[Relevant Documents: Oral evidence taken before the Business, Energy and Industrial Strategy Committee on 14 May and 4 and 18 June 2020, on the Impact of Coronavirus on Businesses and Workers, HC 219 First Report of the Petitions Committee, The impact of Covid-19 on maternity and parental leave, HC 526 e-petition 306691, entitled Extend maternity leave by 3 months with pay in light of COVID-19.]
Motion made, and Question proposed,
That, for the year ending with 31 March 2021, for expenditure by the Department for Business, Energy and Industrial Strategy:
(1) further resources, not exceeding £28,238,529,000 be authorised for use for current purposes as set out in HC 293 of Session 2019-21,
(2) further resources, not exceeding £8,707,662,000 be authorised for use for capital purposes as so set out, and
(3) a further sum, not exceeding £23,687,553,000 be granted to Her Majesty to be issued by the Treasury out of the Consolidated Fund and applied for expenditure on the use of resources authorised by Parliament.—(Kwasi Kwarteng.)
The debate will be led by the Chair of the Business, Energy and Industrial Strategy Committee, the hon. Member for Bristol North West (Darren Jones). I inform Back Benchers that I will impose an immediate four-minute time limit—I am sure you will appreciate that there is a great deal of demand for this debate.
It is a pleasure to open this debate, and I will try to keep my remarks as short as possible to give time for colleagues in the House to contribute. Before I begin my substantive remarks, I pay particular tribute to the right hon. Member for Tunbridge Wells (Greg Clark), who chairs the Science and Technology Committee, and the right hon. Member for Ludlow (Philip Dunne), who chairs the Environmental Audit Committee, for their support. I note that the right hon. Member for Ludlow is unable to take part today because of the lack of virtual proceedings, but he had intended to do so.
The Department for Business, Energy and Industrial Strategy is at the heart of Britain’s recovery. If we are to recover from the economic costs of the pandemic and tackle the climate crisis, it is imperative that we build back better for Britain, with a more inclusive, productive and sustainable economy that provides opportunity, security and resilience for families in every part of the United Kingdom.
That means good jobs for every generation in every part of the country; it means investing in key sectors in order to increase British manufacturing and British exports; it means Government partnering with business to bring forward investments in digitisation and technology transformation to improve productivity, with a specific focus on small and medium-sized enterprises; and it means recognising the importance of a fiscal stimulus in people as well as infrastructure, in the knowledge that an investment in every worker’s skills is an investment in the interests of the British economy. In each of those priorities, embedded in every single spending commitment, the Government must set out how they will accelerate our transition to net zero. Tackling climate change should no longer be a standalone policy; it should be at the heart of every Government decision.
I am confident that across Britain, in every part of our great country, from students and workers to business leaders, entrepreneurs and innovators, we have the capacity to rise to the patriotic challenge before us—that together, we can get Britain back on its feet. That is why, at this turning point for Britain, as we leave the European Union and reset our role in a world quickly changing around us, the Government have an opportunity to rise to the challenge and create a modern, dynamic and aspirational Britain that is fit and ready for the future.
Obviously, the aerospace industry is not going to come back any time soon, so we must look at how we will invest to keep those jobs and skills in the medium and longer term. In particular, we have seen the sort of support that has come from the German and French Governments; we really must look at least to mirror that in this country.
I thank my right hon. Friend for his intervention. He and I have shared constituency interests in that important industry, which I will touch on later in my remarks.
It has been entirely right that the Government have acted quickly, but the scale of the expansion underlines the need for Parliament to scrutinise the effectiveness of its delivery, the extent of the future liabilities to which it exposes Government, and the plan for how support will be provided to the many businesses that are not yet out of the woods and will emerge from this crisis newly indebted—in short, what comes next.
The first key test for the Department must be to ensure that businesses large and small get the help they need in respect of both liquidity and debt management. In the course of our inquiry into the impact of coronavirus on businesses and workers, my Committee has seen evidence of employers doing the right things, but also of businesses and employers doing the wrong things. Conditionality on future support, in respect of both corporate behaviour and embedding the net zero transition and worker training, should become the new normal.
The Department should also take the opportunity to learn lessons from the initial phases of support. For example, my Committee heard consistent evidence of frustration at grindingly slow approval processes for Government-backed coronavirus business interruption loans and a reluctance to lend on the basis of the Government’s 80% loan guarantee, in addition to a widespread perception that eligibility requirements were not being applied consistently.
I wrote to the Secretary of State following the publication of the main estimates to seek an update on whether approval and take-up rates under the interruption loan schemes ever actually increased, particularly following the roll-out of bounce-back loans. It will be vital for my Committee and the House to understand the complete picture in that respect. Equally, although I recognise the trade-offs that exist when support is provided at pace, I am conscious that Ministers have since notified the House of a contingent liability of £27 billion. That figure was not included in the estimates and, needless to say, it could dramatically increase.
It is a pleasure to follow the new Chairman of the Business, Energy and Industrial Strategy Committee, who is making good progress. I draw the House’s attention to my entry in the Register of Members’ Financial Interests.
It seems to me that businesses face two separate and distinct challenges right now: meeting the social distancing requirements and complying with the Government regulations on the one hand, and, on the other, establishing whether there is enough demand for the product or service they provide. Those are very different. Some businesses are unable to trade because of the social distancing requirements or are not permitted to trade, but for many others, there is not enough custom. Either way, that can lead to a decision to cease trading or, far worse, to business failure.
In terms of those businesses not permitted to trade, I have had regular contact with Helen Taylor of Helen Taylor Aesthetics in Rugby, which is a clinic offering anti-ageing face and body services and skin treatments. It is an environment with high levels of cleanliness and sanitation, and she believes there is a strong case for her business to be open at a time when pubs, non-essential retail and hairdressers are open. I hope the Minister will be able to give some good news to that sector.
Another sector hit hard in respect of both regulation and demand is hospitality. I welcome the move to 1 metre- plus, but that still represents a challenge in many locations where it is only possible to operate at 70% capacity. For many businesses, that is sub-economic in the short term, so they have not opened. Those businesses, like others, welcome the Government’s support. The furlough scheme and the grants and loans have enabled many to keep going, but the question is, for how long? The hospitality sector employs many young people, and it needs a stimulus. I hope that we will hear the Chancellor announce tomorrow not a tweak to the standard rate of VAT—a small amount off the rate will not make much difference to the decision on whether or not to spend—but zero rating of restaurant meals, which would have a big impact on the sector, taking 20% off the price.
I am taking from my own time by intervening, but my hon. Friend has said “businessmen”, “salesmen”, “salesmanship” and “salesmen” again—will he please acknowledge that there are women in this world?
I certainly acknowledge that point. With four minutes to speak, I am rushing through the content of my speech, but I take the point. We need people to be trained in these skills.
With the little bit of extra time I now have, I want to put in a plug for manufacturing. My constituency is adjacent to Coventry, the home of motor manufacturing. My constituency is also home to the Manufacturing Technology Centre, which has contributed to a new paper, “West Midlands: the Speed to Scale Region”. There is a strategy to deliver new products at pace, and we need to make certain that we include manufacturing as part of our overall business mix.
It is a pleasure to follow other members of the Business, Energy and Industrial Strategy Committee. On youth unemployment, the Select Committee heard that workers aged under 25 were about two and a half times more likely than other workers to be in a sector that was shut down during the pandemic. The Government must act now to save jobs and create a plan to get young people back into work. I strongly support the TUC’s suggestion of a jobs guarantee for young workers. In essence, it would provide a guaranteed job, including training and paymen of at least the living wage, for young workers who have been out of work for more than three months.
In the time I have, I will focus on the economic powerhouse that is the beauty industry—an industry that employs over 300,000 people across the UK in every town, village and city. In many places, including my own constituency, beauty salons are the lifeblood of the high street. The sector’s success is critical to our economic recovery.
Does my hon. Friend agree that the beauty industry, which contributes billions of pounds to the economy and provides over 370,000 jobs, is no laughing matter, despite the Prime Minister’s frivolous and flippant dismissal of the question when he was asked about it in Prime Minister’s questions last Wednesday?
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The breadth of interest in this debate is a function of the gamut of responsibilities and policy areas contained in the BEIS brief—an important brief for us to hold to account. The pandemic has given the Government, and BEIS most of all, an overriding and immediate task: to save as many jobs, businesses and livelihoods as possible. Covid has seen day-to-day departmental spending increase eightfold in the space of a year, from £2.1 billion in 2019-20 to £15.9 billion in 2020-21, with a significant majority of it concentrated on delivering emergency loans to the hundreds of thousands of businesses that have required help.
Today is not the right occasion for a full analysis, but it is more than conceivable that if the Government had been willing to reform the initial loans frameworks and supplement them with targeted help for the worst-hit sectors, they could have provided materially more support earlier in the day at a lower eventual cost to the Exchequer. As Britain emerges from lockdown into a state-sponsored recovery, it is vital that the Department learns the lessons of the past few months in making the strategic interventions necessary to get businesses back on their feet, while balancing the fiscal risks of significant borrowing against value for money and potential future increases in interest rates. We must spend the money we are borrowing wisely. I therefore ask the Minister, in his summing up, to set out for the House what lessons have been learnt about the effectiveness and value for money of the initial support packages, and which lessons will be taken forward in the design and delivery of future support.
Evidence taken by my Committee from sectors in the most immediate need has also underscored the urgency of strategic sector-specific support packages and the high cost of failing to act. As the Member of Parliament for Bristol North West, I see that especially in the hospitality and aerospace sectors, and, while the hospitality sector can start to slowly reopen, the aerospace sector cannot. The aerospace sector should command a bespoke package of support bringing forward decarbonisation targets for new aircraft and developing the technologies of tomorrow, not just to protect vital jobs and skills, but to maintain our international competitiveness in this important sector. However, the Government seem unwilling to take a coherent sectoral approach. I appreciate that the Minister cannot make any announcements in advance of the statement tomorrow, but I wonder whether he might tell us if he thinks his Department will move from a one-size-fits-all approach to a more sophisticated sectoral approach in the months ahead.
Those decisions should be underpinned by the industrial strategy, a key long-term metric for the Department’s success. In its annual report earlier this year, the Industrial Strategy Council identified key areas for improvement. One was in relation to the Department’s multi-agency research and development spending, principally through UK Research and Innovation. In their letter to me last week, the Secretary of State and the innovation Minister, the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Derby North (Amanda Solloway), undertook to engage and consult on the Department’s research and development road map ahead of the autumn spending review. I hope it will include a clear commitment to seeking third-country membership of Horizon Europe, which would contribute about £2 billion of value to British research, regardless of the outcome of trade talks. That would send a much more valuable signal about the Government’s seriousness in ensuring that science and innovation in Britain are supported for the long haul and that the ambitious spending targets identified in the industrial strategy are met.
Of equal importance to the Department’s role in shaping the post-pandemic recovery is the Industrial Strategy Council’s call last month for a clearer overreaching vision for UK skills, with a strategic overhaul and expansion of training policies and institutions. It identifies a median scenario whereby 7 million current UK workers will have seen their jobs automated by 2030 in the absence of sustained investment in reskilling in our workforce. As OECD analysis has shown, the employees most at risk from automation are often the least likely to participate in training. The pandemic only compounds the latent injustices, with the rise of remote working and learning making investment in digital access and digital skills even more important.
I am an advocate of the acceleration of automation and technology adoption, but it must be coupled with economic stabilisers from the state for training and jobs transition for workers, and it must tackle inequalities and have a clear view of modern competition. It must also be coupled with consumer and workplace health and safety regulations that protect workers, and it must prevent monopolisation and overbearing corporate power from the owners of data technology and digital services. Yet we seem to be in a twilight zone where the Government have an industrial strategy but often seem to lack reference to it, or indeed ignore it, making spending decisions—for example on the OneWeb satellite company—that seem to bear no resemblance to the published strategy while intervening in the market in an often incoherent and opaque manner. That cannot continue, and the Government must set out the framework in which they will operate in the years to come so that the market can understand what rules will be followed and on what basis.
Those of us content with the idea that the state plays a role in the economy would recognise such interventions from the Government in the past few months as an industrial strategy, so it would be useful if in summing up today the Minister set out what the Government’s industrial strategy actually is and how it will be used in the decisions for post-pandemic growth. This, to be clear, should not be about picking winners. It should be about working with business to deliver on economy-wide objectives. If the Government are going to truly level up the economy, they need to trust, empower and properly finance local decision-making in a real partnership between the functions of the state and business and trade union leaders.
Lastly, as I said at the beginning of my speech, I do not see climate change as standalone policy, but one that is embedded in every decision. I hope the Government will set out how every decision, through the billions of pounds that they spend, helps us to reach our net zero target.
At a time of shifting global power, we should take these opportunities not only to re-emphasise the importance of multilateralism and the rules-based international order in terms of climate and trade, but to evidence why it is in all our interests to work together. The Government have a rare opportunity right before them to create a more inclusive, productive and sustainable economy that delivers good jobs, good pay and security for families at home here in the United Kingdom, while using our soft powers to show the world what we can all achieve together. That goal will be the defining test for this Government.
Having set up a business, built it up and then sold it, I want to focus on the Department’s role in encouraging entrepreneurship. I get feedback from regular meetings with the Federation of Small Businesses, my chamber of commerce and other business breakfast groups, and one of the best and most interesting inquiries the Select Committee did in the last Parliament was on small business productivity. We found that the support for people running small businesses and the guidance and advice is incredibly patchy. Those running businesses are often unsure where to go and unsure of their obligations in running a business, and that continues through their life.
It is important to recognise that businesses are often set up because somebody is good at a particular trade. They may be an electrician or a builder, and they may have done an apprenticeship. They have learnt the skills needed in that trade, but few have had any training in running and managing a business. It is a different skillset, and it is one that Government need to recognise. Some support is provided by local enterprise partnerships and growth hubs. We have a fantastic one in Coventry and Warwickshire, but we heard that this was incredibly patchy.
We also heard that businesses should make time to work on their business as well as within their business. Often businessmen are too busy, but they need to make some time available and have some support for personal development. One of the skills that we need more businesses to have is salesmanship. Nothing happens until a sale is made. Salesmanship is a professional career recognised by the Association of Professional Sales, and right now, we need the country’s best salesmen pushing for sales of UK-produced products.