Examination of Witnesses (Question Numbers
1-19)
RT HON
LORD MANDELSON,
SIR BRIAN
BENDER AND
MR JOHN
EDWARDS
21 OCTOBER 2008
Q1 Chairman: Secretary of State, Permanent
Secretary, welcome. I was not going to ask you to introduce yourselves—I
thought that was a little otiose in the circumstances—but
we have a third witness, so I will, as I usually do, begin by
asking witnesses to introduce themselves for the record.
Lord Mandelson: Peter Mandelson,
Secretary of State for Business, Enterprise and Regulatory Reform.
Sir Brian Bender: Brian Bender,
the Permanent Secretary.
Mr Edwards: John Edwards, the
Director General, Finance.
Q2 Chairman: Mr Edwards, thank you
for joining us. Secretary of State, happy birthday.
Lord Mandelson: Thank you very
much. I cannot think of a nicer group of people with whom to spend
it.
Q3 Chairman: You are obviously in
charm mode today. That is very good!
Lord Mandelson: But I am assuming
I will not spend my entire birthday with you.
Q4 Chairman: We imagine about two
hours, Secretary of State, until half past twelve, something like
that.
Lord Mandelson: We will whiz through
it.
Q5 Chairman: There is a lot to whiz
through! Can I begin on a consensual note, though I am sure the
whole session will be consensual, by expressing our gratitude
over the last three years for the very good relations we have
enjoyed with your department under its three previous secretaries
of state? You are our fourth secretary of state in three years.
We are really moving on some. Can I express particular public
gratitude to the department under your predecessor, John Hutton,
actually for accepting the major recommendation of the Committee's
most recent report on the construction industry for a post of
a chief construction officer. That is quite a radical recommendation,
which the Government has embraced, and so we are very grateful
for that. Today was to have been, and still is, the annual session
we have with the department on the departmental annual report,
and you have kindly stepped into the shoes vacated by John Hutton,
who had agreed to be before us on this day. I think today's session
may have a rather different flavour to the one we expected when
we set it up, for three reasons really. First, the machinery of
government changes that have come from the reshuffle and the changing
accountability of ministers to Parliament that have resulted from
that. Frankly, within that also your own position, Peter, which
I think will attract some interest from members of the committee
as well. Secondly, the recession. I think we are allowed to use
that word now—I think it is now official and, if it is not,
I apologise for using it—which means we do, I think, have
to discuss with you the steps the department is taking to address
the very real economic challenges that the country faces. Third,
I had not expected to raise this with you today, but, in the light
of your comments to The Financial Times yesterday about
Royal Mail Group, we will be asking you some questions about your
intentions in relation to Royal Mail and, indeed, your other comments
about flexible working, which I am sure members of the committee
will address during the session on the recession. I was noting
on the BBC website on your biography that when you were appointed
Britain's EU Commissioner William Hill were offering odds of three
to one you would not serve your full term. So they had to pay
out, presumably, but not quite for the reasons they expected.
What odds do you think they will be offering this time round?
Lord Mandelson: I am sure I shall
enjoy the eternal confidence of the bookies of the country. I
hope so. Can I say, first of all, yes, there was a report in The
Financial Times yesterday about the Royal Mail, but I am afraid
it is not based on any conversation I have had with them in the
last 24, 48 or 72 hours. If I am quoted in that article, it must
be a quote from some time before the article appeared. On the
subject of flexible working, I did not give an interview to The
Independent either, and I gather that both the headline, and
the introduction to this story, owes more to the inventiveness
of the subs than the journalist who actually wrote it. Having
said that, I am very happy to answer questions on both those subjects.
Q6 Chairman: You have already issued
partial clarification; I am sure more will be forthcoming later.
We are grateful for that.
Lord Mandelson: I have had to
put up with a sort of media narrative which has owed more to lifestyle
journalism than economic and business analysis, and the only thing
that has been absent from this narrative is, sort of, sex, drugs
and rock and roll, but no doubt that will be rectified in the
coming Sunday newspapers. I, of course, await it with bated breath.
Q7 Chairman: Remind me, was it McMillan
who said that politicians talking about the press were like sea
captains complaining about the weather. I cannot remember
Lord Mandelson: No complaint from
me. I have grown to love them all—like my family.
Q8 Roger Berry: I am no great enthusiast
for many of the media and their behaviour, but the FT article
specifically refers to an interview you gave to The Financial
Times. Have you any idea what the date of that interview was?
It might be helpful in judging the veracity or otherwise of the
FT story.
Lord Mandelson: I think the interview
is based on the conversation I had with a journalist from The
Financial Times when I was first appointed, but as it was
a rather casual conversation, unwitnessed and unrecorded by anyone
from my office, I am afraid I can only rely on my own recollection
of what I said. I did not find the report in The Financial
Times alarming in any way; it just was not based on an interview
given there and then to that newspaper.
Q9 Chairman: Let us return to the
Royal Mail a little later on in the questioning if we can. I do
share your concern that we do not get sidetracked today by the
more excitable comments made in the press in the last few days.
Just one point of clarification. I do not know if you have found
this out yet. The House of Lords' Register of Members' Interests
requires members to keep something on record for three years before
it falls out. In the House of Commons' register it is only for
a year. Are you required to retrospectively declare back to 2005,
or does that requirement really take effect from your appointment?
Do you know?
Lord Mandelson: I would have to
take advice on that.
Sir Brian Bender: We will have
to take advice. I had assumed it was from the appointment. We
will need to check.
Q10 Chairman: Thank you very much.
Lord Mandelson: But remember that
during my time as European Commissioner I was governed by a code
there, which is obviously not the same as the code governing ministerial
behaviour in our own country, but it is, nonetheless, a code,
and I did not depart in my actions or behaviour from the terms
of that code.
Q11 Chairman: Fine. Let us go to
issues of perhaps more substance. When you were last Secretary
of State for Trade and Industry (and I have to say this Committee
still prefers that name for the department), it was a bigger department
than it is now. You have lost at least three things of some significance
for different reasons. I think this committee rather reluctantly
accepts the case for a separate Department for Energy. It is an
important issue. Do you want to comment on the loss of energy
since you were last at the department?
Lord Mandelson: I think it makes
good sense for energy and climate change to be brought together.
I dealt with both those issues as a member of the European Commission
during the last four years, and they were almost always bracketed
together in the discussions we had in the Commission and in the
policy development that we brought forward. So I think it makes
good sense to bring these together in the one department, which
I believe Ed Miliband will lead very ably. I will work closely
with him on how energy issues impact on businesses. In fact, I
think we are meeting later today for our first "bilateral"
to discuss the overlap between his work and responsibilities and
mine. I am also going to attend the Business Energy Forum, which
includes the CBI and other business organisations. So I think
we all have a very positive agenda to take forward together on
the creation of a low carbon economy, as well as a challenging
agenda in meeting our carbon reduction targets, whilst maintaining
energy security and affordable energy prices for businesses and
consumers. I think these issues are absolutely vital for UK business.
They offer a major opportunity for British business gaining first
mover benefits in the energy market but also capitalising on the
technology transfer, and other overseas market openings, for the
supply of environmentally related goods and services. So we are
in a very good position to benefit, we are in a good position
to be market leaders, we are in a very good position to lead by
example to the rest of the world and, I believe, in a very good
position to participate, visibly and actively, in the negotiations
leading up to the Copenhagen Conference at the end of 2009.
Chairman: So that is a yes, you see the
logic for taking it from the department. We were going to ask
this a little later on, but I will bring Mick Clapham in now and
then Lindsay Hoyle.
Q12 Mr Clapham: Secretary of State,
is it possible to say how the loss of energy policy is going to
impact on the department's budget, and could you also say a little
about the impact that it might have on staff, what kind of numbers
of staff you have lost as a result?
Lord Mandelson: It might be better
if I ask Brian Bender to comment on that. I know that there are
a myriad of briefing figures that will help you understand what
is going on, but whilst I find them—in fact here they are.
Approximately £2.2 billion of BERR's programme and capital
budget is expected to transfer to DECC, including £1.8 billion
committed to managing energy liabilities; £35 million of
the administrative budget is expected to transfer to DECC, leaving
BERR with an administrative budget for 2008-09 in the region of
£297 million. There is a chance that the figure transferring
to DECC could rise as the details are worked through. As for staff,
at the moment it is estimated that 520 staff will be transferring
from BERR to DECC.
Q13 Mr Clapham: Does that include,
for example, the coal health aspect of your Department?
Sir Brian Bender: I should say,
the details have yet to be finalised. So what the Secretary of
State said and what I am about to say is provisional, but the
planning assumption is that the work on coal health will move
across, and the other planning assumption yet to be confirmed
(and that affects the biggest part of the budget) is that the
budget for the Nuclear Decommissioning Authority will move across,
although the Shareholder Executive would continue from within
BERR, carrying out its overall relationship and governance role
with the NDA.
Q14 Mr Hoyle: Glad to see you back
at the Committee. It seems a long time. It is a long time!
Lord Mandelson: It has been a
long time but it makes the return all the sweeter.
Q15 Mr Hoyle: Let us see if we can
stir the sugar a little then! Obviously, you are renowned to have
an appetite for work, and as the Chairman has said, we are losing
big chunks of the Department, it seems to be a rump of a department,
nothing like what you have overseen in the past. Is there anything
that you believe you can bring into the Department to bolster
its role?
Lord Mandelson: I think that what
I can bring is two things at the outset. One is the ability and
determination to focus very strongly on the interests of UK business
and their need to get through the current economic difficulties
that we are facing and to emerge stronger on the other side, and
I just want to emphasise this, if I may. We are not simply the
fire brigade at BERR, rushing to put out the flames that have
been ignited by the financial crisis in the United States which
has then spread like wild fire across the global economy. We will
do our bit, and I will be very active indeed in formulating an
action programme for business that helps all British business,
but particularly small and medium-sized enterprises, to get through
the worst that is going to hit us, but it is equally important
that we not only steer the country through and nurse and restore
the economy back to health but we also limit the damage to the
UK economy in the short term that will reduce our performance
in the long term.
Q16 Chairman: Can we take those questions
a little later on. We do not want to go too far down that particular
avenue at present.
Lord Mandelson: Okay. I have a
second point which I want to make, which is simply the experience
and knowledge of the world I have gained as European Trade Commissioner,
and I hope very much that my Department and the Government and
the country as a whole will benefit from that.
Mr Hoyle: I think that could lead me
to my point. I am pleased to hear you say that you are here for
UK Plc, because it is very difficult to swap horses from a job
in Europe to, now, UK Plc. That is the first point. Your priority
is for UK Plc. I am sure you can assure us of that, and, of course
(something the Chairman touched on), can we go back to the name
that is well trusted and well-known around the world, and that
is DTI, rather than our Chairman having to suffer the name BERRC.
Chairman: We actually forewent that pleasure
when we dropped regulatory reform, there being another committee;
so we are now at your beck and call rather than BERRC's.
Q17 Mr Hoyle: Surely, now is the
time to put the trust back in by changing the name, but I think
it is a reassurance to say you have given up Europe, it is all
about UK Plc.
Lord Mandelson: It is all about
UK Plc, but I know a lot more about how Europe works and how we
can open markets around the world to the benefit of British businesses.
Let us be under no illusions about this, we have a very, very
strong productive base in the UK. We have very strong companies
which are very well positioned in overseas markets. What we have
got to do is to ensure that those overseas markets remain open
for our business, and I am talking not just of tariffs but of
non-tariff barriers behind the border barriers which are as effective,
or, to put it another way, lethal in excluding access for our
goods, services and investment as the more obvious tariffs. So
I can draw a great deal on the experience I have gained in opening
up markets around the world and ensuring that fair trade rules
operate around the world, because we are very reliant on that
rules-based international trading system to make sure that we
have a fair size of the global economy which, optimistically,
we can note, is going to double in size in coming decades. So
our job here is, as I say, not just to get through the worst but
to make sure that we are in a strong enough position to sustain
and, hopefully, expand our relative share of global markets.
Chairman: You manifest that very powerfully.
We have got slightly distracted from the line of questioning we
wanted to pursue, but Mark Oaten wants to come in quickly.
Q18 Mr Oaten: I am just drawing on
that European experience. When you were acting in that role were
there any EU issues you were overseeing or some EU legislation
and regulations which you felt actually worked against British
interests?
Lord Mandelson: I do not think
so. I shared with the British Government a concern about the impact
on our labour market of certain bits of European legislation—the
Agency Worker Directive and the Working Time Directive. I think
in respect of both those pieces of legislation we have arrived
at a sensible point of consensus between the Commission and the
European Council, the Member States, and I hope that that will
be endorsed by the European Parliament as well.
Q19 Mr Wright: Very briefly, Secretary
of State, you mentioned that some of the portfolios have changed
within the Department. Surely you must be disappointed with that
position, because, as I understand it, the budget of the Department
is going to be reduced from £6 billion down to less than
£2 billion. So you must be disappointed, from your previous
role in the DTI, that you have had taken away really a lot of
the meat of the Department, or do you consider that is going to
give you more opportunities to look at the business and enterprise
side?
Lord Mandelson: I think so. £6
billion was, of course, the size of our budget when we had science
included.
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