Examination of Witnesses (Questions 140-159)
LORD JONES
OF BIRMINGHAM
23 FEBRUARY 2009
Q140 Miss Kirkbride: So what has
been announced already would be enough to be working for Jaguar,
to take a specific example?
Lord Jones of Birmingham: If there
were sufficient credit in the system. It is a big one—if
there were sufficient credit in the system. It is easy to say
quickly, "Let us get the goods in market and have people
being able to borrow money so they buy a Jaguar". That has
taken five seconds to say. That is a huge ask. Is that sufficient?
Yes, in many ways, but it is a big thing. Secondly, if we are
going to carry on asking companies like Jaguar to green up what
they make—and there is nothing wrong with that but it is
expensive—then direct, proportionate, taxpayers' help there
is a good thing. Third is preservation of the skills base.
Q141 Miss Kirkbride: What about someone
like LDV that has come out this last week as a potential cause
for concern? Its MD on the radio this morning said that it had
not made a profit in the last four years and yet clearly it will
be looking for taxpayer insurance for any loans that it takes
out. What would your take be on that?
Lord Jones of Birmingham: I think
this is very difficult.
Q142 Miss Kirkbride: But you are
sitting on Mandy's shoulders giving him advice.
Lord Jones of Birmingham: As you
may imagine, I do answer the question, do I not? I have got a
reputation for that, and I will not duck it. It is difficult because
I am a Brummie. They have been making vans there for as long as
I have been alive. It is difficult because there are good, decent
people who are in this predicament through no fault of their own.
However, there is a difference in downturns and recessions between
two types of business. There are those who fall victim to this
cyclical nature of economies that go into recession because either
what they make or the way they make it or where they make it is
no longer in tune with where society has moved to. I have in mind
Woolworth's. I think Woolworth's is a classic example. I say this
with huge sensitivity to the 27,000 people who worked there and
anybody saying, "You would not be saying it if it was you";
I do understand the issue, but nevertheless Woolie's is caught
by an economic downturn of a cyclical nature and perhaps LDV is
partly caught in that. That is different from this type of recession,
ie, starving the business environment of liquidity so they do
not go and buy a JCB, they do not go and buy a Jaguar, they do
not go and buy a Nissan or whatever. That is not the same as the
other type and there are two different victims in this recession:
those who are caught only because of the banking crisis and those
who would have been caught in a downturn anyway. It makes not
a jot of difference, does it, to the poor soul who is made redundant
in either case who cannot pay his or her mortgage in the morning?
It makes not a jot of difference to the taxpayer who has to look
after that person in the safety net of state benefit, but it is
a different way of analysing what you would do. I will criticise
the Government if they are not getting behind the ones which are
first-class products and are there only because of the financial
crisis. It is more difficult to criticise the Government for not
doing something about those that are caught in the normal cycle
of an economy.
Q143 Miss Kirkbride: In terms of
the way those two separate categories are handled, to go back
a little bit on what we have said, it is really for the initiatives
that have already been taken in terms of loan guarantees to become
effective and then for that assessment to be made not by government
ministers but by the banks which must resume their lending and
the decision they then take is fine and the Government should
not get involved?
Lord Jones of Birmingham: Are
you saying that with relevance to LDV or generally?
Q144 Miss Kirkbride: LDV.
Lord Jones of Birmingham: No,
I do not think that is applicable to LDV at all. Of course, it
is applicable partly to LDV, but no, you should not be looking
at these government initiatives and saying that application of
all those in the morning would solve LDV.
Chairman: I do not think that
is what she said.
Q145 Miss Kirkbride: No. I did not
explain myself correctly. What I am saying is that, subject to
the Government's initiatives working and the credit getting through,
the assessment of that insurance-backed credit by the Government
should be made by the banks.
Lord Jones of Birmingham: Oh,
right, so in other words—
Q146 Miss Kirkbride: Or these companies.
Lord Jones of Birmingham: And
the banks will do their usual task of picking winners as opposed
to the Government?
Q147 Miss Kirkbride: Yes.
Lord Jones of Birmingham: Yes.
Q148 Miss Kirkbride: And then que
sera.
Lord Jones of Birmingham: Yes,
but as long as the banks are doing their job. I get called by
a building company down in the south west and they want to borrow
£20,000 from a bank with "Scotland" in its name,
so you have got a 50/50 chance of guessing the right one. He has
got a letter and it basically says, "Here it is and after
two years it will have cost you £23,000 to borrow it".
Why do they not just take two lines to say, "I do not want
to lend you the money"?
Q149 Chairman: Yes, but hang on.
You did declare your interest at the beginning, the fact that
you are working for a bank. I have to say my understanding is
that all banks are going to be doing the same thing. I am picking
on the ones that are state owned and have names.
Lord Jones of Birmingham: Except—
Q150 Chairman: HSBC is doing the
same thing.
Lord Jones of Birmingham: Chairman,
I am not going to comment on that. What I am merely saying is
that you as a taxpayer have no say over what Standard Chartered
or HSBC say. You do have an involvement in the other two.
Q151 Chairman: Except, by definition,
they are the banks in the biggest trouble and therefore have to
rebuild their capital whereas the most prudent, and we will take
HSBC, has got more liberty which it is not using.
Lord Jones of Birmingham: Quite
right; I agree with you, but you were asking me who would decide—
Q152 Miss Kirkbride: Who is going
to decide, yes.
Lord Jones of Birmingham: Your
question was, "Would you leave it to the banks?".
Q153 Chairman: Yes.
Lord Jones of Birmingham: I am
answering you, yes, if the banks did the job. If you are a small
business down in Taunton and you are told in a letter, "You
can have your £20,000 but it will cost you £23,000",
you might as well just say, "I do not want to lend you the
money". The banks in that case, all other things being equal,
stack it up, make sure it is right, are not doing their job. The
reason, Chairman, I chose that was not a cheap jibe at rivals
of the bank that pay my wages. It was because the Government has
a stake in those and not any other.
Chairman: Actually, the bank that
is causing most difficulty to small business anecdotally is one
you have not even mentioned today.
Q154 Miss Kirkbride: What I was meant
to be asking you about was training policy. In earlier exchanges
you had with Mr Hoyle I did not disagree with what you were saying
about trying to back Britain more particularly when it comes to
procurement but I wonder how you reconcile that little love-in
with the Buy America programme that we have had from Obama, which,
of course, has caused quite a lot of shock waves around the world.
Lord Jones of Birmingham: You
know I come to this Committee as an inveterate free trader. I
do not support tariffs, I do not support a Buy America programme.
Q155 Miss Kirkbride: What would be
the difference be?
Lord Jones of Birmingham: I am
about to explain. I would not support putting into legislation
a Buy British programme, no matter how much I would find that
frustrating, because we cannot really go round to the French and
the Germans and Americans and say, "Why are you protecting
yourselves?", if we are doing it too. I think our love-in
was actually about the sentiment to procurement where we do not
even give ourselves a chance. We do not even compare apples with
apples. We put our companies up against different procurement
processes in different countries or in this country where they
are not even competing on a level playing field. I would not support
protectionist measures in the short term, let alone in the long
term. In the short term it would not be in our interests as a
nation because we are such a free trading nation and we want to
pay our way in the world by trading round the world. You cannot
do that if you protect your home market in an unfair way, but
in the sentiment of procurement we really do not give ourselves
even a level playing field on which to operate and I think that
is where the love-in was.
Miss Kirkbride: As I say, as much
as I have a lot of sympathy with your love-in, a true free trader
would not allow what Mr Hoyle said, which is to say that you take
into account the taxes paid in one country. You say wherever the
goods are made the cheapest that is the place where you buy.
Q156 Mr Hoyle: That is not what I
said.
Lord Jones of Birmingham: Do you
think it is right that a Cabinet minister in this country goes
round in a car made in Japan, not, notice, a Japanese car, because
I think there is nothing wrong with him going round in a Japanese
car made in Britain, nothing wrong with that at all, but do you
think it is right? Just answer me that.
Miss Kirkbride: It is competition,
is it not? I feel I should point out that we are asking you the
questions.
Mr Hoyle: I want to clarify whether
I have been used.
Miss Kirkbride: But the point
is that in proper free trade you would buy the goods and services
which are made where they are done most cheaply in the world and
are the most designed for that kind of production, and therefore
you increase the purchasing power of the country that is buying
those goods and services so that they can produce more. You do
not take into account the whole macro view of it all. You just
do it straightforwardly on where the cheapest things are made.
You buy them even if they have come from Japan because of the
benefits that would ensue. You do not take into account the more
holistic view of the loss of tax and income and jobseekers' allowance
that would be created by buying there, which is what Mr Hoyle
did say.
Chairman: Mr Hoyle wants to clarify
what he actually said.
Miss Kirkbride: Let him clarify
what he said. What did you say?
Mr Hoyle: What you are not doing
is comparing where I started from. We are on about a state-owned
factory in China which is completely at an advantage because it
is owned by the country so therefore how do you end up putting
it in China when you would not even be able to sell—
Chairman: We must not be protective.
Mr Hoyle: Obviously, a state-owned
factory has a complete advantage when it is going to do work for
the UK. The point on the Japanese was that it is not cheaper,
far from it, and the fact is that it has done all "It's green"
in the valuation and the fact is, as we have said, that it has
got a bigger carbon footprint than British built cars because
it has been shipped round the world.
Miss Kirkbride: You have made
the point, so what things should be taken into account?
Chairman: Can I from the Chair
point out that that you are not a free trader because you think
a British minister should drive a British-made car? That is a
perfectly reasonable view to hold but it means you are not a free
trader.
Mr Hoyle: I will answer it.
Chairman: No. It is a perfectly
reasonable view and I have got a lot of emotional sympathy with
it, but it means you are not a free trader.
Mark Oaten: A pick-and-mix free
trader.
Mr Hoyle: Woolworth's is, essentially.
Miss Kirkbride: To go back to
where we have been.
Q157 Mr Hoyle: A free trade alliance.
Lord Jones of Birmingham: Ah—ping!
You seem to be saying that most free traders would find a convenient
place where they are not. Is that what you are saying?
Q158 Chairman: If you think a British
minister should drive a British car you are not a free trader.
Lord Jones of Birmingham: I believe
that if my wages are paid by the British taxpayer and paid by
people who risk their livelihoods and invest in Britain the minister
or a civil servant provided with a car should be supporting the
people who pay their wages. If there is an area where that car
encounters no competition, for instance, to my knowledge I do
not think Britain makes a people carrier, clearly that is different,
but where you can and within the realms of competition then I
believe that someone who relies on the taxpayer for their wherewithal
should be supporting those taxpayers' jobs. You are telling me
that conflicts with genuine free trade?
Q159 Miss Kirkbride: I think it gets
very difficult.
Lord Jones of Birmingham: I could
go into the early hours arguing with you on that.
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