Business, Energy and Industrial Strategy: Departmental Spending

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.