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The comments made by the noble Lord, Lord Feldman, on the fashion industry, are important. They highlight the fact that exhibitions are hugely important for a range of industries, which is why UK Trade & Investment is investing more in the trade access programme to help small companies, entrepreneurs and innovators with exhibitions around the UK and internationally.
I mentioned earlier that I was in Davos last week at the World Economic Forum. I met executives from Nike, Siemens, Merck, Wipro and Deutsche Bank, to name a few companies. They all commented that Britain is highly regarded as a centre for foreign investment because of its innovation, its universities, its scientific capability and its great workforce. So those who talk down our capability or say that we have none and we have no manufacturing are making a huge mistake.
A key area that a number of noble Lords have mentioned is access to finance. My noble friend Lord Myners and I are working extensively with the banks to ensure that finance continues to be available to all firms of all sizes. Generally, SMEs are able to get the finance they need. Around two-thirds of applications from small firms with a turnover below £1 million are approved, and over 80 per cent of loans and 90 per cent of overdrafts in the medium sector are approved.
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There is no doubt, though, that SME demand for finance remains a key issue and remains down compared to 2007 levels, although this is due in part to SMEs taking advantage of low interest rates to repay their debts. I will be meeting with the credit officers of all the major banks involved in dealing with entrepreneurs and small businesses next week to discuss these issues and to make sure that they are there with access to finance as demand recovers.
One or two people have said, "Well, some of these schemes haven't worked". It is interesting, though, that the enterprise finance guarantee has had an 83 per cent drawdown, and of the 7,792 loans 6,456 have been drawn, which has resulted in £647 million being injected into the economy.
I could go through the other schemes, whether VAT, the deferment of tax, empty property relief; you name it. I will not go through the list, but an extraordinary number of serious measures have been introduced, and I would say that they have had a profound impact on the economy.
The crisis has highlighted-I think the noble Lord, Lord Wade, mentioned this-that we need a better way of getting funds into the market. The Rowlands review has highlighted that the venture capital industry needs to be stronger in the UK. We have set up an innovation fund that now has £325 million available, but we are also setting up the growth capital fund and there are other ideas floating around. We need a framework to bring these together, and we are thinking about that at the moment.
There have been quite a few comments about enterprise and skills. The reality is that we need to embed enterprise at primary and secondary school level. Pupils have to be encouraged to develop enterprise skills-being creative, taking and managing risks, problem-solving and adopting a can-do attitude-across the curriculum.
Activities like Make Your Mark clubs and Make Your Mark challenges, co-ordinated by Enterprise UK, are very important, as have been the National Enterprise Academy and the National Council for Graduate Entrepreneurship. It is encouraging to see that last year we had a record number of people starting apprenticeships-240,000, up from 65,000 in 1997.
This morning, I was at a get-together hosted by the noble Baroness, Lady Coussins, on language skills. If we are going to be a competitive, entrepreneurial and innovative society, it is clear that small businesses need to improve their language skills. That will require a partnership between universities, business and schools.
If we are going to have such a society and grow on the success that we have had in the past decade, though, we need to tackle underachievement by key groups so that you have an opportunity irrespective of your gender, ethnicity or location. That is why women's enterprise is getting so much attention from us as a Government. Women run about 15 per cent of our 4.8 million small businesses. If we had the same percentage of women in business as in America, we would have another 700,000 businesses. If women had the same start-up rate as men, an extra 150,000 start-ups per year would be created. This week, I met a group of black African and black Caribbean business people
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I now turn to the subject of regulation. We clearly need good regulation. We have seen improvements in health and safety and we need to ensure that that balances the rights of individuals and businesses but does not hinder business. We are the first Government to measure and commit to real reductions in regulatory burdens. Since 2005, we have published annual departmental simplification plans. We have made £2.9 billion annual business savings, rising to £3.3 billion by May 2010. But there is no doubt that this is a continuing challenge and that is why I went to Brussels a few months ago to see how other countries are doing. It is a challenge not only in Europe, but in the US, Canada and throughout the world.
Lord Hunt of Wirral: I could not agree more with the Minister. He is seeking to defend the regulatory regime in this country. But is he aware that the World Economic Forum has a ranking for countries? In 1997, we were fourth. We are now languishing in 86th position in that table. How does he explain that?
Lord Davies of Abersoch: I have already referred to the fact that when you look at the ease of doing business in the UK, the OECD ranks us very highly. When you look at entrepreneurship and foreign direct investment into the UK, the reality is that this is a continuous challenge for all Governments, but we are continuing to attract foreign direct investment into the UK and people are still starting new businesses. There is no doubt that the world is getting more complex. It is a challenge for all countries, which is why we have given this a huge focus, in the same way that we have given focus to public sector procurement. A number of noble Lords have mentioned that we need an efficient public sector procurement. The public sector spends around £220 billion per year on goods and services. We are committed to seeing more SMEs bidding for and winning a fairer share of contracts. That is why we are working to implement the Glover report.
Another issue was mentioned by a number of noble Lords. The noble Baroness, Lady Byford, mentioned digital requirements. We need the right infrastructure. Infrastructure UK, which is a new body, provides strategic focus in the Government across the full range of infrastructure sectors. It raises the bar on how infrastructure investment is planned, prioritised, financed and delivered. I hosted a breakfast this morning with Infrastructure UK and a range of financial institutions to look at how we might get more investment into this sector. It is clear that we need to be a digital economy. That is why the Digital Economy Bill is so important and is why we are committed to two megabits universal broadband throughout the UK. Infrastructure investment is a challenge right across major nations. That is why Infrastructure UK has been created and why we are giving it the right type of focus.
My last couple of points are on the right tax environment. The UK has the most competitive corporation and capital gains tax rates in major developed nations. The main rate of corporation tax at 28 per
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Finally, we need the right support for innovation. We can all quote from different tables, but the one that I would like to quote from is that the OECD ranks the UK second only to the US in research excellence. As my noble friend Lord Giddens highlighted, we have and should continue to build on a successful partnership between universities and business, particularly in the area of research. The Technology Strategy Board has £1 billion to invest in this spending review. It is also important that a number of these projects have been in partnership with the EU.
We talk about innovation and enterprise. If I had been closing this debate in 1989, there would not have been an internet. There were very few mobile phones and the Berlin Wall was still up. The past 20 years have seen huge scientific and economic progress around the world. Britain has the strength, innovation and creativity to be a key participant in the growth of the world economy in years to come. The Government's focus is on supporting enterprise, fostering knowledge and helping young people to develop the skills and capabilities to reach their personal and economic potential. We are investing in infrastructure, ensuring open and competitive markets, building on our industrial strengths and, in particular, providing active and strategic government. Enterprise and innovation are at the heart of a successful economy. That is why we are backing them so strongly. I thank the noble Lord, Lord Sanderson, and I will respond to him in writing on cashmere sweaters and nuclear power.
2.46 pm
Lord Sanderson of Bowden: My Lords, I thank all noble Lords who have taken part in this debate. I particularly thank the Minister for his reply. At one stage, it was a little like what Sir Walter Scott said about the debating skills of the Duke of Wellington-he sliced the argument into two or three parts and helped himself to the best. With that final comment on today's debate, I beg leave to withdraw the Motion.
National Security Strategy
Debate
2.47 pm
Moved By Lord King of Bridgwater
Lord King of Bridgwater: This is an opportune time to address the national security strategy. It follows very quickly after the publication of a Conservative policy for a national strategy and the appointment in this House and in another place of the Joint Committee on the National Security Strategy. Let us look at the history. Many noble Lords will be familiar with the original announcement by the Prime Minister setting
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I do not think there could be any dispute in this House about the need for a national security strategy. Not many would challenge the view that this is now a much more dangerous world for our own country and all countries. If I reflect on the time when I had some responsibility for national security as Secretary of State for Defence and when I was chairing the Intelligence and Security Committee, I see that some challenges have taken on much greater significance. Quite clearly, the threat that jihadist suicide bombers now pose throughout the world is much more severe. There are now risks of nuclear proliferation, particularly in one or two less than stable states. There are increased concerns about the growth of poverty, the impact of climate change and concern about food and water security. The risks that they pose for a mass migration of people create new challenges for us as well. Most recently, there have been discussions and concerns about cybersecurity and the increased risk of potential cyberattacks; and energy security, with the interesting activities of the Chinese, who are clearly seeking to secure their supplies without any universal observations as to how that leaves other countries in the future with regard to security of energy supplies for their own people. The most recent events in Haiti draw attention to the profound and enormous risk of natural disasters, and the challenge they pose to national resilience.
Against that background I look at the strategy and consider its progress to date since its first publication. The paper certainly covers a very wide canvas. So wide was the canvas that, when it first came out, the Intelligence and Security Committee reviewed it and wondered whether any benefits would flow from it or it was merely a paper exercise. The Times leader described it as "a damp squib". Certainly when one looks at it, ranging all the way from terrorism and swine flu to flooding in Tewkesbury, one sees the enormous range of subjects that it covers and the challenges that it would pose in any implementation.
In what is, I hope, a reasonably bipartisan approach to this problem, it is not too unkind to say that it is not the greatest achievement of this Government that they definitely talk the talk, but it is not always clear as to whether that talk is then subsequently implemented. For instance, I noticed that one of the original recommendations was that the Intelligence and Security Committee-my own area of interest-was to be upgraded. That was two years ago; I am not aware that any of that has yet happened. Look at certain other reports that have been directed at this issue, such as that of the noble Lord, Lord Butler. How many of its recommendations, which were accepted in full by the Government, have yet been implemented? I notice that the Financial Times in February 2009 said that:
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"Most of the initiatives in Britain's first national security strategy have been delayed, watered down or quietly dropped since Gordon Brown unveiled the document to 'safeguard the nation'".
It is against that background that we need to readdress this issue and give added impetus and incentive to it. What is needed here is a strategy that requires, if it is to be effective at all, the involvement of all the relevant elements of government. Perhaps we did not need to the Chilcot inquiry to draw attention to this problem but it shows the limitations of sofa government, which is totally inimical to the real involvement of all the necessary elements in government that must contribute to proper decision-making. I will look at the different elements that must be crucial. I will refer in a moment to the Conservative policy document, which I commend because it re-establishes, under the chairmanship of the Prime Minister, the primacy of the Foreign Office. The need for diplomacy is given a much higher priority. I think it was last week that we heard in this Chamber about the abandonment of the overseas price mechanism. I understand that this was a decision imposed on the Foreign Office by the Treasury. The future efforts of the Foreign Office will be dependent on the current exchange rate of the pound. Given recent turbulent times, what an impossible position that presents the Foreign Office with in planning and maintaining effective programmes.
If I look closer to my own experience, the downgrading of the Ministry of Defence is extremely serious. It is not something that is ignored by our forces on the ground. They know the seniority of the Secretary of State for Defence. The Secretary of State for Defence is, effectively, one of the most junior members of the Cabinet; he is junior to the Chancellor. I certainly did not regard myself as junior to the Chancellor when I had the privilege to be in the Cabinet. He was an equal, senior member of the Cabinet. When you are also junior to the Chief Secretary you really are in trouble. When you go on to say that there is a £36 billion black hole, as the House knows very well, in the Ministry of Defence forward procurement programme and overall financial situation, it is not difficult to see how that happened. We have this most unfortunate situation-some of it accidental or not planned-where there is an annual change of the Secretary of State for Defence. I referred to this in the House yesterday. There is no other business in the world, let alone any major government undertaking, that would say, "You will have a new head every year". What sort of confidence can those in the forces have that they are led by people with real understanding and experience of what they do? That is an elementary point.
My concern is that whatever strategies are produced and whatever plans are made, at the top of what matters is the leadership given. What is the organisation and priority? The co-ordination of the top departments of government of foreign policy, defence planning and capability, home security and resilience, and domestic cohesion needs leadership of a high order and that of the Prime Minister. It also needs, most importantly, to bring in the role that the intelligence agencies can play. Some of the background and experience of the best people could have contributed so much to avoiding some of the challenges that we face. Many of us
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"Good intelligence means looking backwards as well as forwards".
Learning some of the lessons of the history could have saved us an awful lot of the problems that we face now.
Against that background, I welcome the Conservative proposal for a national security council. I notice that the Prime Minister said that we have it already. However, it is a question of emphasis, priority and recognition from within the government system, as well as from the public, that this is a top council. It is not just another ministerial Cabinet committee, but one that is given the highest importance and chaired by the Prime Minister with the Foreign Secretary as his deputy, and with the Chancellor, the Ministry of Defence, the Home Office, DfID, the Security Minister, the CDS and the agencies represented. I also welcome the proposal that, if we are in conflict, there should be a war Cabinet, with the leaders of the opposition parties invited to attend. That is very important, as is that higher profile at this time.
The national security council must draw up a comprehensive strategy; review the national interests and make proper risk assessments for them; and regularly report on progress. That is the most important aspect. From that flows the need for the strategic defence and security review. Obviously, I welcome yesterday's announcement that this is to start. It is accompanied, as is everything under the present Government, by that little code word "not until after the election", but is something that I am confident a Conservative Government-if the Conservative Party is successful-will wish to carry through. They will not only carry it through but undertake that it will be done in future on a quadrennial basis, in the same way that the United States operates. To have left this for 11 years in the changing international situation is extremely undesirable.
The UK is not alone in this situation. We must work with our allies. I was struck that, on the day that the defence Green Paper came out, Robert Gates, the US Defense Secretary, said that the US needs allies and cannot do it alone. Rather more publicity was given to the point that we might work more closely with the French. I welcome that. It is even more important in the military sense now that they are fully involved in the NATO military structure. There are many other countries that we have not worked with previously, particularly in the field of intelligence and security and the fight against terrorism, that can be our allies as well.
We do all this against what will undoubtedly be a very severe limitation on resources. Therefore, we must focus and prioritise. We must be flexible. I again quote Robert Gates. He said yesterday, "The wars we fight are seldom the ones we plan". I thought that followed up very well the recent statement by my noble friend Lord Carrington, who quoted the statement that he made in 1970 when he became Defence Secretary. He asked the Chief of Defence Staff, "How many conflicts have you been involved in since the last war, and for how many have we been prepared?". The answers he got were 41 to the first question and one to the second.
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The challenges that we face will not decrease. It is a very unstable world. The priority for us all in this House, in Parliament and in government is the security of the United Kingdom and of its citizens. It is from that secure base that we can then make the contribution that I hope we will to making the world a safer place as well. I beg to move.
3.01 pm
Lord Soley: I am very grateful to the noble Lord, Lord King, for introducing this debate and for the way in which he did it because I wish to have two contexts in my mind when I discuss this. One is the defence Statement made in both Houses yesterday, which will continue to influence this debate. The other is the important contribution from the Front Bench yesterday, which is that we need some degree of all-party involvement in these emerging policies. It does not mean that we have to exclude party politics entirely; indeed, you will never be able to do that. However, our security services-I use that phrase in the widest sense-will expect no less of us than that we give very careful thought to the nature of these threats.
The noble Lord, Lord King, said in his opening remarks that we live in a profoundly dangerous world. I am not sure that the world is more dangerous than it was at the time of the stand-off between what was then the Soviet Union and the United States. You think of the Cuban missile crisis. However, what is fundamentally different is the pace of change, the incredible instability around the world, and therefore the increased unpredictability of what is going to happen. At least you knew what the stand-off between the Soviet Union and the United States was about. You could see the structures of them. Now you cannot see those structures any more. The quotation about the number of predictable wars makes that point rather well. Therefore, we have a duty to give very careful thought to this and to look at it in depth.
As regards the national security strategy, I can do no better than echo the words of the House of Commons Defence Select Committee, which called it one of the most important innovations that this Government have introduced. I say that particularly of the 2009 updated policy statement, which was an improvement. The noble Lord, Lord King, said, expanding on Conservative policy, that if the Conservatives won the election, they would set up a national security council. I understand that and the arguments he made underlying that. However, I am not sure that what he described is essentially different from what is involved in the 2009 update paper. If I remember rightly, paragraph 8.4 of the conclusions of that paper talks about the Prime Minister chairing the committee which brings all of these together and involves other organisations, individuals and the private sector. There is not a great deal between the parties on this. There might be a slight difference of emphasis, but I do not think that there is an enormous difference.
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There are two areas on which I want to spend a bit of time, although there is an enormous area you can cover. In a way, the biggest danger we face-we all know this-is the increasing fragility of so many states and the expansion of non-state actors, the so-called terrorist groups or whatever, who are sometimes linked to ideologies, religion, protest movements or nationalism. There is a whole range of them. Combined with that we face the profound dangers of increasing scientific knowledge, easily available, on the production and use of weapons of mass destruction, however you define them, and it covers a wide range of issues.
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