Examination of Witnesses (Question Numbers
20-39)
RT HON
LORD MANDELSON,
SIR BRIAN
BENDER AND
MR JOHN
EDWARDS
21 OCTOBER 2008
Q20 Chairman: That was my next question.
Perhaps we can come back to Tony's question. Brian, can I bring
you in after I have finished this. I was going to ask about science
specifically, because although I think this committee sees the
logic for energy, I think we are more nervous about science innovation,
which has a very strong link with business and enterprise and
driving the economy. You used to oversee the science budget and
were very interested in that part of the Department's work. What
do you feel about science?
Lord Mandelson: You are asking
me to comment on decisions that are taken way above my pay grade.
Q21 Chairman: Nothing is way above
your pay grade.
Lord Mandelson: Well, higher anyway.
Mr Hoyle: Can you share your private
view then?
Q22 Chairman: We are among friends!
Lord Mandelson: I know, it would
be very easy to take you all into my confidence. Look, I will
be honest. If I had been asked at the time what my view was about
where science should be placed within the Government machine,
I think I would have made a strong argument in favour of it remaining
at BERR, but there is a case, equally, for it moving to a department
which includes universities. If you remember what I was about
when I was in the DTI the last time, the basis of the White Paper
that I brought forward, Building a Knowledge Driven Economy
in Britain, had as its cornerstone, it's sea-bed, Britain's
science base, and what I promoted at the time was a bridge between
the research that took place in universities, the excellent science
base that we have in this country and the commercial sector, and
I was always promoting and looking for ways in which it would
be possible—I hesitate use this word, but it is unavoidable—to
spin off from our science base and the research and development
taking place in our universities into commercially based profitable
activities to produce high value-added goods and services stemming
from the R&D taking place. You could say one part of that
bridge is in the university sector, the other side of that bridge
is planted firmly in the commercial sector and the DTI, as it
then was, BERR as it now is, could appropriately span the two.
We are, however, where we are. It has been agreed, decided rather,
that the responsibility for science should transfer, and I have
seen no deterioration since I came back in the financing of Britain's
science base. It has vitality and I hope also the ability, as
I say, to translate, to convert, a science based R&D into
commercially profitable goods and services which we can then export
throughout the global economy, and that will remain a very important
aspect of my work.
Q23 Chairman: I want to come back
to Tony's question. Here you are, one of the most powerful men
in the Government, running a department that is a shadow of its
former self. It has lost energy and it has lost science, two of
the big spending items of the department's work and also very
import strategically for the economic interests of the country.
Curiously, you do hang on to one little corner of your empire,
the anti-corruption bit. The officials stay within BERR but they
report to Jack Straw at the Ministry of Justice. What is that
all about?
Lord Mandelson: What that is all
about is that Jack Straw, as the Secretary of State for Justice,
has responsibility for law enforcement. He has within his department
responsibility for pursuing wrong-doing, but the work that will
be done to support his role, I believe, will remain inside the
DTI, inside BERR.[1]
Q24 Chairman: You were right first time!
This is a bit of a puzzle, is it not, because when the job was
given to John Hutton, your predecessor, we were told by the Minister
of State that it sat naturally with the business and enterprise
secretary and now, with your appointment, we are being told it
sits naturally with Jack Straw at the Ministry of Justice, but
the officials still sit naturally at the Department, your Department.
I really do not understand this. It is a bit of a puzzle.
Lord Mandelson: It is a bit of
a moving feast, Chairman, because before it was with John Hutton
it was with Hilary Benn at DfID. To be honest, I do not think
this is the most important item on my agenda.
Q25 Chairman: Were the officials
with Hilary Benn's Department?
Lord Mandelson: To be perfectly
frank, having travelled the world and seen how other countries
and commercial sectors operate from different countries, I happen
to think that we have a rather good record in this country in
the ethical practice and behaviour of our companies. I do not
accept the implications of the OECD study, which seems to suggest
that we have a bad record or a worse record than others. All I
would say is that I have come to the conclusion in the last few
years that actually British companies operate pretty ethical behaviour.
So, whoever is responsible for it, I believe that they will not
have as much work on their plate as some inferences from the OECD
report might otherwise suggest.
Chairman: I will not pursue the question
too much, but I am puzzled by the fact the departments remain
under the responsibility of the permanent secretary but not his
secretary of state. It does seem very strange. Let us go back
to Tony Wright's question. The Department has been shrunk. Tony,
do you want to remind the Secretary of State what it was?
Q26 Mr Wright: I think you have probably
answered it, Secretary of State. It is just on the basis that
it was a £6 billion department, now £2 billion, taking
away what I consider is the meat of the Department, certainly
in terms of energy, and I think you have probably explained that,
but I just wonder what is the future of the Department. You must
be hugely disappointed to come into a department that has certainly
lost a lot of its emphasis and leaves you with very little to
deal with, probably reporting to other departments and discussing
with other ministers the way forward. I am confused as to what
direction this Department is actually going. Are you going to
look for other areas you are going to bring into the Department
or are you there to say perhaps other parts can now leave this
Department and we lose business and enterprise altogether?
Lord Mandelson: I understand the
point you are making, but I do not think that BERR is going to
be short of work in the coming years, given what the British economy
is going to go through as a result of the global financial crisis
or the global financial recession, which, as we know, is having
reverberations throughout the global economy; not just in the
developed world but amongst the emerging economies as well. I
have been told to be an effective voice for business in government,
and that is why last week I instructed my office to issue a memorandum
to the whole of the Department which I called an Action Programme
for Business. It is about being completely focused on getting
the UK business through the present economic downturn and emerging
stronger on the other side. Therefore, the Action Programme
for Business will include the following areas.
Q27 Chairman: Can we do that when
we come to the economy? We think we can usefully start our section
on the economy with those questions.
Lord Mandelson: I am very happy
to, but I do not think you can for long separate a discussion
about what the Department is doing from the state of—
Q28 Chairman: I accept that.
Lord Mandelson: I am happy to
come back whenever you wish.
Chairman: The Chairman is aware of that,
I can assure you, but we want to try and stick to a rough order.
Brian Binley, then Julie Kirkbride, then we will move on to questions
of accountability.
Q29 Mr Binley: Secretary of State,
the Chairman described you as one of the most powerful men in
Government, and I am sure we all recognise that. Therefore, you
will appreciate that the relationship between yourself and the
Prime Minister is of import to our understanding of how you might
be effective in the role in which you are now placed. Can I probe
a little bit in that respect and start by saying that on Sunday
you accused, or are reputed to have accused, David Cameron of
swinging around like a pendulum. Is not that, in truth, what you
have been doing by oscillating between the last Prime Minister
and the present one over the past 15 years?
Lord Mandelson: Did I say swinging
around like a pendulum or swinging back and forth like a pendulum?
Mr Binley: I will take the latter, if
that is what you mean?
Q30 Chairman: It may be more than
a semantic point.
Lord Mandelson: This exacting
linguistic precision is very important to me.
Mr Binley: Of course it is.
Q31 Chairman: A play for time!
Lord Mandelson: Since you have
raised the issue, it did strike me that one minute the Leader
of the Opposition seemed to be all over the bankers like his best
friend and then running for cover as if he could not abide them.
Q32 Mr Binley: I understand what
you meant about Cameron. Will you tell me how it relates to your
oscillations between Mr Brown and Mr Blair over the last three
years, which was the essence of the question?
Lord Mandelson: I think the unified
thread that runs through both premierships is my belief in the
outlook, the philosophy and policies of New Labour. I do not feel
that I have oscillated very much, to be honest. I think most people
would regard me as pretty rock solid, standing very firmly on
New Labour ground, and I am not for budging.
Chairman: There we are, Brian. That is
your answer.
Q33 Miss Kirkbride: We were talking
a moment ago about your experiences as European Trade Commissioner,
and I wondered now, with your new hat on as Secretary of State
for Business and Enterprise, whether you were at all worried by
the prospects of the outcome of the American election, which might
make America more protective?
Lord Mandelson: I think that is
a really important point. If the reaction to what is happening
in the global economy is people turning inwards, seeking a protectionist
response to what is happening, leading to other economies in the
developed world and amongst the merging economies following suit,
then we will very fast start to see a shrinking of trade, and
that will result in a lowering of living standards and prosperity
for all of us, not just ourselves and Europe. My own approach
is that just as we should reject a do nothing, sit on our hands,
laissez faire approach to what is happening economically,
equally we have to reject, on the other hand, a protectionist
approach or response to what is going on. I have been encouraged
by what Mr McCain has said publicly about his commitment to open
markets and free trade. I have been encouraged by what Mr Obama
has said more recently about his commitment. I know that at an
earlier point in this presidential race he and Mrs Clinton seemed
to be competing with each other for what they thought was a protectionist
blue collar vote in the US primaries. I hope that that phase is
now behind them and that when either Mr McCain or Mr Obama come
into office they will see the paramount need for an international
response to be made to the financial crisis globally, that they
will be able to give a lead both to the creation of new international
architecture that we need to put in place, appropriate regulation
of the global financial system, and also will give the lead to
reviving the global trade talks, the Doha round, as well, which
have run into a siding—they have not collapsed altogether—and
I think there is a long agenda that whoever is elected president
of the United States will have to take up and embark on and I
think we need to be very well placed in this country to join with
the United States to encourage them to go in the right direction.
These are very big questions and they are very serious ones.
Q34 Miss Kirkbride: I very much agree
with you, but bearing in mind the dire straits of the American
car industry, to take one of the problems that America has at
the moment, do you not think that the Democrats are more likely
to be appealing to the protectionist argument given that is their
core base?
Lord Mandelson: I know why you
say that, but I do not think one should assume that that is the
conclusion that a President Obama would reach. There is a lot
of discussion to be had with whoever is President, and I think
we in Britain are in a very good place to point out the benefits
and gains from a free trade, open market approach. It is something
on which I have not flagged in promoting and championing. Just
going back to Mr Binley's observation, I have worked very closely
with the British Prime Minister, the present British Prime Minister,
as well as his predecessor, in keeping the United States and its
administration well engaged on these international matters, particularly
international trade. The Prime Minister has not flagged in his
commitment to the world trade talks and I think he personally
is in a good position to take up that argument with whoever is
elected in the US.
Q35 Chairman: I think we will have
to return to this as a separate inquiry at some later stage, given
the importance of trade issues (and perhaps when the result of
the election is actually known), but thank you for those answers.
We do want to turn to questions of the structure of the ministerial
team and your accountability to Parliament. I must declare my
interest. I was a special adviser of DTI when Lord Young of Graffham
was Secretary of State and at that stage, of course, we had alongside
in the Commons a Minister of Cabinet rank, Tony Newton and Ken
Clarke—the two people, as far as I recall, who were there
at the time. There is nothing wrong in principle in having a few
members of the House of Lords in the Cabinet. I understand that.
But you had alongside you a rather smaller team and a man held
in high personal regard but who is not in the Cabinet. Do you
feel that you as Secretary of State are adequately accountable
to the House of Commons?
Lord Mandelson: If I can satisfy
you in my accountability, then I will satisfy myself. If you feel
unhappy as members of the Commons and members of this Select Committee
about my accountability, then that would worry me. My job is to
demonstrate my accountability bona fides. I have written
to you about this, as I think you would acknowledge. My desire
is, through you, to maintain my accountability to the Commons
primarily. There may be other select committees that want to call
me, but I know that my principal Commons masters will be this
Committee, and I hope that you will help me, enable me, to remain
fully accountable, and that might mean that we have to see each
other rather more often than we might otherwise have done; but
at the same time I will be at the Despatch Box, in the House of
Lords, properly questioned by their Lordships, so I will have
two channels of accountability in that sense and I hope that I
will be able to satisfy you that I am answering properly for the
work I do.
Q36 Chairman: This is actually quite
a big discussion we are going to have and this is quite serious,
because not only is it you that is the issue but also, of the
five ministers in your Department beneath you, two of them are
in the House of Lords dealing with very important issues: Baroness
Shriti Vadera is doing competitiveness of small business and Lord
Carter doing communications, technology and broadcasting. Only
one of the team is dedicated to the House of Commons, that is
Pat McFadden, and Gareth Thomas is shared with DfID and Ian Pearson
with the Treasury. So actually we have one Lord's minister and
one Common's minister and that is it. So when we want to ask strategic
questions about trade on the floor of the House of Commons or
about small business or about competitiveness or broadcasting,
the part-time ministers in the Commons will have to stand in to
answer those questions. There are two issues here. The first is,
I do not believe that is a satisfactory model for making your
whole department accountable to the House of Commons, never mind
your own personal position, and, secondly, I do not believe that
Gareth Thomas and Ian Pearson have the time to do justice to these
roles. I think there is an issue of workload for your ministers
and accountability to the House of Commons. I have to say, I am
personally very unhappy about that.
Lord Mandelson: You obviously
need to address your opinions to the Prime Minister. I did not
make or divide up this ministerial team. I think you are both
being realistic in your description of the hard work and the long
hours that the Commons ministers are going to have to embrace,
and I have discussed this with them. They are up for it. They
are going to have to work very hard, but I do not think it is
fair to say, just because Lord Carter, for example, cannot come
to the Despatch Box in the Commons to talk about communications,
technology and broadcasting, that there will be no ministerial
answerability for those issues, because other ministers in the
Department will be properly briefed. We are a team and we have
a collective effort and responsibility within that team for everything
that we do. It is true that Gareth Thomas, the other Minister
of State, Pat McFadden being the one, is shared with DfID, but
I do not think you will find him holding back in throwing himself
into the trade policy work for which he is responsible, the UK
trade and investment activity which previously Lord Jones led.
Q37 Chairman: I understand, but he
will have to travel, for example, as part of his responsibilities:
so then you are down to two Commons ministers?
Lord Mandelson: Just because he
travels does not mean to say he will be permanently absent from
the House of Commons. I do appreciate the point you are making.
Q38 Chairman: Ian Pearson will have
legislation, unusually, to take through the House of Commons as
Treasury Minister, which is not normally the case.
Lord Mandelson: He is doing so
at the moment.
Chairman: On top of the Finance Bill
he has got other legislative measures to take forward as well,
so he has also got legislation. There are some very talented and
able ministers, by the way, but it is asking a lot of them both
in terms of their work load and in terms of their accountability
to us. Lindsay.
Q39 Mr Hoyle: I think in fairness,
Secretary of State, you are excellent, you can charm this Committee,
you can instruct us all round, fantastic, but the truth of the
matter is we are talking about part-time ministers who not only
can travel but could also have a conflict of interest between
the two departments. It is very good of you to say you are going
to appear in front of us on a very regular basis, we look forward
to it, we do take that on board, but we are not all of the House
of Commons. What I would say is the Commons has got to scrutinise
the business of departments, and I feel that will not be able
to take place with the situation we have got. I think it needs
to be looked at. I know of your good relations with the Prime
Minister and your charm. We ought to look at the ability to ensure
that we have a full-time minister of state that is answerable
to the Commons. Let us forget the committee. We know that you
are hands-on, we know that you are full-time, but it is the conflict
of interest between the jobs they have got and where they will
be at the time they are needed. It is that we want you to take
on board and look at.
Lord Mandelson: But there might
also be combined interests which straddle two departments. Let
me give you an illustration of what I mean. When I was in the
DTI before, I did not feel that the division of responsibilities
between the then DTI and DCMS really worked for us in respect
of communications and digital technology. We were at the beginning
of a major technological birth that was going to effect and underpin
the development of our economy. To have Lord Carter with a foot
in both camps—I am not suggesting that they are rival camps,
but they need to be joined up camps—the business side and
the communications side in the DCMS. So there are not conflicts
of interest in that sense, there are combined interests which,
in my view, can be operated more successfully by having Stephen
operate from both departments. As you saw last Friday when he
launched the work that he is going to undertake to produce the
report on Digital Britain, which is of absolutely core importance
to our business and commercial future and, therefore, our prosperity
in the future, it touches on very real interests and concerns
in DCMS. He can then draw on both, bring them both together, combine
them and produce one national interest.
1 Footnote by Witness: As noted in a Written
Statement of 15 October (Official Record 15 Oct 2008: Col 45WS)
the Prime Minister has appointed Jack Straw as Anti-Corruption
Champion, a personal appointment complementing his position as
Secretary of State for Justice. The official secretariat supporting
the Anti-Corruption Champion role remains in BERR, along with
responsibility for the OECD Bribery Convention. Back
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