gentleman has said that; he has been extremely critical of the obligation.
The hon. Gentleman talked about our energy targets. We are one of the few countries that will meet its Kyoto obligations. We are on track to meet our 2050 target on reducing CO2. However, we must return to the point that we have raised time and again: exactly what is the Conservatives’ policy? The leader of the Conservatives said earlier this year:
“Anyone can say they’re green. It’s easy to do the softer things like ride your bike, visit glaciers and rebuild your house to make it green. But it’s only clear you mean it when you do the tough things as well.”
He is quite right. I was surprised, therefore, to find that this afternoon a Conservative council has turned down yet another application for a wind farm. Conservatives are blocking wind farms all over the country. The London array, which is an offshore scheme—one of the largest in Europe if it goes ahead—is being blocked because the electricity cannot be brought ashore. The hon. Member for Meriden (Mrs. Spelman), who speaks from the Conservative Front Bench, said a short while ago:
“Both the renewable energy industry as a whole, and our rural communities throughout Scotland, will benefit from a moratorium.”
That seems to be something less than a wholehearted commitment to renewable energy, which I understood to be one strand of the Conservatives’ thinking.
Mark Tami (Alyn and Deeside) (Lab): My right hon. Friend talks about renewable energy, but does he agree that the Conservatives are equally confused and in a mess on nuclear power?
Mr. Darling: I was going to come to that. The hon. Member for Rutland and Melton said at the beginning of last year:
“From about the age of 12, I have had an instinctive hostility to nuclear power. I treat it with profound suspicion.”—[ Official Report, 17 January 2006; Vol. 441, c. 779.]
I was surprised, therefore, that on the day that I published my White Paper he urged me to go and build nuclear power stations as quickly as I possibly could. I was even more surprised that this morning, in an interview with Andrew Neil on the BBC, when he was asked what is Tory policy on nuclear, he said that “It’s pretty well the same as the Government’s.” [Interruption . ] Well, we had better have a word with the BBC, because according to the transcript that I have here that is precisely what he said. Again, this is so reminiscent of the grammar school debate, where we are not sure whether the Tories are for something or against it, and then their leader comes along with a characteristic grammar school compromise and says:
“Let’s give green energy the chance and then have nuclear there as a last resort.”
In other words, perhaps in 2020 or 2030, if it has not worked because the Tories have blocked all the wind farms, we will start considering nuclear. That policy makes absolutely no sense at all.
In relation to planning, the hon. Member for Rutland and Melton has said that he supports a streamlined planning system. I welcome that. However, on the day before that, the shadow planning Minister had condemned the proposals. We all know in this House that if we want infrastructure of the sort that we need, whether for energy, transport, housing or whatever, we will have to reform the planning system. The test will come when proposals finally come before the House and we see whether they are supported.
I welcome what the hon. Member for Rutland and Melton said about science. He did not say much, but he said that we were doing the right thing. We have indeed doubled the amount that we are spending on science, and it will rise to just under £4 billion by 2010. We have spent £3 billion on rebuilding our science infrastructure in universities so that we have the first-class facilities that we need. Importantly, we are putting money into getting that research from the laboratory into the marketplace, which is absolutely essential. We are beginning to see the results of an improved science base in this country, with the decoding of the human genome, the fact that a fifth of the world’s top 100 selling medicines were developed in the UK, and the fact that we have only 1 per cent. of the world’s population but produce 9 per cent. of all science papers and 12 per cent. of all citations. Our expenditure on research and development has been increasing. Encouragingly, in the past three years 25 university spin-out companies have floated on the stock market to the value of £1.5 billion. That is all very welcome.
I hope, in the interests of the long term, that we will have the Conservatives’ support. I was rather surprised and disappointed to see that the Tory technology and science taskforce said that a Tory Government will not spend any more on science. We are spending more because we think that it needs to be spent.
Mr. Dunne: I have had the privilege of witnessing some of the investment that the Government have put into large science projects by visiting the Synchotron project at Hanwell outside Oxford. Will the Secretary of State explain to the House why that excellent project was held up for more than a year by his predecessor, the right hon. Member for North Tyneside (Mr. Byers), who decided that he thought it better, despite all the scientific evidence available, to locate it nearer to his constituency than where the scientists wanted it in Oxford?
Mr. Darling: I have no knowledge of that, but I will happily look into the matter and write to the hon. Gentleman. There would be more force to what he said if he accepted that those who speak for the Conservative party have not always been saying the same thing. I was disappointed that when the shadow Chancellor went to silicon valley in California last year, he said:
“I have seen the future and at present Britain is not part of it.”
He was roundly condemned by academics and research institutions the next day. He was also condemned by the hon. Member for Havant (Mr. Willetts), who is of course the source of much wisdom, and who has said:
“After a slow start, licensing income is now growing fast, and we are better than the US in generating spin-offs”.
The hon. Member for Henley (Mr. Johnson), who is also often a source of great inspiration, has said: “British research is fantastic”—what a tribute to the new Labour Government! I very much hope that we will have the Conservative party’s support on science.
There is also the automotive industry to consider. The industry has had its problems, but a new generation of Astra car is being developed at Ellesmere Port. That plan was very much at risk just a year ago. The new Mini is being produced in Oxford, and BMW recently completed the millionth Mini. Toyota now manufactures engine parts in Deeside, and the north-east has the most productive car plant anywhere in Europe.
Mr. Fraser Kemp (Houghton and Washington, East) (Lab): On the automotive industry, the support that we have had for research and development over the past few years is greatly welcomed; it allowed us to maintain production of the new Almera and the convertible Micra, a car that sold in huge numbers. Would my right hon. Friend care to reflect on the fact that in the past few weeks, Nissan has, for the first time in a long while, begun to export cars to Japan from the Tyne? That is a tremendous endorsement of the plant, and of the British motor industry.
Mr. Darling: I agree with my hon. Friend: that is a tribute to Britain’s car industry. Who would have thought 20 years ago that we would be exporting cars to Japan? The traffic seemed to be in the other direction. There is also the example of the aerospace industry.
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