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16 Jun 2010 : Column 966

I felt compelled to speak because I have a business background. I went to that bastion of capitalism, Harvard business school, but that was 20 years ago and I have been somewhat cleansed since then. I have had many years of working in consultancy, finance and running my own small business. Then I lived in the countryside and raised my children. On my campaign, I had a reputation for speaking from notes on the back of a fag packet. As this is a no-smoking zone, I have had an upgrade and am speaking from scribbles on the back of some very nice House of Commons paper.

I want to make a couple of specific points and to say why I felt compelled to get up and speak. I am really worried, because I do not think that Opposition Members understand the fundamental reason why we are here today or how Government should support business. We hear lots about micro-interventions and RDAs. Everybody knows that if one visits one's RDA one will find that they have wonderful and often overlapping agendas with many other parts of the public and private sectors, but they are not lean, honed, efficient and joined-up mechanisms. In many cases, they are the worst bastions of the unaccountable and unelected public sector. They might, in many cases, be doing good work, and that is why they might well have a role to play in many places, as the hon. Member for Sedgefield (Phil Wilson) suggested, but they are not the best way in which to spend precious pounds of taxpayers' money. However, the Opposition appear to think that that is the right thing to do.

The Opposition also think that micromanaging the economy is the right thing to do. Let me just reference a couple of the myriad schemes that were put in place to support business during the recession. The £10 billion working capital guarantee scheme was designed to underwrite portfolios of loans held by banks, which is such an important part of unlocking the crunched credit system, but it made only £2 billion-worth of guarantees in the time that it was operational. It lent only 20% of its capacity, which suggests that it was not doing what business needed.

Then we had the £75 million capital for enterprise fund, which was designed to do what we would all like to do-get high-tech, high-grade start-ups off the ground-but it lent only half of that money in the time that it was operational. That again suggests that there was a disconnect between what the then Government wanted to do and what business really needed.

Nadhim Zahawi: Does my hon. Friend agree that the real problem with these quangos is accountability? A very good local charity in my constituency was the beneficiary of some money from Advantage West Midlands, and it was very grateful for that money. When it asked, "How would you like us to report on our achievement?" the RDA said, "Oh, just write a report; it doesn't really matter." So there is no real accountability. Will she expand on that point and on how the coalition's policy will bring to local people the accountability that will make the difference in terms of efficiency of delivery?

Claire Perry: I thank my hon. Friend for that important intervention. The whole issue of accountability and transparency in the public sector is key. One phrase that I love to say is that sunlight is the best disinfectant, and that can be applied to the spending of central Government, local authorities or these unelected, unaccountable quangos,
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which in many cases are not even consolidated into departmental accounts. It is very easy to pay for junkets to the south of France if one knows that nobody is looking at the books. He raises an incredibly important point on an issue that we have pledged to improve with a far more rigorous and accessible system of transparency in public spending, which I wholeheartedly support.

Let me return briefly to the other schemes that were meant to make such a difference. Do hon. Members remember the £2.3 billion automotive assistance programme-the former Government's flagship scheme that was going to support the entire vehicle manufacturing system and supply chain? It made only three offers of loan guarantee schemes and only two companies decided to go ahead with them.

Then we had the other enormous underpinning of the British export industry-the £5 billion trade credit insurance scheme, which sought to underwrite firms doing the incredibly valuable job of earning pounds by exporting. Well, it underwrote 109 policies. That sounds reasonable, but they were worth £18.5 million. That sort of micro-meddling and initiative-itis bedevilled the former Government, and as a business person, I feel they do not get what British business needs. But we do.

British business needs three things. First, it needs transport and broadband infrastructure. If my memory serves me right, Labour Members only recently started to get to grips with the concept of high-speed rail, which will do so much to rebalance economic growth across the regions.

As for broadband infrastructure, in rural Britain we are extremely deficient in what will give us a living and working countryside. Instead of grinding through additional taxes, more changes and a digital switchover fee, the Government have a plan to get the broadband network in place. That is incredibly important.

Secondly, British business needs a decent low-taxation environment. On corporate competitiveness, we have gone from 10th in the world to 26th over the last 10 years. We can all give examples from our constituencies of companies that have left the country to move to more benign taxation environments. I am talking just about the headline rate, not the taxation complexity to which my hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi) referred earlier. Have Members seen the size of our tax code list? The list reaches my waist and I am 6 feet 1 inch. It is a lot of paper and we have developed a whole industry employing lots of people to interpret tax codes for small businesses. The Conservatives' aspiration is to have the lowest tax rate in the G20 and that is what British business needs.

Thirdly, we need to get regulation out of the way. My hon. Friend the Member for West Suffolk (Matthew Hancock) described the health and safety madness that bedevils businesses of all sizes. Indeed, we have gone from fourth in the world for business regulation benignness to 86th over the last 10 years. We have become a country where people have to wade through acres of red tape to do what they need to do every day.

Over the last 13 years, Labour Members did not get, and still do not get, what British business needs. We are the party that will deliver our promises, which is why I am pleased to speak in support of the amendment for which I shall vote tonight.

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6.7 pm

Chi Onwurah (Newcastle upon Tyne Central) (Lab): As my right hon. Friend the Member for Wolverhampton South East (Mr McFadden) said at the beginning of the debate, we stand on the brink of a new industrial revolution.

Let me declare two interests. Newcastle was at the leading edge of the first, high-carbon industrial revolution, so we have an interest in seeing a resurgence of industry and manufacturing. As an engineer, I too want to see manufacturing and industrial resurgence. But it is not my interests that lead me. There are five global challenges that require a new industrial response.

First, population and economic growth across the world are stoking demand. Secondly, the global financial crisis has made it extremely important that we grow other sectors. Thirdly, climate change is making many of our ways of building and manufacturing things inefficient. Fourthly, the population of the western world is ageing. That is a good thing; it is good that people are living longer, but it requires different markets and goods- for example, more automotive goods. Finally, globalisation means global markets and global industries.

On the Opposition Benches, we believe that we need to grow our way out of the global financial crisis. The challenges I have enumerated give us many opportunities for growth in the UK, in the north-east in particular; for example, in renewable energies such as wind power, which is why the previous Government invested in NaREC-the New and Renewable Energy Centre-a world-class testing facility for wind turbines in Blyth. Sustainable transport provides another opportunity for growth, which is why the previous Government invested in it by giving grants to enable Nissan to build the electric car facility in the constituency of my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson).

Some months ago, I visited Newcastle university's electrical engineering department, where I saw the world-leading research into electric motors that is taking place as a result of the previous Government's increased funding for research and development. Another example relates to ageing with dignity, as promoted by the centre for ageing and vitality in Newcastle.

We stand at the brink of enormous industrial change and the potential for enormous industry growth. The Government have two possible responses. They can leave things to the market, get out of the way-such a well-loved phrase-and let the existing capital and goods markets figure everything out, or they can put in place the economic and active industrial policies that will support industry. The Government seem to have decided to do the former; or having listened to the words of the Secretary of State for Business, Innovation and Skills, I would say that they have decided to do the former while professing to do the latter. I want to say why that is not in this country's or even the coalition Government's interests.

As I have said, I am engineer by profession. I also spent three years getting an MBA to hone my business and management skills. I have worked in France, the US, Nigeria and the UK, as well as travelling extensively for my work. I have seen many different combinations of private and public sector involvement, including the raw entrepreneurship of Lagos street markets. Having
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listened to Conservative Members expressing their contempt for all regulation, including that on health and safety, I now understand that that is the kind of market economy that they want to bring to this country. I have also worked in the highly regulated labour markets of Germany. I have helped to build small businesses, to grow medium-sized ones and to expand multinationals. I have also helped to set up the framework for the public sector regulation of the telecommunications industry. So I know from bitter experience just how difficult it is to create the virtuous cycle of investment, innovation and job creation.

Let me tell hon. Members what I have found that works. The role of the private sector is crucial-it mobilises investment, creates jobs, innovates and takes risks-but the public sector is equally important. The right regulatory environment gives investors the confidence to invest and helps smaller companies to compete on a level playing field. By providing grants and incentives for innovation and investment and using the public sector procurement process intelligently, the public sector can help emergent industries to flourish. By directing funds to build the right infrastructure, the public sector helps ideas to become businesses. Conservative Members are right: the public sector does not create jobs, but it can provide the soil and fertiliser to enable them to grow. So we need active individuals, partnered by industrial activism. A proactive partnership between the public and private sectors is essential if the UK is to take a leading role in the world's low-carbon future.

Nadhim Zahawi: I am pleased to see a fellow engineer on the Opposition Benches. I recall the hon. Lady not wishing to be here for the election of the Speaker and wanting to go back to play bingo in Newcastle. Is she proposing that the Government give further subsidies to the bingo industry in her constituency?

Chi Onwurah: I would thank the hon. Gentleman for his intervention if I could understand the line that he is drawing between bingo and the huge questions that we face. I support the bingo industry-I support all service industries-but he may not have followed today's debate, which is about Government support for industry, particularly manufacturing and engineering industries. I would appreciate being able to stick to that subject for the rest of my contribution.

Labour's industrial activism means that there are appropriate grants to support industry across the country. Under Labour, the regional development agency One NorthEast was able to take strategic regional decisions and support new technologies and the complex supply chains necessary to make them successful. I share the utter confusion of my hon. Friend the Member for Sedgefield (Phil Wilson) about Government policy with regard to the RDAs, which are to be abolished but allowed to re-grow in some form that is not entirely clear. That uncertainty is damaging jobs and industry in Newcastle and across the north-east, and I urge the coalition to provide clarity and send signals that a regional strategic decision-making authority will continue to exist.

Chris Heaton-Harris: Will the hon. Lady give way?

Chi Onwurah: I am afraid I will not give way. I have very little time and I know that other Members wish to speak.

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Let us be clear. Active support for industry is not a uniquely Labour policy. Across the world, Governments who know the benefits of long-term investment support their industry. I do not believe that China is a political model for us, but it has invested aggressively in technology and is reaping the rewards for doing so. Its wind power industry has doubled in output in the past year. In Singapore companies planning to relocate are asked how many graduates they need, what kind of grants they want and what kind of infrastructure would help.

Claire Perry: Will the hon. Lady give way?

Chi Onwurah: No, I am afraid I have no time.

Our competitors recognise the importance of supporting industry. The coalition uses the excuse of not wanting to pick winners, but in reality it wants to take our country back to a laissez-faire industrial indifference which will leave us without technology leadership in any sector. It talks about the importance of cutting the deficit. We agree. We set out plans to cut the deficit in half over four years, but that should not be used as a reason to risk our futures.

The people of Britain understand that even when times are difficult, one should not stop investing in the future. It was Britain's leading role in the first industrial revolution that gave us our current relative prosperity. If the Government do not equip the country to take advantage of the opportunities that are presented now, they will betray not only the north-east, but future generations across the UK. I support the motion.

6.17 pm

Toby Perkins (Chesterfield) (Lab): Thank you, Mr. Deputy Speaker. It is a great pleasure to speak for the first time in a debate chaired by you.

I am sorry to see that the hon. Member for Devizes (Claire Perry) is leaving us.

Claire Perry: Will the hon. Gentleman give way?

Toby Perkins: That was a brave attempt. Before the hon. Lady spoke, I thought we had already been patronised more than we could stand, but she raised the bar considerably.

Claire Perry: Will the hon. Gentleman give way?

Toby Perkins: No, I should like to make progress. Other Members wish to speak.

My background as a small business owner and now as an MP in the east midlands, in a coalfield and manufacturing area, gives me a broad perspective on the debate. That broad perspective is one of the things lacking in the arguments that we hear from the Government Benches. People seem to fail to understand that the private sector and the public sector do not live in two entirely opposite worlds that never have anything to do with each other. As a business man, I rely on people buying products from my firm. Some of those people might be doctors, some might be teachers, some might work in private industry. What all of us who run a business need more than anything else is a strong economy and a strong environment in which to do business.

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Of course, everyone running a business and everyone in society wants to pay less tax. More important than a small cut in corporation tax is an economy supported by Government to run successfully. Hon. Members should remember that corporation tax is 5 per cent. lower now for big firms than it was in 1996-97. All the parties are talking about manufacturing, yet only Labour has put in place the financial means to support manufacturing and to boost industry, which is what should be happening.

I was pleased to hear the contribution by the hon. Member for Stratford-on-Avon (Nadhim Zahawi), who I think might be joining the proud tradition of Tory rebels over the years in his call for more support for industry. He said that the British Government should support our manufacturing firms in the way that the American Government support theirs. I hope that he will continue to stick to that line after he has spoken to his Whips.

In our area, the East Midlands Development Agency is not, of course, the whole solution, but it is an important contributor. In Chesterfield, there is an organisation called CPP that employs 270 staff. When I went to visit it before the election, people there told me that they were able to carry out the initial set-up only because of the support of the development agency, which put in £1.7 million.

The east midlands engages in more manufacturing than any other area. The Secretary of State has said that he wants his Department to be the Department for growth, but cutting investment allowances will not speed the growth that we need in our economy. I was horrified to hear the hon. Member for Loughborough (Nicky Morgan), who is not with us at the moment, say that she keeps speaking to people who tell her that the East Midlands Development Agency is not contributing and is not doing a good job, and they want to get rid of it. In fact, for every £1 the development agency puts into the local economy, we get £9 of benefit coming back. I do not know who the hon. Lady can have been speaking to, because local businesses and business organisations are queuing up to support it.

Chris Heaton-Harris: Will the hon. Gentleman give way?

Toby Perkins: Yes, if the hon. Gentleman promises to be brief.

Chris Heaton-Harris: As a fellow east midlands MP and a former east midlands Member of the European Parliament, I thank the hon. Gentleman for giving way. Will he at least acknowledge that lots of the money that is invested by the East Midlands Development Agency goes to the so-called golden triangle, which his constituency falls within, and that areas in Northamptonshire and Lincolnshire have suffered because they have not been getting the inward investment that they might well have got had there been a local enterprise partnership?

Toby Perkins: I am sure that the hon. Gentleman knows his local area better than I do. I do know, however, that Derbyshire and Nottinghamshire chamber of commerce has spoken out strongly in saying that it would like the East Midlands Development Agency to be left in place. It is up to Members in other areas to ensure that they get schemes before the agency and try
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to work with it in a positive way. The current lack of certainty from the Government will not lead any organisations to think that they should be talking to the development agency, as they cannot be sure that it will even be there in a few months' time.

Pat Zadora, the chair of the east midlands business forum, has said:

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