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The scale of achievements at that university is considerable. New industrial collaboration is being developed with some of the major employers-for example, with Airbus UK, with its 14,000-strong skilled workforce in north Wales. It is working in collaboration with University College London and local companies on a project to build the largest telescope in the world-a project that, if successful, could bring more than £200 million into the north Wales economy. That is an astounding university project and I wish it well. In all of this, the academic staff are supreme.
8.47 pm
Lord Griffiths of Fforestfach: My Lords, it is a great pleasure to follow a fellow Welshman with such an intimate knowledge of the university sector, which I was in for the first 20 years of my career. I agree with almost everything he said. Before speaking on some issues relating to the economy and business, I, like most others today, congratulate my noble friend Lady Wilcox on her appointment as a Minister in the Department for Business, Innovation and Skills. She is exceptionally qualified for the job, having run her own family business, managed a significant multinational, been on the boards of various companies and chaired the National Consumer Council. On behalf of us all, I wish her well. I congratulate my noble friend Lord Henley, a former Minister, on his current appointment and on his courage in responding to such a wide variety of subjects in today's debate. I do not envy him.
It is very easy to be depressed about the general economic situation. The UK fiscal position is, frankly, not good. One could say it is rather dire. The eurozone is in crisis, and the markets in the eurozone have been in crisis despite the €750 billion package that was meant to sort out everything. Global financial markets are jitterier than at any time since the aftermath of the financial crisis early last year. Despite this, there are some grounds for optimism. The world economy is growing at more than 4 per cent a year, and world trade has come back in the past 12 months by something
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The key to turning around our economy is sustaining the recovery. That means creating a low tax, enterprise economy that has incentives to save and to build up capital and in which government expenditure is under control. Like the noble Lord, Lord Desai, I think that economic growth is critical. It will lead to higher tax revenues and create more jobs. We have been here before. In the early 1980s and the early 1990s, painful decisions involving cuts in public spending were necessary, but we know that they produced long-term gains. After 1992, we had 16 years of uninterrupted economic growth quarter by quarter.
I believe we can return to that, but we face three challenges. The first is that in the emergency Budget later this month, the Government need to put forward some form of medium-term financial plan that lays out, for at least three years, targets for public spending, taxes, the deficit, public sector borrowing and money supply. They then need to stick to it. Drawing up such a plan is not difficult, and when the numbers are announced later this month they must show a significant reduction in the borrowing requirement as a percentage of GDP. There is no reason why this should lead to a double-dip recession. A medium-term programme that investors believe is credible will restore confidence in the foreign exchange and capital markets and encourage investment. The lower exchange rate-the pound has gone down by 25 per cent over two to three years-will help exports. If we fail in this, and if the Government fail in this, we could well find ourselves in the same position as certain eurozone countries.
Publishing a plan is not difficult, but sticking to it will be. At some stage, the Government's resolve to balance the books will be tested. There could well be painful strikes, protests and marches, and even the possibility of social unrest, which was mentioned, cannot be ruled out. If we are to return to prosperity and stability, it must be faced. We must avoid the mistakes that Ted Heath made in the early 1970s.
The second challenge that we face relates to the banks. If the recovery is to gain momentum, the banks have to lend more off their own balance sheets and to raise more capital from the equity debt and credit markets for business. Without this, investment will falter and the recovery will be put at risk. At present, there is a lot of talk about new taxes on banks and new regulations on banks. We certainly need a different regulatory framework. I can see why the public are angry at the incompetence, greed and excessive risk taken by banks. Their anger-I say this as a banker-is not without substance. The problem, however, is that if politicians and regulators pursue populist policies that could be quite arbitrary, we might find that the banks, instead of helping the recession and helping growth, are a mortmain on it.
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The third challenge is this; it is very important that economic policy is underpinned by a sense of fairness and justice.
Lord Lea of Crondall: I am grateful to the noble Lord for giving way in his last minute. When he referred to the banks, I expected to hear an agenda of banking reform, but his statement seemed to be, "Watch it. Goldman Sachs can do no wrong". Is that not a bit like the Conservative Party's caricature 20 years ago of the TUC doing no wrong?
Lord Griffiths of Fforestfach: This is a complex subject, and we do not have time tonight to deal with it in detail. Clearly, we need a stronger regulatory structure with very clear rules on capital, liquidity, the structure of compensation and so on; about that I have no doubt. It would be wrong for politicians and regulators to respond to the public anger by piling so much regulation and tax on to the financial sector that it cannot play its role in the recovery.
I am way over my time, but my final point is that the sense of fairness and justice as we face difficult times will be very important. Our enterprise economy should never become a Darwinian jungle. So many things can be done by the coalition Government to present the policies fairly. We are in difficult times. We have been here before, we have taken difficult decisions in the past and pain has resulted in gain, and I have no doubt that we can do it again. I wish the coalition Government every possible success.
8.56 pm
The Earl of Glasgow: My Lords, it is encouraging to learn from the gracious Speech that the Government are still committed to a high-speed rail network, although we all appreciate that the service is unlikely to be in operation before 2025. What is not clear, however, is the planned reach of this north-to-south high-speed line. It is sometimes reported that the Government plan to go no further than Manchester or Leeds, and sometimes in the first stage no further than Birmingham, but surely the real value of a high-speed rail service is to reduce the travelling time on long-distance journeys-by that, I mean distances of more than 200 miles.
From the outset, the line must be planned to go all the way to Scotland. The 20 minutes or so that will be saved on the 120-mile journey from London to Birmingham hardly justifies the huge capital expenditure. On the other hand, the two hours or more that will be cut from the journey time from London to Glasgow will make a huge difference. Perhaps more importantly for the future, it will greatly reduce the need for the large number of polluting internal flights that now go between England and Scotland, and may eventually make them redundant altogether.
We are told that the tipping point-a new buzzword for me-is approximately three hours. That means that on a journey that takes no more than three hours, the traveller is most likely to take the train. If a journey takes more than three hours by train, the traveller will choose to fly. That certainly matches my experience. If I could get to London from my home in Scotland in three hours, I would certainly take the
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Surely the main purpose of high-speed rail in Britain is to cover the longer distances at a considerably increased speed. Improvements to the existing network should be able to satisfy the needs of the shorter-distance traveller. I therefore seek the Minister's assurance that the Government are now planning a high-speed rail route all the way to Scotland and that this decision will not be left until after the Midlands or north of England route has been established. I would be grateful to know the Government's policy on this.
Another reason for wanting assurance on this concerns the whole of the Scottish economy. A high-speed rail service to London and the continent that starts no further north than Manchester or Leeds will put Scotland at a considerable economic disadvantage in relation to the rest of the United Kingdom. The population of England will continue to grow, while the population of Scotland, so much further away from most of Britain's financial and industrial centres, will continue to decline. It is quite reasonable to expect the Scottish Government to shoulder the financial burden of a line from Glasgow and Edinburgh to the border, but I would expect the Government to finance the line as far as Carlisle.
Clearly, no engineering work on any new high-speed rail network will start for a good few years. I hope that we do not have to wait until Crossrail has been fully completed before it can get started. But when the building starts, in a time when we all hope that the country will be in a much healthier financial position, the objective must be to build the complete line from the Scottish border to the Channel Tunnel, not just a part of it as a first stage.
Finally, I hope that the Government recognise something that many of us on all sides of the House have stressed for some time; namely, that Britain's future transport policy must be based on the train-not just the high-speed rail link to Scotland but a greatly improved and expanded existing service. We cannot go on building more motorways, bypasses and dual carriageways. We cannot go on building more airports and runways, and those ghastly terminal buildings. We are meant to be a country which is concerned about the environment and committed to reducing carbon emissions. Apart from the train being the most environmentally friendly mode of transport for passengers and freight, it is potentially-I emphasise "potentially", because it is not necessarily the case at the moment-the most civilised and stress-free form of travel.
The more roads we build, the more cars and trucks will materialise to fill them. If this Government could have the courage to resist the cries of anguish from the very vocal car lobby, they should seriously consider a four-year or five-year moratorium on road building. Clearly, essential road improvements and projects already started must be completed and road maintenance must continue. But the money saved on major roadworks could go to improving the efficiency, comfort, convenience and capacity of our railways.
The main objective should be to persuade some of those people who cannot move without their car to occasionally consider the train as an alternative and,
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9.02 pm
Lord Bates: My Lords, it is a privilege to follow my noble friend. I was reminded that the paragraph in the gracious Speech that refers to high-speed rail links also mentions the increase in broadband speeds. As well as having that physical network and infrastructure to embrace and encourage enterprise in the economy through high-speed rail-which I fully endorse as someone who lives in a peripheral region in the north-east of England-increasingly, the second part, the commitment to and the going forward of the major broadband infrastructure, will be extremely welcome.
It is a privilege to take part in this debate on the gracious Speech. I, too, along with my noble friend Lord Griffiths, offer my congratulations to colleagues on the Front Bench-the noble Lord, Lord Henley, and the noble Baroness, Lady Wilcox. The noble Baroness gave an outstanding opening address. She displayed her instinct for business and enterprise, and an ability to cut through bureaucratic waffle with a knife-a fish knife at that. I want to use my time to focus on the needs of business, particularly as they pertain to the north-east of England. I should declare my interests, as listed in the register of interests, in two small- to medium-sized enterprises in that region.
The gracious Speech states that the "first priority" of this Government,
That is about as clear as we can get it. The task is to get the ruptured pipe of debt under control before it wreaks irreparable damage on the fabric of the British economy. Time is not on our side, but as Abraham Lincoln said, you cannot escape responsibility for tomorrow by evading it today. That is the lesson of history that the previous Government ignored and which it falls to this Government to tackle.
But it is not just about cutting costs, it is about increasing revenue and sales. Our sales force is the 2 million-plus businesses out there who are fighting for their very survival. We need to free them up to do what they do best: to create wealth and create jobs. Cutting corporate taxes will enable businesses to invest more of their own profits and in turn increase tax revenues to the Exchequer. Even more important, in my view, is the strong message of deregulation through the gracious Speech because that helps both sides of the balance sheet, the public and the private sectors. By reducing the burden of regulation, not only do we free up business to create more wealth, therefore yielding more tax revenue, but at the same time we reduce the requirement for armies of bureaucrats to police and interpret the rules, and allow more resources from the public sector to be directed towards protecting front-line services.
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Finally, I want to say something about the north-east of England and local enterprise partnerships, which are referred to in the gracious Speech. Over the past couple of years there has been a healthy and vigorous debate in the north-east region about the future of our regional development agency, One North East. In the spirit of the coalition, consensus is beginning to emerge about the way forward, and I for one welcome that. On the one hand there was a debate about whether we should have multiple local enterprise partnerships, based on Teesside, the rural economy and Tyne and Wear. Consensus is emerging around the fact that we are the smallest of the English regions in terms of population and geography and therefore we need one voice for the north-east region. On the other hand, there is a recognition that the current organisation of the regional development agency is too large and unwieldy. In trying to manage everything, it is failing in many ways to do something significant. At the moment it manages everything from housing quotas, transport, highways, planning, cultural and even forestry strategies, thus falling foul of the contribution of the noble Lord, Lord Myners-whose contributions from the Front Bench I have always enjoyed and no doubt will continue to enjoy when he speaks from the Back Benches-when he said that jobs cannot be created by interminable meetings in committee rooms. He is absolutely right. Jobs are created by businesses that make and sell things, and they deserve a Government who are on their side, not on their back. The role of an enterprise partnership should be focused solely on the need to promote enterprise within a region and to sell the region internationally.
On Saturday, I had the privilege of attending the rollout of a huge, 2,500-tonne pipe-laying rig, the first of its type in the world, which was launched on Teesside by the engineering business founded by Dr Tony Trapp, a former academic at Newcastle University's engineering department. He has built a company without any government help which has a turnover of £150 million and employs 500 people, and which spins out lots of other businesses around the north-east. The north-east of England is now a centre of excellence for seabed and offshore engineering, and that is particularly significant given the commitment to new sources of renewable energy such as offshore wind farms. That is happening not only in this country, but around the world.
As well as legislation and money, we need to recognise that there is a place for inspiration and leadership. The north-east is the only region in the country which exports more than it imports, and we have many strengths, but in the past we have put far too much faith in government to solve our problems, and far too little faith in ourselves. Tony Trapp told me that his motto for success in business was ABC: ambition to achieve; belief in our talent and ability to succeed: and the courage to face up to the inevitable challenges along the way. That has worked spectacularly well for him and I believe it works for the north-east too. I also believe that it is a good mantra for the coalition Government.
9.09 pm
Baroness McIntosh of Hudnall: My Lords, I begin by joining in the congratulations that have been offered to the two new Ministers. I should like also to extend
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I want to talk about a particular aspect of business but, before I do, I should like to say something about transport. As a supporter of the stop Stansted expansion campaign for some years, I welcome the withdrawal of BAA's planning applications for additional runways at Heathrow and Stansted airports and the part that the new Government's declaration of intent has played in provoking that long overdue decision. How much it was attributable to government action and how much to BAA losing the will to live in the face of very well organised and effectively marshalled economic and environmental arguments I could not say but, either way, I hope the Government will remain steadfast on the critical issue of airport expansion. When they come to review aviation policy, I hope they will not revive the crippling uncertainties that have blighted communities in Sipson and north Essex for nearly a decade. When the Minister comes to reply I hope he can reassure me on this point.
I turn now to business, albeit of a kind that does not often get mentioned in the same breath as the City and high finance, so I am taking this opportunity to discuss the creative industries where they belong-in company with other significant contributors to this country's economic effort. Too often they are assumed to inhabit a different bit of the political universe. The term "creative industries" covers everything from the mega-commercial, mega-successful worlds of computer gaming, blockbuster publishing and multi-million dollar film franchises such as Harry Potter and James Bond, right down to tiny one or two-person enterprises making, for example, hand-crafted jewellery, designing fashion or creating i-phone applications. The result of this diversity is a mass of output and a body of talented people whose skills are in demand all over the world. The UK creative industries are a success, accounting for, according to DCMS figures published earlier this year, 6.2 per cent of gross value added in 2007; exporting £16.6 billion worth of services in the same year, which was 4.5 per cent of all goods and services exported; and in 2008 there were coming up to 2 million jobs in the sector, of which 1.1 million were in the creative industries themselves and a further 800,000 plus creative jobs were within other businesses.
By any standards these are significant figures generated by businesses which deserve our respect and support and not the lofty disdain manifested, for example, in a curiously sour piece in a recent edition of Prospect, which makes the fundamental error of assuming that, because we talk about the economic benefits of a strong creative and cultural sector, we elevate the importance of those benefits over the quality of what is created. That is simply wrong.
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In a thoughtful speech last month, the new Secretary of State for Culture, Olympics, Media and Sport, Jeremy Hunt, said:
"For me, culture is not just about the value of our creative industries-not just about more than 3 million visits to UK cinemas each week, more than 40 million visits to our national museums and galleries each year, or more than 14 million visits to the theatre in London alone-it is what defines us as a civilised nation.
I agree with that sentiment from the bottom of my heart, but I also recognise the economic impact creative industries have had and can continue to have as long as they are not cut off at the knees by the insensitive application of harsh economic correctives or the loss of support for fledgling enterprise.
The noble Baroness, Lady Wilcox, emphasised the new Government's belief that economic recovery in this country must be led by the private sector, particularly SMEs. Contrary to popular belief, most creative businesses are in the private sector and many are SMEs-for instance, in independent television production, the fashion industry or, indeed, computer gaming-but their market is globalised and highly competitive and they need to be encouraged in two significant ways, both of which require government to play a part. The first is that many of them depend on high skills levels, including in design, mathematics and computing. I refer your Lordships to the findings on this subject in a report published earlier this year by the House of Lords Select Committee on Communications looking into the film and television industries. Higher education has an important part to play in delivering these skills-and here I acknowledge the remarks of my noble friend Lord Jones-and severe cuts to that sector will have a negative impact on our creative industries. Secondly, the commercial viability of, for example, London theatre, which has an astonishing track record of success both here and overseas, depends significantly on talent and material nurtured in publicly funded organisations such as the National Theatre, the Chichester Festival Theatre and the Royal Court. The recent 4 per cent cut administered to the Arts Council, which was more than to other DCMS bodies, makes me wonder whether the Government have yet fully understood the symbiotic nature of public and private enterprise in the cultural sector.
However, I recognise that, at a time when the national watchword appears to be austerity, there can be no expectation of special treatment and I do not ask for it. What I do ask is that our creative industries, for which the UK is very widely admired, should not be treated less well than other sectors and that their particular needs and unique contribution should be properly respected.
9.15 pm
Lord Birt: My Lords, I share the universal delight in the ascent of the noble Baroness, Lady Wilcox, who during the day seems to have risen almost to the status of sainthood. I only hope that her trademark cheery beam will be maintained in the white-water ride ahead.
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